Online Gambling in France: A Risky Bet for the Future?
France’s online gambling market is booming, but a significant portion remains untaxed and unregulated. Is legalization the answer, or will it create more problems than it solves?
The State of Play: A Lucrative Market
Online gambling has surged in popularity in France in recent years. In 2023, the market generated a Gross Gaming Revenue (GGR) of €13.4 billion. Every segment experienced GGR growth, a feat not seen since 2019, surpassing even the records set during the 2020 lockdown. This trend continued into 2024, with an 11% increase in GGR in the first half of the year, reaching €1.3 billion.
However, these impressive figures don’t include online casinos, a highly profitable segment currently unregulated by French law. While players can access a wide range of games and generous bonuses on these platforms, the revenue generated escapes French taxation. Despite this, a PwC study commissioned by the ANJ (National Gambling Authority) in 2023 revealed that between 3 and 4 million French citizens have engaged in online casino gambling.
The Untapped Potential: A Tax Goldmine?
The French government is eager to tap into the revenue generated by this activity. Estimates suggest a GGR of between €748 million and €1.5 billion. This represents up to 11% of the total GGR of the gambling market. If taxed at the same rate as other gambling segments (55.6%), online casinos could contribute hundreds of millions of euros to state coffers.
The Regulatory Challenge: A Cat-and-Mouse Game
The National Assembly will decide whether to legalize online casinos. However, the ANJ has already highlighted the difficulty in controlling illegal online gambling offerings. When the ANJ manages to shut down a site, it often reappears within days, resuming its activities. The effort required to close a site is immense compared to the ease with which operators can reopen.
Poker’s Success Story: A Model for Legalization?
Currently, online poker is the only authorized online casino game in France. Lawmakers believe that the outcome of poker depends more on player skill than chance. This may be why it has experienced consistent growth in recent years. Online poker surpassed its 2020 lockdown levels, with a GGR of €504 million in 2023. This represents a 14.1% increase compared to 2022. Between 2019 and 2023, the activity experienced an average annual growth of 16.6%. Concurrently, the number of Active Player Accounts (APA) increased by 7.7%, reaching 1.9 million.
Other games, such as slot machines, roulette, and blackjack, are considered too reliant on chance by lawmakers. Yet, all these games are perfectly legal in land-based casinos. Given the impressive performance of online poker, it’s reasonable to expect that legalizing currently prohibited games would attract a large number of players.
The Opposition: Land-Based Casinos Fear the Competition
Unsurprisingly, land-based casino owners are not pleased with the prospect of online casino legalization. The French land-based casino union warns that up to 15,000 jobs could be lost. Grégory Rabuel, president of the Casinos de France union, even suggests that the sector could lose up to 30% of its turnover if online casinos are legalized.
“Legalizing online casinos would create unfair competition and jeopardize the future of land-based establishments,” argues Rabuel.
The ANJ’s Perspective: A Chance to Clean Up the Industry
For the ANJ, legalization presents an ideal opportunity to clean up the French gambling sector. Given the difficulty in controlling the illegal market, it may be better to legalize the entire sector and impose strict measures that operators must adhere to. This would also unlock significant revenue potential. Even if the GGR remained capped at €1.5 billion, the French government could potentially generate up to €800 million. Moreover, it’s almost certain that the GGR would soar after legalization.
The Key Considerations:
- Potential Tax Revenue: Legalization could generate hundreds of millions of euros in tax revenue for the French government.
- Job Losses: Land-based casinos fear significant job losses due to increased competition.
- Regulation and Control: Legalization would allow for better regulation and control of the online gambling market.
- Combating Illegal Activity: Legalization could help to curb the growth of illegal online gambling sites.
The decision to legalize online casinos in France is a complex one, with significant potential benefits and risks. The National Assembly must carefully weigh these factors before making a decision that will shape the future of the French gambling industry.
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