Taxing online casinos is a balancing act for governments. High tax rates can push operators out of the market or lead players to seek alternatives in unregulated platforms, while low rates may fail to provide adequate public revenue. The challenge lies in creating a system that regulates the industry, protects players, and remains financially viable for operators. Striking this balance is essential to maintain competition, foster market growth, and secure long-term economic benefits.
The 2025 tax proposal: Key details and objectives for online casinos
The French government plans to introduce a 55.6% turnover tax on online casinos, making it one of the highest rates in Europe. Unlike profit-based taxes, this turnover tax applies to the total bets placed, regardless of the casino’s profits. The government’s goal is to secure stable revenue from a rapidly growing industry and address its budget deficit.
This tax structure presents several challenges for operators. Even during periods of low profitability, they would still need to pay a significant portion of their turnover. This could lead operators to reduce player bonuses or modify game features to offset losses. Such changes may affect the market’s attractiveness to players.
France’s taxation framework also includes taxes on winnings on online casinos, requiring players to pay a 12% tax on winnings exceeding €1,500. While this policy increases state revenue, it could discourage high-stakes players. These players might opt for platforms based in lower-tax jurisdictions, further reducing the market’s competitiveness.
The government hopes that regulating online casinos will help recover part of the estimated €1 billion currently generated by unregulated platforms. However, the high tax burden raises concerns about the risk of driving both operators and players toward unregulated markets. Finding a balance between fiscal goals and market competitiveness is critical.
Comparing France’s taxation with other European markets
France’s proposed turnover tax far exceeds those in other European countries. For instance, Germany imposes a 5.3% turnover tax, allowing operators to stay competitive while contributing to state revenue.
The United Kingdom uses a 15% tax on gross gaming revenue (GGR), a profit-based model that supports market growth. This system has helped create a thriving gambling market, attracting both domestic and international operators.
Malta, a major hub for online gambling, offers a low 5% GGR tax. This competitive rate has established Malta as a favorable location for operators, fostering significant revenue generation for the country. Estonia similarly applies a 5% tax on net profit, supporting a healthy and regulated market. Meanwhile, the Czech Republic uses a tiered system with rates reaching up to 35% for certain gambling activities.
Implications for online casino operators and players
For operators, the high turnover tax means tighter profit margins and difficult choices. Many may cut back on promotional offers or increase house edges to maintain profitability. These adjustments could make regulated platforms less attractive compared to international competitors.
Players may also feel the impact. Higher house edges and fewer incentives could prompt them to look for alternatives in jurisdictions with lower taxes. This trend could weaken the regulated market and increase reliance on unregulated platforms. Such outcomes undermine the intent of the tax, which is to promote consumer protection and increase state revenue.
Eloise Lambert, an expert from jouerenlignefr.org, emphasizes: “The government’s intentions are clear, but such a steep tax rate may inadvertently push both players and operators toward unregulated markets. A more balanced approach is necessary to maintain market integrity and consumer trust while achieving fiscal goals”.
Economic impact and revenue goals
The French government expects significant revenue from legalizing and taxing online casinos. Below are the key impacts and projections:
- Projected Revenue: Regulation could help recover up to €1 billion lost annually to unregulated platforms, providing a substantial boost to state funds.
- Market Growth Potential: The European online gambling market is expected to reach €49.95 billion in gross gaming revenue by 2025, with France positioned to benefit if its market remains attractive to operators.
- Job Creation: The sector may generate employment in areas like technology, customer service, and compliance, contributing to economic growth.
- Consumer Protection: Regulation would introduce stricter oversight, reducing risks such as fraud and unfair practices common in unregulated platforms.
- Impact on Traditional Casinos: Land-based operators could face increased competition from online platforms, requiring strategic changes to retain customers.
- Tax Compliance: Legalization can improve transparency, ensuring operators report revenues accurately and contribute their share to public funds.
- Technology Advancements: The regulated environment could drive development in secure gaming platforms, payment systems, and data management technologies.
Critics warn that excessively high tax rates may discourage operators from entering the market.
Conclusion
France’s taxation strategy for online casinos is bold but poses significant risks. High taxes could reduce market participation, drive players to unregulated platforms, and weaken consumer protections. To avoid these outcomes, France must strike a balance between generating revenue and maintaining a competitive industry. Collaborative efforts between policymakers and industry stakeholders will be essential for fostering a sustainable and well-regulated market. By aligning fiscal policies with market realities, France can achieve long-term benefits for players, operators, and the economy.
