Stick or twist: Calls grow louder for France to legalise online casino

When Betclic Group CEO Nicolas Béraud went on air for an interview with radio network France Info to call for regulation of online casino in France, he wasn’t alone in sharing his sentiments as industry heads on LinkedIn threw their unanimous support behind it too.

“It is important that the public authorities control other gambling in the same way as online sports betting,” said Béraud. He went on to point out that sports betting accounts for one-sixth of online gambling in France and that illegal gambling remains a contentious issue. The success of sports betting alone is evident from the record numbers Betclic reported from last year’s World Cup, which saw the group return a record number of active players during the tournament, along with the Betclic app being downloaded 300,000 times. Three million customers staked €615m across the four-week competition, with stakes for the final between Argentina and France reaching €23m, a group record for a single event.

Betclic’s figures for sports betting beg the question as to why online casino has yet to be regulated in France, with the country missing out on €1bn of gross revenue from the vertical, as per a Kindred Group estimate based on a 2020 study by Harris Interactive, that is instead being lost to the black market.

In the same interview, Betclic Group’s CEO added: “France is one of the few countries not to have regulated online casino games, and several studies have shown that there are more than a million players who play regularly on these sites without any control, without tax for the state.”

All together now

This is an argument that is wholeheartedly supported by other online gambling operators in the market as a huge, missed opportunity. David Ozararat, president of VBET France, tells EGR Intel that most of the online operators are on the same page regarding online casino.

“We are all defending this position about regulating casino, which should be a high priority for the government because this offer exists today, but in the black market. ANJ is fighting against the unregulated operators and the government is fighting it. But we have to see that illegal gambling still exists. And there are billions of euros going out of the country where regulations are not necessarily the same, and sometimes those websites do not have a licence. There is little or no regulation about addiction and the money is going out of the network of our country,” he explains.

The European Gaming & Betting Association (EGBA) was quick to endorse Béraud’s views on LinkedIn, with secretary general Maarten Haijer pointing out that France is a significant gambling market in Europe, having generated GGR of €11bn in 2021.

“Creating a regulatory framework for online casino would enable the country to provide consumer protection to all its players, enable ANJ, the gambling authority, to exert more control over the online gambling market, and raise more taxes for the French state. It’s a win-win really,” he comments.

Kindred Group, which offers its Unibet brand in the country, also supports the regulation and supervision of online casino, pointing out that it is a public health issue. Adrien Julian, head of corporate affairs for France at Kindred Group, argues the lack of state control on the online casino market is a “lose-lose situation”. Echoing similar concerns to VBET France, he adds: “Unlicensed doesn’t mean it’s not there and easily accessible. Today, in France, dozens of operators, mostly based in Curaçao, have dedicated French illegal platforms and a growing number of people are actively playing on these websites.

“It is estimated between 1.4 million and 2.2 million French people play on these platforms. This ban is not understood and counterintuitive to most players as over 80% of the population isn’t even aware online casino is prohibited.”

Adrien Julian, Kindred Group

French business lawyer Benjamin Fellous of law firm Benjamin Abraham Avocat backs the call for online casino regulation but acknowledges that cracking down on illegal operators is difficult as motivated users will always find a way. “A strict and efficient regulation enabling online casinos may allow French clients to defend themselves before French jurisdictions, in case a litigation arises if they gamble through French incorporated companies,” he highlights.

Reluctance to regulate

VBET France’s Ozararat believes one of the main reasons why online casino hasn’t been regulated is due to the potential damage to turnover for small land-based casinos. However, it is a two-way street, and the bricks-and-mortar casinos are now pushing for online casino to be accepted as well. “The land-based casinos would like to see a law or regulation that allows the offline to go online, and online operators would like to be available to everyone,” he remarks.

Drilling down into the rationale behind the government’s reluctance to regulate, Ozararat attributes this partly to land-based casinos financing the municipalities. Under the Homeland Security Code, enacted on 1 May 2012, casinos must be located by the sea or in thermal and climatic resorts. The small municipalities therefore reap economic benefits from the local casino in terms of employment and tax payments.

The second reason, Ozararat argues, is down to gambling addiction, as the government is worried that problem gambling rates would be higher with online casino than the land-based offering. However, Ozararat vehemently discounts this misconception: “I don’t see how because with the land-based [offering] you don’t have the capacity to make automatic alerts about a player’s habit. It’s much easier to fight against addiction and to have responsible gaming online than offline,” he states.

In 2010, lawmakers split online casino out between poker, a booming product at the time that was legalised, and slot machines and table games, which were left unregulated. Kindred Group’s Julian agrees that the opposition by land-based monopolies back then was a key factor in this decision.

However, with the size of the black market being too big to ignore and having become a growing concern for policymakers and health specialists, Julian believes now is the time for change. “Regulation is the only way forward, and we believe that a public debate is urgently needed, in association with experts, researchers and both online and land-based operators,” he states.

Under the Online Gambling Law in France, only sports betting, horseracing and poker are permitted to be offered by online operators, alongside lottery which operates under the monopoly run by FDJ. The French regulator, L’Autorité Nationale des Jeux (ANJ), which took over from the previous authority ARJEL in June 2020, details on its site that there are 17 approved operators for online sports betting plus six each for both horseracing and poker. Casino games are currently only available in the 202 gaming venues spread throughout the country and at eight gaming clubs in Paris.

