Last March 5th, French Minister of Finance Eric Woerth gave the broad outlines of the bill on opening the Internet gambling market to competition. It will concern horse racing, sports betting and for casino games, only poker has been retained since roulette games, blackjack and slots have been officially put aside, the reason being that these are considered too addictive.
The online gambling market should be legalized on 1 January 2010. Finally, the percentage of tax deduction will be around 7.5% on sports and horse racing bets and 2% on poker bets. As for the redistribution rate, it should be around 80 and 85%, said Woerth. This rate is applicable to sports and horse racing bets. For poker players, it should be higher since in land-based casinos, it is 96%.
Woerth reminded that for several years, France has been facing a massive illegal gambling offer on the Internet. “Every day, 25,000 illegal websites are offering games in all sectors, from sports betting to poker and slot machines. One quarter of these sites are in French and some have become major actors on the Internet. Bets on French websites have been exceeding two billion euros and 75% of the sports betting come from illegal websites.”
The minister added: “We want to open the online gambling market to competition because we think this is the best answer to the present situation”. The websites which will be respecting the legislation “will be entitled to advertise and thus develop their image and fame and pick up most of the market shares. The illegal websites, on the other hand, will be compelled to silence and confronted with all the technical and legal tools we will be creating to impede their activity”.
The minister of Finance detailed some repressive measures in order to illustrate this “determined fight against illegal sites”. These sites won’t be able to advertise (fines can go up to four times the amount of the advertising cost) and illegal gambling on the Internet will be liable to 3 years imprisonment and a 45 000 euro penalty, 7 years and 100 000 euros if a group is involved (a company, for example). Woerth also mentioned blocking the access to illegal sites and prohibiting any financial transaction towards these sites. He took the example of Italy, who managed to block 1 400 illegal sites. Such a policy could inspire the French government.
The bill has just been submitted to the Council of State, which has one month to deliberate. It should thus be examined by the council of ministers at the beginning of April prior to going before the Parliament before summer. The second semester should thus allow potential candidates to register themselves at the Independent Regulation Authority for Online Games (ARJEL) in order to obtain a free and renewable five-year licence. ARJEL will make sure the operators respect the specifications and withdraw the approval if need be.
The operators won’t be forced to be in the French territory but they won’t be allowed to be based in a tax haven. They’ll need to have an accounting separation for all activities carried out in the French territory, bank identification details for the players in France, they should not anonymize the payment methods and will need a permanent correspondent in France.
An advisory gambling committee (CCJ) will also be set up in order to ensure a responsible gambling policy for all land-based and online games instead of applying rules and regulations on a case-to-case basis. The CCJ will act as a sort of “unique moral authority” over the whole gambling sector, focusing on responsible gambling. The CCJ will be able to carry out studies on gambling addiction in France and will publicly give its opinion on the quality of the plans of action carried out by all operators – land-based and online – in favor of responsible gambling.
Finally, specifications will include various gambling moderators with a view to protect the players against gambling addiction: a ceiling set on bets; a ceiling set on the player’s account; a ceiling on the balance of the player’s account; automatic payment of winnings in the bank account as from a certain amount; indication of the time spent playing (clock); indication of the losses during the gambling session; possibility to auto-exclude a player and application of online gambling limits.
Woerth specified that the taxation retained by the government on bets considered two elements: “first, it is necessary to ensure a constant tax return and social income from gambling, which is currently at five billion francs”. Secondly, “we must offer an attractive framework in order to encourage illegal operators to choose reality”. Above all, he admitted, “the rates must be identical for each type of game, depending on whether they are sold on the Internet or through a physical network”.
Part of the social income will be reserved for financing the fight against gambling addiction, by topping up the budget of the National Institute for Prevention and Health Education (INPES). As for the tax collected on poker, 15% of the income will be allocated to the Centre des Monuments nationaux (Arc de Triomphe, Conciergerie, Cluny, etc). “In advance, I thank the poker players” said Christine Albanel, Minister of Culture.
Online and land-based betting for sports and horse racing will thus be taxed at 7.5%. This percentage will be broken down between the taxes in favor of the State (5.7%) and social security (1.8%, including dedicated to INPES). Sports bets will also be taxed 1% in favor of amateur and professional sports (CNDS), while the horse racing sector will collect 8% on horse racing bets. For poker, taxation will be 1.8% (including 15% allocated to the CMN) and 0.2% for social security.
Last point, regarding sports and horse racing, the events organizers will acknowledge “a property right” on these events which will be “certainly profitable”.