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Room For Evolution in France?

| By iGB Editorial Team
With an amendment to allow EU-wide poker liquidity sharing set to pass and operators now allowed to offer fantasy sports, French authorities finally seem to be taking steps towards addressing the lack of appeal of the regulated offer.

The French online gambling and gaming landscapes are experiencing significant change from a regulatory perspective and we can expect to see more over the next few months. It’s as if the attractiveness (or lack of) of the French gaming market had begun to raise serious concerns among legislators as requiring drastic action. Better late than never…


One of the hottest topics of 2016 within the French online gaming sector is the potential regulation of e-sports via the Draft Law for a Digital Republic, currently under discussion before the French Parliament. Considering the huge popularity of e-sports in France (generating more than $22 million of income a year in France and growing at 10% per annum), it was high time that the legislators gave serious consideration to e-sports.

To date, e-sports have existed in a grey area regarding the lawful organization of such competitions on French territory. Video gaming competitions are currently considered as falling under the ban on prohibited lotteries, despite the ongoing organization of many e-sports events in France under a regime of “administrative tolerance”.

In an attempt to address this issue, the Draft Law for a Digital Republic includes an article setting out a legal framework applicable to e-sports, the current draft of which has been widely criticised for placing practical obstacles in the way of their effective organization.

This draft article (i) creates the obligation for the organizers of video game competitions wishing to operate land-based e-sport competitions in France to apply for a specific licence granted by the French Ministry of Youth; (ii) specifies that the competitions operated by licensed organizers would not fall under the prohibition applicable to lotteries under French law; and (iii) provides for the definition by Ministerial Order of the video games authorized in the context of competitions.

In tandem in early 2016, the French Prime Minister assigned two Members of the Parliament to develop a legal and regulatory framework to promote the development of video gaming competitions in France, in order to define the regulatory framework to be applied to e-sports. The two MPs issued their Intermediary report regarding the competitive practice of video games (e-sports) in March 2016.

This report notably recommends clarifying the current legislation by providing an explicit exemption for landbased video game competitions from
the general ban applicable to prohibited lotteries (i) where the registration fees required are limited to a contribution to the organization costs and do not correspond to wagers; and (ii) provided that the organizers of the competitions are subject to proportionate declaration obligations.

As the discussions on the Draft Law recently began before the French Senate, several amendments to the “e-sport” article were filed, in line with the recommendations made by the parliamentary report (such as the creation of specific employment contracts for professional video game players, exemption under specific conditions from the general ban on prohibited lotteries currently applicable to land-based video game competitions, etc.). Lively exchanges in the French Parliament can be expected ahead of a legal and enforceable e-sports legal framework coming into force in France.

From an online gambling perspective, it is interesting to note that the concerns of French legislators are clearly focused on the regulation of video gaming competitions and not on the potential bets taken on their outcome. In fact, on the topic of e-sports betting, the parliamentary report expressly stated that: “The organization of bets is currently prohibited and the mission does not make a proposal to authorize these bets, as the sector is not yet sufficiently mature”. The regulation of e-sports betting is therefore clearly not considered a priority issue by the French legislators.

Liquidity pooling

After years of waiting, the sharing of liquidity at the European level for online poker players may finally become a reality in France, as an amendment authorizing online poker liquidity sharing with other jurisdictions was also filed within the aforementioned Draft Law for a Digital Republic.

In practical terms, this amendment, if adopted, would authorize online poker players holding a confirmed account with an operator licensed by ARJEL to wager against players registered with operators licensed in other EU Member States. To be authorized, the following conditions would also need to be met:
• Liquidity sharing would only be possible with players registered with operators licensed by a regulator with which ARJEL has signed an information sharing agreement;
• French-licensed operators would need to apply for ARJEL’s express authorization to open their online poker tables to players registered in other Member States. ARJEL appears to be confident that this amendment will pass, as it highlighted in a press release earlier this year that: “On the 28th of October 2015, while speaking at the Symposium organized by ARJEL (the French online gambling regulations authority), the Budget Minister reaffirmed the government’s support to this measure”. 

