Gambling advertising in Portugal

A Growing Industry

In 2021 Portugal became the 12^th European jurisdiction with an online gambling industry valued at over €500 million by market size. Since then it has expanded robustly despite a challenging turnover taxation system for online fixed-odds sports betting and a relatively shallow market comprising a sparse, albeit steadily increasing, number of entrants. The Portuguese online gambling industry has undergone several legal changes to accommodate the growing number of online gambling options available in the market. In Q4 of 2023, the revenue generated by online gambling increased by 16.4 percent year-on-year, reaching €227.4 million. This number was up by 5.6 percent compared to the previous quarter and marked a sixth consecutive quarter of growth. The national gambling regulator, Serviço de Regulação e Inspeção de Jogos (SRIJ), reported that the number of new online gambling accounts created during Q4 of 2023 increased from 237,600 to 319,500[1]. This brought the total number of active accounts to 4.2 million.

Alongside this growth comes increased gambling advertising, as operators use various marketing channels to attract customers. However, the proliferation of such advertisements has raised concerns about their impact on society, particularly vulnerable individuals and youth. Regulatory authorities in Portugal have implemented measures to govern gambling advertising practices to address these concerns. Despite these efforts, there remains a need for more comprehensive self-regulation within the industry to mitigate the risk of excessive intervention by regulators in the future.

Current Regulatory Framework

Gambling advertising in Portugal is strictly regulated by the SRIJ, which has comprehensive oversight of all aspects of the gambling industry, including licensing, supervision, and enforcement of regulations.

Prior to April 29th, 2015, online gambling was not regulated. This all changed with the passage of the Online Gambling Act (Regime Jurídico dos Jogos e Apostas Online) which, with subsequent amendments establishing a licensing system for online gambling services, sets out detailed guidelines and restrictions on the content, placement, and targeting of advertising. The regulatory framework establishes that all gambling advertisements must be truthful, clear, and accurate, and that they should not be harmful or misleading to consumers. The regulations also prohibit gambling advertisers from targeting minors and vulnerable individuals, such as those with a gambling addiction. The Code of Advertising Practice further provides guidance on responsible advertising practices, including those related to gambling.

Despite the comprehensive regulatory framework, there have been instances of controversial gambling advertisements in Portugal that have called into question the effectiveness of the current regulatory regime. The SRIJ has been called upon to strengthen its enforcement and oversight mechanisms to ensure compliance with the regulatory framework. Recent controversies have highlighted the need both for clearer guidelines and stricter penalties for non-compliance.

Self-Regulation or Regulatory Intervention?

The ongoing debate over the promotion of responsible advertising practices in the gambling industry has recently sparked a great deal of interest with many passionate and thoughtful arguments being put forward. While some people believe that self-regulation is the way to go, others argue that regulatory intervention is necessary to ensure that vulnerable populations are protected from harm.

Those who support self-regulation believe that it is a good way to encourage innovation and growth in the industry while also giving industry stakeholders the power to regulate themselves using codes of conduct and voluntary advertising standards. This, they claim, is empowering and helps create a culture of responsible advertising within the industry.

Others, however, believe that self-regulation is insufficient and that more stringent regulatory intervention is necessary, citing examples of markets where self-regulation is apparently failing. A recent study from the University of Bristol[2] revealed that during the opening weekend of the 2023/4 English Premier League season, 92 percent of the content of ads from gambling brands breached advertising regulations as they were not clearly identifiable as such. They concluded that self-regulation – with operators adhering to the UK’s Gambling Industry Code for Socially Responsible Advertising – is failing to limit the prevalence of such campaigns.

While self-regulatory measures can be helpful, they may lack teeth and be driven by commercial interests rather than consumer protection. Ultimately, both self-regulation and regulatory intervention have their place in promoting responsible advertising practices in the gambling industry, and we believe a balance between them should be achieved. The European Gaming & Betting Association (EGBA) published in 2020 the first pan-European Code of Conduct on responsible advertising for online gambling[3], to which several national gambling associations (Portugal’s being one of them) and operators are voluntary signatories.

How to avoid the regulator’s interventionism?

There is a common belief that self-regulation in the gambling industry is only applicable to those sectors where the state’s involvement is not a crucial factor, and therefore, government intervention is not necessary for the proper implementation of industry regulations. However, we believe that self-regulation is not an option but a necessity, as in some cases, state intervention alone cannot fully regulate all the critical aspects of the industry. The clearest examples of effective self-regulation are around responsible gambling and advertising. Gambling operators often take the initiative and independently implement specific tools and policies in their products, without any legal requirements. Notably, in the 2021-2022 EGBA sustainability report, some of the world’s largest gambling brands, including Bet365, Entain, Kindred, Betsson, Flutter and Mr. Green, issued a joint statement about driving sustainability through a focus on safer gambling. [4]

To address the negative effects of excessive gambling advertising, a multi-faceted approach is recommended that combines industry-led initiatives with regulatory oversight. Industry stakeholders should develop and enforce stricter advertising standards and codes of conduct. This should include prohibiting the targeting of vulnerable populations such as youth and problem gamblers. Advertisers should also be required to follow clear guidelines regarding the content, placement, and frequency of gambling advertisements to minimize their potential impact on susceptible individuals.

