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 operating a state-run monopoly for online gaming for almost three years and under pressure from the European Commission (EC), the French Gambling Act (law number 2010-476 of 12 May 2010) was introduced and enacted, allowing regulated online gaming. The French government realized that by legalizing and regulating online gambling in France, it could better control underage and problem gambling, as well as unlicensed and disreputable online gambling sites, while increasing tax revenues. 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 Holdem and Omaha), online sports betting, and online horse betting. Additionally, gaming licenses were made available in time for operators to take advantage of World Cup betting, in the 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 percent 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. PokerScout listed Winamax.fr as second in France (12th overall) and EverestPoker.fr as third (13th overall).
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.
ARJEL granted 17 licenses in the first eight days of the regulation’s being enacted. As of the end of 2010, 54 sites from 30 operators had been licensed by ARJEL. 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 must be limited to France, and online operator file servers storing player account information must 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.
With mediocre turnover figures reported for 2010, criticism about operating conditions for sports betting companies in France has increased and on March 18, 2011 France’s budget minister rejected lowering online tax rates for 2011, and implied that online casino games would not be authorized in the short term.
The government has been prompted 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.
As of the end of the third quarter 2012, the French online gaming market continues in its downward spiral with online poker leading the pack with the lowest generated revenues of €70 million and stakes in table games declining 12% as well as a 6% decline in horse betting revenues amounting to €61 million with active player accounts decreasing 2%. On the up side, thanks to the Olympics, online sports betting increased 14% to €156 million compared to the prior year. Without the Olympics, the revenues generated would have been a loss.
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