French Senators have approved a tax hike that will impose, if implemented, an effective 60% tax rate on the gambling industry.
On the latest episode of iGaming Daily, Ted Menmuir was joined by SBC’s French correspondent, Jake Pollard, to delve deeper into the news.
Jake explained that the tax rises are part of the French government’s efforts to reduce debt and increase its social securities budget by €500m. Lottery, land-based casinos and retail and online sports betting verticals will all be hit by the hike, though horse racing was spared despite being initially included.
On the industry reaction to the news, Jake said: “As you can imagine, it’s been very negative. What French companies are saying, and especially the bosses of the companies, is that they are already paying the highest taxes in Europe when it comes to gambling.
“These new taxes will bring it to around 60% of [gross gaming revenue] which as far as I’m aware is by some distance the highest taxes on online sports betting operators. Equally, the tax also applies to land-based casino operators who say they have a much broader cost base than 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 jobs in danger, it’s going to make it more difficult to compete and make it more difficult to attract international investors or international operators.”
Amongst the news of the tax hikes, is also the ongoing debate over the formation of a regulated icasino market in France.
Although welcomed by many, the move does have opposition from land-based casinos and also Francaise des Jeux (FDJ) – one of the biggest operators in France – which, according to Jakes, has left people “scratching their heads”.
He said: “FDJ have this unique position in that they operate these instant games and scratch card games and some of those games are essentially very similar to slots. The only big difference is the payout ratio, which is between 65-70% compared to most online slots which are around 96-97%.
“So you can see the difference in the margins and the difference that would generate for FDJ in terms of revenues. FDJ can’t say this out loud but many people are saying that [they] want to protect the market and don’t want to have to compete against loads of online [operators].”
Bringing the episode to a close, Jake compared the stringent tax rates to other similar regions and outlined that operators should still have optimism for the market’s future.
“If you look at New York in the US, online sports betting is [taxed at 50%] and people still want to be there because these are big markets, and France is a big market,” he explained.
“You’re talking 65 million people. It’s got a big history of casinos as well, it’s got the most casinos in Europe, and it’s always been big on the lottery. So France is a country that likes gaming.
“Sure the tax rates are scary, they’ll give you palpitations in some cases, but it’s still a big market and people are still going to come to it because it’s worth it. If you can run your business properly you will make money out of it.”
