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 with new legislation enacted in 2010.
After allowing the operation of a state-run monopoly for online gaming for almost three years, and under pressure from the European Commission (EC), 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 June 1, 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.
Additionally, gaming licenses were made available in time for operators to take advantage of World Cup betting, in summer of 2010. In the first month of legalized online gaming, there were 1.2 million accounts opened and €83 million wagered. The numbers reflected more than a 50% increase over the same time period in 2009, when betting was confined to state-owned websites.
The new regulations had an immediate impact on the online poker market. By November 2010, Pokerstars.fr – the PokerStars French-only network – was the largest poker platform in terms of players in France and the 10th-largest overall, according to PokerScout.com. Winamax.fr eventually surpassed PokerStars.fr as the largest platform in France. As of January 2014, it was the ninth-largest poker platform in the world, according to PokerScout. PokerStars.fr remained 10th.
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 poker 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.
In 2013, online poker revenue dropped 13% to €258 million. Sports betting revenue increased 19% to €164 million.
With the World Cup and Olympics taking place in 2014, this year could be another good one for sports betting revenue.
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