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Though requested for review by ministers, last week French senators approved tax hikes to be implemented across all gambling disciplines as part of the budget 2025. France will introduce a new tax threshold on the GGR of for lotteries, sports betting and online gambling with real tax income charges on gambling operators nearing 60%. How will Michel Barnier's new tax plan impact the unique structure of French gambling following the transformative changes of 2024? Furthermore, iGamingDaily examines ongoing developments regarding the French government's consultation on launching an iCasino market and its efforts to address concerns of entrenched stakeholders about the terms of play of online casino. And before we get started, here's a message from our sponsor. iGamingDaily is sponsored by Optimove, the number one CRM and marketing solution for the global gaming industry. I'm Ted Benworth and joining me today, SBC, French correspondent. Jake Pollard, Jake, how are you doing? I'm very good, Ted. Good to be here as well. So again, another week of changing developments in France. How are you kind of observing developments on the ground? Yeah, I mean, as you say, lots of stuff going on. I mean, obviously, last week was the annual conference of Avashale, the online gaming operators trade body, which is really, you know, really... quite enriching in terms of discussions and debates. And on top of that, there are also the budget talks and obviously the government's plans to raise taxes across the board on certain operators and certain verticals, which as you can imagine is making quite a few companies unhappy. So, okay, lots of movements. So let's focus on these tax increase. Tax increases and what are the key components of the tax plan for the French government and where they're being applied to? Yeah. So basically, so I mean, as we've reported on SBC for some time now, the tax rises are part of the government's efforts, one, to reduce its debt, but also to boost its social security budget. So they're looking to raise around 500 million euros. And within that, they're going to raise taxes on... casinos, on lottery, on sports betting, online sports betting and retail sports betting activities. They were also going to raise taxes on horse racing, perinutrile activities, but they rescinded that one and they've abolished it basically following protests by MPs, by operators, by a number of stakeholders from that vertical. So those are the key components of the tax plan. And this was kind of fast-tracked by the Senate above kind of the minister's decision, right? So what was the reaction to that? I mean, as you can imagine, it's been very negative. I mean, what French companies are saying, and especially some of the bosses of the companies are saying, is that they are already paying the highest taxes in Europe when it comes to gambling taxes. So in terms of online sports on average it works out roughly at the moment at 55% of GGR. These new taxes will bring it up to around 60% of GGR, which as far as I'm aware is by some distance the highest taxes on online sports betting operators. But equally, you know, that level of tax also applies to casino operators and these are only land-based casino operators who are being... are being taxed in France at the moment, they say they have much broader cost base than say online operators. So across the board, it's impacting different verticals. And again, the bosses of these companies are saying it's going to put employment jobs in danger, it's going to make it more difficult to compete, but also make the country more difficult to attract potentially international investors maybe or international operators. Back to the industry reaction, I mean, how do French stakeholders engage with the government in terms of it's representation and kind of put their point of view across on tax and regulation with the government? I mean, it really goes through trade bodies or lobby groups, if you want to call them that, but really trade bodies speaking to MPs, speaking to ministers in charge, speaking to the ministries. in this case, the Budget Ministry, which is responsible for the overall 2025 budget. So it's really political representations made to politicians trying to put the case forward for their specific vertical, whether it's casinos, lotteries, or sports betting. The good thing, I mean, there are a couple of points of interest here is the good thing is the government generally debating and discussing these topics. Whereas, for example, just to give you the example of online casino regulation, which I'm sure we'll discuss shortly, the previous administration wouldn't even acknowledge the various stakeholders, whether it's the land-based casinos, whether it's some of the online guys. So at least from that point of view, that's a positive. At the same time, it has also shown some flexibility. For example, it has withdrawn the tax, the planned tax increase on horse racing operators. But of course, what that means is that other verticals are saying, well, hang on, if you're doing that for horse racing, why not do it for other verticals? So the government has to find a balance because it has to raise some revenues like all governments have to do at the moment, but also trying to not make people too dissatisfied across the board. and also point the finger and say, well, hang on, why