Version: 11032003
Editor: Franka Pals
Publisher: Novamedia
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Portugal is located in Southwestern Europe, bordering the North Atlantic Ocean, to the west of Spain.
Following its heyday as a world power during the 15th and 16th centuries, Portugal lost much of its wealth and status with the destruction of Lisbon in a 1755 earthquake, occupation during the Napoleonic Wars, and the independence in 1822 of Brazil as a colony. A 1910 revolution deposed the monarchy; for most of the next six decades repressive governments ran the country.
When Portugal handed over its last overseas territory, Macau, to Chinese administration in 1999, it brought to an end a long and sometimes turbulent era as a colonial power.
Now Portugal – which shares the Iberian peninsula with its larger neighbour Spain – is focusing on its relations with Europe, but it remains at the hub of some 200 million Portuguese speakers around the globe.
A bloodless military coup in 1974 followed costly wars in the African colonies against nationalist independence movements. During the 1970s and early 1980s Portugal's political climate alternated between left and right. Independence was granted to all of Portugal's African colonies by the end of 1975. Indonesia unilaterally annexed the former Portuguese territory of East Timor in 1976.
Portugal recently restored diplomatic relations with Indonesia after it handed authority over East Timor to UN administration following an independence referendum marred by violence.
Portugal entered the EC (now the EU) in 1986. Portugal joined the European single currency in 1999.
Portugal has become a diversified and increasingly service-based economy since joining the European Community in 1986. Over the past decade, successive governments have privatized many state-controlled firms and liberalized key areas of the economy, including the financial and telecommunications sectors. The country qualified for the European Monetary Union (EMU) in 1998 and began circulating its new currency, the euro, on 1 January 2002 along with 11 other EU member economies.
Economic growth has been above the EU average for much of the past decade, but GDP per capita stands at just 75% of that of the leading EU economies. The government has failed to reign in a widening deficit and to advance structural reforms needed to boost Portugal's economic competitiveness. A poor educational system, in particular, has been an obstacle to greater productivity and growth. Portugal has been increasingly overshadowed by lower-cost producers in
Central Europe and Asia as a target for foreign direct investment.
Football's European Cup will be held in Portugal in 2004, and this is certain to have an impact on the Portuguese economy and society.
Economic policy
In 2000 the GDP in Portugal amounted to $106 billion, an increase of 3.2 % compared to 1999. In 2001 the GDP grew by 1.8 percent, which signified a clear slowdown in growth compared to 2000. The GDP per capita was $10,300 in 2000.
In the years 1997 – 1999 Portugal succeeded in meeting the convergence criteria of the Maastricht Treaty, so that the country became one of the founders of the euro and as such transferred control of its monetary policy to the European Central Bank. In this period the macroeconomic climate changed substantially, leading to a substantial fall in inflation and the interest rate.
For 2002, the Banco de Portugal expected the growth of only 1.0 percent to 1.75 percent, a drop which the central bank ascribes to a decline in government expenditures, virtual stagnation in family spending, and an expected reduction in corporate investments.
GDP growth rate :
Employment
In 2001, the unemployment rate amounted to between 4 and 4.25 percent (2000 : 4 percent), while the growth in salaries, according to the provisional figures, was at the same level as in 2000. It is disquieting that, for the fourth successive year, salaries rose faster than productivity, something which in the long run can lead to high unemployment. The Banco de Portugal has already been pressing for some time for more restraint on pay hikes.
Inflation
In 2001 inflation amounted to 4.4 percent (2000 : 2.9 percent), the highest figure since 1994. According to the Banco de Portugal, inflation has now peaked and will be in the 2.2 – 3.2 % range in 2002.
Stability and growth pact
In 2001 the budget deficit amounted to 2.2 %, higher than the 1.1 percent which was established for 2001 in the stability and growth pact. This is attributable (firstly) to the fact that tax revenues proved to be much lower than the government's optimistic forecasts, while (secondly) government expenditures were higher. Portugal has been unsuccessful recently in reining in the growth of current expenditures (without interest). The result has been that these expenditures rose from 30 to 36 percent of the GDP between 1990 and 2000. At the end of the 1990's government consumption was approximately 1 percent higher than in other Member States. Moreover, the budget deficit of 2001 appears to have been partially camouflaged by 'desorçamentação', i.e. systematically failing to include certain expenditures in the budget. An example of this are the expenditures of the exorbitantly-expensive national healthcare system, which are partially incorporated into the national debt. According to the stabilityand growth pact, the Portuguese budget must be balanced in 2004, something which, given the recent developments, is definitely not going to be an easy job. In 2002 the budget deficit is supposed to amount to no most than 0.7 percent, but in the budget for 2002 the government already states a deficit of 1.8 percent. According to the stability and growth pact, in 2001 the national debt as a percentage of the GDP must be reduced to 55.2 percent. According to the provisionally available information, in 2001 the deficit amounted to more than the target figure, namely 55.9 percent of the GDP (2000: 53.2 percent).
