For ARJEL president Jean-François Vilotte, online poker in Europe needs liquidity sharing

25 October 2013

The drop in online poker revenues across France and other regulated markets in Europe is  mainly an issue of liquidity and player numbers rather than purely related to high levels of taxation, Jean-François Vilotte, president of France's igaming regulator ARJEL, has told iGamingBusiness.

Commenting on ARJEL’s third quarter figures published this week which showed that stakes for online poker cash games in France had dropped a dramatic 21% to €1bn, the highest decline in activity since the market regulated in 2010, Vilotte said: “The fiscal argument (most notably the system of taxation on stakes) should not be neglected, but it isn’t the only cause. Italy has much lower taxes than France for poker but activity there has dropped at three times the level than here. However, France’s online poker market, like its Spanish and Italian neighbours, operates on national liquidity only. On a product such as poker, this produces a natural concentration of activity among a few dominant sites: 90% of the stakes are recorded by three operators. For cash games, 1% of the players generates 60% of the stakes and when player numbers drop even a little, this leads to a significant drop in stakes. The risk for the regulator is that these players go looking for stronger liquidity and find their way to illegal sites.”

New poker variants should be launched so that operators can vary their offerings to players, according to Vilotte, however, ARJEL does not have the legal capacity to do this for poker, which still comes under the Ministry of Interior’s authority, but does for online betting.  
 
As gaming regulators from Italy, Spain, Denmark and France meet up regularly to exchange data and insights, talk of liquidity sharing between regulated sites from those markets is often mooted as one obvious way of stemming the negative trends currently surrounding poker.
 
Vilotte agreed, but also cautioned: “We hope to convince the relevant authorities of the need for new variants and international liquidity between countries with comparable regulatory standards and within the framework of an agreement between regulators.” The ARJEL president added that his organisation could only propose such changes and France’s legal statutes would have to go through parliament to enact them.
 
Online betting continued to grow in France during the third quarter of 2013, with stakes rising 17% to €182m (€584m for the nine month period) compared with €156m during the same period in 2012. Gross gaming revenues for French-licensed operators rose 15% to €31m during the quarter, up from €27m in 2012, with football generating nearly €20m of the 2013 figure.
 
Asked if he was surprised by the vertical’s good health, especially when taking into account much of the pessimism and gloomy predictions shortly after market regulation, Vilotte said he wasn’t. “We always thought the downbeat statements (about the sector) didn’t make sense. The market had to acclimatise, find an equilibrium and the offer had to evolve while ensuring sporting integrity levels were not compromised.”
 
For the ARJEL president, his organisation’s ability to enable the evolution of the offering played an integral role. “We have the (legal) ability to do that and we work in a constantly evolving environment by maintaining dialogue with the operators and sporting bodies. That is how it should be done. Stakes have risen, not because punters are betting more, but because there are more of them (+17%, 106,000 active player accounts in Q3 2013 against 92,000 in 2012) as more French people become interested in sports betting in one of the most secure markets in the world.”

As 2013 did not have a major sporting event, Vilotte added that the football World Cup in Brazil next year could provide a boost of around €100m in stakes to the sector, as long as France manage to beat Ukraine in the play-offs in November.

Online stakes for horse racing pari mutuel dropped 2% during the third quarter of 2013 to €255m, gross gaming revenues were €1m down on 2012 to €60m. Stakes for the nine month period were up 0.5% on 2012’s €829m to €833m. The market will be broadly stable in 2013. 

For Jean-Francois Vilotte, the ideal scenario for a regulated market such as France is one where the legal offer pushes out the illegal one and offers operators a viable working environment, which ARJEL has managed to do for the country’s online betting sector, by having a “reactive offer, which has adapted without prejudice and has been able to evolve. This is not the case for online poker, where the regulator does not have the legal capacity to modify the offering”.