Gaming in France: overview

Legislative framework of gambling regulation

Legislative framework of gambling regulation

Status: Law stated as at 01-Oct-2016 | Jurisdiction: France

Contents

♦ Legislative framework of gambling regulation
   ◊ Overview
   ◊ Definitions of gambling
   ◊ Regulatory authorities
   ◊ Gambling products
♦ Land-based gambling
   ◊ Regulation/licensing
♦ Online gambling
   ◊ Regulation/licensing
   ◊ B2B and B2C
   ◊ Technical measures
♦ Mobile gambling and interactive gambling
♦ Social gaming
♦ Gambling debts
♦ Tax
♦ VAT exemption
♦ Advertising
♦ Developments and reform
   ◊ Legal development
   ◊ Reform
♦ The regulatory authorities
   ◊ Autorité de Régulation des Jeux en Ligne (ARJEL)
   ◊ Ministry of Home Affairs
♦ Online resources
   ◊ Legifrance

Overview

images 1. What legislation applies to gambling?

France is a country of Christian-Catholic tradition, so gambling has long been totally prohibited. There is a general ban on gambling relating to games of chance (Article L.324-1, French Code of Homeland Security ( Security Code)) but over the years, several exemptions have been granted, gradually authorising certain gambling activities. These must be either offered in specific venues or provided by authorised operators.

The Security Code was enacted on 1 May 2012 and encompasses a significant portion of the gambling regulations in French law. Other gambling products are subject to specific laws and regulations.

Casinos

The Security Code authorises and regulates casino games in sea, thermal and climatic resorts, as well as in cities classified as tourist resorts (except Paris) and on cruise ships flying the French flag, with authorisation and subject to conditions.

Gaming clubs and houses

Some gaming clubs and houses can offer games of chance if authorised by the Minister of Home Affairs (Law of 30 June 1923 on the budget for the year 1923). In addition, authorised gaming clubs can provide “club card games”, which is a special category of gambling that only includes bridge, poker, tarot and rummy (Order dated 15 July 1947 on the regulation applicable to club games).

National lottery

The government was authorised by law to create a national lottery (Article 136, Finance Law 1933). The national lottery is a legal monopoly in France operated by the incumbent operator, La Française des Jeux. In addition, La Française des Jeux is also authorised to offer sports betting games (Decree 85-390 on the organisation and operation of sport forecasts games).

Horse racing

Authorised horse racing companies can offer pooled betting (pari mutuel) (Law of 2 June 1891 on the organisation and operation of horse races). Horse racing companies can organise bets on their races and the management of these bets is entrusted to a consortium called Pari Mutuel Urbain (PMU) (Decree 97-456 of 5 May 1997 relating to horse racing companies and pooled betting).

Greyhound race companies

Although greyhound races are not very popular in France, authorised greyhound race companies can offer pooled betting on the races they organise (Decree 83-922 dated 20 October 1983 on greyhound racing companies).

Online gambling operators

The online gambling authority, the Autorité de Régulation des Jeux en Ligne (ARJEL) can license operators authorising the offer of club games (although the law refers to club games, only poker is currently authorised), sports betting or horse betting (Law 2010-476 dated 12 May 2010 on opening the online gambling and betting market to competition and regulation) (Online Gaming Law).

Definitions of gambling

images 2. What is the legal definition of gambling in your jurisdiction and what falls within this definition?
General definition

Traditionally, French law classifies gambling contracts into the “random contracts” category, which are defined as mutually agreed contracts with consequences (being profits or losses for one or both parties) depending on an uncertain event. The random contracts category includes (Article 1964, Civil Code):

  • Insurance contracts.
  • Life annuity contracts.
  • Games or wagers.

For games or wagers, the uncertainty relies on the chance of winning or on the risk of bearing a loss.

The legal criterion that distinguishes gambling from other random contracts is the existence of a wager on chance (the fact that a party bets money on the chance of the other party). In other random contracts, the money put at “risk” is the consideration for a service.

However, recent changes in French law have tended to blur the lines and skill games have entered the scope of the prohibition against gambling products.

The French legislator has aligned and codified the definitions for both online and land-based gambling products (Articles L.322-2 and L.322-2-1, Security Code). Games of chance include “any operation offered to public participation, regardless of the designation it may receive, in order to trigger the hope of a gain which would be acquired, even partially, through chance and for which the operator requires from participants a financial contribution” (Article L.322-2, Security Code). This definition covers “games which functioning relies on the know-how of the player”, particularly skill games (Article L.322-2-1, Security Code).

Online gambling

The definition of online gambling and betting is “any gambling game or betting performed exclusively through a service of online communication to the public” (Article 10, Online Gaming Law). The law further defines online gambling operators as persons offering to the public, on a regular basis, online gambling or betting services with stakes having a monetary value and under terms and conditions that constitute a standard membership agreement.

The Online Gaming Law only refers to sports betting, horse betting and club games. Nevertheless, the only club game authorised is poker. To date, there are no other gambling activities authorised under the Online Gaming Law.

