Online poker has declined for a third straight year in France and the country has lost half its online poker business, according to a recent report from French gaming regulators.
And that should be a warning to U.S. states contemplating allowing online poker, writes columnist Greg Shaun for pokersites.com.
Online play in France has been declining since 2012. Once occupying more than 5,700 seats on 30-day roving averages, traffic is now averaging just 2,600 virtual chairs, a decline of more than 54 percent.
ARJEL, the regulatory authority for online games, has blamed France’s high taxation rates for chasing away several online platforms. Microgaming, Full Tilt, OnGame, Barriere Poker and Partouche have all left the country’s market, leaving just five rooms including market leader Winamax, Shaun writes.
According to ARJEL, the effective task rate on iGaming in France is 46.30 percent compared to Denmark’s 20 percent, England’s 15 percent and even Spain’s 25 percent, for example.
Lawmakers in France, however, are unwilling to reduce its seemingly exorbitant tariff, a decision that, according to ARJEL, runs the risk of losing over 2,000 jobs as continued networks flee the market.
“AFJEL is calling on French authorities to adjust the tax system to only gross profits instead of gross revenues, and also reduce tax rates to mirror other European Union markets, two concepts that will likely fall on deaf ears,” Shaun says. “It’s understandable countries that legalize online gambling want to make a profit, but it appears the French are kissing the industry goodbye through the squeezing of revenues. And other jurisdictions would be smart to learn from France’s mistakes.”
Shaun points to Pennsylvania, which is considering legalizing online gaming. The leading bill in the state, however, sets a tax rate of 54 percent.
“The government taking more than half of the cake before it’s even served isn’t exactly the warm welcome gaming companies will be looking for when considering their next market entry,” Shaun says. “Taxes are, unfortunately, a needed evil to properly run a strong government. They fund everything from education to defense, but taxing one industry in particular to the point where it ceases to exist obviously only leads to a reduction in overall tax revenue. After all, a 10 percent tax on $10 million translates to more generated tax revenue than a 45 percent tax on $1 million.”
