French gambling liberalisation – EGBA fears another “exception francaise”

The major trade organisation for European-facing online gambling groups, the European Gaming and Betting Association, is critical of new restrictions enshrined in amendments to a draft law on liberalising the French gambling industry.

The National Assembly has passed a number of amendments to the draft law which EGBA is concerned impose further restrictions on foreign companies entering the French market.

In a statement mid-week headed “Online betting and gambling: another ‘exception Francaise?'”, EGBA notes that the vote for the amendments worsens the conditions of the opening market.

“This confirms the real intention of the French government to fight, as stated by French budget Minister Woerth, in favour of a “French specificity” the statement points out, listing the questionable amendments as:

* The resetting of customer accounts: New entrants will be forced to close down the .com accounts of their French customers until they are granted a licence.  This is clearly a distortion of competition as the former French monopolies 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 licence 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 make French consumers spend more to get a better return on their bets. This additional obstacle will only serve the purpose of limiting the level of competition by making it less attractive to new market entrants and restricting consumer choice.

Sigrid Ligné, Secretary General of EGBA comments in the statement, “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.

“These new concerns come on top of existing restrictions that have already been flagged, such as the introduction of a “sports betting right” and the requirement to force EU operators to establish an IT platform in France,” she added. “They come at a time when the overall taxation model proposed risks rendering the French offer uncompetitive in a global market, and drive away consumer demand towards an underground market with no consumer protection.”

A number of implementing decrees will follow in the coming months which will specify some of the requirements of the draft law. “It is crucial that these implementing decrees are also 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.” Ligné remarked.

The draft now goes to the Senate for discussion and vote in January.

In following French developments, RapidTV News quoted a study on the French market released this week at Monaco’s Sportel which
estimated the value of online sports betting in France at Euro 800 million immediately after liberalisation in the summer of 2010 – in time for the Soccer World Cup.

“Ten operators should share 80 percent of these revenues, that are forecast to rise to Euro 1.4 billion by 2011 and Euro 1.8 billion in 2012,” the study concluded.

Licensed operators could be expected to make major investments in marketing and advertising in the first two years, especially through sponsorships into sport and media, the study found, defining the target audience as primarily the 900 000 French Internet players already betting on ‘illegal’ websites, as well as new players in the age demographic 18 to 45 years-old.

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