Another day, another casino operator decides the cost of running an online sportsbook in France is too high. Ladbrokes, is the latest after a string which included William Hill, Sportingbet, and Betfair.
Discouraging these operators and countless others is Autorite de Regulation des Jeux En Ligne’s (ARJEL, the French Regulatory Authority of Online Games). ARJEL has imposed an 8.5% tax on all betting stakes. To be clear, this tax is collected as money comes in, without any regard for revenues or whatever is left after money goes back out.
To put this in some perspective, the most generous online casinos, including Go Casino, Grand Vegas Casino, and Online Vegas Casino, all offer payouts of over 98% and quite difficult to find an online casino which pays out less than 94.31%. It doesn’t take a shrewd accountant to realize that the gaming site would need to pay out less than 91.5% in order to pay the taxes and break even. Hence, this tax makes it impossible for gambling site operators to compete in France.
It has been suggested, not unreasonably, that this high tax is a back door to the European Union’s free trade laws. France protects the interest of Francaise Des Jeux (FDJ) which runs the lottery and Pari Mutuel Urbain (PMU) a leader in horse betting. Both now offer numerous other gambling opportunities. As neither company is offering an online casino and their competition is already very limited, this 8.5% tax is not crippling their own business ventures.
Clearly, this is a losing situation for gamblers. As with any industry, only competition will lead to new and enhanced goods and services. Internet casinos offer a very clear example of how consumes lose. Assuming FDJ and PMU cannot get an exemption from this tax, they would be forced to choose between (1) offering lower payouts, (2) not ever offering an online casino, or (3) subsidizing the casino from other operations (a most unlikely choice).
Moreover, gambling operations must ever concern themselves with money laundering and fraud. Private operators have stronger incentives to dedicate the necessary resources to monitor and prevent their businesses from being abused. Moreover, those operators who already have experience on the international market, will already have the expertise and infrastructure to help tackle these problems which may go unnoticed by an inept and disinterested government employee.
A review on gaming tax is expected in 12 months, but there is no guarantee that the tax shall be dropped or any other improvements made to the French gambling laws.