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France: the sector’s inevitable historic underperformance

By - 21 September 2020

The French gambling market is worth around €50bn in bets and €11.1bn GGR. There are five game categories in the French market – lottery games online and retail (FDJ); Sports betting online and retail (FDJ and 14 approved operators); horse betting online and retail (PMU and eight operators); online poker (six operators) and casinos and circle games.

The PMU has over 13,155 outlets, the FDJ has 30,460 PoS, there are 230 racetracks in France and 202 casinos.

Online gambling in France accounts for over 11.6 per cent of gambling revenue. The growth of online gaming saw an 18 per cent increase in 2019 of GGR to €1.4bn in total made up of sports betting, poker and horse racing.

The French casino sector saw a 4.8 per cent growth beween 2018 and 2019 in GGR to €2.4bn, the fifth consecutive year annual increase and the highest in 17 years. The sector had revived after big drops in the late 2000s.

Visitor figures were up to 33.5m and electronic games spend was increasing. Casino slots saw a GGR of €2.02bn and table games €391.1m in 2019. The casino with the highest revenue was Enghien (Barrière) with €161.6m.

The FDJ reported an annual turnover of €17.2bn is up eight per cent on 2018 showing positive results after partial privatisation. GGR was €5.5bn made up of lottery with €4.6bn and sports betting €845m. The PMU horse racing monopoly saw gross proceeds from 2019 games of €1.9bn.

There were around 194,000 cases of Coronavirus and 30,300 deaths as of August 5, whilst the largest concentration was around Ile-de-France region, which incorporates Paris.

France banned large gatherings on March 8, whilst schools and business were closed on March 12. Borders closed a week later.

The first phase of de-escalation began on May 11 when horse racing was resumed, this was followed by the second phase on May 28 and third phase on June 22. This third phase saw flights and transport begin again and schools, hotels, bars and cafes also re-opened. Stadiums and racetracks opened on July 11.

The casinos were all closed down in mid March and on June 2 those casinos in ‘green zones’ (low risk of transmission) were permitted to re- open. Those in ‘orange zones’ (high risk) remained closed for a while longer which included the Paris and Ile- de-France area.

ANJ, the new gaming regulator which oversees all gambling in the country, reported that the virus showed little impact during the first quarter with GGR up 21.8 per cent year on year to €435m in total, driven by sports betting with €263m compared to €222m in 2019, an 18 per cent increase with the highest revenue coming from football betting (€162m).

Major French domestic leagues were suspended from March 13 and stakes were down 40 per cent in March having risen 11 per cent in January and Febraury. GGR for poker duirng the first quarter of 2020 was €98m compared to €68m in 2019. This increase was partly down to lockdown. The last two weeks of March saw player activity up by 180 per cent.

Online gambling has been booming and turnover increased by 66 per cent over the last five years and exceeds €1bn. There were around four million active player accounts in 2018. Sports betting has been the main driver of growth and the number of active players has tripled in five years.

FDJ has predicted losses of about €120m in revenue and €50m in EBITDA core earnings for this year in its sports betting division as a result of the virus. Around 80 per cent of its sales network was allowed to remain open duirng the nationwide lockdown although sporting events were cancelled.

Meanwhile the virus has dashed the hope of France reaching its 100 million foreign tourist target this year. Tourism usually contributes almost €80bn to the GDP of which 30 per cent comes from international visitors and 70 per cent domestic spend. It is worth 9.7 per cent of GDP.

POST CV19 OUTLOOK – by Philipe Bon

“France has 202 casinos and eight gaming clubs in Paris. From March 14 2020, all these establishments had to be completely closed by a government decision, due to the Covid crisis. All of the 15,000 employees, with a few exceptions (security functions) were placed on partial unemployment. A large part of the wages were covered by the State, which means that a social catastrophe has been avoided, at least for the time being.

“The total closure lasted until June 2 and most casinos were allowed to reopen, but without table games. It was not until June 22 that all games were authorised.

“In order to prepare for re-opening as soon as possible, casinos and clubs made urgent investments to be able to comply with health instructions. The employees were trained accordingly and they have all put in a tremendous amount of energy to ensure that locations re-open in perfect conditions to guarantee their protection and that of the customers.

“The imposition of health regulation brought two measures that have had an impact on the activity: the distance from play stations and the wearing of masks for customers. As a result, only 70 to 80 per cent of the slot machines are active and many customers do not come or stay for a shorter time, because they find it difficult to tolerate the mask.

“GGR annual loss compared to the previous year reached –35 per cent at the end of May just before the partial re-opening. By the end of July, which was the first full month of opening, the loss had narrowed to -29 per cent. Activity is far from having regained its normal rhythm. This season will certainly constitute a historic underperformance. At this stage we do not know if casinos, some of which were economically fragile before the health crisis, will be able to survive.

“The other activities of casinos, restaurants and cultural events have not recovered to their pre- crisis level either. We therefore still have around eight per cent of employees in a position of partial unemployment. This is an important problem and we strongly hope that the end of the crisis will make it possible to regain full employment for all.”

Philippe Bon is the General Delegate of the professional employers’ trade union Casinos de France representing 154 casinos and five gaming clubs. The union defends the professional interests of its members providing research and representation.

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