Historically, the French government limited gambling to a lottery, run by state-owned operation Groupe Française des Jeux, and horse racing, run by state-owned operation Pari-Mutuel Urbain (PMU). All other forms of gambling were deemed illegal. However, this all changed when the French government passed and enacted the Gambling Act in spring of 2010, allowing regulated online gaming. The purpose of this law was to thwart gambling addiction and money laundering, and to shelter existing French operators' market share, including the government-owned monopolies.
Autorité de régulation des jeux en ligne (ARJEL) was created to regulate the online gaming industry and opened its doors to foreign operators with the stipulation that operators adhere to a strict set of guidelines. On 1 June 2010, ARJEL began offering licenses for online poker (Texas Hold'em and Omaha), online sports betting, and online horse betting. Online casinos are still illegal.
Even though the new law opened up France's online gaming market to foreign operators, it came with restrictions. Only limited types of online gaming would be available to the operators, and the incumbent French monopolies were to get preferential treatment.
ARJEL also implemented extensive requirements for dealing with problem gambling. Players must have the option to self-exclude from play and to limit how much they can gamble, and links to problem-gambling resources must be displayed on the site in a prominent position.
All of the newly licensed operators stopped accepting French players at their online casinos to stay compliant with French gambling law. Additionally, the pool for online poker players was restricted to France. And online operator file servers storing player account information had to be located in France to be eligible for a French operating license.
The effective tax rate on sports betting is 8.5% (increased from the original 7.5% in 2010) and payback to players is limited to 85%. The taxes and 85% payback limit were intended to protect players by making gambling less addictive. Poker is taxed at 2% of each pot or tournament prize pool.
The government has been urged to consider making amendments to the existing gaming law due to numerous player and operator complaints, with many operators withdrawing from the French market due to high tax obligations.
Two French online poker rooms, Barriere and Partouche, pulled out of the market in 2013 citing the soft economy and a poor tax structure. And French operators who were hoping to build liquidity by sharing player pools with Italy and Spain had their dreams dashed by France's parliament, which nixed the idea.
The government has also consistently rejected the idea of changing the onerous tax structure.
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