Land-based gambling

There is no specific definition of land-based gambling. The law only contains a prohibition on holding a “gambling house open to the public” (Article L. 324-1, Security Code) and “the importation or manufacturing of any machine which functioning is based on hazard and which offers the possibility, potentially through the display of signs, in exchange for a stake to gain a direct or indirect advantage of any nature whatsoever” (Article L324-2, Security Code).

Casinos and gaming clubs benefit from specific exceptions to these prohibitions.

Regulatory authorities

images 3. What are the regulatory or governmental bodies that are responsible for supervising gambling?

The regulation of gambling is carried out by different governmental authorities or bodies depending on whether it is land-based gambling or online gambling.

Land-based gambling

Land-based gambling activities are centrally supervised by the Ministry of Home Affairs at national level. Depending on the nature of the game, various governmental or state representatives can intervene at different levels during either the licence application process or the enforcement process. Interventions are mainly carried out by the Préfet (state prefect), but can also be performed by national commissions or federations that have regulatory powers. All land-based gaming licences are issued by the Ministry of Home Affairs.

Online gambling

Online gambling is regulated by a single governmental authority, the Autorité de Régulation des Jeux en Ligne (ARJEL), which was created when the French online gambling market opened in 2010. ARJEL has full competence to issue licences, enforce online gambling regulations and fight against illegal gambling websites.

See box, The regulatory authorities.

Gambling products

images 4. What gambling products have been specifically identified by legislation, and what different requirements have been established for each?
Poker

Poker is currently classified as a game of chance (Online Gaming Law). Poker can be offered by gaming clubs, casinos and online gambling operators and it is the most popular game in France.

Poker in casinos. Casinos can offer six different types of poker:

  • Casino Hold’em poker.
  • Casino stud poker.
  • Texas hold’em poker.
  • Omaha poker 4 high.
  • Ultimate poker.
  • Three card poker.

An Order details the rules applying to each category under which poker can be played in casinos in the form of cash games or tournaments (Order dated 14 May 2007 on the regulation applicable to games in casinos).

Casinos are strictly regulated venues. They must provide three different activities (entertainment, catering and games) and are not allowed to offer all casino games without limitation. They can only offer the types of games for which they hold a licence.

Poker in gaming clubs. Licensed gaming clubs can offer club games (Ministerial instruction of 15 July 1947). Since poker is defined in the Tax Code as a “club card game” it counts as one of the few card games authorised in gaming clubs and houses.

Online poker. Online poker is authorised and subject to a “club game” licence for online gambling operators from the online regulatory authority ARJEL (Online Gaming Law).

There are specific rules, separate from the rules applicable to poker in casinos, on the types of poker that can be operated online (Decree 2010-723 on the categories of club games mentioned in Article 14 of the Online Gaming Law and the principles governing their technical rules). As the scope of the Decree is very strict, only the following types of poker are authorised:

  • Texas Hold’em Limit.
  • Texas Hold’em pot limit.
  • Texas Hold’em no limit.
  • Omaha Poker 4.

These types of poker can be offered as cash games or tournaments.

Betting

Forms of betting. Apart from sports betting, the only authorised forms of betting in France are horse and greyhound betting. Greyhound betting is almost anecdotal so only horse betting (which can be provided both as land-based and online services) will be covered.

Horse racing companies can organise bets on their races and these are managed by Pari Mutuel Urbain (PMU). PMU is a special legal entity created by horse racing companies to manage their betting activities and all horse racing companies authorised to organise bets are members of the PMU. Horse betting organised by PMU is regulated (Order dated 13 September 1985 on the rules of urban pooled betting and hippodromes).

Land-based horse betting. This is a pooled betting system under which all the stakes on a certain type of bet are pooled and redistributed among the players. There are specific rules covering each type of bet (simple bets, coupled bets, first three horses, first four horses, first five horses) (Order of 13 September 1985). As part of the general rules, minors are not allowed to place bets. Bets can be placed at the appropriate counters located in the hippodromes, in establishments located outside hippodromes but authorised for that purpose, by telephone (subject to conditions), or through an interactive terminal.

Online horse betting. This is regulated by Decree 2010-498 dated 17 May 2010 on the definition of horse races on which online bets can be offered, and subject to the general principles applicable to pooled betting.

Online horse betting operators can offer horse betting on races organised in France or abroad, provided that the races are listed on the official list approved each year by the Minister of Agriculture. The list, available from ARJEL, indicates all the bets that are authorised, including simple and complex bets. Complex bets are defined as bets for which players must designate the horses ranked in the five first positions (without needing to find the right finishing order).

Online bets on horse racing can only be offered on the official results of one or several authorised horse races. The official result of a race is defined as horses ranked in the positions to receive prizes (limited to the five first positions).

Sports betting

Land-based sports betting. La Française des Jeux can offer betting games (Decree 85-390 relating to the organisation and operation of sport forecasts games). Originally, the Decree created a game called “loto foot” which was halfway between a lottery and a pure betting game, but now it authorises forecast games on all sports and competitions.

The forecast games offered by La Française des Jeux are similar to a lottery and include several variants. Participants must fill in a grid and forecast the results of games. Nowadays, there are three different forecast games offered: loto foot, Match of the day and 1N2, all of which are odds betting games. Players can only play at licensed points of sale and also online on the Française des Jeux website.

