French lawmakers have approved an increase to taxes on retail and online gambling, as well as the lottery. [Image: Shutterstock.com]

Gambling tax raid

France has approved a swathe of tax hikes on multiple industries, including the gambling sector.

Lottery Gross Gaming Revenue (GGR) will now be taxed at 10%. The tax on retail sports bets will be hiked from 7% to 10%, and the tax rate for online bets will also be increased from 10.5% to 15%.

lawmakers previously rejected the tax increases and even threatened industrial action in response

The move had been a controversial part of the country’s budget, as lawmakers previously rejected the tax increases and even threatened industrial action in response. However, senators in France’s upper chamber finally passed the legislation last week.

Tax hikes challenged

Prime Minister Michael Barnier hopes to raise €500m ($524m) from French gambling operators as the country seeks to fill a gap in its budget with sin taxes, which will also target alcohol and tobacco.

One area which will be exempt, however, is horse racing, which saw an unprecedented strike called in protest at the prospect of additional taxes being levied on the sport.

Several industry figures have criticized the move, such as Nicolas Béraud, CEO of Betclic, who was speaking at the annual conference of AFJEL, the iGaming trade body of which he is also president.

Béraud stated that the government was “at best underestimating and at worst ignoring” the problems faced by the industry, adding that many operators would see their margins squeezed to the point of unprofitability.

sports leagues could suffer from the grassroots money which flows from gambling

Former AFJEL president Jean-François Vilotte, who now heads the French Football Federation, also agreed that many sports leagues could suffer from the grassroots money that flows from gambling into financing their activities. Vilotte also added that bodies that ensure sports integrity could also come under pressure due to a lack of funding.

FDJ facing questions

The move also comes amid suggestions that France may be willing to open up its gambling market to other operators in the future, which could potentially have a big impact on La Française de Jeux (FDJ).

the operator enjoys extremely high margins on many of its products

FDJ has an exclusive right to operate the lottery in France, as well as scratchcards and other instant games. The operator enjoys extremely high margins on many of its products, with scratchcard return-to-player (RTP) rates around 70%.

With revenues up to €1.4bn ($1.5bn) in the company’s most recent accounts, the group presents an obvious target for French tax increases. However, whether the operator will be able to survive a combination of uncompetitive low RTP rates and an increasingly harsh tax system in a more open market remains to be seen.