New Zealand's view on French gambling market

An interesting outsider's perspective on the newly liberalised French market

The New Zealand Herald carried an interesting and well researched article on the French online gambling market this week, observing that the French government's move to permit strictly regulated online betting was a response to illegal websites siphoning off more and more of the country's gaming income, and pressure from the European Commission.

The article, at www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10667793, traces the development of the French gambling market from the 1500s to the present day, covering its beginnings as a lottery to the present day and the wide range of modern gaming options on offer.

The newly liberalised online gambling sector, opened to outside competition for the first time, has been good for advertising thus far, with Euro 14 million already spent on a comprehensive range of advertising and publicity initiatives in the first two months.

The Herald article claims that France has an estimated 30 million regular or occasional gamblers, and by the end of June, the first month of liberalisation, 1.2 million people had registered with online bookies and staked Euro 83 million in bets, most of them on the football World Cup.

The piece quotes a study by the French consultancy Precepta, which reported in 2009 that French betting was worth Euros 2.3 billion to Euros 3.1 billion, of which only Euros 700 million was legal; the company now estimates that the sector could be worth Euros 4 billion to Euros 6 billion by 2013.

Francis Merlin, a specialist in online gaming, told the New Zealand Herald that internet poker alone could see a turnover in France of Euros 300 million this year, rising to Euros 500 million in 2011.

The Authority to Regulate Online Gaming (ARJEL) has so far granted five-year licenses to 26 French and foreign operators, permitting them to offer betting on a range of 28 sports, French and foreign horseracing and online poker.

Online roulette, blackjack and bingo are barred and "spread betting" (betting on the outcome of a sports event without knowing the amount one is likely to lose) is outlawed.

The state's monopoly on physical outlets is unchallenged, and there is no competition for the 197 local land casinos.

To achieve licensing status, applicant internet operators must set up an office in France and make substantial contributions to funds for the development of sport, the preservation of national monuments and help for addicted gamblers.

In addition, licensed online operators must collect a government tax of 7.5 percent on sports and horse-racing bets, and 2 percent on online poker - the highest in Europe and the reason why several leading groups have thus far opted to stay out of the French market.

Tim Phillips of Betfair.com told the Herald that liberalisation was unlikely to stamp out unauthorised sites, whose costs were around 40 percent lower and offered better odds as well as gambling in games that remain outlawed in France.

"There will always be a black market and I think we have to be pragmatic about this. The successful regulation will be the one that catches as much of the black market as possible," said Phillips. "But our view of the French regime is that it doesn't catch half of the online gambling activity."

The newspaper also raises the question of whether France - or indeed any nation in the borderless world of the internet - can police online betting properly.

According to ARJEL president Jean-Francois Vilotte, several thousand online gambling websites were available to French internet players before the liberalisation. So far, about 20 sites have been closed down by their operators in response to warnings by the French regulator, which has now moved to force Internet Service Providers to block undesirable sites on pain of punitive fines as high as Euros 10 000 a day.

The Superior Court of Paris has given France's eight internet service providers until October 9 2010 to block access from France to offshore bookies, even those in "white listed" EU jurisdictions like Gibraltar.

Hammering the ISPs raises the issue of Internet censorship, however, and ISP filtering often leads to innocent sites being screened out and in any case is easily sidestepped. Filtering "is always difficult", the head of the French Telecoms Federation, Yves Le Mouel, told the Herald.

"You should start by approaching the owner of the site to get him to close it down, but you have to intervene with the site's host in particular," he said.

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