(News Bulletin 247) – The title of the gambling operator fell significantly on the Paris Stock Exchange this Thursday while the executive is working on an increase in levies on the gross product of games of different types of activities.

The calendar is not necessarily happy for FDJ. While the company has just changed dimension by finalizing, on Wednesday, the takeover of Kindred, owner of Unibet, a new threat has caused its share price to fall.

Around 10:45 a.m., FDJ shares dropped 7.2% on the Paris Stock Exchange, showing the biggest decline in the SBF 120.

An analyst linked the decline in the stock to press reports reporting an increase in taxes on gambling. “It should be noted that FDJ already pays high taxes. The levies represent around 20% of the stakes collected by the group and 65% of the gross gaming revenue, which means that the company pays a total of 4.2 billion euros to the State”, underlines this intermediary.

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More than 4 billion euros in deductions for FDJ

In 2023, FDJ collected 21.2 billion euros in stakes from players. But this figure absolutely does not correspond to its turnover.

Of this figure of 21.2 billion euros, the group returns 14.5 billion euros in winnings to players. This leaves 6.7 billion euros of “gross gaming product”. Then, the company effectively remits 4.2 billion euros in public deductions. The remaining 2.5 billion euros corresponds to the net revenue from FDJ games. By adding other non-gaming activities (140 million euros) to this net gaming revenue, we arrive at FDJ’s turnover.

FDJ explains, in its universal registration document, that public deductions are affected in different ways. On the lottery, for example, public deductions represent 65% of the gross product of the games, with 5.1% allocated to the National Sports Agency, 6.2% to the CSG, 2.2% to the CRDS and 54 .5% to the general state budget.

On horse racing betting, 50.9% of gross gaming revenue is allocated to public levies, a figure which rises to 41.1% for point-of-sale sports betting and 54.9% for online sports betting.

To further complicate the situation, online poker taxation is based on stakes and not on the gross proceeds of the games.

Towards an increase in the CSG rate

According to Les Echos, the government plans to modify social security contributions on various gambling games (casinos, sports betting, lotteries, online poker) so as to find 500 million additional revenues for the “family” and “illness” branches of the Social security. This measure would appear in the social security financing bill (PLFSS) expected next week in the Council of Ministers.

According to the daily, the government’s plan would plan to increase various tax rates. That of the CSG levied on the gross product of games for the lottery and casinos would increase from 6.2% to 8.2% or 9.2% while that of horse racing betting would increase by four to five percentage points. Furthermore, the executive would plan a new tax on advertising expenditure in the sector.

The executive would highlight the risks of addiction linked to gambling to justify the measure. On this point, FDJ has set itself, in its strategic plan, an objective to reduce the proportion of “at risk” players. In 2025, their contribution to gross gaming revenue must be reduced to less than 2%.

Contacted by News Bulletin 247, a spokesperson for the Minister responsible for the Budget and Public Accounts, Laurent Saint-Martin, did not comment, referring to the presentation of the budget projects for 2025 next week. FDJ, for its part, did not comment.

Remember that analysts have recently shown optimism on FDJ stock. Deutsche Bank moved to purchase at the beginning of September and Bernstein initiated his “outperformance” coverage in July. The two research offices particularly appreciate the defensive qualities of the action and the internationalization of the group enabled by the acquisition of Kindred.

Bernstein also put into perspective the threat of an unfavorable verdict from the European Commission, which opened in 2021 on the exclusive rights granted by the French government to FDJ as part of its privatization.

The market feared that the group would pay a significant price supplement, with Citi citing a figure of 1.5 billion euros in 2022. Bernstein estimated that, assuming that the European Commission actually requires a price supplement, the bill would not exceed not 368 million euros.