The Gambling Law Review: Portugal
Under certain conditions, the following types of gambling products may be offered in Portugal (said products are regulated under a multitude of legal diplomas):
Lotteries, including instant lotteries or scratch games, are games where a prize is granted depending on the full or partial coincidence between a set of numbers or symbols (state-run games). These types of games are operated as a monopoly both on a land-based and online regime by Santa Casa da Misericórdia de Lisboa (SCML).
Games of chance are games typified by law whose results depend exclusively on chance. The types of games of chance that can be offered by land-based casinos and online websites do not entirely match (being that the first may offer for example keno, boule, cussec and chemin de fer), but are coincidental on the major type of games such as blackjack/21, French and American Roulette, slots and bingo.
Sports betting is placing a certain amount of money on a future sport result the outcome of which is exclusively or fundamentally dependent on chance. The law foresees the following types of sports bets: (1) fixed-odds sports bets (online and land-based, the last a state-run game), where the player places a bet against the operator, who is the organiser of the bet, based on a value equal to or greater than 1.00 (the odds); (2) totalisator/pari-mutuel sports bets (a state-run game), where a percentage of the total amount of bets is reserved for prizes to be distributed among those who correctly guessed the type of result to which the bet referred, with the remainder reverting to the operator that organised the bet; and (3) sports betting exchange (online) which, although foreseen by law and duly regulated, is currently not allowed in Portugal due to the lack of technical rules.
Horse race betting is where a sum of money placed as a bet is associated with a prediction as to a certain kind of result in a horse race or competition, the outcome of which is uncertain and is not dependent on the will of the participants. Horse race betting can be offered online (fixed-odds and pari-mutuel) and land-based (another state-run monopoly operated by SCML). For the moment, no online licence has been issued, nor is land-based horse race betting being operated.
Other types of games of chance are games where the possibility of winning depends on player chance and skill, or exclusively on chance, and which awards prizes that have a predetermined economic value with the exclusion of any cash prize. Promoters cannot charge any amount to players as participation fees. This category encompasses raffles, draws, advertising and knowledge contests and quizzes.
Currently, fantasy leagues, e-sports and skill competitions are not yet regulated, but this is an open possibility for the near future.
Regarding complex financial products, Portuguese legal scholars and case law have already ruled that swap contracts, as typified contracts under European law should not, as a result, be subject to the gambling and betting contract regime.
Gambling is allowed in Portugal, but because it is an exclusive right of the Portuguese state, any private operators that seek to develop said activity in Portugal need to get previous approval for this purpose and operate the activity under several legal impositions and under the power of the regulator SRIJ – The Gambling Inspection and Regulation Service. The type of authorisation varies depending on the type of operation (land-based, online or state-run games). Land-based gambling operates under a concession regime (semi-open market), while the online gambling market is open to any operator that asks for a licence and complies with certain good standing, technical capacity and economic and financial capacity criteria. On the other hand, state-run gambling follows a monopoly regime, granted by the state to SCML.
iiiState control and private enterprise
From the moment a private enterprise is awarded a concession or licence to operate gambling in Portugal, then the operation is up to said authorised entity, but it must always be conducted under the terms of the applicable legal framework and will always be subject to the SRIJ's – the regulator's – powers.
Besides private enterprises, state-run games are operated under a national monopoly regime granted to SCML by the state, subject to the supervision of the Ministry of Labour, Solidarity and Social Security.
Gambling in Portugal is regulated at a national level for all its verticals. This means that the same set of rules is applicable throughout its territory and there is only one regulator to oversee the operation of gambling, which is the SRIJ in cooperation with judicial authorities when necessary.
The only exception to this is that in the autonomous regions of Madeira and the Azores, and due to a transfer of competences operated by the Portuguese Gambling Law, the procedure for awarding concessions (land-based casinos) depends on the competence of the regional governments.
Only operators awarded a concession to operate land-based gambling in Portugal may engage in said offering on national territory. Non-compliance shall be deemed as a criminal offence, punishable with imprisonment of up to two years and fines up to 200 days. SRIJ will proactively inspect irregular situations.
Likewise, only operators duly licensed to run online gambling in Portugal may engage in this business under national jurisdiction. Non-compliance is a criminal offence punishable by imprisonment of up to five years or a penalty payment of up to 500 days. Negligence is punishable and attempt is punishable. SRIJ will proactively inspect irregular situations.
In what concerns online activities, SRIJ will notify illegal websites and ask them to block their activity for Portugal. If illegal operators do not act, SRIJ has the power to request to the intermediary network service providers to take down and block access to any signalled non-licensed operators that do not comply with prior notices and take-down requests. As a last resort, SRIJ will start a criminal process, presenting the case to the Portuguese Public Prosecutor against the illegal operator, thus impairing any future licence application the operators may request.
