Portuguese Casinos Feel Online Pressure Blame Government

Just last week the Portuguese Association of Casinos (APC) announced the land based industry was determined to cease its contribution to the treasury until its grievances are addressed by the government.

To make the message even clearer the APC has actually filed a lawsuit against the government, claiming that the tax rules applicable to the industry do not meet constitutional requirements. The industry body claims that casinos have been forced to pay more than they actually make.

This is because, in addition to the tax on gross revenues (which vary depending on the establishment), casinos are also required to pay a minimum fee to the state from their transactions regardless of value. Casinos insist that this setup has only compounded their losses and has endangered their operations.

The land based industry is blaming online competition and government complacency for the dismal results. APC president Jorge Armindo insisted that the industry wanted the government “to recognize that there have been no changes in circumstances since our negotiations in 2011, and illegal activities, which include online gambling and illegal gambling, have not been hampered by government action.”

The country has indeed been considering following the recent example of neighboring Spain, which legalized online gambling. Portuguese gambling laws do not yet allow online casinos and the like to operate from the country, but lawmakers have been studying the available options since early last year.

There are several models that could benefit the existing casinos, while also allowing the launch of legal online poker sites in Portugal, but any model requires legislative action.

Speaking at a press conference, Armindo meanwhile confirmed that Portuguese casinos would indeed withhold payments designated for the central budget, pending the outcome of the lawsuit.

As it is the case in many countries where gambling is a government monopoly, the spending of Portuguese casino revenues is predetermined by law far in advance, with such delays causing serious problems for the designated recipients. No doubt this is part of the plan by the casino industry, aiming to escalate the issue and turn the heat on the government.

Two of the country’s 10 casinos, Casino da Madeira and Casino de Troia have decided to stay out of the legal action, so presumably they will continue with their budgetary contributions.

Some of the biggest recipients of these contributions are tourism authorities, whose budget is heavily dependent on those revenues. They are now worried that country marketing efforts will suffer unless the situation is resolved quickly. This is something that ultimately the gambling industry should also worry about, considering the potential impact of reduced tourist activity on casino revenues.

Being one of Europe’s ailing economies, Portugal is eager to maintain and even increase its revenues from the gambling industry. Placing an unreasonable burden on the brick-and-mortar establishments, however, may not be the most efficient way to go about it.

In the age of portable gizmos such as iPads and iPhones and the subsequent customer demand for mobile casino gambling, ISP blocking efforts are clearly not a feasible, long-term solution. Speeding up the legislative review of legalization options and finding a solution that allows the country’s brick-and-mortar casinos to profit from the online boom would be a more sensible thing to do for Portugal.