Prospects
It is expected that the new government will give more direction to the economy than the previous one. GDP growth amounted to only 1 % in 2002, and may move in the direction of 2.0 % – 2.5 % for the years 2003-2006. The inflation fell to 3.0 % in 2002 and the forecast for 2003-2006 is 2.5 %. The chronic current account deficit fell to 8.1 % in 2002 and is estimated to be 6.5% up to 2006.
At the current moment, the risk for the Portuguese economy is that the painful fiscal measures which are urgently necessary will cause confidence in the economy to decline. This might well turn the spectre of further economic downturn into a "self–fulfilling prophecy".
The years 1986 through 1996 were politically turbulent, but this came to an end after the election of Jorge Sampaio in 1996, when a period of political calm commenced. After the elections of 1996 public spending was reduced, leading to a healthier economic climate, and Portugal is still reaping the benefits of this change today.
The present government stands under the leadership of the centre-right parties PSD and PP (social democrats and populists). This government is stable, although it should be noted that the leader of the PP is known for having a somewhat unpredictable personality.
The most important focus of the new government is implementation of the structural spending and taxation reforms which are necessary in order to quickly bring the financial situation back under control. Thus the VAT has been increased and plans to lower the turnover tax were put on hold.
It is expected that the fiscal measures will become even more stringent, and that liberalisation of the economy will be stimulated. Privatisations and labour market reforms will be accelerated.
Corruption Perceptions Index
Portugal stands in 25th place on the corruption perceptions index, with a report figure of 6.3. A low satisfactory grade. To put this into context : of all EU countries, only Greece and Italy score worse. Portugal's figure is comparable with that of Belgium. .
| Population: |
10,084,245 (July 2002 est.) |
|---|---|
| Age Structure | 0-14 years: 16.9% (male 875,485; female 827,670) |
| Currency: | Euro |
| GPD | GDP: purchasing power parity – $174.1 billion (2001 est.) GDP – real growth rate: 1.7% (2001 est.) GDP – per capita: purchasing power parity – $17,300 (2001 est.) |
| Internet: | Internet Service Providers (ISPs): 16 (2000) According to the most optimistic estimates, 20 percent of the households have a computer. Internet use in Portugal is relatively low. In 2000 only 6-7 percent of the Portuguese had Internet, one of the lowest figures in Europe. In the coming years, Portugal hopes to be able to catch up as far as possible. It is expected that 25 % of the households will have an Internet connection in 2005. |
| Telecom | In Portugal, one is above all struck by the rapid growth in mobile telephony. 52 percent of the population now have a mobile phone, and 43 percent (virtually every family) have a fixed telephone. It is expected that the percentage of mobile phone users will rise to 70 percent in the coming 3 to 4 years. |
| Other | Average annual income: US $11,060 |
The following information is based on the "Comparative Legal Study on European Lotteries, part 1", conducted by the research agency Vlaemminck, Holmens van den Hende.
General prohibition: Lotteries and sports betting are prohibited.
Exceptions:
These are lotteries with non-monetary prizes. Such games may not be organised by for-profit companies, except when it has promotional activities as its purpose (sweepstakes).
The Games Department of Santa Casa da Misericórdia de Lisboa (SCML) has the exclusive right on the so-called "Social Games", games where the profits go directly to the state (state treasury or ministries). The games which are regarded as Social Games are the Portuguese state lottery and sports betting. The Games Department has an autonomous structure. SCML is a private legal entity but it is State Approved, which means that it strives to fulfil the objectives of the state.
For all other money games such as casinos, bingo and horse racing, the right to operate is given out under license. This is done by means of a public tender procedure. The contract is normally for 20-30 years and for a limited region, both stated in a contract.
SCML is entitled to organise the traditional lottery, the instant lottery, lotto and sports betting. Only betting on horse races is not in the hands of the SCML. SCML may by law set up other lotteries, provided that it secures approval from the government.
An overview of the laws on games of chance can be found on pages 86-87 of the "Comparative Legal Study on European Lotteries, part 1", conducted by the research agency Vlaemminck, Holmens van den Hende.
It is prohibited to accept wagers from anyone who cannot be deemed to be able to make reasonable decisions with regard to participating in a lottery. This therefore excludes minors and people with a reduced mental capacity from participating.