Gambling advertising by illegal operators is strictly forbidden and sanctioned, and may also influence any future licence application the relevant operator may present.
Offering state-run games by entities other than SCML is considered an administrative offence.
Legal and regulatory framework
iLegislation and jurisprudence
From a historiographical point of view, legal gambling in Portuguese territory dates back to 1927.
The land-based gambling legal framework dates back to 1989. It aimed, among other things, to 'emphasise the responsibility of the concessionaires for the legality and regularity of the operation and practice of gambling under the concession' and 'liberalise . . . the access to gambling halls but, on the other hand, emphasise the principle of reservation of admission'. Up to this date, the Gambling Law has been amended 12 times. In connection, a myriad of pieces of ancillary legislation were approved, regulating, inter alia, each of the concessions area and the gambling offer and operational framework.
On the other hand, online gambling was only legalised in 2014, through Law No. 73/2014, of 2 September and further regulated in 2015 by the Online Gambling Legal Regime (Decree-Law No. 66/2015, 29 April) (RJO), following an extensive legal procedure and side-discussions. The diploma recognized the existence of a legal vacuum and a reality and phenomenon which Portugal could no longer ignore. The RJO followed the best practices at the time and entered into force on 28 June 2015. Further regulatory diplomas aimed to frame the operation of the approved legal provisions were published. These regulations envisage all aspects of online gambling activity, from broader matters such as the online technical gambling system and player accounts, to more specific issues as the rules for each type of game that may be offered.
State-run games follow an extensive legal framework, scattered across a number of diplomas dating back to 1955.
Extensive case law has been issued by the Portuguese courts on gambling matters.
The Gambling Inspection and Regulation Service (SRIJ) is the Portuguese gambling regulator responsible for the control, inspection and regulation of all gambling activity in Portugal (land-based concessions, fixed-odds online sports betting and mutual or fixed-odds horse race betting and online gambling). It is also the entity that determines the public tenders for public concessions, that issues licenses for online gambling entities, collects all the relevant taxes and instructs any gambling administrative offences. The SRIJ is an integral part of http://www.turismodeportugal.pt/Turismo de Portugal, IP and it is subject to the authority of the Secretary of State of Tourism.
State-run games are operated by SCML under an exclusive right system (monopoly), supervised by the Ministry of Labour, Solidarity and Social Security.
iiiRemote and land-based gambling
There is a clear separation, as mentioned in Section II.i.
Within certain conditions, both land-based and online gambling operations are allowed in Portugal.
The main difference between both legal regimes (besides separate sets of legislation for the activity, being that most of the online legal diplomas mimic the land-based rules with the necessary adaptations) is the way the authorisation for its operation is granted.
Land-based gambling must be carried out in casinos, bingo-halls and other duly authorised premises. Operating gambling on a land-based basis is a semi-open activity whose authorisation is awarded through public tenders (concessions). This means interested operators can only present a proposal when a tender is made available in Portugal. Because of the significant investment land-based operators must make, concessions once awarded stay in force for long periods of time (up to 40 years), which means that during this time there is no chance for other operators to try to enter the market.
As for online gambling, the regime is open and any operator may at any given time submit to the SRIJ an approval request for obtaining a licence (currently there are two types of online gambling licenses: one for games of chance and another for fixed-odds sports bets). Assuming that the licence request complies with the applicable legal requirements, and following an extensive licensing procedure, the operator will then be capable of operating online gambling in Portugal.
As mentioned in Sections I.ii and I.iii, land-based games of chance are essentially conducted through casinos, bingo halls and authorised ancillary premises (for example, slot rooms, aircrafts and ships) and based on concessions granted through a public tender to a private legal entity. There are currently 12 casinos and one slot room, spread across nine gambling zones – Azores, Algarve, Espinho, Estoril, Figueira da Foz, Funchal, Póvoa de Varzim, Troia and Vidago-Pedras Salgadas. The only available gambling zone where no casino currently operates is in Porto Santo.
Bingo may either be conducted in casinos or specific bingo halls – in the latter case, the concession is awarded by means of a licence to public or private legal persons in areas to be determined by the Portuguese Secretary of State of Tourism. There are currently 14 bingo halls operating in the Portuguese territory.
State-run games sale venues are operated by SCML games mediators and directly through an online website, and their activity is strictly limited to state-run games and based on an authorisation issued by SCML's gambling department. This authorisation, of an administrative nature, should identify the games covered by the authorisation, the means by which the mediation is developed and establish the objectives to be achieved by the mediator within a certain period of time, as well as the possibility of the authorisation being revoked if the objectives are not achieved.
