Bombshell! Portugal to Ring-Fence Online Poker Market

According to the SRIJ´s Manuela Bandeira, Portugal looks set to repeat the mistakes made by France, Italy and Spain, and ring-fence its online poker market.

Back in April, the Portuguese government enacted laws regulating online gambling. The legislation removed the state monopoly for online gambling and opened up the market to the international companies who had previously been operating illegally in the country.

While the transition into a regulated market is taking place, many online poker operators withdrew from the Portuguese market. PokerStars, Full Tilt, Hills, PKR and Party Poker either stopped providing a service to Portugal or declined to accept new registrations while their license applications were being processed.

How many are likely to return is now in doubt, following the bombshell announced at a Gambling Compliance conference in Lisbon that the Portuguese online poker market will not share liquidity with the rest of the world, but will be ring-fenced similar to France, Italy and Spain.

Oh Dear Mr Bandeira. What Have You Done?

The announcement was made by Manuela Bandeira – the Director of Portugal´s gambling regulator Regulacao e Inspecao de Jogos (SRIJ) – who told reporters that his plan was for the Portuguese online poker market to operate as a standalone entity initially before joining a shared pool comprised of French and Spanish players.

Mr Bandeira went onto say that he expects the European Union to approve Portugal´s new online gambling legislation next week, after which licenses to online operators will be issued. He anticipates that the first online poker sites will be active in the ring-fenced market by the end of February 2016.

Mr Bandeira acknowledged that there was no indication in the online gambling legislation that the country´s online poker players would be ring-fenced, and that a standalone entity was not good for the online poker market in Portugal, but failed to answer questions about why the SRIJ had decided on this course of action.

New Legislation Already had Issues

Prior to this bombshell, there was already speculation that Portugal´s online poker market would fail to thrive under the new legislation. Excessive tax rates on operators meant that cash game rake would likely be 6 percent or 6.5 percent. A reduction in player benefits was also anticipated.

The legislation banned Heads-Up and Spin & Go games, prohibited the use of HUDs and third party poker software, and ruled that operators could not giveaway cash prizes or tournament entry tickets in freeroll tournaments.

The probability was that only PokerStars could survive in such a restricted environment, but now even the world´s largest poker site must be considering whether it is financially viable to continue serving a country with just a quarter of the population of neighbouring Spain – where revenues have halved since regulation and high profile online poker sites have been forced to close.

Another Exodus of Online Poker Players

When neighbouring Spain introduced regulated online poker in 2012, many of the country´s leading players left the Iberian Peninsula to continue playing online poker from the UK. Others chose to remain in Spain and play poker at offshore sites.

Although the Portuguese government is not planning (yet) to tax players on their winnings, another exodus is likely as the tables become unbeatable due to the increased rake, as liquidity vanishes due to the ring-fenced market, and as the value of online poker tournaments declines dramatically.

It has been reported that 46 percent of Spanish online poker players now play at offshore sites. Quite possibly they could be joined by 100 percent of Portuguese online poker players in the near future. Inadvertently, Mr Bandeira has done more to promote offshore poker sites than million dollar tournaments or Game of Thrones themed events could ever do!