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The adoption of the French Bill regarding the opening of the gaming market is likely to be postponed

June 19, 2009 2009

The French bill regarding the opening of the gambling market has been now transmitted for scrutiny to the Parliament. The commission of finance is in charge of preparing the Deputies’ work. At this stage, it is likely that the parliamentarian debates and vote finally end by September 2009. The final implementation of the entire system (implementation regulation, distribution of licences etc) may be postponed accordingly (Mid 2010?). In the meanwhile, the European Commission has rendered its detailed opinion extending the still-stand period for one more month. During this period the French Government is supposed to justify the restrictions to the freedom to provide services as criticized by the European Commission.

On Thursday 5th of March 2009, Eric Woerth, the Budget Minister presented the draft bill concerning the opening of the remote gambling market in France.

On 25th of March 2009 the draft bill elaborated by the government was submitted to the Council of Ministers. Following to the Council of Ministers’ approval, the text was notified to the European Commission, launching the 3 months stand-by period in application of EU Directive 98/34 in the field of gambling. On the same day too, government draft bill was sent for discussion to the National Assembly. At this stage of the parliamentarian calendar, it is likely that the Parliament will resume the procedures of scrutiny, discussions and votes by the September.

This new gambling policy is meant to monitor the offer and the practice of gambling and to channel the demand in a system controlled by public powers in the name of public and social order.

A limited and regulated opening

The opening of the French market will be strictly monitored.

According to the article 5 of the draft bill, the opening will be limited to “online horse race betting, sport betting and games consisting of shared games which depend on skill”.

Thus, lotteries, virtual slot machines, “spread betting”, “betting exchange”, betting on virtual competition and casino games in which consumers play against the bank (roulette, blackjack, etc…) are excluded from the opening.

The creation of an Online Games Regulations Authority

An Online Games Regulations Authority (Autorité de Régulation des jeux en ligne: “the ARJEL”) will be specially created to take in charge the whole gambling policy and the promotion of reasonable game.

This authority will be in charge of:

* Monitoring compliance with the objectives of games’ policy accessible through internet;
* Proposing a cahier des charges (list of requirements established by the ARJEL) to the government for each type of licence (see below);
* Preparing the licence request files for online gaming operators and attributing the licences;
* Auditing for compliance by operators with legislative and regulatory measures and clauses of the reference terms of which they are subject to.

Carrying out surveillance of online operations and participating in the fight against illegal game sites and against fraud;
* Enacting rules regarding the audit of technical and financial data for each online game or bet;
* Determining where appropriate, the technical parameters of online games within the framework of rules set by the decrees;
* Proposing legislative and regulatory modifications to the government.

Once the bill is enacted, the ARJEL will need another few months to be efficient and begin to grant licenses. For the times being, the competent authority has unofficially been appointed and started his mission.

Operators have to comply with strict conditions to get a license

The license will only be granted to online operators complying with the regulations contained in the cahier des charges (specifications).

It sets general requirements for all operators and specific clauses according to each type of licenses, namely sports betting, horse race betting or circle games (such as poker or baccarat).

For instance, all operators will be required to provide information and guarantees concerning their identification, their experience in the gambling industry, the measures they will implement to fight against player’s addiction and prevent minors from playing (see below).

Licenses will only be offered to operators established in a Member State of the European Union or the European Economic Community.

Operators will have to operate from an internet website accessible through a first level domain name with an “.fr” ending.

All data related to gambling activities, exchanged between players and operators and linked to the identification of gaming or betting events, must be available on a mirror server based in France and eventually provided through an operator representative in France.

The licence will be issued for a period of five years. It is renewable. It is not transferable. A specific agreement will be requested for each type of games operated by the licensee.

The draft bill establishes tax rates:

The tax rate will be calculated on the amount of the wagers: the total sums outlaid by players and punters. The winnings, invested by the latter in the form of new bets, will be equally taxed. The taxation amounts 8, 5% for sports betting, 15, 5% for horse racing betting, 2% for online poker.

The establishment of measures against addiction concerning consumers and minors’ protection:

In a preventive way, operators will have to insert apparent objective messages on the website about the interdiction to play for minors and the risks related to gambling activities.

Article 3 of the draft bill forbids to minors to play for money online.

The draft bill confers important obligations to gaming operators in the fight against addiction.

Articles 20 and 21 of the draft bill indicate that gaming operators have to control the age of the players at the time of the opening of the account.

Also, they have to check that the identity of the players corresponds to that of the holder of the bank card used on the site.

Finally, online service information to players will have to be set up.

To conclude, the government draft bill allows the ARJEL and the government to keep a substantial control over the gaming operators and operations. Considering the concern expressed by the Government regarding consumers’ protection, this text appears to put in place a reasonable system.

Draft bill compatibility with EU law

Additionally, it is noteworthy to underline that the European Commission rendered a detailed opinion regarding the French draft bill.

A detailed opinion attempts to prevent Members States from adopting a text, which contains barriers to the internal market, or to urge them to remove the restrictive provisions, thereby avoiding unnecessary legislative work and future EU infringement proceedings. Once a detailed opinion had been issued, the standstill period, during which the draft text must not be adopted, is extended by one month. If, after this time, the draft text is adopted without modification, the Commission can immediately commence an infringement procedure against the Member State’s newly adopted legislation.

Accordingly, the French Government can modify its draft bill by the 8 July or decide to ignore the EC recommendations and takes the risks of the launching of an infringement procedure.

Interestingly the European Commission questioned the French Government regarding the following issues:

* to which extend does the draft law putting in place a licensing regime in France take into consideration the licensing criteria set up by the other Member states for granting their license?;
* To which extend the limitation of the player return rate does effectively contributes to the fight against addiction?;
* To which extend the fiscal representative is necessary as it rather constitutes a barrier to freedom of establishment and of provision of services?;
* To which extend can the right granted to the sports events organizations be justified?

As a result, such a detailed opinion may postpone the true discussion at the Parliament. It is already unofficially evoked that the opening of the market could be postponed to June 2010.


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