French Prime Minister Michel Barnier has announced plans to address France’s national debt and increase social security contributions through higher taxes, with the gambling industry expected to bear much of the burden. His proposal would see the already heavily taxed land-based and online gambling sectors facing even steeper levies.
The proposed tax hike would increase the gambling industry’s contribution to the national budget from €1.2 billion to €1.6 billion ($1.3 billion to $1.7 billion). While land-based casinos are set to see an increase, the online sector is expected to be hardest hit.
Online gambling platforms currently pay approximately 55% of their gross gaming revenue (GGR) in taxes. These taxes are imposed before covering operational expenses, making it difficult for operators to maintain profitability.
France already has one of the highest tax rates on gambling in the world, and these proposed increases have raised concerns that legal gambling operations in the country could become unsustainable. The fear is that such a tax burden may lead to a surge in unregulated gambling, as licensed operators may be forced to relinquish their licenses due to unprofitability.
Local gambling trade body Casino de France expressed concerns about the impact on employment, as the country’s 200 brick-and-mortar casinos employ more than 45,000 people. The proposed additional tax burden could result in the loss of up to 1,500 jobs initially, with the potential for more as the full effects of the tax increase become clear. Online gambling platforms, already facing strained margins, are also likely to face job losses, though estimates are yet to be determined.
Barnier’s proposal has drawn comparisons to similar actions in other countries where aggressive taxation led to the closure of licensed gambling sites and a rise in illegal operations. Licensed operators in France currently pay around 57% of their GGR in taxes and fees, and the new measures could push this figure beyond 60%.
France’s gambling industry has seen growth this year, with GGR rising by 3.8% to €5.5 billion in the first half of 2024, compared to the same period last year. The lottery sector, led by FDJ (Française des Jeux), posted a 5.5% increase in GGR to €3.5 billion ($3.8 billion), and online sports betting saw a 10.5% rise to €1.3 billion ($1.42 billion). However, this positive performance has been overshadowed by the looming threat of higher taxes.
Online sportsbooks are expected to bear the brunt of the new tax plan, potentially facing an additional €150 million ($163.4 million) in taxes. The state-run lottery FDJ may have to contribute another €138 million ($150 million), while the horse racing operator PMU could be hit with an extra tax bill ranging between €60 million ($65 million) and €100 million ($109 million), according to industry sources.
A representative from AFJEL, a trade association for online operators in France, expressed concern over the proposed tax increase: “The tax rise that is being envisaged is monumental” and would have “devastating” effects.
The representative warned that many legal operators could be forced to close, which would impact sports and equestrian events that rely on gambling revenues and lead to increased activity in the illegal market.
Original article: https://www.yogonet.com/international/noticias/2024/10/14/81908-frances-gambling-industry-faces-major-tax-hike-as-pm-targets-sector-to-reduce-national-debt