Online sports betting. Online sport betting is regulated by Decree 2010-483 of 12 May 2010 on competitions and types of sports results defined by the online gambling regulatory authority.

Bets can only be made on certain sports, competitions and types of results, determined by ARJEL following consultation with the sport federations. The official list is available on ARJEL’s website and ARJEL can decide from time to time to add new competitions or new types of results.

Under French law, organisers of sports competitions have rights over the competitions they organise. Consequently, sports betting operators can only offer bets on the competitions for which they have entered into an agreement with the organiser of each competition. Any licensed operator requesting one must be offered the possibility to sign a contract if the operator meets the general conditions set by the organiser (Decree 2010-614 dated 7 June 2010 on the conditions applicable to market the rights to organise bets in relation to a sports competition or event). These contracts are reviewed by ARJEL and the French Competition Authority (Autorité de la concurrence) and must offer similar terms to all operators.

A decision from the French Administrative Supreme Court (14 October 2014, 381192) confirmed ARJEL’s decision prohibiting bets on the result of a game as an even or uneven number.

Casino games

The scope of authorised games is strictly limited by the Security Code, which allows casinos to offer slot machines and the following games (which can be provided electronically):

  • Considerations games. These include:
    • the boule;
    • the twenty-three;
    • French roulette;
    • American roulette;
    • English roulette;
    • thirty-forty;
    • blackjack;
    • craps;
    • punto banco;
    • casino Hold’em poker;
    • casino stud poker;
    • war game;
    • wheel of fortune;
    • ultimate poker;
    • three card poker;
    • rampo; and
    • sic- bo.
  • Club games. These include
    • baccarat- chemin de fer;
    • limited bank baccarat on two tables;
    • open bank baccarat on two tables;
    • the écarté;
    • Texas Hold’em poker; and
    • Omaha poker 4 high and Bingo.

Casinos are limited by the scope of their licence, which determines in particular the:

  • Number and type of games allowed.
  • Duration of the licence.
  • Opening hours of the venue.
  • Bingo.

In addition, the Minister of Home Affairs can authorise a casino to provide, for experimentation purposes, new types of games of chance or new technical devices.

Furthermore, gaming clubs or houses can offer, subject to authorisation from the Minister of Home Affairs, the following games of chance:

  • Baccarat- chemin de fer.
  • Baccarat on two tables.
  • Multicolore.
Slot and other machine gaming

Importing or manufacturing slot machines is prohibited under the Security Code. However, by way of exception, casinos can offer slot machines and other machines offering games of chance (together “slot machines” because their regulation is the same) if they offer at least one of the casino games mentioned in Article D.321-13. Slot machines are also regulated by the Order on the regulation of games in casinos (Order of 14 May 2007).

The return rate to players applicable to slot machines cannot be less than 85% (Article R. 321-17, Security Code). The value of each unitary credit wagered in a slot machine is determined by the operator of the casino and communicated to the Minister of Home Affairs at least 15 days before the slot machine is made available to the public. Any modification of the return rate to players or the value of each unitary credit wagered must be communicated to the Minister of Home Affairs at least 15 days before implementing the modification.

In addition, the law sets out a limit on the credit that can be inserted in a slot machine. The limit is equal to the maximum amount that a machine can pay without human intervention.

The configuration of gaming devices is constantly evolving, with French gaming authorities taking into account (for licensing) cloud-based gaming devices, provided that a sufficient level of data security and reporting is ensured.

Terminal-based gaming

Casino games can be provided electronically in casinos.

Bingo

Bingo is authorised as a casino game (see above, Casino games).

Lottery

As a general principle, lotteries are prohibited. Prohibited lotteries are defined as “the sales of estate, goods or merchandise which are realised through chance, or to which have been added bonus or other benefits, due, even partially, to chance and, more generally, any operation offered to public participation, regardless of the designation it may receive, in order to trigger the hope of a gain which would be acquired, even partially, through chance and for which the operator requires from participants a financial contribution” (Article L.322-2, Security Code).

Recent changes have been made to the regulation of lotteries. The 2014 Consumer Rights Law extended the list of prohibited lotteries to similarly organised skill games and therefore restricts the scope of lotteries that can be organised in France (both as gambling products and as promotional media). Indeed, the (absolute) ban on lotteries is extended to all games which meet the following criteria:

  • Games which are open to the public.
  • Games whose outcome is partially determined through chance.
  • Games which require a financial contribution from the player, even when reimbursement is offered.
  • Games which create the hope of a gain, regardless of its form or its nature.

However, the general prohibition on lotteries will not apply in relation to:

  • Lotteries exclusively for charitable acts, encouragement of arts or financing non-profit sport activities (Article L.322-3, Security Code).
  • Traditional bingo, also called “poules au gibier“, “rifles” or “quines” (Article L.322-4, Security Code).
  • Lotteries in fairgrounds (Articles L.322-5 and L.322-6, Security Code).
  • Lotteries on television and radio shows (Article L.322-7, Security Code).
  • The national lottery (Decree 78-1067 dated 9 November 1978 on the organisation and operation of lottery games) (see below, National lottery).
  • Lotteries organised as promotional campaigns (Articles L.121-36 et seq, Consumer Code) (see below, Lotteries organised as promotional campaigns).

