The Remote Gambling Association (RGA) has noted the opposition of Santa Casa da Misericordia de Lisboa (“SCML”) to the government’s plans to regulate the online sports betting market, but the RGA believes that a viable and competitive market in the future would benefit not just consumers and the government, but Santa Casa as well.
The RGA argues that the Portuguese plans for reform, in particular, the prohibitive taxes that will apply to online sports betting will make the establishment of a competitive licensed market almost impossible. SCML appears to see the establishment of such a successful online betting market market as a threat rather than an opportunity. However, in other jurisdictions (such as Denmark) the incumbent monopoly operators have thrived under new licensing systems. There is no reason that SCML could not be at least as successful in a regime where there will be room for many different kinds of operators to run profitable tax-paying businesses provided that a sensible tax on gross profits is introduced.
The RGA is of the view that the taxes set out in in the draft law are the result of a fear of cannibalisation of the SCML offline sports betting market by future Portuguese licensed online sports betting operators. A forthcoming study by PWC will, among other things, make it clear that any fears of cannibalisation of Santa Casa’s offline sports betting product are wholly misplaced. Furthermore, it is clear that if the punitive taxes for online sports betting in the draft law remain, there will be a clear ongoing risk of many Portuguese consumers using illegal and/or unlicensed operators after regulation is enacted.
Clive Hawkswood, the RGA’s Chief Executive stated:
“We completely understand why Santa Casa, which is such a highly respected institution in Portugal, would have concerns about a fundamental change in the betting market. However, we genuinely believe that its fears are not well-founded and that an online betting market with a reasonable tax regime based on gross profits would present it with a huge opportunity. Santa Casa need only look at the example of Denmark for real evidence of this: operators there are taxed at 20% of their gross profits and the previous monopoly operator, Danske Spil, is doing extremely well even though it has now been in competition with a number of other licensed operators for the past few years.
If the online sports betting market could be taxed on a gross profits basis it would be good news for all stakeholders. It would be a win for Santa Casa who could compete in this sector whilst maintaining their current successful offline sports betting product; it would be a win for the Portuguese state which would benefit from increased inward investment and tax revenues; and it would be a win for the Portuguese consumer who would enjoy the benefits of a licensed and competitive market.
Unfortunately, none of these will be achieved if the tax regime makes it impossible for companies to operate profitably in a licensed Portuguese market. That is the real threat at the moment. There is very clearly a demand in Portugal for online gambling. If consumers cannot be offered the value and range of products they desire from within the Portuguese market they will continue to seek it out from operators who are licensed elsewhere. That cannot be good for Santa Casa or anyone else.“