Portugal iGaming Tax Regime Should Serve as Warning to Australia

Online gambling is legal in Portugal, but despite this, there is still a large amount of traffic going to unregulated online casino sites. The reason as one organization sees it is the discriminatory Portuguese iGambling tax regime.

Portugal’s problem has put many gamblers in a similar position as those in Australia. Namely, forcing them to rely on unregulated sites that regularly try and circumvent existing laws. It also should serve as a bit of a warning to Australian lawmakers as they consider online gambling expansion.

ERBA Calling for Flat Portuguese iGambling Tax

The European Gaming and Betting Association (ERBA) has recently spoken out regarding what they feel is a “discriminatory” tax system for online gambling in Portugal. Under their present structure, Portugal imposes taxes of between 15% and 30% on online casino gross gaming revenue. Other forms of gambling are taxed at a reduced rate based on betting turnover.

Maarten Haijer, Secretary General for ERBA, spoke about this issue on Monday. He stated that the system is “discriminatory because it applies a more favourable tax for some operators, whilst others have to pay a much higher tax based on a broader tax base.”

Consequently, some international online casino companies have chosen to stay out of Portugal rather than deal with the high taxes of the region. It has also resulted in an unexpected rise in unregulated online gambling.

Over 75% of Gamblers Choose Unregulated Online Casinos

In a surprising study, the Universidade Nova de Lisboa and Qdata reported that approximately 75% of gamblers in Portugal opted to use unregulated online gambling products in 2018. That’s up 10% from 2017.

There are multiple reasons for this. The first is that the Portuguese iGambling tax basis used for some providers have forced players off of regulated sites and onto unregulated sites. The other is that Portugal’s regulatory body lacks the tools necessary for preventing unregulated operators from advertising their products in Portugal. It’s gotten so bad that unregulated operators can advertise in local taxi cabs without fear of prosecution.

ERBA Feels Flat Tax is the Best Option

According to ERBA, a flat tax rate based on gross gaming revenue is the best option for making a fair marketplace for regulated online casino and gambling companies. This would even the playing field and also help to reduce some of the player channelization that’s been happening.

According to reports, Portuguese legislators attempted to impose a 25% flat tax on online gambling. However, the proposal failed to pass. Also, it appears that the government is slacking in following up on a promise to review online gambling laws. Back in 2016, the government promised to revisit laws in 2018, but that has yet to happen. It is clear that they must make good on their promise and help quell the rise of unregulated products.

Australia Lawmakers Can Learn From Portugal

Why are the troubles of Portugal relevant to Australia? Australian lawmakers are reportedly looking into whether to regulate online gambling. Therefore, what’s going on in Portugal presently is an excellent case study in things to avoid.

Australia presently bans online gambling and has restrictions in place on advertising services. But they are not foolproof. As you can see from Portugal, failing to restrict unregulated online gambling can result in stifling the regulated market once it is formed.

Next, lawmakers should pay close attention to the Portuguese iGambling tax regime. It is preventing competition and contributing to the unregulated market. The best thing for Australian lawmakers to do is to make a flat tax for online gambling sites to encourage competition and keep Australian tax dollars in the country.

According to some studies, Australian spend more money per person on gambling than any other country. So it makes sense that lawmakers take steps to keep those dollars with regulated websites once they are formed. Of course, lawmakers need to move forward with online gambling regulation. This is so Kiwi’s can gamble online at regulated sites they trust.