Online gaming trade body the Remote Gambling Association (RGA) has spoken out against Portugal’s proposed “punitive taxes” for online sports betting operators.

The RGA says the tax rate suggested alongside Portugal’s proposed online gambling legislation, at a rate of between 8 and 16 per cent of stakes, would make the market unviable for operators who would otherwise apply for licensure.

“Whilst the RGA and its members welcome the Portuguese initiative in seeking to regulate the online gambling sector, our members are extremely concerned about the unworkable tax rates that are proposed in the draft law which is presently being considered,” the association said in a statement Thursday.

It added that such a rate would severely limit competition in the market, to the detriment of Portuguese consumers and the state’s potential tax revenue, and said the proposal to tax monopoly operator Santa Casa de Misericordia de Lisboa at a lower rate for land-based sports betting could be considered illegal state aid.

“The extent of the disparity in tax burden between licensed online sports betting operators and the offline monopoly operator Santa Casa could be as much as 50% in favour of Santa Casa,” the RGA explained. “Such a differential has the potential to create a situation of substantial illegal state aid being granted to Santa Casa by the Portuguese government whilst also destroying any hope for fair competition in a future regulated online sports betting [market].”

Meanwhile in the Netherlands, the reverse argument is taking place, with land-based operators fighting what they see as a preferential tax rate proposal for online operators.

The country’s incumbent operators have launched a petition calling on the government to review its proposal to tax land-based operators at a rate of 29 per cent of gross gaming revenue (GGR) while applying a rate of 20 per cent to online operators.

They argue that the disparity creates an uneven playing field that could result in thousands of job losses across the sector. However, the government has justified it decision to apply differing tax rates by arguing that a higher online tax would drive consumers to unregulated sites that can offer bigger payouts, while it said that lowering the land-based rate would cost the government around €145m in annual revenue.

Launched last Monday, the petition has so far gathered 827 signatures and will be submitted to the government in mid-September.

Both the Portuguese and Dutch regulated online gaming markets are expected to open in early 2015.

Related