EGBA Wants Portugal to Lower Online Sports Betting Tax Rate
EGBA’s Secretary General, Maarten Haijer, suggested Portugal change its tax rate on online gambling. EGBA claims the “discriminatory” online gambling tax affects player signups and gaming site investment in the country.
Most countries tax online gambling on the revenues they generate. Portugal taxes online sports betting on the turnover — that is, the gross amount wagered. Taxation based on turnover produces a much higher tax rate.
In fact, Portugal’s tax rate on online bookmaker bets is so high that it discourages participation. Portugal taxes online sports betting at a rate between 8% and 16% of betting turnover.
Gaming experts crunched the numbers and determined a 16% tax on turnover equates to a 46% tax on revenues. Western European countries like France and Spain passed tax rates in the 10% to 15% of gaming revenues. That amounts to one-third or one-fourth of Portugal’s rate.
2015 Portugal Online Gambling Law
Interestingly, when Portugal passed its 2015 gambling reforms, it based the tax on online casino gaming on gross gaming revenues. The 15% to 30% tax rate on online casino revenues is a bit higher than comparable gaming elsewhere, but it charges on the correct standard.
EGBA’s request comes at a time that Portugal’s gambling regulator, Servico de Regulacao Inspecao de Jogos (SRIJ), plans to review its gaming taxes. SRIJ said earlier this year that the tax rate might be too high and needs a full review.
SRIJ Online Sports Betting Licenses
SRIJ granted 15 gaming licenses, but most companies spent little investment capital in the market because it allows little room for profit. EGBA’s leader noted that French gambling group Betclic holds a Portuguese gaming license, but isn’t interested in the market.
Shared Poker Player Pool
Gaming experts compare Portugal’s tax rate to Spain and France not simply because of proximity, but also their shared markets. In 2015, France, Spain, Italy, and Portugal signed a poker compact to share player liquidity.
The four country’s share a player pool for the purposes of online poker. It gives Portugal access to a huge player pool exceeding 190 million people. Shared player liquidity boosts the size of guaranteed prizes and 1st place winnings, which drives more customers to a poker site.
Portugal’s Online Bookmaker Sites
While the shared market does not directly affect online sports betting, it holds the potential for increased revenue in some situations. More and more, online gaming sites combine sports betting with poker gaming and casino games. These one-stop gambling sites give players a suite of game options.
Lowering the taxes on sports betting therefore increases the player pool, as well. It wasn’t always so, but a move to lower barriers to online gaming makes it more cost-effective for sites to offer several forms of gaming. In the old days, it was best to target a single game type, so national bans on a type of gaming would not bar a site from an important jurisdiction.
In the same way, it’s important for countries who want a share in the gaming revenues to standardize their tax rates (somewhat). That way, each contributes its fair share to the health of the player pool.