Ladbrokes will not launch in France and has pulled out of its proposed sports betting joint venture with Canal+ after it decided tax conditions made the market economically unviable.
The decision coincides with Unibet being awarded sports betting, poker and horseracing licences by French regulator ARJEL, reported La Tribune on Friday. The operator said it hoped to go live by late 2010 or early 2011.
Commenting on Ladbrokes’ decision Gary McIlraith, Ladbrokes managing director of digital channels, international and strategy said: “Together with our partners we have concluded that the French market is now taxed at such a prohibitive level that it does not represent an attractive investment. We will continue to monitor the French marketplace but for the time being will not progress with the launch plans.”
A Ladbrokes spokesman added that the recent confirmation by French authorities that operators would also be required to pay VAT had been the final straw. “Online gambling services in France are already subject to turnover-based taxes and payments to sport and it was recently confirmed that they would also be subject to VAT charges. Initial market size figures from ARJEL have also been below expectations,” he said.
Ladbrokes’ French withdrawal comes only two weeks after French regulator ARJEL released its initial data on the performance of the legal market in its first four months since it launched in June. This showed it was just a quarter the size of the offshore market prior to regulation, despite ARJEL’s figures now including contributions from former monopolies PMU and FDJ.
Chief executives of new market entrants including Nicolas Beraud of BetClic owner Mangas Gaming, Alex Dreyfus of Chiligaming and Emmanuel de Rohan Chabot of ZETurf last week used the platform of France’s first ever egaming conference, Monaco’s iGaming Exchanges, to call for tax rates, betting duties, the registration process and payback conditions to be revised. According to Beraud, the French system was failing to bring the illegal market onshore and in its publicly stated aim of protecting the consumer.
Ladbrokes joins Sportingbet and Paddy Power as high-profile operators which decided against entering the market on a B2C basis, with Sportingbet also opting to cancel its B2B agreements with newspapers Le Monde and L’Express.
Unibet’s announcement in May that it was to enter the French licensing process led to 25% of its share price being wiped out the following week, with investors worried about only a marginal contribution from a key market due to high tax rates and the absence of Unibet’s core casino product. In August, chief executive Henrik Tjarnstrom was then forced to defend the prospect of zero revenues from France in the third-quarter of 2010 due to this decision.