France’s Senate approves controversial tax hikes on gambling

On 21 November, the French Senate approved significant tax increases on various consumer products, including gambling.

The change comes as part of the government’s strategy to address public deficits by targeting industries with high profit margins.

The measures were incorporated into the final version of the country’s Social Security budget, catching some industry insiders by surprise. It was previously thought that the gambling industry would be spared from new taxes.

Once implemented, lotteries, casinos, and sports betting operators will bear the brunt of the changes. The increases, which vary by type of gambling activity, are estimated to average around 10% higher than current levels. Currently, operators pay a tax of around 55% on their gross gaming revenue.

Sports betting will receive the smallest increase. Online and retail operators will pay 1% more, compared to the 4.4% increase that had been put forward in a previous version of the budget.

This decision comes despite political resistance, as the National Assembly rejected the initial proposal just last month. Even the French gaming group Française des Jeux (FDJ) did not anticipate the measure would advance further.

The government expects the tax increases on gambling to generate an additional €50m annually. This revenue is intended to help finance the country’s growing public deficits, leveraging the profitability of gaming operators to contribute more to the nation’s finances.

However, not all areas of gambling were affected. Horse racing betting was exempted from the tax hike following strong opposition from the horse racing industry, which argued that additional financial burdens could harm the sector and its associated businesses.

Mixed reactions in the gambling industry

The decision has sparked mixed reactions. Advocates for the tax increases argue that gambling operators have seen substantial profits, making them well-positioned to shoulder the additional tax burden.

Senator Thomas Dossus was a staunch supporter of the increase. He referred to online gaming operators as “parasites that contribute to making this world toxic.”

France’s gambling regulator reported casino GGR for 2023 of €13.4bn. Now, supporters of the tax increase see the measure as an opportunity to redistribute wealth while maintaining sustainable growth in the industry.

On the other hand, critics warn that the tax hikes could have unintended consequences, including reduced investment in the sector and potential increases in costs being passed on to consumers. Smaller operators, in particular, may find it harder to absorb the additional expenses.

This could potentially lead to unexpected market consolidation or reduced competition. At the same time, it might also become the catalyst for a spike in the use of offshore gaming platforms.

Jean-François Vilotte, previously the President of France’s gambling regulatory body AFJEL and currently serving as the CEO of the French Football Federation (FFF), expressed his own concerns.

He told French media that the proposed tax increases could undermine the financial stability of numerous sports organisations and potentially compromise the integrity of sports. 

Gambling not alone

In addition to gambling, the Senate approved higher taxes on tobacco products and sweetened drinks. Tobacco, a perennial target for tax increases in public health policies, will now face even higher duties that the government expects to deliver €200m more in tax revenue annually.

This measure, which increases the price of a pack of cigarettes to €12.70, is expected not only to boost revenue but also discourage smoking. This aligns with France’s long-standing efforts to reduce tobacco consumption.

Similarly, sweetened beverages will see an increase in taxation, continuing the government’s push to address rising health concerns such as obesity and diabetes. Higher taxes on sugary drinks aim to encourage healthier consumption patterns while generating additional revenue for public health initiatives.

While the Senate moved forward with tax hikes on gambling, tobacco, and sweetened beverages, there was one notable exception. A proposed increase in alcohol taxes was rejected.

The newly approved tax measures are part of a broader strategy to finance France’s social security system and reduce its public deficits. By targeting products and industries that generate substantial revenue, the government hopes to close budgetary gaps and raise at least another €500m per year.

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