Between 54-65 % of the revenues from ticket sales must be paid out in prizes for the national lottery, 50 % on pari-mutuels and between 55-65 % for instant games. If you therefore deduct the gambling taxes of 35 % (on won prizes), you arrive at payout percentages of between 35.1 % and 42.25 % for the National Lottery, 32.5 % for parimutuels and 35.75 – 42.25 % for instant games.
If one assumes that 54 % is paid out in prize money for a national lottery, then the turnover is distributed as follows:
Of the remaining revenue, after deduction of the operating costs, 75 % must go to the ministries and state bodies (government treasury, social actions, health care, sports, education, finances and social security, fighting AIDS and drugs, etc.). The other 25 % goes to SCML for support of its own social actions and health care.
Private revenues from profit are not allowed.
Pari-mutuels are number games and sports betting. With a pari-mutuel the participation forms are distributed free of charge and filled in by the players, after which the wager is paid. The prize money is determined on the basis of the wagers. The prizes are distributed to the players with the right number combinations. The difference with the lottery is that a lottery involves prizes established in advance, independent of the number of tickets sold.
Advertising for games of chance is prohibited, however an exception is made for Social Games organised by SCML.
The laws are adopted by the government, promulgated by the President of the Republic, co-signed by the Prime Minister and published in the "Official Journal". The national lottery is only regulated by laws, pari-mutuels and instant games are approved by the Ministers of Health and of Solidarity and Social Security.
The rules and the internal procedures for the games of chance are defined by the Games Department of SCML, after hearing the opinion of the Gaming Council. In practice, it is the Games Department of SCML which makes proposals for new social games and amendments to the legislation.
In 1783 Queen D. Maria Pia gave approval to Santa Casa da Misericórdia de Lisboa (SCML) to organise a lottery for the benefit of the poor and the royal hospital. Thus was born the Portuguese National Lottery, also called the Lotaria Nacional Santa Casa de Misericórdia da Lisboa. In 1892 the then–government created the so-called "Service of the Lottery", from which the lottery was operated under the name of "Loteria Nacional". This is the sole legal lottery in Portugal. Until 1991, 2 different departments within the SCML ran the games, namely The National Lottery Service and The Department of Sports Betting. Today, all of the games are operated by the same department : The Games Department of Misericórdia of Lisbon.
In 1961, a new law was adopted giving SCML the right to also organise betting games relating to the outcome of football matches. The lotto was added to this group only in 1985, and a decade later the instant and breakopen lottery.
The Portuguese lottery market has only a single operator: SCML. The current director of SCML, appointed on 18 December 2001, is Mrs Gertrude Jorge.
Established in 1493, the National Lottery of Portugal is one of the oldest lotteries in Europe.
In March 1840, Pedro José Pereira Campião, a Lisbon merchant, born in the City of Tomar, established a currency exchange house named "CAMPIÃO" that sold tickets of the "Portuguese National Lottery". Mr. Campião passed his business to his employee, Mr. Jos? Dias who in partnership with his brother, Mr. Vicente Carlos Dias, founded the present company "CAMPIÃO & CIA., Sucs. Jos? Dias & Dias, Lda.", that is still run by the same family.
CAMPIÃO is today the Oldest Lottery House in the World, with more than 15o years of existence and could be mentioned in the Guiness Book of World Records. Being the oldest Lottery house in the World it has obviously sold the largest amount of big prizes until the present day. After World War II, CAMPIÃO opened branches in every major Portuguese city and in Angola and Mozambique, increasing its network of resellers, reaching today near 2.000.
CAMPIÃO sells Lotto, Football Lotto and Lottery (Clássica & Popular & Instantânea/ 'Raspadinha'), in it's 16 branches in Portugal.
Proceeds generated by the Lottery are used to fund community and civic projects, supporting hospitals and churches around the country. Of total sales, 20% is allocated to the public treasury which use the revenue to benefit child related welfare programms.
The games offered: Totoloto 6/49, Loteria Nacional draw, Loterica Popular, Loteria Instantanea, Totobola.
In 2001, the SCML had sales of US$ 669,317,256. This represented a drop in sales of 13 % in comparison to the year 2000. The largest sales share was accounted for by the Totoloto with 53.01 %, followed by the Lottery 1 classica with 19.66 %. Yet even their sales fell, by respectively 10 % for the Totoloto and 6 % for the Lottery 1.
SCML offers a lotto game, two sports betting games, two passive games and an instant and breakopen game. Besides the above-mentioned games the SCML also runs two so-called 'add ons'. These are added games which one can play optionally, comparable to the jackpot of the state lottery. The add ons are Loto 2 and Joker. We do not have any separate figures for the sales of Loto 2, but we assume that they are included in the sales of Totoloto.