is this guy getting a tax, you know, or keeping the same tax levels and you're raising arse? So those are the kind of general kind of issues they have to do, the government has to deal with. Politically, just to finish on the politics of it, it's also a quite delicate time for France at the moment because it's not inconceivable that there could be a motion of confidence in the vote of confidence put forward in the government. If it were to lose that, Macron would have to find a new cabinet to have to establish a new government. So, things are very delicate from a political point of view in France. And Barnier is trying to spin all those plates in the air while passing a key budget at a time where French people are dissatisfied, the economy is not doing great, like many in the eurozone. So, all in all, it's... It's a very delicate situation. And then from our point of view, from the our gaming point of view, there's obviously, you know, online casino, which is a huge deal. And the budget pre-perfied, it's fixed. It's going to be passed through. There's there's no chance of revision, is there? I mean, there could be amendments within, say, for in relation to the gambling sector. There could be amendments to, you know, it's not inconceivable that they might reduce the tax raise somewhat on online betting operators, for example. But as it is, those tax measures are like to go through. However, the budget itself, there's no guarantee that it will pass. So if it doesn't pass, that's when you get the vote of confidence, the motion of confidence in the government, and potentially the government can fall and the president has to establish a new cabinet. So, you know, quite serious issues really, overall beyond purely gambling, quite politically, quite big issues are at play at the moment. But yeah, it's maybe a 60-40 that it will go through, but nothing is. You can't say for sure, no one can say for sure whether it will go through or what's going to happen in the next few months. You know, you've just come back from the Avshel conference and how are kind of French stakeholders kind of observing these political plays? Because to some extent, there is progress in France towards gaining resolutions. And also, they've got, you know, one of the things we witnessed in the market is that the ANJ is one of the more progressive regulatory bodies. So it seems that in one sense, France is progressing, but in other aspects, it's regressing. So how do the stakeholders view what's going on at Play? It's, I mean, it's fascinating really, because, you know, as you say, it's... Yeah, it's kind of this potentially this momentous change, which is, you know, online casino regulation could be, you know, could very well happen in the next 12 months. But at the same time, there are big currents all trying to pull in their own direction. So whether it's the land based casinos, you know, who want to protect who feel they have to protect their activity and fear cannibalization, losing businesses to online operators, even lots of the smaller casinos closing down because, you know, that they believe maybe there'll be so much people, there'll be so many people going online that their land-based venues won't be able to survive. So there's those ones. There's obviously the online operators who would love to see a completely open environment in terms of, i.e., anyone who is eligible, who passes the compliance requirements can apply for a license. So that would make for a very competitive open market, which for the industry would be a good thing, for suppliers, for operators. could always show consumers as well that have more choice, that have more variety. And then I guess the last major, major influence on all this is Francis de Jouel, the lottery operator and obviously newly crowned owner of Kindred Group and number three operator online in France after Winamax and Bekley. So they have a very particular position in France because When the Kindred deal was closed, or even when it was announced nearly a year ago, everyone said, ah, they're doing it, you know, one, to get a big pan-European operator, but also preparing for potential regulation of online casino in their home market. You know, Unibet is a very well-known brand in France, and then, you know, they could have Unibet Casino, they could have 32 Red Casino, they could have Maria Casino, all active potentially in France. But in the last few weeks, what's transpired is essentially FDJ are saying... they're opposed to online casino regulation, which has left quite a few people scratching their heads. And the reasons for those are, obviously, FDJ can't really say that, but they have this unique position in that they operate these games, these instant games and scratch card games. And some of those games are essentially, they're very similar to online slots, but the only big difference, as I've written in a piece recently, is the payout ratio, which is between 65-70% compared to most online slots, as you know, in our industry, which are around 96-97% payout ratios. So you can see the difference in margins and the difference that would generate for FTJ in terms of revenues and FTJ. Obviously, they can't say this out loud, but many people believe they're just saying, we want to protect that market and we don't want to have to compete against loads of online fighting for CPA, having to advertise, having to do all this. But hang