Impact of Illegitimate Players on France's Gambling Sector Post Euro 2024: Exploring the Struggles
Laid-Back Lowdown on France's Gambling Scene:
France's online gaming scene didn't quite reach the €1 billion mark during a major sporting event, falling short by a whopping 25% compared to the 2022 World Cup. Reportedly, €900 million was wagered on France's bid to reach the final.
The culprit? players opting for unlicensed operators. According to the French Online Gaming Association (AFJEL), 4 million players chose this route compared to the 3.6 million utilizing authorized services in 2023. Unsurprisingly, the gambling market stagnated in 2022 and 2023, with some companies even experiencing a decline.
AFJEL president Nicolas Boro pointed out that blocking illegal sites failed to curb the burgeoning black market. He stated, "The illegal market is expanding rapidly, swallowing the online sports betting sector and enticing players from legitimate offerings."
Unregulated companies usually offer enticing odds, with not all players aware of the associated risks. However, controversies persist. The National Gaming Authority (NGA) boasted a record GGR of €13.4 billion in 2023. Yet, disagreements are commonplace. For instance, in Germany, the regulator asserts that illegals account for only 4% of GGR, while critics claim that nearly half of users prefer offshore companies.
Behind the Scenes:The challenges France's gambling market faces largely stem from excessive regulations and burdensome taxes driving players towards unregulated platforms.
- Taxes Squeezing Margins: Increasing tax rates, such as the rise from 30.5% to 34.2% in the Netherlands' gross gaming revenue, reduce operator margins. This pressure could force licensed operators to cut payout rates or eliminate promotions, making unlicensed platforms, which face fewer fiscal constraints, more appealing.
- Regulatory Restrictions: Strict deposit limits and compliance requirements challenge player engagement on licensed platforms, unlike unlicensed operators, which usually sidestep such regulations, offering higher betting limits and fewer identity checks.
- Market Fragmentation and Player Preferences: Licensed operators face operational hurdles, with the Netherlands experiencing a 41% revenue drop despite rising active players due to high taxes and unfavorable sports results. Players seeking better odds or anonymity are increasinglymigrating to unregulated markets where oversight is lacking.
- Regulatory Lag: While licensed operators adapt to evolving rules, unlicensed platforms exploit regulatory gaps, especially in online betting. The lack of harmonized EU-wide enforcement exacerbates efforts to crack down on these operators.
In summary, consumers' preferences for unregulated gambling platforms persist, highlighting the tension between consumer protection policies and market competitiveness.
- France's online gambling market, including sports betting, continued to struggle in 2022 and 2023, with players increasingly opting for unlicensed operators due to burdensome taxes and regulatory restrictions.
- The excessive tax rates and deposit limits imposed on licensed operators, in contrast to the lax regulations of unlicensed platforms, have made them less competitive and appealing to consumers.
- The Netherlands, for example, experienced a significant drop in revenue despite an increase in active players, underscoring the challenges faced by licensed operators trying to thrive in a highly-regulated environment.
- Frustratingly, the lack of harmonized EU-wide enforcement allows unlicensed operators to exploit regulatory gaps, particularly in the online betting sector, making it challenging for national authorities to effectively address this issue.
- As a consequence, the tension between consumer protection policies and market competitiveness continues to hamper the growth of France's regulated gambling sector, with offshore, unregulated platforms benefiting from this regulatory lag.
