The French Senate has rubberstamped new taxation increment regulations that have thrown the nation’s gambling sector in disarray. Industry insiders are wary that the recently approved levies may spell doom for the future of the gambling scene in the country.
After much anticipation over France’s public deficits, French Senators have approved a set of tax hikes targeted at various high-income industries, including the gambling sector. The move has received a lot of backlash from stakeholders, especially given the government’s earlier hesitation in tabling the proposal to increase taxes.
It was initially believed that should such a proposal go through; the gambling industry would be spared since France already imposes the highest GGR tax compared to other European jurisdictions. However, in a last-minute turn, the axe fell, with the updated measures extending higher levies to gambling operators who now pay upwards of 55% tax on gross revenues. The policy shift comes as a surprise as the National Assembly had rejected the initial proposal tabled in October.
France’s Prime Minister, Michel Barnier, has been at the center of controversy over his ambitious budgetary overhaul aimed at addressing the nation’s growing fiscal challenges. Some analysts have even gone as far as hinting that it could be suicidal for his political career. With the Social Security Budget for 2025 now officially approved, his plans are set to bring sweeping changes to several high-profit industries, including gambling. Essentially, the strategy is to ensure that businesses and high-revenue sectors contribute more to the nation’s finances.
The reforms also extend beyond gambling, targeting tobacco and sweetened beverages with higher duties to support public health initiatives and increase state revenue. For one, a tax hike on tobacco products and sugary drinks is in line with France’s health ministry strategy to encourage healthy habits. As such, the price of a pack of cigarettes is set to be about €13 by 2027. Alcohol was surprisingly left out in substantial-income products where a tax raise may serve a twofold function.
The budget outlines a broad tax increase across the gambling sector as part of a wider strategy to raise €500 million annually from operators. Operators will now contend with an average 10% hike in levies. Lotteries, casinos, and sports betting platforms are all affected, albeit with varying percentages in their contributions
But then, while most major gambling verticals grapple with the new levies, horse racing betting managed to secure an exemption. This is all thanks to intense lobbying from industry advocates who pointed out that tax raises would put tremendous strain on the sector.
Gambling is one industry that experiences support and opposition in almost equal measure, which is why it comes as no surprise that the tax hikes in the sector have received both praise and antagonism. Supporters have come out to laud the approval, citing the industry’s colossal revenue streams as enough reasons to believe the sector will survive the exceptional tax raises. Senator Thomas Dossus echoed these sentiments, adding that the hike was well deserved for what he termed as
“…parasites that contribute to making this world toxic.”
Then again, critics warn that these measures could have substantial implications for investments, which, if withheld by market stakeholders, may lead to operating costs trickling down to the consumer. Other consequences may apply to small operators, who may be unable to absorb additional expenses and reduce competitiveness. Some industry experts have also pointed out the risk of pushing operators and players to unregulated markets, an expected result in overregulated markets.
Amid accusations of hypocrisy, French primary lottery operator Francais de Jeux (FDJ) has also been quite vocal in its vigorous opposition to the fiscal changes, especially following a dip in its shares during speculations of the tax hikes. FDJ stands to lose considerable income due to the tax raise as it has just recently acquired Kindred in a €2.45bn deal that ended just a few weeks before the Senate approved the new measures.
FDJ has also been pushing back on the possibility of legalizing iCasinos, as this may significantly impact the operator’s ongoing monopoly in some areas. At the same time, the government has announced plans to carry out focus group discussions regarding iCasino regulation even as FDJ heavily criticizes online casino gambling. FDJ argues that the activity:
“…would not meet the arguments put forward by its advocates, in terms of combating illegal (and) excessive gambling, contributing to public revenue and balancing the gambling sector in France”.
The sports sector has also revealed its concerns about the effects of the hikes. Speaking at this week’s annual conference of France’s iGaming trade association, AFJEL, Betclic CEO, and AFJEL President Nicolas Béraud voiced strong concerns over the recently approved tax hikes. He argued that the increased levies would make profitability even harder for gambling operators, posing significant risks to sports federations, leagues, and grassroots programs that depend on their financial support.
Béraud criticized the government for either underestimating or disregarding these warnings, highlighting the broader implications of the changes. Jean-François Vilotte, former head of France’s gambling regulatory body and now the French Football Federation (FFF) CEO, echoed these sentiments. He noted that the decision could negatively impact the industry’s financial stability and ethical standards, which heavily rely on sponsorships and partnerships with gambling operators.
Leaders from the French Olympic Committee also called on the government to reconsider, emphasizing the need for a balanced approach to taxation that preserves the integrity and sustainability of sports funding. As the Social Security Budget rolls out, supporters and critics remain agile. They are all eagerly waiting to see how the industry adapts and whether the tax increases, some of which the government claims are temporary, achieve their desired economic goals
The French government remains steadfast, framing the tax hikes as a necessary step toward fiscal stability and equitable contributions from the country’s most lucrative sectors. Nonetheless, the gambling industry remains wary, viewing the measures as a potential disruptor to a sector already heavily taxed and warning of long-term effects on the sustainability of gambling markets in the country. The real impact of these changes remains uncertain, leaving the industry at a crossroads as it navigates higher levies and their impact on the market.
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