In a significant policy shift, French senators have approved substantial tax increases across various sectors, including gambling, as part of a broader effort to bolster the national social security budget. This move aligns with a comprehensive strategy to address public deficits by tapping into industries with high-profit margins, including the gambling sector.

Legislative shifts and industry impact:

During a decisive session, the Senate passed what has been termed “comportmental tax raises,” which had been previously rejected by the lower house but found favor in the upper chamber. The newly approved rates include a significant jump in taxes on all gambling activities—lottery gross gaming revenue (GGR) will now be taxed at 10%, retail sports bets will rise from 7% to 10%, and online bets will see an increase from 10.5% to 15%.

These tax adjustments are part of the Budget 2025 proposed by Prime Minister Michel Barnier in October, which aims to extract an additional €500 million from French gambling operators. This legislative push reflects the government’s urgency in addressing the national debt and funding social security initiatives.

The tax hikes have sparked considerable concern among industry stakeholders. Nicolas Béraud, CEO of Betlic and President of the French iGaming trade body AFJEL, voiced significant worries at the trade body’s annual conference. Béraud highlighted the detrimental effects these taxes could have on operators’ profitability and the potential risks to sports federations, leagues, and grassroots organizations. According to Public Gaming Reseach Institute, he said: “The government was at best underestimating and at worst ignoring their concerns.”

Jean-François Vilotte, former President of the French gambling regulator AFJEL and now CEO of the French Football Federation (FFF), also expressed reservations. He warned that the financial stability of many sporting bodies could be jeopardized, potentially even affecting sporting ethics. His concerns were echoed by leaders from the French Olympic Committee, who have urged the government to reconsider the fiscal measures.

The controversial stance of FDJ:

Amidst these regulatory changes, the stance of Française des Jeux (FDJ) on the potential regulation of online casinos has drawn criticism and accusations of hypocrisy. As the exclusive operator of some of France’s largest lottery and instant game offerings, FDJ’s opposition to the legalization of online casinos has been perceived as protectionist.

Industry insiders suggest that FDJ’s real concern lies with its profitable scratchcards and instant games, which currently enjoy a quasi-monopolistic status and offer lower payout ratios compared to online slots. The legalization of online casinos could force FDJ to compete on less favorable terms, potentially eroding its market dominance.

The tax hikes are expected to generate an additional €50 million annually, contributing to the nation’s efforts to curb public deficits. However, this decision has not been without controversy. Critics argue that these increases could stifle investment in the gambling sector and lead to higher costs for consumers, potentially driving French gamblers to offshore platforms.

As France navigates these fiscal adjustments, the gambling industry finds itself at a crossroads. With the government set to establish working groups in January to further evaluate online casino regulation, stakeholders like FDJ are preparing for all eventualities. Whether these tax hikes will lead to sustainable growth or unintended economic consequences remains to be seen.