Today, technology connects the world quickly, effectively and sometimes detrimentally. With the rise in connective advancements, the world is at anyone and everyone’s fingertips. Not surprisingly, many industries are profiting from such a wide spread marketable platform. However, the ability to find loopholes and cheat the system can have an unexpected impact on even the most successful of industries. The gaming industry is learning first hand about the implications of the online gambling trend and the internet’s ability to undermine one of the most lucrative industries in the world.
Until recently, online gaming in Portugal was a hot commodity. Fortunately for the brick and mortar gaming establishments there, new regulations and taxation for online gaming entities are making internet gambling an unsavory option, placing more people at gaming tables in the country.
As of September 2015, online gaming in Portugal has changed drastically. Tax rates have spiked as high upwards of 30% for some and can only drop as low as 15% for others. The tax spikes have caused many online gaming industries to halt and even to completely withdraw from the Portuguese online gambling scene. The new law has also opened the online industry to accept online game license applications from other countries. This change has created a larger pool of competition in a less than pleasant online gaming slump for Portuguese-based online gaming businesses.
With online gaming going through a severe upset, places like the Lisbon Casino are gaining revenue traction after an increasingly dry spell. The 2013 European Casino Association statistics listed Portugal in the top five for its members. Coming in at fourth behind Luxembourg, France, and Estonia and followed by Switzerland, Portugal is a competitive force in the ECA memberships. The vast makeup of its earnings for that year were made up collectively of nearly 82% slots and almost 18% tables. The country’s casino earnings had been in a steady decline from 2010-2012, dropping 11%. Notably, nothing in the gambling scene in Portugal can be dis-associated from the large monopoly held by the country’s dominate charitable organization (Santa Casa da Misericórdia de Lisboa.) The brick and mortar establishment earnings decline was largely blamed on the increase of off shore online game operations coupled with a slumping economy.
This July alone the Lisbon Casino paid out a reported €26 million (29 million US dollars.) Reportedly the out-pay average is up from €1.8 million last July. This increase in pay outs was largely due to the establishment stepping up their “attraction game.” The Lisbon Casino took advantage of the recent stifling of the online gaming community to draw in potential new revenue and also bring back people who may have been on an online gaming hiatus. According to reported data, the casino has taken in an average of €856,000 (around 980,000 US dollars) daily. For the Month of July alone, income would have averaged €26.5 million (putting it at almost breaking even for pay-outs), which brings the annual estimated average for the casino at around €312 million for 2015 before payouts. While the average draw ins are up, pay-outs are almost even with in-take.
Despite the new law, the heavier taxes, the opening of the competitive pool and the heavier flow of traffic through Portugal’s brick and mortar casinos, the cash flow ratio is still in a nearly comatose state. There is no strong ebb and flow of revenue, rather the steady in-put nearly equal to out-put ratio can put the casino industry in Portugal asleep on its feet. While the Lisbon Casino is promising “new attractions” and more exciting options for its patrons, it may not be able to fulfill those promises without taking a leap in the direction of heavier risks for bigger profit margins. Time will tell if the casino industry will take a turn for the worst after the new changes implemented this year. A great deal of economic stimulus is riding on the bet Portugal has placed.