National lottery. The operation of the national lottery is granted to La Française des Jeux, which is structured as a semi-public company with regulatory powers. The CEO of La Française des Jeux will (Article 21, Decree 78-1067):

  • Monitor the application of the laws and regulations relating to games.
  • Draft the rules of the games and set out the:
    • technical features;
    • terms and conditions of participation;
    • amounts of the stakes;
    • technical conditions for determining the winners and awarding winnings and prizes;
    • terms relating to the payment/award of the winnings;
    • prizes and time limits for claiming payments and prizes.

Lotteries organised as promotional campaigns. A specific regulatory regime applies to lotteries organised as promotional campaigns (Article L. 121-36, French Consumer Code).

The law aims to cover “trade practices implemented by professionals/businesses in the form of promotional operations leading to the attribution of a gain or an advantage of any nature, through a draw, whatever the modalities for the draw, or through the intervention of chance” (Article L. 121-20, French Consumer Code).

Such promotional lotteries are valid as long as they do not constitute an unfair commercial practice as construed under French law further to the implementation of Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market.

Land-based gambling

Regulation/licensing

images 5. What is the licensing regime (if any) for land-based gambling?
Available licences

The following gambling land-based products can be offered:

  • Horse and greyhound betting.
  • Sports betting.
  • Lotteries.
  • Casino games, poker and slot machines (in casinos).
  • Club card games (including poker) and games of chance (pool, baccarat) (in gaming clubs).

Sports betting and most lotteries fall under the monopoly of a state-owned corporation, La Française des Jeux. Therefore, the licensing regime of these products will not be discussed further.

The organisation of horse betting is limited to mutual betting, completely managed by Pari Mutuel Urbain (PMU), which has a monopoly. The rest of this section will focus on the licensing regime for casinos and clubs. Some general restrictions exist about the geographic area in which some gambling products can be offered. The main geographic restriction is that a gaming club cannot be opened in the same city where there is a casino (Article 13, Order dated 15 July 1947 on the regulation of games in clubs).

Eligibility

Casinos. Authorisations for casinos are granted for the single establishment where games are played by the public, regardless of the entity operating it. A single entity can theoretically operate several casinos in different places.

There is no requirement on the form of incorporation of a casino operator and the law even allows casinos to be owned by individuals.

Casinos can be authorised in sea, thermal, climatic and tourist resorts and on certain ships (Articles L.321-1 to L.321-3, Security Code). The authorisation process is slightly different for casinos located on ships.

Gaming clubs. To be licensed, gaming clubs must be operated by a non-profit association. The gaming activity offered must remain a side activity to other social, cultural or charitable activities of the club.

The creation of the non-profit association is undertaken by filing a notification to the Préfet before commencing any gaming activities. If the notification complies with the legal requirements, notice of its creation is published in the Official Journal, after which it will have legal capacity.

Clubs can hire whoever they want, but all employees, regardless of their function, must be licensed before they start working. A similar licence application to the one for casino employees is required for gaming club employees (Articles 21 and 22, Order dated 15 July 1947 on the regulation of games in clubs).

Authorisation from the Minister of Home Affairs is required for most gaming clubs (Article 1, Decree n°47-798 of 5 May 1947 on regulation of games in clubs; Article 47, Law of 30 June 1923 on the public budget for year 1923), except for gaming clubs that only offer club card games (jeux de commerce). The qualification of “jeux de commerce” is a tax sub-category for gambling products and is very specific and limited in scope. These clubs need only file a notification with the Préfet of the county in which they are established. This declaration must be accompanied by similar information as for a request for authorisation.

Application procedure

Casinos. Obtaining a licence for a land-based casino is a long and complicated process.

A casino must conclude an agreement with the city in which it will be located and be authorised by the Ministry of Home Affairs to begin operating. This authorisation is granted in the form of a delegation of public service (similar to a concession). The authorisation is temporary and subject to permanent control by various administrations. There are reporting duties and the authorisation process is partly carried out by calling for tenders.

The operator of a casino must obtain a global licence for the whole activity conducted in one place (a single licence for a single casino operator in a single place). There is no distinct licence for the premises or the type of games that are offered. Everything must be described in the authorisation submission. In addition to the “main” licence for the casino operator, the casino’s employees and suppliers must also be licensed. To obtain its licence, the casino operator must also conclude an agreement with the city in which the casino will be set up.

Any additional licence required from a casino operator will relate to selling alcohol but will not relate to gaming activities per se.

If no response is received to an application within four months of applying, this is deemed to be a denial of the authorisation (Article R. 321-6, Security Code).

Gaming clubs. Under similar rules as those applying to casinos, gaming clubs require a single licence for the whole scope of their activity in a single place. This licence will describe the authorised scope of activity of the gaming club.

