French legalization talks cause cautious optimism

French officials are in Brussels to discuss a possible opening up of the French online gambling market. The talks may constitute a first step toward a liberalization of French gambling policy, but business commentators expressed skepticism at the development.

Recently, the European Court of Justice threatened France with legal action. The court moved to prosecute France over its existing gambling monopoly, which grants exclusive gaming-operation rights  to gambling companies Pari Mutuel Urbain and Française des Jeux.

The French government has expressed a readiness to comply with requests to loosen the monopoly, but not without conditions. France does not currently adhere to the "mutual recognition" principle, which would allow companies in offshore jurisdictions such as Gibraltar and Malta to operate freely in the French market.

Instead, in order to offer their services to French citizens, such companies would be required to establish branches in France.

French authorities also want to limit private operator payouts to 70% of their proceeds, compared to the industry average of 90% or more. Such a policy would bring private operator payouts into line with the amounts handed back to players by the state-owned companies.

Of course, this would effect a huge increase in the so-called house edge, or, with regard to poker sites, the rake. In general sites with unusually hefty rakes are unattractive to online players.

In a pertinent real-world example,  the very low rakes in poker games on the Swedish state-owned Svenska Spel Web site are the cornerstone of the site's appeal to Swedish players.

Online gambling operators welcome the developments but suggest that sound gambling regulations preferably be modeled upon vigorous systems like the ones already operating in Malta and the U.K.,  for example.

"We're listening, and the fact that there is a dialogue is encouraging. But customer demand and technology will always circumvent any of those restrictions. This is a step in the right direction but it's not good enough," said Petter Nylander, chief executive of Unibet.

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