Cooperation

Alongside stricter advertising standards, regulatory authorities such as the SRIJ should also be more active in overseeing gambling advertising practices and enforcing compliance with existing regulations. This may involve conducting regular audits of advertising campaigns, investigating complaints from consumers, and imposing sanctions on advertisers found to be in violation of advertising standards.

Operators, industry associations and advocacy groups should, in turn, collaborate to establish independent monitoring and enforcement mechanisms to ensure compliance with advertising standards and codes of conduct. This may require the formation of a dedicated group that monitors gambling advertising practices. Such an approach should naturally be supported by the regulator, as it would bring an extra layer of credibility to the process. Regular meetings should be held so that progress and challenges are kept on track.

Claims and complaints

The SRIJ website features two sections – “claims” and “complaints” – that are designed to help the public report issues and grievances related to gaming operators in Portugal. However, it is evident that these resources are not being adequately publicized, limiting their effectiveness in terms of facilitating the regulator’s response to issues.

We believe that the “claims” and “complaints” sections, when combined with data collected from the public, represent the most effective approach for the regulator to respond to complaints and issues related to gaming operators. These resources provide accurate information and allow for self-regulation, which is critical to achieving the regulator’s objectives.

In an ideal scenario, we recommend that Portugal adopts a similar approach to that of the UK[5], where gaming operators are encouraged to address complaints directly with their competitors in the first instance. If the dispute is not resolved within a reasonable timeframe, the matter can then be escalated to the SRIJ for further review and investigation. By adopting such an approach, Portugal can create an environment that promotes fair competition and encourages self-regulation among gaming operators. This, in turn, will help to ensure that the interests of the public and the gaming industry are protected and that any issues are resolved promptly and effectively.

Social media

The advertising of online gambling on social media platforms is a matter of concern, as demonstrated by the strict rules that govern it within the terms and conditions and policies of these platforms. These rules, however, contain narrow definitions of advertising, resulting in user-generated content falling outside the scope of self-regulation and creating a regulatory gap, as recently studied[6].

While social media companies have established strict rules governing advertising placed by them, they shift responsibility for user-generated content onto the users and fail to enforce the prohibition of gambling advertising ex-ante, relying instead on notice and take-down requests by regulators. This approach has resulted in social media companies categorizing commercial gambling advertising posted by influencers as user-generated content in peer-to-peer advertising and refusing to accept responsibility for policing such advertising.

It is our belief that users should be obliged to label commercial advertising conspicuously so that it can be easily distinguished from genuine user-generated content. A clear distinction between advertising and user-generated content is essential for effective regulation. Furthermore, the same rules on advertising, both self-regulation, and state regulation, should apply to affiliate advertising on social media posts, as apply to advertising placed by the social media company itself. By doing so, social media companies can establish a level playing field and ensure that all advertising, regardless of its origin, is subject to the same strict regulatory scrutiny.

Conclusion

In Portugal, an increase in the number of gambling advertisements is causing concerns over public health and consumer protection. Although the current regulatory framework provides a basis for governing gambling advertising practices, there is a need for more restrictive self-regulation by industry stakeholders to address the negative effects of excessive gambling advertising. Implementing a multi-faceted approach involving industry-led initiatives and regulatory oversight can promote responsible advertising practices and protect vulnerable populations from harm. Achieving meaningful change will require collaboration and commitment from all stakeholders, however, and this should include industry associations, advertisers, regulators, and consumer advocates. Together, we can create a safer and more responsible gambling advertising environment that prioritizes the well-being of consumers and the broader community.

Excitingly, there is a growing awareness among stakeholders in Portugal of the challenges posed by gambling advertising. To tackle the negative impact of excessive gambling advertising, we recommend a multi-faceted approach that combines industry-led initiatives with regulatory oversight.

Overall, we are confident that these measures, combined with a thoughtful and sincere commitment to tackling stakeholder concerns, will effectively address the challenges posed by gambling advertising and create a safer and more positive gambling environment for all.

[1] Data available at https://www.srij.turismodeportugal.pt/sites/default/files/2024-03/estatisticas_online_4t_2023.pdf

[2]Available at https://www.bristol.ac.uk/news/2023/september/premier-league-football-gambling-advertising.html

[3] Available at https://www.egba.eu/uploads/2020/04/200625-EGBA-Code-of-Conduct-on-Responsible-Advertising-for-Online-Gambling.pdf

[4] Available at https://www.egba.eu/uploads/2022/11/221115-EGBA-Sustainability-Report-2021-22.pdf

[5]Available at https://www.asa.org.uk/make-a-complaint.html

[6] Hörnle, J., Schmidt-Kessen, M. J., Littler, A., & Padumadasa, E. (2019). Regulating Online Advertising for Gambling – once the Genie is out of the Bottle … . Information and Communications Technology Law, 28(3), 311-334. https://doi.org/10.1080/13600834.2019.1664001