The authorisation request must be made by the manager of the club in two copies and filed with the local Préfet. The Préfet then transmits one copy to the Ministry of Home Affairs which rules on the request after receiving the opinion of the Commission Consultative des Jeux de Cercle et de Casinos (Consultative Commission on Club Games and Casinos), which is tasked with reviewing authorisation requests and investigating measures that will be implemented by the operator to prevent excessive gambling. The request itself can be made by letter in which the club provides that it will:

  • Comply with the applicable regulations and abide by any control or inspection.
  • Dedicate a specific percentage of the gross gaming revenue to fulfilling the purpose of the association (for example, subsidising an activity falling under the purpose of the association).
  • Be independent from any restaurant, hotel, bar, café or nightclub located in the same building or in an immediately neighbouring one, and will have a separate entrance.

The full list of supporting documentation required is set out in Article 8 of the Ministerial Order dated 15 July 1947 on the regulation of games in clubs.

If no response is received from the Ministry of Home Affairs application within four months of applying, this is deemed to be a denial of the authorisation (Article 1-1, Decree 47-798 of 5 May 1947 on regulation of games in clubs).

The authorisation is strictly personal to the club and cannot be used, transferred or assigned in any way to another club or any other entity. Any failure to comply with this exclusivity is cause for the authorisation to be withdrawn.

Any modification of the name, headquarters of the club, or any change in the members of its board of directors, is interpreted by French law as the creation of a new club, requiring a new request for authorisation.

Depending on the type of games that these clubs want to offer their members, more specific formalities may be necessary. For example, if electronic machines are used within the club, specific authorisation must be obtained through either (Article 1, Decree 47-798 of 5 May 1947 on regulation of games in clubs):

  • An explicit mention in the main authorisation.
  • A distinct and detailed authorisation.
Duration of licence and cost

Casinos. The agreement with the city lasts for a maximum of 20 years. The law does not specify the duration of casino licences or their cost but only states that such licences are temporary and that their duration is set in the decision granting the licence.

Gaming clubs. Gaming club licences are granted for a renewable one-year term.

images 6. What are the limitations or requirements imposed on land-based gambling operators?
Prohibitions

Minors are prohibited from participating in any gambling activities, except for certain types of lotteries (lotteries exclusively for charitable acts, encouragement of arts or financing non-profit activities, lotteries in fair ground and traditional bingo). Gambling operators must prevent minors, even emancipated minors, from participating in their gambling activities.

Restrictions

All land-based gambling operators must prevent players from participating in gambling activities if they are on the list of persons prohibited from gambling. People can be listed voluntarily for three years, or involuntarily (people that were criminally sentenced and excluded by a judge from gambling facilities or people whose conduct is likely to disturb the proper execution of the games or the tranquillity and order of the facilities).

Gaming clubs can only allow members of the club to enter.

Anti-money laundering legislation

Land-based gambling operators must implement measures to (Article L. 562-1, Security Code):

  • Identify the client.
  • Appoint a correspondent in charge of notifying the French anti-money laundering authority, the Traitement du renseignement et action contre les circuits financiers clandestins (TRACFIN) of suspicious operations.
  • Implement internal controls.

Online gambling

Regulation/licensing

images 7. What is the licensing regime (if any) for online gambling?

An online operator can only offer gambling products in France (that is, websites which target French-resident customers) if licensed by the ARJEL before commencing gambling operations.

Platform providers do not need to ask for a licence directly, but operators seeking a licence must have the gaming software that they use approved by the ARJEL. In addition, all suppliers must be mentioned in the licence application. Contracts concluded with suppliers must also be provided when submitting the licence application. In the case of white labels, a distinction must be drawn between the company owning the trade mark under which a gambling website is operated and the company actually operating the website (that is, having full control of the gaming software). In this case, the white label operator needs a licence but the trade mark owner does not.

Since the opening of the online gambling market, the European Commission has closed all proceedings against France. Some voices in the market claim that the French system may not be fully compliant with EU rules, because not all gambling products can be offered online. This was raised in the Zeturf v Prime Minister case (ECJ, Case C 212/08). In this case, Zeturf claimed that the French monopoly on online horse betting was contrary to freedom of services. However, the ECJ ruled that the monopoly is legitimate as long as it serves to protect consumer interests against excessive gaming and help the fight against money laundering. So far, the Commission has not given any indication of new concerns about the French regulatory framework.

Available licences

Licences are available for the following three gambling products:

  • Poker.
  • Sports betting.
  • Horse betting.

A licence must be sought individually for each one of these products. An operator can be licensed to offer all three gambling products, but it will have to undertake three separate licensing processes. A licensed operator can also operate several gambling websites with a single licence, provided that it has been granted for all the contemplated websites.

There is no limit on the number of licences that can be granted by ARJEL.

Eligibility

There is no requirement on the form of incorporation for an online gambling operator. The law even authorises individuals to operate a gambling website.

However, to be eligible for a French online gambling licence, the operator must have its headquarters located in the EU or in an EEA state that has a treaty with France about the fight against fraud and tax evasion. Operators headquartered or controlled by a company headquartered in a state without a tax treaty are not eligible either. If the country did not comply with its obligations under the treaty, any operators headquartered there will not be able to get a licence. For 2016, these countries include Botswana, Brunei, Guatemala, Marshall Islands, Nauru, Niue and Panama.

