French Release More Detail On Market Opening

FRENCH RELEASE MORE DETAIL ON MARKET OPENING
Licences for French operations could be issued around mid-2009

Following his meeting on the opening up of the French gambling market last week with European Commission head Charlie McCreevy (see previous InfoPowa report), Budget Minister Eric Woerth has released more detail on the French draft proposals.

France is the subject of a final warning from the EC that could find it before a European Court of Justice judge unless there is a change of direction in its monopolistic gambling policies.

“Being realistic, we’re beginning a controlled opening up of online betting, which we have presented to the European Commission,” Woerth told the Reuters news agency, adding that France will begin issuing licences for online betting operators from the second half of 2009.

The minister said that there was no alternative but to open the French gambling market: “Proceedings against France for our monopoly as regards online betting have been open since June 2007. In these circumstances, either we dig in our heels or we change our position,” he said.

The minister said he would be following the draft proposals with more detailed arrangements for McCreevy’s opinion in September prior to submitting these to parliament, but until then the Commissioner would not make his final decision on halting or suspending legal proceedings.

The French government wished to keep its share of revenues from gambling, Woerth said, estimating these at around Euros 5.3 billion ($8.27 billion). He told reporters that a law would be presented in the French parliament after the summer break and a regulatory authority established by the beginning of next year.

The minister said the level of taxation for online gaming firms operating in France had not yet been set pending consultation with interested parties in order to “…set up something that works, especially with regard to the issue of financial returns towards sport”. The principle applied would possibly be a levy across the sports betting industry.

The controversial issue of sponsorship of sports teams by operators – several major French prosecutions have centred on this – will also be addressed with the relevant parties.

Woerth confirmed the predictions of industry observers when he revealed that the French were proposing to allow only parimutuel betting when it came to the horseracing sector; a system in which the total sum bet on a race is placed in a pool and the final prize is not set until all bets are placed.

“For other forms of sports betting, we will hold discussions with leagues and federations. There, we will not have parimutuel betting but fixed odds betting,” he said, referring to a system in which the prize is agreed before bets are placed.

“We also want to open up casino games like poker, roulette or black jack,” he said.

French licensing will include provision for the protection of minors and would include stringent requirements to guard against problem gambling, together with restrictions on advertising and controls against money laundering. Technology that enables the control of all electronic data and financial transactions and the levying of taxes will be implemented.

The licences will be awarded by industry sectors in the sports betting, casino or poker games category and will be valid for a five year period. Operators that are licensed in other European states will be able to apply for a licence in France.

The European Court of Justice has ruled that gaming firms registered in one EU state must be allowed to operate across the 27-nation bloc unless there is an overriding national public interest not to do so. The French politicians and authorities have hitherto resisted this EU requirement, confining gambling to its two monopolies, the PMU for horse racing and Francaise des Jeux for lotteries.

There will be little immediate change on the French scene as regards online gambling, it appears. Woerth said that operators would be expected to respect current legislation in force.

“To be clear, online games remain forbidden, along with any advertising related to them,” he explained. “The behaviour of operators during this time will be sure to be taken into account by the relevant authorities when the time comes to award the licences”, Woerth said, adding a warning that “unauthorised” sites would be prosecuted vigorously once the licensing regime had been established.