As mentioned above in Sections II.i and II.ii, online gambling is carried out on a geo-restricted basis and requires a licence issued by the SRIJ. This means that in Portuguese territory only '.pt' gambling websites may be accessible and also that '.pt' accounts must always be redirected to the Portuguese licensed website.
In technical terms, operators must:
install a dedicated Gateway, to which all accesses by players shall be redirected (web, mobile access, other) which are established from locations situated in Portuguese territory (from a Portuguese IP address) or who use player accounts registered in Portugal. Therefore, access to the website via the Gateway may only be carried out through the top-level internet domain with the “.pt” ending, for Portugal. The operator shall ensure, as appropriate, access to gateway data in a usable format for a possible audit process.
Additionally, operators must:
install a dedicated infrastructure (Safe), located in Portuguese territory, which ensures the safe storage of the gambling and betting data, according to the defined categories. The Safe's folder structure shall be built on the basis of the structure and frequency specified in accordance with the data model defined by the SRIJ. The operator shall provide the SRIJ permanent access to the Safe, for the purpose of consulting/collecting data, as an integral part of the control and inspection of the gambling activity.
These requirements are expressly foreseen in a regulation dedicated to the online gambling technical system requirements.
In what concerns land-based operation, the production, export and import, sale and transport of material intended to operate games of chance needs prior approval from the SRIJ. Without the SRIJ approval, producing, advertising, importing, transporting, transacting, exposing or publicising of material intended for games of chance represents a criminal offence.
State-run games equipment such as the points of sale are verified by SCML Gambling Department.
In what concerns online gambling, there are no B2B licences. However, before a licence is granted, the operator system will first be certified and then tested (homologated) as a whole, in order to determine full compliance with applicable law and regulations.
viiFinancial payment mechanisms
Currently, the use of cryptocurrencies or other tokens as a payment method for gambling activities is not allowed.
In Portugal, operators may only allow payment methods that use the legal tender in Portugal (euro) or that accept the conversion to this currency, that are supplied by service providers duly authorised by the competent authorities of the relevant countries or jurisdictions and that allow for the person ordering the payment operation to be identified.
Additionally, both land-based and online operators cannot allow mechanisms that may directly or indirectly result in the grant of loans to players.
The licensing process
iApplication and renewal
In order to operate land-based games of chance, private undertakings must be awarded a concession following a public tender to operate in one of the gambling areas existing in Portugal. These entities must be incorporated as a public limited company, with a registered office in a Member State or in a state within the European Economic Area bound to administrative cooperation in the area of taxation and in the prevention of fraud and money laundering – provided that, in the case of foreign companies, they have a branch in Portugal.
The specific public tender (which has no fixed time limit) encompasses all necessary information relating to that concession, such as qualification criteria, location of the casino, the minimum financial payment due, the payment method or the amount of the guarantees due, and generally follows the envisaged legal procedure and the terms of the procedure and specifications published therein.
As for online gambling operators, the process can be divided into three different phases:
- compliance – the applicant must submit extensive documentation to attest good standing, technical capacity, and economic and financial capacity along with the SRIJ official licensing form;
- certification of the gambling technical system – the applicant must present certification reports issued by an independent testing lab recognised by the SRIJ. These testing reports must certify the entire platform that is going to be made available in Portugal as being compliant with the applicable national laws and regulations; and
- homologation – after the above-mentioned certification reports are accepted by the Portuguese regulator, the SRIJ technical team will perform tests on the applicant's gambling technical system. Homologation works as a double check. Not only will the SRIJ have certifications issued by an independent entity assuring the compliance of the system proposed, but the regulator will also test that compliance in practical terms before the issuance of the license. This is usually the longest phase of an online gambling license procedure. There are homologation fees to be paid.
Besides the phases referred to above, at the end of the licensing procedure, and before licence issuance, an operator will have to pay the licence fees of €12,000 per licence. It will be necessary to present to the SRIJ the responsible gambling policy, the identification details of the bank account through which all the transactions concerning the online gambling and betting activity shall be conducted exclusively and the operator will have to present (per licence) one guarantee, insurance or a bank deposit in the total amount of €500,000 as collateral for the performance of all legal obligations (players' liability) and one guarantee in the total amount of €100,000 as collateral for the payment of the special online gambling tax (i.e., IEJO).
Licences are valid for three years and can be renewed after that time for equal periods of time. The renewal of the license corresponds to an update to the documents delivered in the first phase of the licence procedure as mentioned above. There are renewal fees, corresponding to €12,000 per licence.
iiSanctions for non-compliance
See Section I.v.
Regarding land-based gambling operators, the main criminal offences concern operating outside the authorised location, which is punishable with imprisonment of up to two years and penalty payment in an amount to be determined by the judicial authority during the course of the following 200 days. Fraudulent gambling, gambling manipulation and forced gambling are also punishable with imprisonment. The infringement of administrative duties by said operators is sanctioned administratively through the imposition of fines that can go up to €24.939,89. This includes, among other things, causing obstacles to inspections and breaching investment and capital obligations.