Application procedure

The application procedure is similar for all three licences but a separate licence must be granted for each offering.

An operator must complete a form and submit it to ARJEL providing information on specific legal and financial elements and on technical features.

The application also contains an undertaking from the operator to give to all authorised agents of the ARJEL access to their premises and in particular to the hosting facilities where the Front End is stored (the Front End being the hardware collecting and archiving the data).

While reviewing the licence application, ARJEL can request any additional information and documents from operators. ARJEL’s review cannot last longer than four months. In the absence of a reply from ARJEL after four months, the licence is deemed to be denied.

Online operators must pay a licence fee, which varies depending on the number of applications:

  • EUR5,000 for one application.
  • EUR8,000 for two applications.
  • EUR10,000 for three applications.

In addition, operators must pay an annual fee of EUR20,000, EUR30,000 or EUR40,000 (depending on whether they hold one, two or three licences).

Duration of licence and cost

The licence is granted for five years and cannot be assigned. Every five years, operators must renew their licence(s) by filing a renewal form with ARJEL.

After the licence is granted, the operator is subject to a series of system verifications, compliance audits and reporting requirements.

images 8. What are the limitations or requirements imposed on online gambling operators?
Prohibitions

Minors are prohibited from participating in online gambling, and online gambling operators must prevent minors (even emancipated minors) from participating in their gambling activities. In addition, licensed online operators must display a warning on their website stating that minors cannot participate in gambling activities. The licensed operator must require the input of a player’s age when the player subscribes and visits its websites.

Restrictions

Licensed online operators must prevent anyone who is on the list of persons prohibited from gambling from subscribing to its gambling platform and must terminate the account of any player who gets on to the prohibited list.

Licensed operators must also offer self-exclusion mechanisms enabling players to seek temporary (decided by the player with a minimum of seven days) or definitive exclusion from the games. Definitive exclusions cause the termination of the players’ account and prevent them from subscribing again for the next three years.

Licensed operators must also require that players, as soon as they open their account, set a weekly limit on:

  • The cumulated cash wire transfers players can make from their bank account to their gambling account on the licensed operator’s website.
  • The cumulated amount of stakes the player can use.

Licensed operators must display on their website information on the possibility for players to voluntarily put themselves on the list of persons prohibited from gambling, as well as information on the assistance that is available for players to prevent pathologic gambling.

Anti-money laundering legislation

Land-based gambling operators must implement measures to (Article L. 562-1, Security Code):

  • Identify their clients.
  • Appoint a correspondent in charge of notifying TRACFIN of suspicious operations.
  • Implement internal controls (defined by ARJEL in its decision 2011-025 dated 24 February 2011).

In addition, licensed online operators must comply with any asset-freeze measure issued by the government over the funds of specific individuals or organisations.

Licensed operators’ compliance with the anti-money laundering legislation is controlled by ARJEL.

B2B and B2C

images 9. Is there a distinction between the law applicable between B2B operations and B2C operations in online gambling?

Business to business (B2B) operations are absent from the scope of the Online Gaming Law. ARJEL regulates online gambling operators and only answers to operators and not to players or providers of technical solutions (such as providers of gambling software). In this particular aspect, there is a noticeable difference between French law and English law (which has created a specific licence for the providers of technical solutions).

This has raised a lot of issues in the French online gambling industry. As part of ARJEL’s monitoring and controlling powers, all operators must perform certification audits. These include one technical audit of their Front End (see Question 7, Application procedure) six months following the launch of their platform and one yearly legal and financial certification audit each year on the anniversary date of the licence. Although most elements to be audited are in the hands of the platform providers, only the operator has the certification obligation. Therefore, a number of difficulties are often encountered in the certification process.

As for white labelling, only operators providing the white label websites (that is, websites produced by one company under the brand of another company) are liable for the services provided. In addition, all domain names (even for the websites operated under a white label) must be listed in the licence application or later authorised by an ARJEL decision and are therefore assimilated to one operator. The trade mark owner has no direct relationship with ARJEL.

Technical measures

images 10. What technical measures are in place (if any) to protect consumers from unlicensed operators, such as ISP blocking and payment blocking?

According to the Decree 2011-2122 of 30 December 2011, the President of the Tribunal de Grande Instance of Paris can order an ISP blocking measure. In addition, the Minister of Budget can, on a proposal from ARJEL, ban any movement or transfer of funds from unlicensed operator accounts (for a renewable period of six months) (Article L. 563-2, Monetary and Financial Code).

Mobile gambling and interactive gambling

images 11. What differences (if any) are there between the regulation of mobile gambling and interactive gambling on television?

The Online Gaming Law was designed to cover internet gambling in general, so mobile gambling and interactive gambling on television are not specifically addressed in this law. However, some online licensed gambling operators have developed mobile gambling and interactive gambling offers. These offers have not been deemed illegal by ARJEL, which has simply requested that the operators concerned submit their software for new approval in relation to the additional services.

Social gaming

images 12. How is social gaming regulated in your jurisdiction?

