Portugal to Ring-fence Online Poker Market

Kaycee James

6 years ago

Portuguese President Aníbal António Cavaco Silva, who signed the country’s
gambling act into law in May. (Image: ummarderecordacoes.blogs.sapo.pt)

Portugal has announced that its newly regulated online market poker will not pool liquidity with any other nation.

This news surprised the industry this week, not least in its short-sightedness.

Portugal’s close neighbors, Spain, along with France and Italy, began their own ring-fencing experiments in 2011 and 2012 when they opted to tax and regulate online gambling, or in the case of Italy, introduce new online poker ring games to an already regulated market.

Those markets, which Portuguese lawmakers professed to have studied closely when developing the legal framework for their new licensing regime, have been spiraling downwards ever since, self-asphyxiated by a lack of player liquidity.

If these markets shot themselves in the foot by ring fencing online poker, Portugal, with a much, much smaller population, has shot itself in the face.

Unworkable Taxes

The industry was also surprised by the decision because the Portuguese Gambling Act made no mention of ring-fencing, leading operators to assume segregation was not part of its plans.

The country’s long-awaited online gambling reforms came into force on 28th June, having been signed into law in May by President Aníbal António Cavaco Silva.

The bill has opened up the previously monopolized market to international operators, with the cash-strapped government hoping to raise €25 million ($28 million) per year in taxes from the new venture.

The market is currently closed during the ongoing license application process, although online poker operators who may have been considering giving Portugal a spin are likely to be extremely disheartened by the new revelation.

Discontent had already been sown among potential operators because of the high tax rates established by the new licensing regime, which are considered to be overly complicated and punitive.

Online casino and poker revenue will be taxed between 15 percent and 30 percent depending on an operator’s annual income.

A rash of major operators, including William Hill, Ladbrokes, PokerStars and Full Tilt all announced over the summer that they would not be engaging with the market.

Room for Maneuver?

Meanwhile, Portuguese poker players will be left high and dry, while the international player pool, already suffering from losing players to other ring-fenced markets, will be further depleted.

“Whilst [we] welcome the Portuguese initiative in seeking to regulate the online gambling sector, our members are extremely concerned about the unworkable tax rates that are proposed in the draft law which is presently being considered,” the Remote Gambling Association complained in an official statement earlier this year.

Still, because the segregation model is not set in stone by the gambling act, there is scope for Portugal to change its mind on this matter.

Let’s hope it does so before it’s too late.