On 25th February 2014, the French Competition Authority (“FCA”) obtained a series of commitments from the para-public French economic interest group (GIE) “Pari Mutuel Urbain” (“PMU”) requiring it to create a clear distinction between its on-line horse-race betting business and its brick-and- mortar business.
PMU is an economic interest group made up of 57 horse-race companies which operate horse races at the racetracks at the local level and their two parent companies which organize and regulate horse races at the national level.
PMU had been granted a legal monopoly for the taking of bets on-line and through brick-and-mortar businesses but lost this legal monopoly for on-line bets in 2010 as a result of the EU gaming Directive.
In January of 2012, Betclic Everest Group (“Betclic”), a company operating in sporting bets complained to the FCA that the fact that PMU holds a legal monopoly for brick-and-mortar horse- race bets was allegedly ‘mutualizing’ the bets made through this channel with the bets made on- line on its website Pmu.fr. Betclic complained that by doing so, PMU was considerably reinforcing its on-line offer, offering gamblers higher winnings so that the existence of PMU’s competitors was
The FCA jointly conducted a preliminary investigation with the French Regulating Authority in charge of on-line games (Autorité de Régulation des jeux en ligne).
Following the investigation, the FCA considered that there were two relevant markets, the first being on-line horse-race bets and the second brick-and-mortar horse-race bets.
The FCA noted that, in practice, PMU was indeed mutualizing in a single betting pool (masse d’enjeux) all the on-line bets and the bets made in physical outlets. The FCA found that such pooling enabled PMU to multiply by almost ten the betting pools made for each bet.
In fact, PMU’s on-line offer was more attractive as it benefited from the resources of PMU’s legal brick-and-mortar monopoly. Such practice, the FCA believed, gave PMU three advantages:
- PMU was the sole operator able to offer on-line bets on the arrival in correct order of five horses (Quinté +) with very high potential gains and a daily one million euro jackpot;
- stability of odds thanks to the greater size of the betting pool; and
- PMU was then able to diversify its offer and preserve gamblers’ potential gains.
The FCA also held that because Betclic’s and Pmu.fr’s other competitors did not have the brick- and-mortar legal monopoly, they could not propose to gamblers on-line offers as attractive as PMU’s. Accordingly, PMU’s pooling practice was likely to create a risk of crowding out on-line competitors.
In response, PMU offered to make a clear distinction between, and not to commingle, the on-line betting pool and the brick-and-mortar betting pool. After several further concessions, the FCA accepted PMU’s proposals.
PMU committed to implement the divide between on-line betting pools and bets made in physical outlets only as from 30th September 2015, due to PMU’s technical IT issues and constraints. PMU also made additional commitments, notably relating to creating a functional division between the use of its on-line clients data base and its data-base for physical outlets.
This decision should enable PMU’s on-line competitors in the horse-race betting sector to compete against PMU.fr and offer gamblers renewed and diversified on-line offers.