France debates illegal market as political instability stalls igaming

The French gambling landscape is experiencing notable growth, driven by a competitive environment fostered by FDJ’s strategic acquisition of Kindred. However, impending tax increases and the stagnation of online gaming legislation are significant barriers. What factors are hindering the long-awaited legalization of online casinos in France?

Historically, France’s gambling market has undergone a remarkable transformation, shifting from traditional land-based casinos, predominantly located along the coast, to a burgeoning online betting scene catalyzed by the French Gambling Act of 2010. This pivotal legislation has laid the foundation for significant developments in the sector.

As reported by the regulatory body l’Autorité Nationale des Jeux (ANJ), the French gambling sector witnessed a 3.8% year-on-year increase in overall turnover during the first half of 2024, reaching €5.5 billion ($5.25 billion/£4.13 billion). Online sports betting alone accounted for a remarkable 16% growth in gross gaming revenue (GGR), totaling €871 million.

Moreover, the online gambling market experienced an 11% boost, with total GGR escalating to €1.3 billion. Notably, online poker also saw a slight uptick, with gross sales rising by 2% to €257 million and a player base expansion of 10%, now totaling 1.2 million active participants.

In an exclusive interview with iGB, ANJ President Isabelle Falque-Pierrotin expressed her confidence in the market’s vitality. “The gambling sector is exhibiting a unique contra-cyclical trend. While other aspects of the economy may falter, our industry continues to thrive,” she stated.

Falque-Pierrotin pointed out that La Française des Jeux (FDJ), now rebranded as FDJ United, commands nearly half of the market’s GGR. Through its acquisitions of ZEturf in 2022 and Kindred in 2024, FDJ has successfully expanded its reach beyond its traditional lottery monopoly, intensifying competition within the online market.

“This competitive momentum significantly impacts the French market and elicits responses from other operators,” Falque-Pierrotin noted. Despite the increases in competition, a critical element remains absent as France stands alone among EU nations in not legalizing igaming.

Political Uncertainty Stalling Igaming Legislation

Attempts to advance igaming legislation stagnated last October due to political instability. The previous government’s initiatives, led by Michel Barnier, faced substantial resistance from the land-based casino industry, particularly from Casinos de France, which prompted the government to conduct consultations on the potential benefits of legalizing igaming.

The fall of Barnier’s government, triggered by a vote of no confidence, effectively halted all progressive legislation. Following this, President Emmanuel Macron appointed François Bayrou as prime minister, leaving the future of proposed regulations uncertain.

Annabelle Richard, a legal partner at Pinsent Masons, commented to iGB, “The prevailing political instability has dampened the sector’s outlook on igaming legalization.” She emphasized, “The uncertainty surrounding the government’s tenure greatly diminishes the likelihood of any draft legislation reaching its conclusion—a process that can be notoriously prolonged in France.”

Challenges Facing Igaming Legislation

While some stakeholders believe the legalization of igaming is within reach, hesitation remains concerning the timeline. Predictions range from this summer to early 2026, contingent on political developments.

The ANJ has articulated that any forthcoming igaming legislation should incorporate stringent regulations. “The regulator isn’t tasked with deciding whether igaming should be permitted. However, if the opportunity arises, it must be approached with strict conditions relating to marketing practices and operator requirements,” Falque-Pierrotin stated.

Richard noted that land-based casino operators have successfully lobbied against the online casino market’s expansion, citing potential threats to local businesses and employment. Alarmingly, they have warned that online legalization could precipitate the closure of one-third of French casinos, jeopardizing around 15,000 jobs in its first year.

“Their position is increasingly difficult to maintain, especially with several recent draft regulations suggesting that the illegal market’s magnitude, coupled with a need for increased tax revenues, may compel the French government to embrace igaming soon,” Richard added.

The Strain of France’s Illegal Gambling Market

Mirroring trends observed across Europe, France confronts an expanding illegal online gambling sector. A report by PwC published in November 2023 identified 510 websites offering illegal gambling services to French consumers, with 65% of these platforms providing online casino games.

According to the study, “French consumers of illegal online gambling largely access these sites via direct internet searches, reflecting a robust awareness of the illegal gambling landscape,” the PwC report stated. The estimated GGR for the illegal market hovers between €748 million and €1.5 billion, a size that has ignited debates among operators and regulators regarding necessary remedial actions.

Enhanced Regulatory Efforts Against the Black Market

In response, the ANJ has bolstered its enforcement capabilities against the illegal market, employing new tools that allow for rapid blocking of IP addresses. “Over the past two years, we have been remarkably effective; we’ve successfully blocked nearly as many websites as we previously could only through judicial proceedings,” remarked Falque-Pierrotin.

While illegal operators often manage to create mirrored websites under alternative addresses, Falque-Pierrotin believes that the enhanced regulatory actions signal a commitment to combat illicit operations. “We’ve fostered productive partnerships with technical intermediaries, search engines, and social networks, implementing hotlines for reporting illegal content,” she elaborated.

Though the ANJ estimates the illegal market constitutes roughly 10% of the overall French market, operators contend that these figures underrepresent the true scale, advocating for more stringent measures against illegal activities.

Last year, the French gaming trade body l’Association Française des Jeux En Ligne issued a warning, indicating that illegal gambling participation in France reached a critical point, with four million illegal players documented in 2023, outpacing the regulated sector, which boasts 3.6 million players.

