On November 21, the French Senate passed major tax rises on a variety of consumer products, including gaming.
The shift is part of the government’s plan to reduce public deficits by prioritizing industries with strong profit margins.
The adjustments were included in the final version of the country’s Social Security budget, taking some industry insiders by surprise. It was originally believed that the gambling business would be exempt from additional taxes.
Once enacted, lotteries, casinos, and sports betting companies would face the brunt of the changes. The increases, which vary by type of gambling activity, are expected to be approximately 10% greater than current levels. Currently, operators pay a tax of approximately 55% on their gross gaming earnings.
Sports betting will see the smallest increase. Online and retail companies would pay 1% extra, up from the 4.4% increase proposed in a previous version of the budget.
This decision comes amid political opposition, with the National Assembly rejecting the initial proposal just last month. Even the French gaming club Française des Jeux (FDJ) did not expect the measure to progress further.
The government believes that the gaming tax increases will raise an additional €50 million each year. This money is meant to assist finance the country’s mounting public deficits by leveraging gaming operators’ profits to contribute more to the national budget.
However, not all forms of gaming were impacted. Horse racing betting was exempt from the tax increase due to strong resistance from the horse racing industry, which contended that increased financial obligations would hurt the sector and its affiliated enterprises.
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Mixed reactions in the gaming sector.
The ruling has elicited diverse emotions. Advocates for tax increases contend that gambling firms have made significant profits and are well-positioned to bear the additional tax burden.
Senator Thomas Dossus was a strong backer of the raise. He described internet gaming businesses as “parasites that contribute to making this world toxic.”
France’s gambling authorities reported €13.4 billion in casino revenue for 2023. Now, advocates of the tax rise see the legislation as an opportunity to transfer income while ensuring the industry’s long-term growth.
However, critics worry that the tax rises may have unforeseen repercussions, such as lower investment in the sector and potential increases in expenses passed on to consumers. Smaller operators, in particular, may struggle to absorb the higher costs.
This could result in unforeseen market consolidation or lower competition. At the same time, it might be the impetus for an increase in the use of offshore gaming platforms.
Jean-François Vilotte, former President of France’s gambling regulator AFJEL and current CEO of the French Football Federation (FFF), raised his own reservations.
He told French media that the proposed tax rises could jeopardize the financial health of various sports organizations, potentially jeopardizing sports purity.
Gambling not alone.
In addition to gaming, the Senate authorized increased taxes on tobacco and sugary beverages. Tobacco, a recurring target for tax rises in public health programs, will now face even higher levies, which the government hopes to generate an additional €200 million in tax revenue each year.
This proposal, which raises the price of a pack of cigarettes to €12.70, is intended to not only enhance income but also discourage smoking. This is consistent with France’s longstanding attempts to curb tobacco consumption.
Similarly, taxes on sweetened beverages will rise, as the government continues its efforts to combat emerging health concerns such as obesity and diabetes. Higher levies on sugary drinks are intended to encourage healthy consumption habits while also raising funds for public health programs.
While the Senate approved tax increases on gambling, tobacco, and sweetened beverages, there was one noticeable exception. A planned increase in alcohol taxation was denied.
The recently adopted tax measures are part of a larger strategy to fund France’s social security system and decrease state deficits. The administration intends to fix budget shortages and raise at least extra €500 million each year by focusing on revenue-generating products and sectors.
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