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Portugal’s online surge: a flash in the pan?

By - 25 August 2021

Serviço de Regulação e Inspeção de Jogos (SRIJ), Portugal’s national regulator, has consistently recorded strengthening figures for online revenue. In 2020’s Q4 results, sports betting overtook casino games to become the main source of income for licensed operators, whilst online casino revenue increased over 50 per cent on the preceding period.

Catlin Negoita, Commercial Manager at Kalamba Games, Maria Luisa Malfasi, Business Development Manager at ESA Gaming, and Ivo Doroteia, CEO at Sportingtech, discuss the evolution of Portugal’s online market and whether it has become a bigger market than neighbours Spain.

The Portuguese online market has experienced strong growth in recent months, much to the surprise of various industry analysts. What’s the driving force behind this betting activity increase?

Catlin Negoita, Commercial Manager at Kalamba Games: The Portuguese market has seen healthy development in the last few years. Although sports betting witnessed the highest increase in volume, with revenue amounting to a total of €64.1m in Q4 2020, the casino vertical followed closely, reaching total revenue of €49.1m in the same period. This is truly amazing growth compared to the same period in 2019 and if we take a close look at the elements that favoured this success, there are some key factors at play.

Firstly, Covid-19 measures helped accelerate the conversion of land-based players to the online environment. Secondly, Portugal shifted its fiscal policies in 2020, removing the higher rates of tax for betting and gaming. Finally, it’s now clear that the market has drawn the attention of top-tier industry players, making it more competitive and attractive.

Ivo Doroteia, CEO at Sportingtech: I’m not sure it was a surprise, to be honest. I think it was both projected an expected. Ahead of Portugal regulating in 2015, the country had a very vibrant land-based industry, with bingo, lottery and bricks and mortar casinos all enjoying healthy numbers and favourable trading conditions. One game, “raspadinha”, was worth €1,718m in 2019, meaning that the Portuguese spent €4.7m on average per day only on this game.

What online regulation provided was another channel upon which customers could enjoy this form of entertainment and this has seen an impressive growth despite the pandemic. Figures released by national regulator Serviço Regulação e Inspeção de Jogos do Turismo de Portugal (SRIJ) show that overall online revenue in the three months to 31 December 2020 was up 74.7 per cent from €64.8m in Q4 of 2019.

What possibly is surprising is the phenomenal growth in sports betting during that period from a standing start. Those numbers are particularly impressive, and it is probably already Portugal’s number one gambling activity. But, then again, maybe that isn’t so surprising given how popular sports are with Portuguese people. It’s just that they now can bet in it.

Maria Luisa Malfasi, Business Development Manager at ESA Gaming: Portugal is still a relatively young market and for several reasons, growth has been slow since online gaming was regulated in 2015. One is the punitive turnover tax for sports betting operators which, last year, was reduced from 16 to eight per cent.

As a result, more operators entered the market which has propelled the recent growth. The pandemic also played a part with people naturally turning to online activities while stuck at home. As the market continues to mature, licensed operators are also learning more about the local player demographic and can ensure they target them correctly in terms of product offering, marketing, bonus offers etc that help with acquisition, engagement, and retention.

Is this another example of how Covid-19 has impacted betting behaviour and a flash in the pan, or indicative of something more?

Maria: Online casino gaming in Portugal received a push from the Covid pandemic as the sports-mad audience had no events to bet on for a long period. We will probably see a return to normality from August or September with most sports now up and running again. Many will however have enjoyed wandering off-piste and exploring new verticals that were new to them and might still want to continue betting part of their budget in other areas or online rather than in retail.

Ivo: I think it is totally sustainable. If you look at the reports and recent history of the land-based industry, that has been sustainable for decades. There is no reason why online would be any different. Covid-19 has undoubtedly impacted the industry, but that was not as felt in Portugal, with online enjoying a bounce as entry to venues were restricted and land-based revenues disrupted.

Customers naturally looked for new options and online today register impressive numbers. The official numbers from the regulator highlight a sustainable growth on both verticals, with the revenue from sports wagering rocketing 89.6 per cent year-on-year to €64.1m, players wagered a total of €345.6m on sports, with football being the most popular sport to wager on, accounting for 86.7 per cent of all bets placed in the quarter.

Online casino revenue reached €49.1m in Q4, an increase of 57.9 per cent on the same period in 2019 and the second successive quarter of growth for this segment of the market. Consumer spending within this market was up 70 per cent to €1.41bn.

Many have enjoyed the process and want to stay. Given that the most difficult thing in our industry is acquisition, those online operators that have benefitted have almost certainly done the hard yards. Once customers are safe and secure its more comfortable for them playing on their own devices in their own homes. They don’t need to expose themselves to Covid or anything else by using retail.

