Online Gambling Revenue still Sluggish in France, Regulators promise Change
Five years ago, the launch of regulated online gambling in France was the talk of the town. Online poker rooms, online casinos, online sports betting and horse racing markets – France was finally taking an authoritative step into the modern world of iGaming. But problems have plagued the market ever since, and despite promises for affirmative change, revenue is still sluggish.
In the latest Q3 reports, it was revealed that sports betting is the only real area in which French gambling is seeing notable success. Revenue from sports betting jumped 3% to €62 million compared to last year’s Q3 results. Horse race betting also saw an increase of 5% to €60.1mm, but the racing turnover saw no improvement, holding steady at €238mm.
Despite those increases, online gambling as a whole dropped 0.3% to €176.1mm in the last three months, ending September 30, 2015. The most negative contributor was online poker, which should come as no real surprise as France’s internet poker landscape fails to provide an appealing environment for operators or players.
The fact that online poker tournaments saw an increase of 21% in revenue year-over-year was overshadowed by the 20% decrease in cash game yield, which amounted to an overall decline of 5%, down to €54 million.
Where did France Go Wrong?
How is it that the French online gambling market is so crippled, while their neighbors in the UK are experiencing such laudable growth? When French gambling regulator, ARJEL, was tasked with the goal of overseeing a license-based iGaming market, officials chose not to mimic the legislative climate in the UK, instead opting for a ring-fenced market and demanding exorbitant tax rates from operators.
While the casino side of the business may be unaffected, the ring-fenced nature limits the number of online poker players that can participate to only those physically located in France. As such, the player pools aren’t large enough to attract new customers to the virtual felt.
The high taxation—33% corporate tax, plus an additional 9.3% on sports betting turnover and 2% on internet poker cash games; a fiendish amount compared to the UK’s flat 15% GGR tax rate—prevents smaller iGaming companies from being able to compete in the market. Even worse, players find themselves bored with the stagnant and/or unappealing promotional campaigns due to the lack of competition.
Charles Coppolani, President of ARJEL, admitted back in 2010, shortly after France launched its interactive gaming industry, that the market was “not as competitive” as they had hoped for. However, in a more recent statement, when reflecting on the last five years of regulated iGaming, Coppolani said that ARJEL’s long-term goals were “partially achieved, even if everything didn’t go exactly as planned.”
ARJEL’s President is confident that regulators are doing a great job, and doesn’t believe the sluggish results of France’s online gambling market should be “dramatized”. Instead, he commended the efforts of regulators and operators, saying that of the 17 licensed online betting sites (note: there were originally 62), “many have achieved balance, or are about to achieve it.”
Change is a’ Coming! Eventually… Maybe
Back in June, the Association Française de Jeu en Ligne (AFJEL) released a report after studying the first five years of regulated online gambling in France. The results were highly conclusive, keenly urging regulators to reconsider the exorbitant tax rate, the limited number of gambling opportunities, and the ring-fenced nature of the market.
Based on that study, ARJEL called for a complete renovation of the framework that governs the industry in France. Coppolani himself promised that more poker variants would be available before the year is out, after admitting that internet poker was in “big trouble”.
He also vowed to press the matter of shared liquidity with other regulated EU markets, but that song and dance has gotten old over the years. It’s clearly time to stop talking and make good on these promises if France ever wants to see its online gambling market thrive.