Opening Up the Online Gambling Industry in France
The online gambling scene in France is on the verge of changing irrevocably with the imminent enactment of a new legislation inspired in part from the successful example of the UK and other European countries. It remains a vastly untapped potential for online gambling operators. The liberalisation of the market, which up until now has been controlled by the monopoly of the state-owned Française des Jeux, is under intense scrutiny from the European Commission while at the same time preparing itself for the fast-paced environment of the online gambling world in which operators are already active offering an ever-growing choice of games of chance to the willing French consumer.
In this article I will attempt to cover the key points of the emerging French Gaming Law (which remains to be finalised) by looking at its viability with regards to tax and licensing regimes and how it will affect foreign entrants to the market.
In the interest of the consumers, an essential element of this legislation aims to prevent addiction by fixing limits on wagers and winnings that may be placed or received by punters. With this in mind, operators will be obliged to include warnings about underage playing and the potential risks of excessive gambling.
The opening of the market will encompass horse race and sports betting and shared games of skill, involving the ability of the player to improve his or her chances by adopting a certain strategy in relation to their opponents – such as online poker. Hence, lotteries, online slot machines, betting exchanges and casino games involving playing the bank (blackjack and roulette for example) will be excluded from the opening as they are considered too addictive.
A new independent public authority, ARJEL (Games Regulations Authority) will be set up specifically to regulate the remote gambling market, responsible for:
· Ensuring compliance with policy objectives regarding internet accessible games.
· Suggesting to government specific requirements for different types of licences available.
· Preparing and attributing online gambling operator licence requests.
· Monitoring online operations and clamping down on illegal gambling sites and fraud.
ARJEL will be empowered to block access to such websites through a direct injunction to Internet Service Providers and block such financial transactions.
· Enacting auditing rules concerning technical and financial data for each transaction.
· Making suggestions to Government on legislative and regulatory issues.
· All operators shall be required to provide information and guarantees as to their identification, gambling experience, shareholding, measures taken to prevent fraud and money laundering, secure online payment and protection of data and minors.
· Licences will be granted to operators within Member States of the EU or ECC. Any of these whose headquarters or shareholders are based in so called non co-operative tax havens shall be refused licences to offer their services in France.
· Online gambling internet websites must be accessible through a first level domain name ending in “.fr”.
· A mirror server, based in France, shall contain all data relative to gambling activities and exchanges between players and operators.
· Licences shall be granted for five-year renewable periods and shall be non-transferable.
· The tax rate will be based on amounts wagered by players, according to the following:
8.5% – Sports betting
15.5% – Horse race betting
2% – Online poker
Such taxation based purely on wagers rather than gaming gross revenue is less well suited in the case of poker operators for example, for whom 2% tax on wagers would equate to taxing approximately 60% of gross revenue. This could put operators off entering the market, as well as go against EU regulations of freedom to provide services. However on the whole, France should remain attractive despite the proposed tax regime that might be an obstacle to foreign online gambling operators seeking to enter the French market.
With the implementation of the Draft French Gaming Law, the ARJEL will need a further few months to be efficient and begin granting licenses. According to Senior Government Officials, France will not start granting online betting licenses at the beginning of 2010 as initially thought. Partly as a result of the detailed opinion of the Commission rendered on June 8th, 2009, the Draft French Gaming Law will most likely not be implemented as from January 1st, 2010. In any event, it should be in place for the kick-off of the World Football Cup in South Africa at the latest.