There is no specific social gaming regulation in France. Social gaming is nonetheless subject to the general prohibitions on lotteries (see Question 4, Lottery).

Considering that the skill of a player is not a relevant criterion anymore, any social game offered to the public can constitute a prohibited lottery if both:

  • The game is not free to play.
  • The game offers a prize to which a monetary value can be attributed.

Virtual currencies used in social games can lead the game to be considered as a prohibited lottery. In fact, requiring payment in a virtual currency can potentially constitute a financial sacrifice and granting prizes in virtual currencies can potentially constitute a prize with a monetary value, especially if the virtual currency can be purchased with real money or can be exchanged for prizes with a monetary value.

Gambling debts

images 13. Are gambling debts enforceable in your jurisdiction?

Gambling or betting debts are not enforceable (Article 1965, Civil Code).

There is, however, an exception to this prohibition if a client purchases casino chips with a cheque that is not supported by sufficient funds. The casino can demand payment of this specific debt.

Tax

images 14. What are the applicable tax regimes for land-based and online gambling?

For both land-based and online gambling, different taxes apply depending on the betting and gambling activities. Taxation can either be based on the wagers or on the gross gambling revenue.

Land-based gambling

Casinos. First, the state receives a progressive tax on a casino’s gross gambling revenue (a 25% deduction first being made from the gross gambling revenue before applying the tax), and then 10% of that tax is paid back to the local authorities.

The following illustrates the gross gambling revenue and the tax bracket applicable to it:

  • Up to EUR100,000: 6%.
  • Between EUR100,001 and EUR200,000: 16%.
  • Between EUR200,001 and EUR500,000: 25%.
  • Between EUR500,001 and EUR1 million: 37%.
  • Between EUR1,000,001 and EUR1.5 million: 47%.
  • Between EUR1,500,001 and EUR4.7 million: 58%.
  • Between EUR4,700,001 and EUR7.8 million: 63.3%.
  • Between EUR7,800,001 and EUR11 million: 67.6%.
  • Between EUR11,000,001 and EUR14 million: 72%.
  • Over EUR14 million: 83.5%

Added to this tax is a tax imposed by the city in which the casino is established, defined in the agreement between the town and the casino and which cannot exceed 15% of the gross gambling revenue.

Finally, casinos are also subject to the following social contributions:

  • CRDS: 3% of the gross gambling revenue.
  • CSG: 9.5% applied on 68% of the gross gambling revenue for slot machines and 12% on any winnings paid to the players equal to or exceeding EUR1,500.

Gaming clubs. Special tax rules apply to gaming clubs. The revenues of gaming clubs are gathered in the form of a pot (cagnotte) that is composed of the gross gaming revenue generated by the clubs.

The taxation of gaming clubs is progressive and the following rates apply:

  • Up to EUR30,490: 10%.
  • Between EUR30,491 and EUR228,700: 40%.
  • Above EUR228,701: 70%.

Lottery. The tax for the National Centre for Sports applies. It amounts to 1.8% of wagers (limited to EUR163.450 million per year). A 0.3% tax (limited to EUR27.6 million per year in 2016 and EUR17.7 million per year in 2017) applies until 2017.

A social contribution of 6.9% must also be paid. It is calculated on the basis of 25.5% of wagers.

Horse betting. The tax contribution for horse betting is 5.3% of wagers. The social security contribution is 1.8% of wagers.

In addition, there is a 12% tax on the commission received by companies organising horse races for bets made from abroad but regrouped in France, which is due through Pari Mutuel Urbain (PMU).

Sports betting. The tax contribution for sports betting is 5.3% of wagers. The social security contribution is 1.8% of wagers and the tax for the National Centre for Sports is 1.8% of the wagers (limited to EUR32.3 million a year).

Online gambling

Online sports betting. The taxes are the same as for land-based sports betting (see above, Land-based gaming: Sports betting).

Online poker. The tax contribution for online poker is 1.8% of wagers. The social security contribution is 0.2% of wagers.

Online horse betting. The tax contribution for online horse betting is 5.3% of wagers. The social security contribution is 1.8% of wagers and the tax for the companies organising the races is 6.3% of wagers.

VAT exemption

Operating revenue (revenu d’exploitation) related to the organisation of betting and gambling activities (whether land-based or online) is exempt from VAT (Article 261 E, Tax Code). Casino games are also exempt from VAT.

This VAT exemption is not applicable to the earnings (rémunération) of gambling and betting operators and intermediaries (land-based and online) who take part in the organisation of lotteries, poker and horse race betting.

VAT must be paid on earnings. Earnings is the amount remaining once the operators have paid their taxes and the winnings to players (earnings = operating revenue – taxes – winnings paid out to players).

Advertising

images 15. To what extent is the advertising of gambling permitted in your jurisdiction? To the extent that advertising is permitted, how is it regulated?
Land-based gambling

Any form of advertising for a house providing games of chance (maison de jeux de hasard) without proper authorisation is prohibited. Therefore, advertising is authorised for all other establishments or websites licensed or authorised under the applicable legislation. However, many rules restrict advertising games of chance, in particular in relation to the protection of minors or the fight against addiction.

