Breaking developments in France see Senators approve of new tax hikes across all gambling activities. Meanwhile, Jake Pollard examines FDJ’s unexpected opposition to the upcoming online casino regulation in France, criticised by opponents as protectionist and hypocritical.
French Senators have voted in favour of the government’s “comportmental tax raises” targeting soft drinks, tobacco and gambling.
The tax hikes on gambling had been rejected by MPs but the Senators approved the measures yesterday, Lottery GGR set to be taxed at 10%, all retail sports bets at 10% from 7% and online bets at 15% from 10.5% currently.
A tax increase across all gambling disciplines was proposed in October by the Budget 2025 of Prime Minster Michel Barnier with plans to raise €500m from French operators.
Opening this week’s annual conference of the country’s igaming trade body AFJEL, Nicolas Béraud, CEO of Betlic and AFJEL President, said higher taxes will make it even more difficult for operators to generate profits and put at risk many sports federations, leagues and grassroots organisations.
The government was “at best underestimating and at worst ignoring” their concerns, he said.
Jean-François Vilotte, former President of the French gambling regulator AFJEL, and now CEO of the French Football Federation (FFF), told French media the plans would jeopardise the financial footing of many sporting bodies and even sporting ethics. Leaders from the French Olympic Committee echoed his calls to the government.
French casinos and online operators already pay GGR taxes of around 55% and the new measures would push the taxes to close to 60%. The reforms are part of the government’s plan to raise €500m to boost its social security budget and address its national debt.
Peeling the layers of FDJ’s opposition to iCasino regulation
The French lottery giant’s opposition to regulation in its home country is not that surprising when assessing its online gaming portfolio.
The attitude of Francaise des Jeux towards the potential regulation of online casino in France and its apparent opposition to the vertical being legalised has left industry observers surprised and suspicious as to the possible motives behind the lottery giant’s stance. However, peeling through the company’s product layers it is possible to glean some potential explanations for its position.
As exclusive operator of one of Europe’s largest lotteries, FDJ is also in the unique position of being the only company allowed to operate online bingo, scratchcard and instant games in France.
Among those scratchcard and instant products is where a likely explanation for its position can be found. One industry source explains that under the current system, “FDJ’s scratchcards and instants are very similar to online slot machines, the only thing that differs is the pay out ratio”.
The ratio for online slots is around 96%, while FDJ’s scratchcards and instants pay out between 65% and 72% on average. There is therefore a major difference in the profits and margins it can generate from those products.
In addition, it has an exclusive monopoly on those products and benefits from, in effect, having the French mass market to itself at the moment. “Should iCasino become regulated,” adds Gaming&Co’s contact, “players are not going to be interested in games with pay out ratios of just 70%” and “FDJ would have to compete against all the other online casinos for players” (depending on the type of regulation that is agreed).
Digital instants
A quick scan of FDJ’s H1 results shows group revenues of €1.4bn, with lottery revenues up 5% YoY to €1bn, “thanks to a good performance from instant games”. The group added that “digital momentum remains very strong, up 24.4%”, revenue from instant games was up 6.7% and digital penetration was 13.8% in H1 vs. 11.6% in H123.
While online casino games may produce higher margins, the prospect of regulation would mean FDJ would not have the mass of French players that it has at its disposal currently.
Ready for all scenarios
While some sources describe the group’s position as “hypocritical”, others say FDJ is adopting a defensive position and simply prefers the “status quo and keeping its exclusive status” rather than having to compete in an open market. And if iCasino does become regulated, “FDJ would be ready with Kindred” and its 32Red and Maria Casino brands.
In response to G&C enquiries, FDJ said legalising online casino “would not meet the arguments put forward by its advocates, in terms of combating illegal (and) excessive gambling, contributing to public revenue and balancing the gambling sector in France”.
It added that impact assessments needed to be carried out, and “in the absence of a precise framework taking into account all the ins and outs of such a measure” it was logical “to question the objectives put forward by its defenders”.
FDJ’s €2.6bn acquisition of Kindred Group this year enabled it to acquire a major pan-European betting and casino operator. It closed that deal in early October and the French government introduced its online casino amendment on 22 October, leading industry observers to wonder if the events were connected.
Following major pushback from the country’s casinos and mayors, the government withdrew the amendment, held an industry roundtable, during which FDJ expressed doubts about iCasino regulation, and in January the government will establish working groups to evaluate the issue.
https://sbcnews.co.uk/retail/2024/11/21/opap-q3-2024-lotto/