Five years after the liberalization of gambling on the Internet and the rush towards a supposedly lucrative sector, the results are gloomy.
April 2010: Online poker is authorized in France. A green light that investors were waiting for to embark on this new El Dorado. The French, however, had not waited for the legal framework to get started: there were already many players on the virtual green carpets.
As soon as the market opened, the online gaming regulatory authority (Arjel) issued licenses to 11 operators . The former monopolies are then in the running: the Française des jeux joins forces with the Barrière casinos to create the Barrière Poker site and the PMU launches with PartyGaming .
Other financial groups are also trying their luck: the Mangas Gaming group – owned by businessman Stéphane Courbit and Monaco’s Société des Bains de Mer (SBM) – is developing Everest Poker, TF1 is opening its EurosportBet site dedicated to both in poker and online betting. The major specialized global players are of course on board. The English site Winamax is taken over by the singer – and poker player – Patrick Bruel and the founder of the Meetic site Marc Simoncini, while PokerStars entrusts the management of its French subsidiary to Alexandre Balkany, son of UMP deputy Patrick Balkany.
Stakes plummeting since 2011
Five years after this start with fanfare, it is an understatement to say that the initial enthusiasm has died down: the latest economic balance sheets reflect a deep crisis in the sector.
4.5 billion After a very strong growth in their beginnings, bets recorded in online poker never stop declining, according to figures from Arjel. These bets correspond to the money invested in “cash games” , where players can leave the game at any time. In 2011, they reached their peak, at more than 6.5 billion euros. In 2014, they fell to less than 4.5 billion. However, players shun less tournaments, whose entry fees are growing fairly continuously. But they remain much lower than cash games with only 1.5 billion euros generated in 2014.
Poker: player stakes down since 2011
Still amounting to several billion, these numbers may seem impressive. Poker remains here far ahead of sports betting and horse betting, the two other types of gambling authorized since 2010. But we must subtract from these figures the winnings, which return, logically, to the winning players. The “player return rate” is high in poker, around 97% compared to 75 to 82% for sports and horse betting.
Once the subtraction has been made, the finding is worrying for professionals in the sector: poker turnover is now lower than that of horse racing betting and barely higher than that of sports betting.
17 poker sites shut down
Result: even by reducing their marketing expenses and the budget dedicated to communication campaigns, legal sites are struggling to meet their market share objectives. Especially since the sector is heavily taxed. The overall operating result is ultimately negative: online poker ends 2013 with a loss of 9 million euros. This is less than in 2012 (when it lost 35.6 million euros) but it remains far from the tremendous growth on which the sites were counting when they were launched.
Some have therefore preferred to quit the game before losing their feathers: this is the case of Partouche Gaming France and LB Poker in 2013 , yet two big names in games of chance. LB Poker was born in 2010 from the association of Française des jeux and Barrière, the number one casino. In three years, the company had accumulated 71 million euros in operating losses. Same fate for Partouche Gaming, yet launched by Partouche, another casino heavyweight.
The 25 professionals approved in 2010 are now 8. The weakest are forced out of the sector and only the leaders Winamax and Pokerstars are doing well by capturing three-quarters of the stakes.
These two sites, older and based abroad, attracted French players even before obtaining their approval from Arjel. And this is what the other operators reproach them for, as La Française des jeux declared before withdrawing from the market : “We left the operators who had acquired notoriety and a market share illegally to sue their activity. This did not allow our subsidiary to find its place . »
How to explain the debacle of online poker?
Fewer bets, fewer turnovers, fewer sites, the crisis that is shaking the sector probably has several causes.
First factor: the end of a fad
In 2010, poker is booming , gaming sites are authorized and many novices are trying their luck on green carpets, virtual or not. Barely four years later, the number of players is decreasing.
An argument regularly put forward but to be tempered: it is not because the authorized French sites are deserted that the practice of poker is abandoned.
Second factor: the economic crisis
In its latest report, Arjel also holds the vagaries of the economic situation partly responsible for the current crisis, with household leisure spending being tightened. But according to this scenario, the turnover of horse racing and sports betting should also suffer. However, it is not the case.
Third factor: competition from unauthorized sites
The role of Arjel is to limit access to unauthorized online games, which were already numerous before the enactment of the law. Five years later, the Arjel declares that it has “drastically reduced illegal supply” . At the end of 2013, 833 sites complied with the law following a formal notice, and 36 were blocked by Internet service providers.
47% of poker players still admit to playing on illegal sites, according to a 2012 survey by the Observatoire des jeux . .
Fourth factor: excessive taxation
Online poker sites pay a tax based on players’ bets : 1.8% of the sums involved are deducted. To revitalize the sector, the Arjel recommends moving the tax on the gross gaming product , the money not returned to the players. A tax that would be more suited to the situation of online poker.
By closing the door to non-approved foreign sites, the law obliges French players to play only with each other. Who says fewer players, says fewer bets. To give a breath of fresh air to poker, Arjel recommends opening the liquidities of virtual tables to certain foreign markets, such as Spain or Italy, which also work with national authorities.
Fifth factor: unattractive games
Poker has several variants, but the only game modes authorized online are “Texas hold’em” and “4-card Omaha”. A lack that makes sites based abroad more attractive to players.
English legislation, a model to follow?
Elsewhere in Europe, however, online poker is the delight of many operators. The United Kingdom is known to be a destination of choice for high-level players, despite tougher legislation since October 2014 – across the Channel, poker rooms must now obtain a license and the income generated by players is taxed at height of 15%. But the European Union has other poker havens with more flexible legislation, such as the island of Malta, Estonia, or Denmark.
Should the legislation be relaxed in France? If nothing is done, online poker may continue on this slippery slope. Arjel, aware of the problems of the sector, has only an advisory role on the question. The ball is now in the court of the government , which is responsible for any decision on taxation or the opening up to new variants.