For online gambling, besides being a criminal offence punishable with imprisonment of up to five years or a penalty payment in an amount to be determined by the judicial authority during the course of the following 500 days for operating (or even promoting) gambling without a licence, failing to comply with any obligation foreseen in the main law (RJO) may result in reprimands, compulsory pecuniary penalties or in the application of an administrative fine by the SRIJ, which – according to the severity of the offence (minor, serious and very serious) – may range from €5,000 to €1 million or 10 per cent of the offender's turnover – if the latter exceeds €1 million. Different values apply if the offender is a natural person.
Portugal transposed the European Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing in 2017. This introduced new rules both to land-based games of chance operators and online gambling operators, with an emphasis on player identity verification. In land-based casinos, the player's identity has to be confirmed at several different moments; and in online gambling a player account can only be opened after the operator confirms the identity of the player through an official document.
Operators are obliged to report any suspicious activities detected on player accounts that may represent money laundering or terrorism financing to the competent Portuguese authorities (DCIAP and UIF and finally to SRIJ).
The special gambling tax (IEJ) is applied to land-based casino games, varying according to the geographical gambling area and the amount of income. Tax rates may vary depending on the gross gambling revenue, ranging from 2.5 per cent to 35 per cent.
Stamp duty is applied to bingo (25 per cent) and to state-run games (4.5 per cent included in the amount of the bet and 20 per cent on the amount of the prize if it exceeds €5,000).
The special online gambling tax (IEJO) is applied to online gambling, and the tax rate varies merely depending on the type of game. On games of chance, it is settled monthly at a rate of 25 per cent on the overall gross revenue of the given month. On fixed odds sports bets, it is settled monthly on the turnover of the given month at a rate of 8 per cent.
Prizes won by online players are not taxable. Operators are not subject to corporate tax, sales tax or stamp duty.
Advertising and marketing
The rules and principles on advertising are generally the same as on land-based games of chance, bingo games outside casinos and online gambling and betting. Some of these provisions are not applicable to state-run games.
Most of the rules derive from legal diplomas, although the Regulator has issued some more specific guidelines to implement these legal rules.
The rules mainly aim to protect minors and vulnerable people and aim for adherence to the mandatory obligations of responsible gaming.
Regarding protection of minors, it is forbidden, for instance, to associate the game with youth culture or with public personalities who may be admired by children or young people. Advertising of any events in which minors participate cannot contain any references to gambling. Moreover, operators that advertise through social networks or other online content sharing services must activate mechanisms to limit the access of minors and all communications shall include the mention '+18', SRIJ and the SICAD symbol (SICAD being an entity that deals with addictive behaviour in Portugal).
Advertising can only portray gambling as playful and entertaining and never present it as a solution to financial problems, an alternative to work, a way of achieving financial security or of obtaining easy profits.
There are also specific rules regarding what needs to be included in each commercial communication.
Advertising on television and radio is only possible from 10:30pm to 7am and cannot take place 30 minutes before or after a programme targeted at children and young people.
The year in review
Two events significantly marked the year 2020: the covid-19 pandemic (with particularly harmful consequences for land-based casinos and bingo halls) and the increase of online gambling activity, and the changes to the tax framework applicable to online gambling.
Also, and following an extensive public discussion on the possible prohibition of online gambling advertising due to covid-19 and compulsory rules of confinement, SRIJ published a set of voluntary rules and good practices, to be followed by online gambling operators.
At the time of writing, 25 online gambling licences have been issued, and 15 national and foreign-based online gambling entities operate in national territory.
Particularly relevant in terms of European case law affecting the Portuguese market, the European Union Court of Justice (EUCJ) issued a ruling on 22 October 2020, in case C-275/19, SCML v. Sportingbet PLC and Internet Opportunity Entertainment Ltd. The EUCJ concluded that the rule imposing the exclusivity of online operation of lotteries on SCML is a technical rule, which should have been notified to the Commission in advance.
Regarding online gambling, operators were requested to give their opinions on a project concerning the amendment of rules regarding poker in tournament mode. The project was approved and published in the Portuguese Official Gazette of 20 April 2020, Series II.
The regulation of new types of sports – in particular e-sports – is also expected with regard to online gambling,
Regarding land-based gambling, all casino concessions due to expire at the beginning of 2021 have been renewed due to the covid-19 pandemic.
It will be interesting to see if the EUCJ's decision will affect the Portuguese market and if online gambling operators will continue the trend of business volume growth for the second consecutive year.
1 Filipe Mayer is a partner and Alcina de Oliveira Alves is a senior associate at CCA Law Firm.