No Help for French i-Gaming Industry until 2017

Despite calling for changes to the existing i-gaming structure in France, major online operators do not expect any help from the Government until 2017.

The French i-gaming industry is in crisis. Although online sports betting has doubled in volume since it was regulated in 2010, this area of online gambling still represents a small percentage of gross gaming revenues compared to the stagnant horse-racing industry and the rapidly declining online poker industry.

Even the usually passive French regulator – ARJEL – described the situation as “fragile” in its recently released five-year assessment, and said that i-gaming in France had an uncertain future. However, industry experts are resigned to the fact that the i-gaming industry in France will not see much-needed legislative changes before the presidential elections in 2017.

What the Industry Would Like to See

What the industry – and indeed most online gamblers – would like to see, is a reduction in the high levels of taxation on online gambling in France. One of the major reasons for the decline of online poker in France is that players have to pay a 2% tax on all cash game pots and the online operator has to pay 33% corporation tax on its profits.

As the operator often absorbs the 2% tax, that raises the effective rate of taxation to 46% of gross gaming revenues. The operator then has to charge an unbeatable level of rake to recover some of that money, and even then there is little money left for promotions and bonuses. ARJEL has said that taxation levels need to come down to levels comparative with other EU countries in which online gambling has been regulated.

More Verticals and an Even Playing Field

Two other changes that online operators would like to see is an increase in the number of verticals they are allowed to offer, plus a dismantling of the government´s stranglehold on the horseracing industry. Currently, online casinos are not regulated in France, meaning that many online gamblers are visiting offshore gambling sites to play Blackjack, roulette and slots.

Operators also complain that the online horseracing industry is dominated by state-controlled Pari Mutuel Urbain (PMU) and that it has not been opened up to create a fair, competitive marketplace. Online poker providers in particular would also like to see compacts formed with other regulated EU markets so that liquidity could be increased at the tables – and that would naturally require a change in the tax laws.

No Changes in the Near Future

Speaking to the media after the release of its five-year assessment of i-gaming in France, ARJEL´s president – Charles Coppolani – said that a limited number of casino games would be considered for regulation, but not in the near future. He also extinguished any chance that online operators would be allowed to offer virtual slot machines, describing them as “too addictive and therefore too risky”.

Mr Coppolani´s pessimistic outlook was mirrored by the chairman of one of the leading online sports books – Hervé Schlosser from France-Pari – who admitted in an interview with eGaming Review, that it would be too risky for politicians to consider tax changes before the elections and it would probably need a major political change in France for anything to happen afterwards.

Not Exclusively a French Problem

Although the ring-fenced markets in Italy and Spain have not yet reached the level of crisis being witnessed in France – primarily because they allow online casinos – online poker is practically on life support in both countries. Revenues from online poker in Italy are tumbling year-on-year (cash game action was down almost 25% in 2014), while Spain´s lack of cash game action is disguised by an increase in tournaments revenues.

However, the general decline of online poker in Spain has forced the closure of two more poker sites. Efortuny and Poker Heaven have both announced that they will be closing their virtual doors at the end of the month. Both sites have sent emails to their existing databases advising players to cash in any FPPs and reverse any tournament entries they may have before the June 30 deadline.