The Illegal Igaming Market’s Impact on Land-Based Casinos

Industry leaders stress the urgent need for enhanced enforcement mechanisms. Laurent Lassiaz, CEO of JOA Casinos and VP of Casinos de France, voiced his concerns to iGB: “I wish to see a more aggressive governmental stance against illegal gaming, especially since it is a paramount issue across Europe.” Lassiaz pointed to the significant cannibalization of land-based operations occurring due to the illegal igaming market.

“Our data indicates a substantially large illegal market, and it’s evidently impacting our operations,” Lassiaz stated, emphasizing that many customers mistakenly believe that these websites are legal. “Many of our patrons are already engaging with these illegal sites, often unaware of their illegality,” he added.

Characteristics of Illegal Gambling Sites

Richard acknowledged that upon investigating illegal gambling sites on behalf of her clients, she observed that these platforms often require more user data than their licensed counterparts. Their Know Your Customer (KYC) protocols are notably less stringent.

“While depositing money is typically uncomplicated, withdrawal processes become unmanageable. Users encounter numerous verification hurdles, which oddly seem to fail repeatedly,” Richard explained. “Players are often tasked with scanning their identification cards and submit video footage, only to engage with operators whose identities and locations remain obscured,” she continued.

This lack of regulation exacerbates issues for players with gambling addictions, as even those who win struggle to withdraw their funds, compelling them to return to these sites indefinitely.

The Sorare Law: A Step Towards Modernization

Amid these challenges, France has taken a notable step towards modernizing its gaming landscape with the introduction of the ‘Digital Space Regulation Law’ in 2023, commonly referred to as the Sorare Law or JONUM framework. This legislation was designed to accommodate the innovative digital gaming platforms, exemplified by the fantasy sports cryptocurrency-based trading card operator, Sorare.

Sorare allows users to win NFT-based items, which can potentially be monetized. The platform operates by issuing virtual player cards as NFTs that players can acquire on the Ethereum blockchain to create fantasy teams. The value of these cards is subject to fluctuations based on real-world player performance, leading to intrinsic market dynamics.

The ANJ has expressed considerable interest in Sorare’s operations due to the implications of its model.

Innovative Approaches with “Free-to-Play” Casinos

In response to regulatory requirements, the ANJ mandated that Sorare enhance access to its free-play model, ensuring equitable winning opportunities for all participants, regardless of whether they opt to spend money. The operator’s revised model enables French players to participate in tournaments without needing to purchase NFTs or blockchain cards.

While Sorare’s success extends globally, its free-to-play format previously allowed for circumvention of gambling regulations in the UK. However, the UK’s Gambling Commission initiated legal action against Sorare for operating unlicensed gambling operations as of last year.

Richard underscores that this regulatory framework raises pivotal questions about the trajectory of online gambling and models capable of navigating around existing prohibitions on online casinos.

“Many operators are exploring opportunities to introduce slot-like features into their online games, utilizing appropriate skins to adhere to regulations,” Richard indicated. “Although cash prizes are prohibited, operators can offer tokens redeemable for cash through external channels. Moreover, there are existing platforms where players can exchange these digital tokens for monetary rewards,” she added.

Rising Tax Obligations Straining Operators

While contemplating the possibility of legalizing igaming, French operators are bracing themselves for increased tax liabilities across all online verticals in 2025, as stipulated in the Social Security Financing Act. These adjustments relate to heightened social security contributions, set to take effect on July 1, 2025.

French gambling tax rates vary by vertical and are calculated based on GGR, with operators required to pay an additional social security contribution that is also on the rise. Online sports betting’s contribution will escalate from 10.6% to 15%, while on-premises sports betting contributions will increase from 6.6% to 7.6%.

Additionally, Richard highlighted a newly instituted annual contribution on advertising expenditures, amounting to 15% of gambling advertising investments—covering everything from publication costs to purchased advertising space. “The new Article L137-27 of the Social Security Code was altered during the parliamentary process, making this financial obligation mandatory as of July 1, 2025,” she explained.

FDJ and Banijay Critique Increased Taxation

During its full-year earnings call on March 6, FDJ CFO Pascal Chaffard reported a substantial tax revenue increase resulting in €45 million owed for 2024. This escalating tax burden is projected to adversely affect the group’s revenue target of €3.8 billion, which anticipates a recurring EBITDA margin exceeding 24%. FDJ also foresees a tax payment leap to €100 million by 2027 due to the rising rates.

François Riahi, CEO of Banijay Group, which owns Betclic Everest Group, described the tax increases as “anti-competitive” and disclosed plans to contest the new rates with authorities. His comments came during the group’s March 6 earnings report, estimating a financial impact of €20 million from the elevated taxes in 2025.

Lassiaz emphasized to iGB that “the tax burden in the French market is substantial. A significant proportion goes to the national government, with additional contributions at municipal and regional levels. There’s a growing recognition among high-ranking officials that the casino industry is instrumental in financing local initiatives.”

These increased taxes raise concerns that operators may pass costs onto consumers, potentially driving players into the black market. The future of igaming legislation remains uncertain under the new French government, yet the looming budgetary needs may prompt stakeholders to urge for its revitalization this year.