on, I mean, doesn't FTJ's opposition just highlight, well, you know, yes, it is protectionist, but also doesn't it put them at the forefront of a French gambling market that is severely exposed to the black market, to black market actors with anything between a billion and 1.5 billion exposure. And doesn't that put them in direct conflict with they are a part of the problem now by taking this protectionist. Completely, completely. And it's purely really, of course, they wouldn't say it out loud, but everyone I've spoken to about this are saying FTJ just want to keep the market to themselves. And if I was in their position, maybe I'd do the same. I mean, it's kind of they're making, I don't know. It's hard to know because they don't break out the figures, but last H124, they made a billion in lottery revenues, including online instant games. And a lot of that growth came from, and they said it themselves, it came from online instant games. So digital penetration has gone up to, I can't remember, something like nearly 17% compared to 12% last year. So they're clearly generating a fair amount, fair amounts of revenues from those games. The other question, and I asked them this for a four piece I did recently, I said, how would you address the illegal market then? If you don't want it to regulate, how would you address it? They didn't answer me. So yeah, there are serious questions for them to address. But they are a very particular company in the sense that they generate so much revenue for the state. it puts them really, you know, there's no one really comparable in the market in France. So you know, what they say does hold sway, but you know, I think the stakeholders are thinking, you know, that the government will look at the various aspects of competition of having trying to have a kind of open market that's competitive, that's open to companies that can truly compete on offer customer service, that kind of thing. And hopefully they'll legislate for a scenario that allows that competition to flourish. But is this just part of the bargaining at the initial stage of, yes, France will implement iGaming laws, but we're trying to, you know, are these just the power plays of FDJ at this initial stage where it views it wants to kind of impose? itself on the negotiations of Ad Casino for 2025? Absolutely. It's totally that. It's exactly that. It's set out the stall, you know, reinforce the messaging, as well as plan for all eventualities, obviously. So maybe, you know, if we look at the scenario now, you know, so at the moment, they're kind of opposed to it, basically, that's their messaging. And then... Let's say the first three months of the working groups next year from January to March or whenever that is, will be whether to regulate online casino in France. So let's say they agree to regulate it. The next three months after that, the next quarter after that, what will be the details? What will be the levels of competition? Do you need to have a land-based presence in the country? Do you need to own a land-based casino? A similar model to what's happening in Belgium or in the US in some states. All those details of the modalities or the different kind of legal compliance regulatory details will be hashed out during that second quarter. And if we get to that stage, that's when FTJ will even more put the pressure on the various, whether it's the government agencies and other stakeholders. And everyone will try and get the best potential scenario for their vertical. So FTJ aside, I mean... Coming into the first phase of the consultation, are you seeing entrenched camps, not only from FDJ, but from the municipal casinos, France's online gambling sector, of how I casino laws should be determined and interpreted? I mean, it's not so much entrenched as they have their own vision for how it should be regulated. So for example, as we've mentioned before, the French casinos believe... they should have an exclusivity period of say three to five years where online casinos could only operate in partnership with their members. So, you know, you would have to have a partnership with, I don't know, let's say, Jouer Group and some of their casinos to be able to get an online license. You know, that raises various issues, especially for the much smaller independent ones that might have one or two establishments. How do they get a share, a slice of the pie? You know, all those kind of details would have to be worked out. So there's that. You've got then AFSHARE or the online guys, they would want what we have say in the UK. So you wanna open a casino, put a license application through, establish all the, whether it's a data vault and fund securities and KYC measures, make sure, show that you will be compliant and you can get yourself a license and operate. And then you have the FDJ model at the moment, which seems to be opposed to any regulatory scenarios. So what will happen? I mean, it's impossible to tell. But yeah, those are the kind of entrenched views. I wouldn't say they're entrenched, but those are the kind of scenarios people would want. But I mean, I'd say overall, from what I've seen anyway, I mean, hopefully I'm not speaking out of turn, but they all seem to have a good relationship between each other. You know, some parties sometimes. You said it. There's quite a bit of need. Yeah, no, but yeah, exactly. Famous last words. But the, you know, sometimes