Portugal – Conclusions of PWC Study demonstrate that online sporting bets would generate €20M more revenue to State if taxes were based on GGR

Conclusions of the study elaborated by PwC and presented at the Parliament

  • Current Taxation plans will lead to the loss of competiveness for regulated operators and encourage consumers to use the non-regulated market;
  • The tax regime will make it harder to promote a big regulated market;
  • The PWC study concludes that the proposed system will result in a small, inefficient and unprotected market; the countries with the alternative GGR tax system were able to create larger, efficient and secure systems for consumers.

Lisbon, 28th January 2015 – Online sporting bets would generate €20M more revenue to the State until 2018 if the taxes were based on Gross Gaming Revenue (GGR). The current proposal based on betting turnover, and the revenue the Government will receive will remain at €17 million, until 2018. This conclusion was presented to the Commission for Economy and Public Works at the Parliament by PricewaterhouseCoopers (PwC), in a study developed for Remote Gambling Association (RGA).

To support the study “Sporting Bets Regulation in Portugal”, PwC collected and analyzed data on other European countries, according to the tributary regimes applied in each one of them and the corresponding market behavior, with especial highlight for fiscal revenue.

As observed by PwC study, the proposed model on Portuguese law chooses taxation on bet value over a GGR regime. According to the study, the former discourages the demanding of licenses and the coming of new entrants in Portugal, for the awards won’t be competitive, maintaining players in unregulated market. For the State, the biggest consequence of this scenario will be a fiscal revenue way inferior to the one expected when it was decided to regulate the online gambling market.

PwC’s analysis notes that in France, with a model identical to the Portuguese, half of the online gambling traders had left the country by the end of the first year due to the lack of profitability (18 of the total 35), which weakened the offer made to the consumers and caused a meteoric decrease of revenue to the Government.

Absorption rate at stake
Under these conditions, the ability to attract supply and clients from the unregulated to the regulated market (absorption rate) is minimal. The verified experience in other countries shows that a tributary regime based on the total amount of bets prevents market evolution and is not able to absorb more than one fourth of the market. On the contrary, GGR model increases its absorption rate over 50% (more 50% in Spain: more than 80% in Denmark), double the projected rate for Portugal under the present regime.

  • GGR (Gross Gaming Revenue): Taxation on Gross Revenue
  • Bets: Taxation on Total Amount of Bets
  • The real presented date on Denmark, Spain and France: Projection date in the case of Portugal.

Consumers with less security
By analyzing the potential socioeconomic impacts of the regulation of online sporting bets in Portugal, in light of the experience and situation of other European countries, PwC’s study maintains that the present model damages the consumers for, by remaining in unregulated market, there remains no kind of juridical protection in the moment of placing and collecting the bet. Thus, there won’t exist a legal identification umbrella for the users personal data. On the other hand, there won’t be any control of addictive behavior, contrary to what happens in the traditional gambling and in regulated market of other countries.
The study concludes that the proposed system is diminished, inefficient and unprotected. The countries with a GGR model were able, in contradistinction, to create plural, efficient and protected systems.

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