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Rhadamès Killy Partner Jean-François Vilotte Partner De Gaulle Fleurance & Associés, France Two reports that could alter the shape of the French sector With presidential and legislative elections both upcoming within the next few months, and with the recent publication of two reports on the gambling sector by the French Court of Auditors and members of the National Assembly respectively, it seems possible that changes to the French gambling sector could be on the horizon. Rhadamès Killy and Jean-François Vilotte of De Gaulle Fleurance & Associés analyse both reports and the potential impact of the elections on the French gambling sphere.

The first round of the French presidential order. Under French law, gambling is corporation with 72% of the shares election will take place on 23 April prohibited3, subject to the following held by the French State. The French 2017 with a subsequent run-of election specific derogatory regimes: Ministry of Budget is the regulatory between the top two candidates slated body overseeing the FDJ’s activities. for 7 May 2017. The presidential election covers online sports will then be followed by a legislative betting, horseracing betting, and . Ofine horseracing betting (through election to elect members of the It has been open and regulated since betting shops and sales outlets) are National Assembly on 11 and 18 June 2010 following the passage of the Act exclusively operated by the PMU, 2017. These elections appear to be of 12 May 2010 on the liberalisation under a state monopoly. The PMU is an the most unpredictable ever. Against and regulation of the online gambling economic interest grouping controlled this backdrop, this article will purport sector4. The Act of 12 May 2010 created by numerous racing bodies, most to assess the impact they could have ARJEL, the regulator for online gambling, importantly France Galop and Le Trot. on the sphere of gambling in France. and set out the main policy objectives The French Ministry of Agriculture, that needed to be pursued generally Interior Ministry, and Budget Ministry Two ofcial reports on gambling (not only in respect of online gambling) regulate the PMU’s ofine activities. Land regulation have recently been released with respect to the gambling sector: based and private poker rooms6 and will likely influence the course of can legally operate subject to municipal action of any government set up in the ‘The State policy in the matter of authorisations. There are currently wake of the presidential and legislative gambling is aimed at limiting and approximately 200 land based casinos elections. The first one is an October deregulating the ofer and the operating in France. The private poker 2016 report from Cour des comptes, the consumption of games, and controlling rooms have all been closed down and French Court of Auditors1 (hereinafter, the the exploitation thereof in order to: will be replaced by new private gambling ‘CDC Report’). The second report was clubs (better regulated and controlled) published by the National Assembly on • prevent excessive or compulsive starting in 2018. The Interior Ministry 8 February 20172 (hereinafter, the ‘Myard gambling and protect minors; regulates activities and defines Report’), which is an assessment report • ensure integrity, reliability and the scope of online poker games (in on the gambling regulation, and was transparency of gambling operations; respect of operators licensed by ARJEL). prepared by two MPs, Mr Régis Juanico, • prevent fraud or crime, as a socialist, and Mr Jacques Myard, a well as money laundering and Moreover, the Health Ministry - in terms Republican MP Member of LR. The Myard financing of terrorism; of fighting problem gambling - as well as Report, in a bipartisan efort, purported • ensure the balanced and equitable the DGCCRF (the consumer protection to take the CDC Report a step further development of various types of unit) and TRACFIN (the anti-money and made 16 proposals for improving games, avoiding destabilising the laundering intelligence unit) have had the existing gambling framework. business of the branches concerned5.’ important remits in relation to gambling.

For a better understanding of the shops and games The main findings outlined in the CDC reports’ findings, a quick summary (ofine and online) are exclusively Report were that 1) the Act of 12 May of the French gambling regime and operated by the FDJ, under a state 2010 failed to create a general and regulatory objectives and bodies is in monopoly. The FDJ is a limited unified regulatory and legal framework

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The Myard Report confirmed the findings of the CDC Report and made 16 proposals in order to improve the gambling environment and framework, including creating a new inter-ministerial gambling committee and designating a sole and unique independent agency to regulate gambling. continued

for gambling; the framework is too more and more horseracing punters away show that there are real inconsistencies scattered, lacks coordination and lacks a from horserace betting. This worked to and problems relative to gambling unified purpose, 2) the policy objectives the disadvantage of horserace betting. from a regulatory perspective. This defined in the Act of 12 May 2010 were As a result, in order to compensate has led to failures in meeting major therefore only partly achieved, and 3) decreasing revenues, the PMU lowered public policy goals, and endangered against the backdrop of a fast growing pay-outs to winners, whereas pay-outs important economic sectors that exist global gambling market, rapidly- to sports punters remained high, which because of betting or gambling (the evolving technologies, and continued in turn kept sports betting even more horseracing sector, casinos). These EU pressure on state monopolies, a attractive. This was further compounded sectors are so important economically redefinition of the gambling sector and by the fact that 1) the PMU has had to that the Government that will be formed regulation are more than necessary. As stop pooling online and ofine bets (as this coming June will no doubt revisit a result, the CDC Report made a series from September 2015) following a ruling the legal and regulatory framework of proposals, including the creation from the French Competition Authority associated with gambling. Given the of a new inter-ministerial gambling in 2014, and 2) both state monopolies proposals made by the CDC Report and committee, extending ARJEL’s remit to have been subject to unequal regulatory Myard Report, any change in the law will cover all gambling, and undertaking a rules which in the end favoured the FDJ, likely be inspired by these reports. Even fiscal reform of the gambling sector. which is commercially more aggressive if public policy issues and the protection with respect to ofine activities (to wit, of the economic sectors associated The Myard Report confirmed the the live betting ofering in sports betting with gambling have ranked first in the findings of the CDC Report and made shops). In turn, the horseracing sector, assessment and proposals made in 16 proposals in order to improve the which is essentially financed by the PMU, the reports, there is no doubt that any gambling environment and framework, is now in danger, contrary to the policy change in the law will benefit all licensed including creating a new inter-ministerial objective set out in the Act of 12 May operators, not only the state monopolies. gambling committee and designating a 2010. The Myard Report also points to sole and unique independent agency the decreasing revenues of the casino to regulate gambling. In particular, sector and online poker operators. 1. La régulation des jeux d’argent et de hasard, Rapport de la cour des comptes. Enquête it made proposals with a view to demandée par le Comité d’évaluation et preventing excessive or compulsive In response, the following proposals de contrôle des politiques publiques de gambling and protecting minors (i.e. were evinced, inter alia: 1) with a view l’Assemblée nationale, Octobre 2016. test-casing live sports betting in FDJ to make the PMU more competitive, to 2. Rapport d’information enregistrée à la Présidence de l’Assemblée nationale le shops; making compulsory the showing revisit the issue of pooling online and 8 février 2017, par le Comité d’évaluation of ID in PMU and FDJ betting shops; ofine horseracing bets, which would de la régulation des jeux d’argent et de and extending the banned players’ imply that the Competition Authority hasard, sur l’évaluation de la régulation des list to FDJ and PMU betting shops). would have to examine the issue on its jeux d’argent et de hasard, présentée par MM. Régis Juanico and Jacques Myard. own initiative and publish an advisory 3. Home Security Code, Article L320-1 et seq. Moreover, the Myard Report pointed out opinion, and 2) change the taxation 4. Law 2010-476 of 12 May 2010 relative to the that money wagered on horseracing had basis from wagers to GGR (first for online opening of the online gambling industry substantially diminished as opposed to operators, then all gambling sectors). to competition and deregulation. an increase in wagers in respect of sports 5. Article 3, Act of 12 May 2010. betting. Sports betting has attracted The CDC Report and the Myard Report 6. Cercles de jeux.

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