The ruling party in government in France is En Marche. Led by President Emmanuel Macron, the party is planning to privatize Francaise des Jeux (FDJ), the state-owned lottery and gambling operator. However, there is more to this deal than initially meets the eye.
Background to the deal
It was confirmed on Tuesday that the En Marche government is planning the privatization of FDJ. However, this deal looks like it will come to fruition only if a few conditions are met.
FDJ, established in 1976, operates the national lottery, sponsors the FDJ professional cycling team, and offers a variety of online games and sports betting.
The French Assembly is calling on En Marche to restructure the current regulatory framework for gambling in France. The reason En Marche wants to privatize FDJ is that one of its key initiatives is called the “France enterprise and innovation program.”
This will see certain state-run holdings being privatized, such as postal services, railway stations, and airports. The French Assembly has given its approval for En Marche to go ahead with the sale of the 72% stake that the government has in FDJ. This came with the condition that new regulations for the country’s gambling sector be established.
Specifically, the Assembly wants an independent supervising body that will make sure that the buyers of FDJ fall in line with the requirements of civic, fundraising, and social responsibility standards. The Assembly is also advising that the government should create a new authority for gambling regulations that would overlook all aspects of betting and gaming in France.
Gambling regulation in France
The current structure for gambling regulation in the country falls under three different groups. ARJEL monitors the online gambling offerings, the finance ministry is in charge of the general regulation of gambling, and the French Agricultural Department ensures that horseracing laws are followed.
This three-pronged approach can be made a lot more efficient, according to the French Assembly, if these groups are unified into a single organization. There have been instances of this level of inefficiency in recent years, with certain gambling stakeholders in the country having been negatively affected by double guardianship while running their licensed gambling services in the nation.
The FDJ privatization plan has been on the cards for some time now. A lot of the government’s ministers see the company as operating in an area that the state should not be involved with.
It is believed that the party hopes to sell the stake for about $3bn (£2.6bn), which would be a decent short-term injection into the government’s finances.
Other European gambling privatizations
There have been other instances of governments in Europe deciding to privatize state-owned gambling institutions. In January of this year, it was announced that the state-owned casino operation in the Netherlands, Holland Casino, which had held a monopoly on the gambling market in the country, will be privatized in the coming two years. The operation has 14 casinos throughout the nation and is the only legal provider of casino games in the country.
The government in the Netherlands had originally planned to sell the casino group back in 2012 but, following significant losses in 2012 and 2013, they decided to hold off on the sale. A loss of $810,000 (£700,000) in 2012 increased dramatically to a loss of $25.5m (£22m) in 2013. This meant that Holland Casino was one of the few casino chains in the world operating at a loss.
Following a significant cutting of costs, changes in personnel, and restructuring, Holland Casino has recovered from this rocky period. It made profits of $14m (£12m) in 2014, $77.5m (£67m) in 2015, $85.6m (£74m) in 2016, and $85m (£73.5m) in 2017. Therefore, it is in a strong position now to be sold at a price above the $1bn (£860m) mark.
In 2013, the Greek government sold most of its stake in the OPAP gambling monopoly, one of the largest gaming operators in Europe. This stake was sold for $870m (£752m) as part of the country’s economic bailout conditions. The two state-run lotteries were also sold to drum up revenues to help overcome the country’s economic crisis.