The new Law 2010-476 of 12 May 2010 (the Law) is designed to open up competition and regulate online gambling and gaming in France. The Law follows the reasoned opinion sent in 2007 by the European Commission requesting that France amend its legislation in order to put an end to obstacles to the free movement of sport betting services.

Reform Limited in Scope

Online gambling and betting are now authorised but are subject to strict rules. In short, online horse bets should be exclusively in their mutual form, while betting odds and live betting are also authorised for online sports bets. Authorised cash games are limited to online poker; other online casino games, such as slot machines, roulette and black jack, are still prohibited.

Necessary Authorisation

Online operators must obtain authorisation granted by ARJEL, the new regulatory authority. In the first five months, ARJEL has granted authorisations to 31 operators. The authorisation is valid for a renewable five-year period and is not transferable. Online operators should have the technical and financial capacity to comply with their obligations, which relate notably to the combating of fraud and money laundering, the prevention of gambling addictions and the implementation of measures to prevent minors from gambling. They should set up a dedicated website with a “.fr” domain name, be established in the European Union, Iceland or Norway, be sure of the identity, age and address of the player, and hold an account in a bank established in the European Union. All information must be submitted in French.

Controls and Sanctions

Operators offering online gambling activities without authorisation are subject to three years’ imprisonment and a €90,000 fine, while companies may be fined up to €450,000 and can be prevented from requesting an authorisation for five years. Authorised operators in breach of their obligations can have their authorisation suspended, cancelled or reduced and can be fined.

ISP Obligations

The Law grants ARJEL the power to ask internet service providers (ISPs) to block access by French players to illegal gambling websites. Before implementing this procedure, a letter of formal notice is issued, demanding that the unauthorised online operator stops its activities within eight days. The Paris Court of First Instance has already applied this procedure by ordering ISPs to block French players from accessing, subjecting them to a €10,000 daily fine if the website was not blocked within two months.

Advertisement Obligations

The Law provides that broadcasting advertising in favour of approved operators shall be accompanied by a message warning against excessive or compulsive gaming. Advertising is prohibited in publications, audiovisual communication services and online services directed at minors, as well as in cinemas when it can be viewed by minors. Failure to comply with advertisement obligations can trigger a fine of €100,000, which can go up to four times the amount of the advertising expenses.

Competition Issues

The French Competition Authority has decided to analyse the competition questions likely to arise in this sector. The market access conditions (notably the agreements providing betting rights), the subsistence of monopoly activities, as well as the existence of vertically integrated operators and the pricing policies applied by operators, such as tied reductions or loyalty-building discounts, are under scrutiny. The French Competition Authority’s opinion, which will provide guidelines to authorised operators, is expected by the end of 2010.