Fantasy games 

ARJEL initiated discussions in early 2016 with its licensed operators on the introduction of “fantasy” offers through the online sports betting services offered by these operators in France. 

Until recently, “fantasy games” were not clearly covered by the French regulations and in light of the major success of these offers worldwide and the operators expressing a serious need to diversify their offer to become/remain attractive to the French public, ARJEL decided to move forward.

Following a decision issued by the ARJEL College on 14 April 2016, the DET was amended to include fantasy games among the gaming actions to be recorded by licensed operators. The DET (Dossier des Exigences Techniques in French or “Technical Requirements Documentation” in English) is the document detailing the technical scheme to be implemented by licensed operators to comply with their obligations related to ARJEL’s supervision of gaming data.

In its decision, ARJEL described “fantasy offers” in the following terms: “The ‘Fantasy League’ offer relies on the choice made, by a bettor, of a determined number of actors in a real-life competition or sports event, and on the formulation of a list of sports bets on the statistical performance of these actors; the accuracy of these forecasts is determined by the results issued by the organizer of the competition or sports event and enables the bettor to obtain a number of points fixed according to the game’s rules; the bettors of each ‘Fantasy League’ are then listed according to the number of points allocated at the end of the competition or sports event, their rank determined by the amount of their gain, with the winning players sharing in total wagers after deduction of the operator’s fees or commissions”.

ARJEL further clarified the legal definition of sports bets, stating that Fantasy League offers would be categorised as a pari-mutuel form of sports betting, as defined by the French Online Gambling Act. The French Online Gambling Act therefore does not need to be amended to authorize Fantasy League offers in France, the only requirement being for ARJEL to amend the DET to detail how licensed operators should record gaming data corresponding to these offers.

Now that the new version of the DET has been adopted, operators licensed in France are authorized to market fantasystyle offers, provided these comply with all applicable requirements (e.g. implementing all functions required to record gaming data related to these new offers and applying for homologation from ARJEL for the gaming software).

Skill games

Further to a court decision issued earlier this year, ARJEL reiterated its position that online skill games requiring a financial sacrifice by the player are prohibited under French law.

As a reminder, in 2014, the Consumer Law inserted Article L. 322-2-1 into the Code of Homeland Security, providing that the prohibition applicable to lotteries as defined in Article L. 322-2 “covers games whose functioning relies on the know-how of the player “.

This extension of the scope of the prohibition applicable to lotteries could then result in the prohibition of other games, including skill games offered to the public that involve players spending money in hope of a potential gain. Yet, as these provisions are rather poorly drafted, there is room for interpretation on the application of the ban to skill games.

Later in 2014, ARJEL officially informed all licensed operators that, in accordance with Article L. 322-2-1 of the Code of Homeland Security, “games of skill which are sometimes known as ‘skill games’ are henceforth expressly prohibited by the law”. In fact, ARJEL adopted quite a restrictive approach, considering as under French law, “prohibited lotteries” include all games meeting the following conditions:

• A public offer;
• A financial sacrifice made by the player;
• The hope of a gain.

On 28 January 2016, a decision issued by the French Court of Appeal of Paris led GameDuell GmbH, a German operator offering online paid-for skill games targeting French players, to cease such activities in France (their offer involved card and dice games through which players could earn real money).

ARJEL subsequently declared in a press release dated 2 February 2016 that this decision confirmed the prohibition of skill games where such games triggered the hope of a gain and required a financial sacrifice on the part of the player.

However, this decision originated from a Court of Appeal, which is not the highest level of jurisdiction in France, so it could become very interesting should an equivalent litigation reach the French Supreme Court in the near future.

Additional clarifications of the French online gambling regulations

The legislators have also continued their work on clarifying the French Online Gambling Act, based on their experience in the six years that have elapsed since its enactment, and also in response to the issues raised by ARJEL and its licensee operators.

On 29 December 2015, the Online Gambling Act was notably amended in the Finance Law 2016 to expressly clarify that where players’ balances have not been reimbursed by the end of the six-year retention period, subject to the specific conditions defined in the Act, these sums will be acquired by the French State.

Further amendments to the online gambling legal framework can be expected, however in a more distant future, given that 2017 is a presidential election year. To be continued…

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