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I.M. Round Table | French Regulatory Proposal3 April 2009
Welcome to IGamingNews' round table discussion on the new French regulatory proposal. Joining us today is Anouk Hattab-Abrahams, a lawyer with the Brussels branch of Ulys, and Lorien Pilling, a research analyst with Global Betting and Gaming Consultants. Greetings all. Let’s jump right in. Thus far, the biggest point of contention on the regulatory proposal seems to be the tax rate. Some are saying it is too high. What’s your opinion on this? Mr. Pilling:
Ms. Hattab-Abrahams:
Ms. Kozlowski: What do you think the effects of a high tax rate will be? Ms. Hattab-Abrahams: It will most likely drive operators away from the French market. It has already driven away one client of ours. For example, the taxation rate imposed in the U.K. is 15 percent on gross gaming revenue. It is equivalent to about a 1 percent tax on total wagers. France wants to impose a 2 percent tax on total wagers for poker. Economic experts have foreseen that with such a high taxation rate, players will keep looking for unauthorized or illegal offers with a higher return. Mr. Pilling: The combined effect of the high tax on stakes and the limits on payout will be unattractive to customers and operators alike. One of the appealing aspects of gambling on the Internet is the value for money and high payouts it can offer. Ms. Kozlowski: Do you think some operators will continue business in France without a license? What will they risk? Ms. Hattab-Abrahams: The draft law uses several weapons to fight these operators: fines and prison, blocking of funds and shutting down Web sites. However the draft law has not yet been reviewed by the European Commission, who may have a say on some of these tools. It is also not clear whether this policy will be efficient. That is what we keep advocating with the other EU argument -- that such a high taxation rate may be considered as an unjustified barrier to free provision of services within the EU. Mr. Pilling: I think operators without a French license will continue to target French customers precisely because there will be demand from French gamblers wanting better value than can be offered by French-licensed companies. As Anouk says, the law will attempt to block them and fine them. But it will revert back to arguments about trading across borders in the EU by companies holding valid licenses in other jurisdictions. Ms. Kozlowski: Do you think the taxation rate will need to be reevaluated or changed at a later date? Ms. Hattab-Abrahams: We hope so, but it is not clear that the French government will take the hint that easily. Mr. Pilling: I don't think the French authorities will want to change it. This whole process is about the French government keeping hold of its tax revenues rather than seeing them disappear offshore. Ms. Hattab-Abrahams: All in all, it will probably remain a de facto FDJ (La Française des Jeux) monopoly. Ms. Kozlowski: Do you expect the legislation to pass European compliance testing unscathed? Ms. Hattab-Abrahams: We don't believe so, since for the blocking of funds, the European Commission had already expressed its concern when France notified a decree containing the same measures. Plus, there are some very imprecise parts in the law on whether non-banking operators/micro-payment operators will be authorized to offer their services. It seems at first glance that the French government has wanted to create another monopoly on this market for banks. Mr. Pilling: I imagine there will be challenges to it from trade associations and maybe other jurisdictions, and looking at what happened in Italy, the EC could ask for changes. It’s likely to be a time-consuming process. Ms. Kozlowski: Looking at Italy as a module for this, what could some of those changes be? Ms. Hattab-Abrahams: The Italians created an interesting regime for skill games. That would be a good idea. Mr. Pilling: It's trying to ensure that opening up the market really takes place -- rather than seeming to open up -- when in reality it's still about protecting the monopoly position. Ms. Kozlowski: Where will advertising regulations fall in all of this? Are those included, or will they be? Ms. Hattab-Abrahams: So far advertising is not a topic of complaint for licensed operators since it will be possible to do it through sponsorship, TV commercials and so on. Mr. Pilling: Maybe Anouk can confirm this, but I believe licensed operators will be subject to existing general advertising regulation. Non-licensed operators will not be permitted to advertise in France. Ms. Hattab-Abrahams: That's correct for non-licensed operators. But for licensed operators, they will be entitled to do the same advertising rights as the FDJ has. Ms. Kozlowski: How actively have French sports rights-holders lobbied Budget Minister Woerth's legislative proposal? From what you've seen of the proposal, have the rights-holders done well out of it? Ms. Hattab-Abrahams: Believe me they have! They lobbied really hard through the Comité National pour les Sports Olympiques and obtained that, for every betting organized on an event they organize, they will have rights paid by operators. Plus, there will be sponsorship and a global fund for sports that will be fed by operators. Ms. Kozlowski:
Mr. Pilling:
Ms. Hattab-Abrahams:
Ms. Kozlowski:
Ms. Hattab-Abrahams:
Mr. Pilling:
Ms. Kozlowski:
Ms. Hattab-Abrahams:
Ms. Kozlowski:
Ms. Hattab-Abrahams:
But when things started to turn sour, Partouche tried to cancel the deal. However, the business partner who was in Belize or Switzerland did some clever trick. He directed the for-fun Web site onto a paying one. In brief, the court left Partouche alone because he was not really involved. Ms. Kozlowski:
Ms. Hattab-Abrahams:
Mr. Pilling:
Ms. Hattab-Abrahams:
Mr. Pilling:
Ms. Kozlowski:
Ms. Hattab-Abrahams:
Mr. Pilling:
Ms. Kozlowski:
Ms. Hattab-Abrahams:
Mr. Pilling:
Ms. Hattab-Abrahams:
Mr. Pilling:
Ms. Kozlowski:
Ms. Hattab-Abrahams:
Mr. Pilling:
Ms. Kozlowski:
Ms. Hattab-Abrahams:
Mr. Pilling:
Ms. Hattab-Abrahams:
Ms. Kozlowski:
Mr. Pilling:
Ms. Hattab-Abrahams:
For other pure gambling companies they will need to have a very competitive offer, but I think FDJ will remain No. 1. Mr. Pilling:
Ms. Hattab-Abrahams:
Mr. Pilling:
I.M. Round Table | French Regulatory Proposal
is republished from iGamingNews.com.
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