there's a bit of needle between the different stakeholders. And so far from what I've seen, you know, they seem to be fairly civil to each other. So, you know, maybe behind the scenes is different, I don't know. But that's what I've seen anyway. So back to kind of the market conditions, If you're a French operator, what is left of that market? What are the real growth drivers? Because if they're going to start taxing sports betting at 60%, where is there left to grow your customer base? Yeah, I mean, it's a good question. I mean, it's... There is still... I mean, I think online sports betting has shown that... even within a tough, highly taxed environment, it can still grow. Having said that, it's important to recognize that, yeah, essentially, if you're not part of the top three or four, it's very difficult. As someone said to me recently, you either have to be very small or startup or very big, i.e. a bit clique or Winamax to be able to get anything out of the market. Anyone in the middle tends to find it very difficult. In terms of online casino, I think what the authorities would say is if it is taxed at 60% of GDR or whatever, those kinds of levels, they'll say, you know, casino is margin, big margins and you can generate margins. And if you can't run a casino, you shouldn't ask Donald Trump, you know, you shouldn't be a business. Yeah, so it's that kind of scenario, I'd say. And you know, the thing is, you look at a lot of other, let's say, jurisdictions with fairly high taxes. If you look at New York in the States, online sports betting is what, 50%? People still want to be there because these are big markets and France is a big market. You're talking 65 million people. It's got a big history of casino as well. It's got the most casinos, land-based casinos in Europe. It's always been big on the lottery. So France is a country that likes gaming. And yeah, sure, the tax rates are. you know, scary, you know, they're, they give you palpitations in some cases, but it's still a big market and people are still going to come to it because, you know, it's, it's worth, if you can run your business properly, you will make money out of it. So how positive are you that there can be kind of resolutions and that pathway can be like laid out towards launching a market? Oh, I mean, I was trying to hedge my bets. Yeah. Putting me on the spot. I mean, I'd say if. I would say roughly, I put it at 60-40 in favor of it at the moment. Um, I mean, I may miss slightly higher because there is a will to do it. There is a will to, from everyone, I would say, um, you know, from the online guys, obviously, but even the casinos, I mean, okay, if there was no regulation, the land-based casinos will not suffer, so to speak, but. still would because the illegal market is so huge in France. People save one and a half to two billion euros. It's way more than that. I reckon it's, well, most people reckon it's two and a half, three billion more like. So already that's a major, major illegal market. And it's only getting bigger, to be perfectly honest. And you're talking, and that's without even including crypto, crash games, bonus buy slots, all those kinds of features that are coming up more and more. So there's that. And I say, for my money, don't put words into their mouth, but I would say the regulator would like to see this. No, put it this way, a regulated market would enable the regulator to do its job properly, whereas at the moment it's fighting constant regard actions of trying to ban such and such illegal operator. And what it's like illegal operators just bring up next day with a different site. Um, so, you know, I'd say, yeah, I'd say the will, the will is definitely there. So I'd say 70 30, the reality is probably more close, closer to 60 40. Okay. And Jake, just to wrap up with your journal, how should kind of audiences be following French developments in 2025? What they should, what should they be looking out for and what are kind of your nuggets for next year? Okay. I mean. In terms of the French market, follow them on SBC and Gaming and Co, the two leading sources for the market. I think the key issues will be tax levels that the government implements as part of its social security budgets, obviously online casino regulation, key issues, size and scope of the illegal market. And when I say legal, obviously I'm talking about online casino, but also online sports betting is actually not as big as online casino, but it's quite a sizeable market. So whether it's crypto, whether it's, you know, or just bookies or, you know, like similar to what we've seen with stories in the UK at the moment, like Telegram, you know, they who do all their communications with players via Telegram, those kinds of things, that's still a sizeable chunk of the market as well in France. And my nuggets, I would say. I would say look out for some typically French convoluted regulatory scenario where they allow land-based casinos to operate and online operators to operate online casino, but in some kind of convoluted deal where there has to be either a partnership or some revenue share or something like that. I wouldn't be surprised if they cut the pair, find some halfway house. You'll be right from that one up. Exactly. I'll try and make sense of that. Alright, thanks a lot, Ted, mate. Amazing correspondence from France. Okay, this has been iGamingDaily. Thanks for tuning in, guys.