Online gambling

Advertising online gambling websites must be identified as such and contain written or verbal warning messages depending on the platform on which the advertising is offered. If the advertising is offered online, the warning message must contain a link to a website dedicated to the fight against addiction. Such advertising cannot be offered on websites that appear to be mainly targeting minors. In addition, any advertising for online gambling websites through radio or television is forbidden 30 minutes before and after the broadcasting of programmes specifically targeting minors.

Developments and reform

Legal development

images 16. Has the legal status of land-based and online gambling changed significantly in recent years, and if so how?
Land-based gambling

There have been no significant changes to the rules on land-based gambling in recent years. The latest changes were related to casino regulation, but were not significant. These changes were implemented by the Decree of 6 December 2013 amending the provisions of the Order dated 14 May 2007. This Order provided for various measures to modernise the regulation of games in casinos, by for example:

  • Introducing rules to lucky ladies games, bad beat jackpot games, poker tournaments, and electronic blackjack.
  • Authorising casino operators to set an earlier closing time for slot machines than for table games.

In addition, new casino games were added in 2014 and 2015. These included:

  • War game.
  • Wheel of fortune.
  • Ultimate poker.
  • Three card poker.
  • Rampo.
  • Sic- bo.
  • Bingo.
Online gambling

The Consumer Rights Law has made some changes to the Online Gaming Law, including:

  • Protecting and guaranteeing the repayment of players’ assets.
  • Strengthening the fight against gambling addiction.
  • Strengthening the fight against fraud, money laundering and terrorism.

One of the recent substantial modifications to the legal status of online operators is the amendment to Article L.322-2-1 of the Security Code. This states that online skill games requiring a financial contribution from the player and triggering the hope of a gain are de facto illegal because they cannot be licensed by ARJEL. The main purpose of this amendment is to prevent gambling offers getting around the applicable regulations and banning what were considered to be abusive practices. The amendment created confusion between gambling offers with intrinsic dangers that justify a strict regulatory framework and other types of games that are purely entertainment.

More recently, the rules on opening and closing player accounts with online gambling operators were modified (Decree 2015-620 dated 5 June 2015).

“Fantasy games” were not (until recently) clearly covered by French regulation. They were added as a type of sport betting in the technical documentation for licensed operators by an ARJEL decision dated 14 April 2016.

Reform

images 17. What, if any, are the likely short-term and long-term developments/legislative amendments concerning gambling in your jurisdiction? Are there any proposals for reform?
Land-based gambling

Gaming clubs have been under heavy scrutiny from the authorities, leading many of them to be closed. There are now only two gaming clubs in France, both of which are located in Paris.

While authorities were reducing the number of gaming clubs, discussions were initiated about closing all gaming clubs and opening casinos in Paris instead. A 2015 report on the subject recommended either authorising casinos in Paris or reforming the legal framework of gaming clubs. The report highlighted that numerous stakeholders were not keen on the idea of authorising casinos in Paris, fearing that it could negatively impact the image of the city and cause surrounding cities to fear loss of affluence and revenue.

Due to these mixed opinions, the report recommended as an alternative, a reform that terminated the current legal framework of gaming clubs. The current framework is seen as obsolete and not transparent enough. Under the new framework, gaming clubs would be commercial companies instead of associations.

The Ministry of Home Affairs has declared in favour of reforming the gaming club framework. However, no action has yet been taken to reform them and the possibility of having casinos in Paris cannot be excluded yet.

Online gambling

The bill for a digital republic, which has been adopted by the French Parliament and is expected to be promulgated shortly in 2016, contains provisions on online gambling. One of the main additions to the bill is the possibility for licensed operators to pool players with other licensed operators in Europe, provided that an agreement is concluded between ARJEL and the relevant foreign national gambling authority. The bill also authorises ARJEL to send a copy of the cease and desist letters sent to non-licensed operators to the host, and to enjoin the host in the measures necessary to prevent public access to the website of the non-licensed operator.

Also expected at a later stage are tax changes and potentially an extension of the scope of the law to new games. More specifically, taxation (currently based on the overall amount of stakes placed by players) could instead be based on the gross gambling revenue generated by operators. This in particular responds to a request from operators who regularly claim that the tax is too high and not calculated on the right basis.

Social gaming

The regulation of social gaming is not being currently debated in France.

The regulatory authorities

Autorité de Régulation des Jeux en Ligne (ARJEL)

W www.arjel.fr

Description. ARJEL is the governmental authority that regulates online gambling activities and operators, issues online gambling licences, enforces online gambling regulations and fights against illegal gambling websites.

Ministry of Home Affairs

W www.interieur.gouv.fr

Description. The Ministry of Home Affairs is in charge of granting land-based gambling licences and more generally oversees land-based gambling activities.

Online resources

Legifrance

W www.legifrance.gouv.fr

Description. Legifrance is the government entity responsible for publishing legal texts online. It provides access, in French, to laws and decrees published in the Official Journal, important court rulings, collective labour agreements, standards issued by European institutions and international treaties and agreements to which France is a party.

Source: Practical Law

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