France Approves Restrictions In Draft Online Gambling Law

by Ulrika Lomas, Tax-News.com, Brussels

14 October 2009

The French National Assembly has voted on the first reading of its draft online gaming and betting legislation. Several amendments reinforce restrictions against potential new EU entrants.

French budget minister Eric Woerth confirmed his intention to fight in favor of "French specificity," and the draft laws appear to favor the current duopoly operators Pari Mutuel Urbain (PMU) and Francaise des Jeux (FDJ). About 50 operators, according to Woerth, would be licensed by the new supervisory body, Arjel, to operate in France compared with the thousands currently operating illegally.

According to Sigrid Ligné, Secretary General of the European Gaming and Betting Association (EGBA), “At the time when Europe is watching the development of France’s reform, the introduction of even more unjustified restrictions is threatening to corrupt the efficient workings of the market. If the Senate votes along these lines, the prospect of a French market that is both viable and compliant with EU law is a long-way off.”

Some of the new restrictions passed include:

• The resetting of customer accounts: New entrants will be forced to close down the internet accounts of their French customers until they are granted a license. The EGBA says this reinforces competitive advantage of the duopoly as FDJ and PMU will be able to continue offering their services without interruption.
• Discrimination against operators in other EU jurisdictions: New entrants from other EU jurisdictions may see their application for a license turned down even if they have reciprocal EU tax reporting arrangements with France.
• Further limitation of pay back ratio: Further limits of the average pay back ratio to customers (which includes the sums of the bets (i.e. bonuses) and not the stakes) will force French consumers to spend more. The EGBA believes this will limit the level of competition by making it less attractive to new market entrants and restricting consumer choice.
• Online betting exchanges such as Betfair will not be able to apply for the new licenses. Reference was made to a 2007 report from the British Gambling Commission which indicated that a much higher proportion of participants, 9.8%, using betting exchanges, went on to develop gambling addictions. Betting exchanges permit customers to lay as well as place bets.

The EGBA has already flagged other concerns earlier, such as the introduction of a "sports betting right" and the requirement to force EU operators to establish an IT platform in France. The EGBA considers the taxation and overall proposed terms render the French offer uncompetitive in a global market, and unlikely to deter many unlicensed operators. Bookmakers will be required to pay 1.8% of their revenues to the French sports commission and apply for separate licenses for each sport.

A number of implementing decrees will follow in the months to come to specify some of the requirements of the draft law. “It is crucial that also these implementing decrees are scrutinized by the European Commission and Member States to ensure EC law compliance. We urge the French government to notify all implementing decrees as soon as possible,” said Ligné.

The draft now goes to the Senate for debate. The government hopes that the new laws will be effective before the World Cup football in the summer of 2010.

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