The European Union’s executive body, the European Commission, said on Thursday that it has concluded an investigation into Française des Jeux (FDJ), France’s largest gambling company, which recently grabbed headlines for its multi-billion acquisition of Kindred Group, another European sector giant.
Four-Year Investigation Finds FDJ to Operate Within Legal Limits
The commission was looking into potential state overreach and examined whether the gambling company had received undue funds from the state to pull ahead against domestic and European competitors. Importantly, however, the commission’s decision reaffirms that FDJ is operating within the European legal framework, and the fees payable by the FDJ to ensure exclusivity in certain verticals are not a breach of that law.
The commission examined the exclusive rights granted to FDJ by the French government, including exclusivity to operate sports betting games and lottery products, as well as whether fees paid for those rights were in line with the law.
The exact stipulation filed with the commission was that FDJ only had to pay $412.98 million (€380 million) to the government to guarantee itself exclusivity and that the amount was “too low,” and therefore violated competition rules.
The commission acknowledged that the fees were slightly below what would be considered “fair,” but did not find any malicious intent. In the meanwhile, the FDJ has agreed to pay adjusted fees of $518 million (€477 million).
FDJ holds exclusivity from 2019 to 2044, and the challenge is that amounts to too little per year under the original agreement. However, the commission has found that the adjustment more than satisfies the terms of the agreement and that the resulting agreement – factoring in the increase in fees – did not constitute “state aid.”
France Will See Big Changes to Its Gambling Laws
FDJ holds exclusivity rights to operate both offline and online lottery games along with offline sports betting contests. France is in the midst of considering whether it should expand its offer to include online casinos. Sports betting is already regulated, and available online but FDJ does not hold exclusivity on the Internet sports betting market.
A recent attempt to legalize online casinos has been put on the backburner under protest from local leaders and the industry. France, though, is unlikely to avoid the elephant in the room for a lot longer and online casinos will be legalized eventually. In the meantime, the FDJ will have several decades of unchallenged operations in several high-yielding sectors.