TAXATION
The rate of taxation has also been a source of contention between operators and regulator. The tax rates are higher than the companies are used to paying in the offshore jurisdictions. The tax rates are as follows: Sports betting – 7.5% of the handle Pari-mutuel horseracing betting – 7.5% of the handle Poker – 2% on revenues (rake)
Additionally, e-gaming operators are subject to the following levies: Sports betting - 1% (rising to 1.8% in 2012) of handle for the funding of sports Horseracing – 8% of handle to fund racing
Operators will also be subject to corporate tax, with headline rate set at 33.3%. The betting operators, in particular, complained that the tax on total handle rather than on Gross Gaming Revenues (Yield) will prevent them from developing sustainable operations in France.
company “had spent more on the initial marketing campaign in France than we expected”.
But it is not just the operators who are suffering in the new European environment of individual domestic licensing and high-tax. Customers are getting a raw deal as well. French poker players are noticing their chips are disappearing more quickly because of the increased rake percentages caused by higher taxes under the new French regulatory regime.
Sports bettors in France are also getting worse value for money under the new operating conditions. GBGC has conducted some research comparing the odds being offered on .com sports books versus .fr sports books. Given the high tax on stakes and payout stipulations, it is not surprising to find that the French consumer is worse off betting with the French regulated sports books than with the equally well-regulated sports books located in low-tax jurisdictions offshore.
Based on GBGC’s sample of matches the .com sports book was operating to an average theoretical margin of 7.44% on 1x2 football betting. The .fr sports book was operating to an average theoretical margin of 12.46% on the same sample of football matches. This represents a 67%
increase in theoretical margin over the .com sports book. Of course, the result of this is that the winning customer suffers in the form of lower winnings on their bet.
Those companies that have given an indication of how early trading has been going have generally been very positive. ARJEL has released data that shows two million accounts have been opened since June. Sports betting stakes between June and early October amounted to €262m, horseracing stakes came to €230m, and online poker generated around €500m in stakes.
But whilst customer registrations may have been encouraging during the World Cup, the tax and necessary marketing expenditure are putting pressure on the operators. French media reports stated that LFDJ spent €2m on advertising in a single week in the early part of June and Bwin and PMU spent around €1.6m in the same period.
In October 2010 both Sportingbet and Ladbrokes announced that they were shelving their plans to enter France for the time being. Sportingbet has not entirely ruled out getting back into the French market at some stage but it is unlikely to be in 2011 as was anticipated. Ladbrokes, meanwhile, has cited the “prohibitive levels of tax” as the reason for its decision to cancel its B2B joint venture with Canal+.
There could be a lot of money spent before any licensees see a reward from their French operations.
ARJEL Approved Companies as at October 2010
888 Regulated Markets Ltd - Joaonline - Ad Astra - La Française Des Jeux - BES SAS (Bwin) - LB Poker - Betclic Entreprises Ltd - LIL Managers Ltd BETNET PMU - Beturf - Partouche Gaming France SAS - Canalwin SAS - PKR France SAS - Casino Du Golfe - Reel Malta Ltd (PokerStars) - Electraworks SAS (PartyGaming) - Rekop Ltd (FullTilt) Everest Gaming - Sajoo (Bwin, Amaury) France Pari - Societe Française de Jeux Sur Internet - FULLFUN - SPS Betting France GENY INFOS - Iliad Gaming - Tranchant Interactive Gaming - Intralot France - Zeturf France Ltd - Jeux 365
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