The payout percentage of the Totolotto, the Totobola, the Totogolo and the Joker is 50 %. For the other games the payout percentage is 65 %.
| Game | Prize Payout (%) |
Price (EUR) |
Sales (EUR) |
Share of Sales (%) |
To the year before (%) |
Per Capita sales (US$) |
|---|---|---|---|---|---|---|
| Totoloto, 6/49 | 50 | 0.25 | 400,903,377 | 53.01 | 10.00 | 35.55 |
| Totobola, 14 | 50 | 0.25 | 12,225,773 | 1.62 | 8.00 | 1.08 |
| Totogolo | 50 | 0.25 | 2,843,185 | 0.38 | 4.00 | 0.25 |
| Lottery 1, Classica | 65 | 4.99-14.96 | 148,669,251 | 19.66 | 6.00 | 13.18 |
| Lottery 2, Popular | 65 | 1.50-2.49 | 41,137,035 | 5.44 | 5.00 | 3.65 |
| Instant Lottery | 65 | 0.50-1.50 | 105,340,596 | 13.93 | 34.00 | 9.34 |
| Joker | 50 | 0.50 | 45,209,282 | 5.98 | 8.00 | 4.01 |
| TOTAL | 756,328,499 | 100 | 13.00 | 67.06 | ||
Portugal has almost ten million inhabitants and over 3.4 million households. Each household consists of an average of 2.93 persons. The GDP is $10,300 per capita of the population, which makes $30,179 per household. Of this amount, an average of 0.65 % ($196.49) is spent on lotteries. The total lottery market in 2001 is US$ 669,317,256, which is equal to the annual sales of SCML.
The SCML itself controls the organisation of the lotteries. In October 2000 SCML signed a contract with Gtech which provided that Gtech would replace the entire offline system of SCML with a new online system. This new system gives the SCML control over both the operational and the management parts of the organisation. In the meantime this system has been installed.
Along with this system, Gtech also delivered 5000 new terminals. For the production of the instant tickets, SCML opted for Oberthur as supplier.
| Lottery | Tickets sold | Tickets per person | Ticket price (US$) |
|---|---|---|---|
| Totoloto, 6/49 | 1,603,613,508 | 160.69 | 0.28 |
| Totobola, 14 | 48,903,092 | 4.90 | 0.28 |
| Totogolo | 11,372,740 | 1.14 | 0.28 |
| Lottery 1, classica | 14,904,186 | 1.49 | 5.64-16.90 |
| Lottery 2, popular | 20,620,067 | 2.07 | 1.70-2.81 |
| Instant lottery | 105,340,596 | 10.56 | 0.57-1.70 |
| Joker | 90,418,564 | 9.06 | 0.57 |
| Total | 1,895,172,753 | 189.91 |
(Note : For the ticket prices of Lottery 1, Lottery 2 and the Instant Lottery, averages are taken in order to calculate the number of tickets per person!)
In total, the average Portuguese in 2001 purchased 189.91 tickets with an average price of $0.35. The average price is thus low. We do not have any separate sales figures for the 'add on' Lotto 2. The average Portuguese spent $67.06 on lotteries in 2001.
There is only a jackpot for the Totoloto, the Loto 2, the Totobola and the Totogolo. If no one guesses the right combination of numbers, then the jackpot is added to the jackpot of the following week. The level of the jackpot of these lotteries depends on the number of players. Thus it follows that the jackpot of the Totoloto is usually the highest, given that annually the largest number of tickets are sold here. A high jackpot is therefore a purchase motive in Portugal.
The SCML has only one lottery which is coupled to a TV show, the Totoloto. In this show people play a game and at the end the drawing is performed. This show is broadcast every week on Saturdays. A Post code lottery show in Portugal will have to compete with a game show around the Totolotto. However, the concepts of the Post code lottery are a good deal more innovative and therefore should be able to compete with that of SCML.
The drawing of the Lottery 1 classica is held once every two weeks. One can play on a weekly basis in the Lottery 2 popular. Only the drawings of Lottery 1 and Lottery 2 are broadcast. The Joker and Loto 2, the 'add ons' of the Totoloto can also be played every week. In order to play you must indicate on the Totoloto form whether you also want to play the Joker and/or Loto 2. The Loto 2 is an extra drawing on Mondays, and with the Joker one can play with the unique number that is printed on the Totoloto form.
In 2000 SCML spent $10,392,225 on advertising. This was 1.37 % of the total sales in that year. The greatest share of the advertising budget was spent on television.
| Media | Advertising expenditures (US$) | % of the total budget |
|---|---|---|
| Television | 5,846,659 | 56.2 |
| Radio | 834,808 | 8.0 |
| Printed media | 1,669,617 | 16.1 |
| Production | 258.455 | 2.5 |
| Other | 1,785,686 | 17.2 |
It is striking that no money is spent on direct mail, even though this is permitted under the law.