I don’t see that changing any time soon, the challenge now is upon the operators that need to use the best tools and practices available in the market to retain these new customers and cater for responsible gaming, while growing and consolidating their operations. That is where Quantum can assist and simplify the challenges of regulated markets making it simpler and transparent for operators, costumers, and regulator.

Catlin: Covid-19 undoubtedly impacted betting behaviour, as it did in most global markets but as explained above, other key factors also influenced this growth and allowed it to be sustainable – not just a matter of pandemic echoes that will eventually dim.

According to Regulus Partners, Portugal’s run-rate revenue is now almost double that of Spain on a per capita basis. Has it become a bigger market than its neighbour?

Catlin: At this point, the numbers do indeed show that Portugal is a bigger market than Spain per capita, but given Spain’s overall size and scope, there is a lot of room for future growth in Spain as the market continues to mature.

Ivo: Portugal will always be very important to me personally and to us as a company. I’ve worked in the market for a long time now, for a number of companies and as a consultant for the regulator. The way the market has evolved has ensured Sportingtech is now getting far more opportunities.

We have several very interesting deals in the pipeline with international renowned operators looking to enter in Portugal, for instance. I wouldn’t say that the market is bigger than Spain; it is different. Spain has a much bigger population, which naturally affects the size of the market. Importantly, however, Portugal has far fewer restrictions on advertising, which is advantageous to operators.

It’s all about how they position their brands. Spain is a very stable and well-regulated, so both are very important to us. But, maybe with a touch of bias, I am particularly excited about Portugal’s potential to grow.

Maria: Spain is a bigger and more mature market than Portugal and I expect that it will continue to outperform its smaller neighbour. The Spanish market has suffered a recent decline because of advertising restrictions and tighter responsible gaming policies that have been introduced in the country.

In every regulated market, operators and suppliers must be ready for rules to change and be agile in adapting to the new circumstances. I expect this will be the case in Spain and the market will stabilise again once the dust has settled.

In 2020, Portugal removed its higher rates of tax for betting and gaming. Is this likely to remain the case in the long-term?

Catlin: I do think that the tax rates will remain the same. The market needs predictability and stability and what we’ve seen is that current fiscal measures suit the market well and have been largely accepted, so it works and there’s no reason for this to be changed.

There is also a high level of importance applied to responsible gambling, which bodes well for the reputation and image of the industry in the country. General operating conditions are favourable too, with marketing options available to companies in terms of advertising. The market is currently very balanced and for the industry, it is hoped this remains the case.

What’s key to capturing Portugal’s domestic betting audience?

Maria: The most popular form of gambling in the Portuguese market is sports betting and especially football. Regarding casino games, the best performing content is classic slots and traditional games such as Roulette and Blackjack.

As with any market, it is vital to know your customer and the supplier that can capture local preferences and deliver products that reflect this will be the winner. ESA Gaming’s EasySwipe portfolio is the perfect match for the Portuguese market.

The content is developed to seamlessly integrate into sportsbooks to offer players the best quality casino games without disrupting the sports betting portfolio and brings something truly unique to a crowded marketplace.

If sports betting is the most popular product in a country, then why take customers away from sportsbook when they could be offered alternatives within it? Why offer myriad slot games with difficult to understand features and complicated paytables if sports betting is why they came to your site in the first place.

Catlin: The best way of capturing the market’s audience is by delivering products that appeal to the country’s culture and betting habits. Kalamba Games strives to provide the markets we are live in with appropriate content that caters to local players’ preferences and Portugal is no different in this respect.

With Portugal’s online gaming industry better served by a broader range of operators including Betano, 888 Betway and SkillOnNet, is the possibility of a black-market resurgence negligible?

Catlin: The current regulations proved that the Portuguese regulated market can sustainably grow while making sure that the needs of the players are looked after. If the current regulations remain clear and predictable, it’s safe to say that the resurgence of the black market is not something that will happen anytime soon.

This is the benefit of applying a balanced, reasonable, and common-sense regulatory framework that works for all stakeholders. The alternative is the black market that existed pre-legislation and that doesn’t benefit industry, government, or player.

On a sliding scale, how prominent is the Portuguese market for your operations going forwards? Has this position changed in light of the figures being recorded?

Maria: We have only just made our debut in Portugal and will spend the next few months analysing the performance of our content and localising it further if needed. The recent growth has only cemented our view that there is great potential in the market, and we believe it will play an important part of our business going forward.

Catlin: We always aim to ensure our content becomes certified in markets that have the right audience for it. Portugal has been on our radar since it became clear that regulation was imminent as we are confident our portfolio suits the market there.

We’re always monitoring and reassessing our performance and efforts in any market we’re live in to ensure we’re getting the most out of them and this is how we’ll continue to operate in Portugal. It’s a thriving region and if it continues to be so, it is most certainly in our future plans.

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