According to H2 Gambling Capital data in 2021, France is the fourth largest gambling market by revenue at €11bn but its share of online gambling is one of the lowest in the EU, with 29% of the country’s gambling taking place digitally. While France clearly has a very large and well-established land-based gambling presence, Haijer believes there is still room for online growth. Active player accounts hit an all-time high in 2021 at 5.4 million for online gambling, as per ANJ data.

Taking these figures into account, how much is the French market being held back when its neighbours – such as Spain, Belgium and Italy – all have regulated online casino? Kindred Group tells EGR Intel that the unlicensed market for online casino is estimated to be worth over €1bn in gross revenue. The extent of the black-market activity is backed up by data from H2 Gambling Capital in 2021 which estimated that at least 13% of France’s gambling activity was taking place via offshore online casinos.

France and Cyprus are the last two EU markets to have maintained a ban on online casino. With online casino ranking among the top two products in licensed markets, Julian of Kindred Group believes “a well-functioning licensing system could rapidly help to drain this illegal market”.

With growth evident across most verticals, the case for regulating online casino becomes an even stronger one. For Ozararat of VBET France, the more products you can offer as an operator the better, with slots and table games being a gamechanger. “With casino, it is one of the only products in the market that can allow you to be profitable, even if you’re not a big operator. So, for the smaller and mid-class operators, casino can change the game. For the big operators, it would be a huge step because casino is very profitable,” he adds.

Successful operators in the French market are those that are multi-vertical, says Ozararat, since firms with just a single product offering face higher cost of acquisition and lower profitability. “So, if you look at Betclic, Winamax and Unibet, they have all the products available. The customer for them costs less and the retention is higher because there is cross-selling in the middle. For poker, you need a lot of liquidity, which is very difficult to do after 12 years of regulation of the market. If you look at horseracing, it’s the same because it’s parimutuel.”

He goes on to make the point that the only product (other than sports betting) that doesn’t need liquidity and can bring in money is casino.

A taxing situation

As well as there being no protection against problem gambling and fraud for those playing with unlicensed operators, there’s also a significant amount of tax not being paid.

France has one of the highest tax rates on sports betting in Europe at 55.2% of GGR, while at the lower end of the scale there is Belgium at 11% and the UK and Latvia at 15%. Naturally this fuels concern among the industry of taxation going the same way for online casino.

Ozararat stresses the need for a further study to be carried out: “I cannot say because I don’t know what the profitability of this product would be. We need to compare that to the land-based rate and to the profitability that can be possible. As an operator, I will always fight for the interest of the company,” he remarks.

David Ozararat, VBET France

Julian says there are lessons to be learned from the 2010 regulation of online sportsbooks and poker since more than half of operators had to shut down due to the prohibitively high level of taxation. He adds: “A balance needs to be found because, for a licensing system to work, operators need to be profitable and attractive.”

Another challenge with the prospect of a high tax rate is its ultimate impact on the country’s channelisation rate. Haijer of EGBA explains: “If it’s too high, like the country’s current sports betting tax is, it would make it too attractive for casino players to continue playing on the black market. That would negatively impact the channelling rate.” A report by Copenhagen Economics in 2016 stated that the sweet spot to achieve both high channelisation as well as high tax revenue is a rate of 15%-20%.

Tackling addiction

Referring to the concerns around problem gambling, Ozararat is adamant the safer gambling tools are already present with online sportsbook but would need an added layer of protection on top for online casino. “I do think that whenever you’re online-only, it’s very easy to monitor the behaviours. It’s easy to set up alerts on deposits, withdrawals, increasing of stakes, etc. It’s also easy to monitor how much time a player spends on casino and at which hours. Are they playing all night?

“All of these can be automated and monitored. You can also put some rules and limits, such as check for people who are playing for more than an hour per day or those spending €1,000 per month. All of this is done already on sportsbook. It’s true that sportsbook and casino cannot be compared in terms of addiction risk. So, you need another process, but this has to be automated and it will be very easy to measure the outcomes. It’s much more difficult to do it offline than online,” he explains.

Julian of Kindred Group agrees RG must be at the centre of any future online casino regulation. “Existing safeguards, such as self-imposed deposit limits or a self-exclusion system, urgently need to be adapted to protect the 1.4 million people actively playing on unlicensed websites. We believe there are many ways to protect players so they can stay in control and enjoy their gambling. We have some very good examples of player protection across Europe and we should be inspired by them,” he says.

Going forward, operators are holding out for the day when online casino is given the regulatory go ahead. Kindred Group’s head of corporate affairs for France is hopeful for the development of a robust legal framework that is in sync with the evolving gambling market in the country “because today the disconnect is just growing”. As well as the topic of online casino, the Stockholm-listed operator would like to see gambling elements in gaming addressed as a matter of urgency while similarly NFT-based gambling (such as Sorare) is challenging the existing legal framework.

Julian concludes: “We want French gambling legislation to be modernised in order to take account of these developments and ensure that everyone is protected and able to play safely. It is therefore urgent to question the way in which online games are organised, supervised and taxed in France, by putting the player’s interest at the heart of policymaking.”