A sharp tax hike could hamstring France's regulated gambling industry, risking thousands of jobs and driving players to unlicensed casinos. With taxes skyrocketing, can the sector survive the Prime Minister's latest debt-reduction plan?
Regulated gambling in France is in panic mode after the new Prime Minister Michel Barnier announced his plans to reduce the country’s national debt and increase social security contributions through increased taxation.
Death Knell for Regulated Gambling
In a disturbing announcement, Barrier stated his intent to force the land-based and online gambling industry to shoulder his plans to reduce debts and bolster the country’s social security holdings.
The increased tax rates would see the gambling industry’s contribution to national income jump from €1.2 billion to an astonishing €1.6 billion! As expected, while land-based venues will see an increase in their taxes, the government has made it clear that the online sector would be hardest hit.
The report notes that online gambling sites already pay approximately 55% of their gross gaming revenue (GGR) in taxes. Their social security contribution is calculated at 10.6% of GGR. Keep in mind that these taxes are due before the operators have paid salaries, licensing fees, banking and processing costs, and other sundry expenses that go hand in hand with running a business.
The French gambling market is already considered one of the highest-taxed markets in the world. The additional taxes could make the gambling jurisdiction unprofitable, leading to a rush of lapsed licenses and increased interest in unlicensed gambling.
Thousands of French Jobs Threatened
In addition to the incredible financial contribution that online casinos and land-based gambling venues already make, they also employ thousands of locals. If the gambling venues can no longer afford to operate, this will cause an instant spike in joblessness.
According to Casino de France, a local gambling trade body, the country’s 200 brick-and-mortar casinos currently employ more than 45,000 people nationwide. Forcing these casinos to pay an additional 10% of their GGR towards social security coffers would see an instant job cut impacting 1500 staff members. Once the long-term impact of the additional tax is better understood, this number could increase exponentially.
The current tax requirements severely strain the viability of online poker and betting platforms; there is no estimate of the job losses this would cause in these verticals.
Potential Black Market Casino Hotspot
Much like we have seen in the UK and other countries where gambling is not seen as a legitimate industry but rather as a cash cow, the government runs the risk of losing revenue and putting players at risk with their ever more aggressive taxes and restrictive rules.
Sites will likely close by increasing the tax burden of licensed casinos, which already pay around 57% of GGR in fees and taxes. This will cause job losses, reduce revenue potential, and could see players joining unlicensed online casinos as they seek out welcome bonuses, promotions, and access to the games they want to play.
Not only does their gaming spend now leave French soil but players lose the support and protection that the local regulator is intended to provide.
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