The European Commission has officially concluded its investigation into Française des Jeux (FDJ), France’s state-backed lottery and sports betting operator, affirming the legality of its monopoly while adjusting the payment FDJ must make for its exclusive rights. The probe, launched in 2020 following complaints about potential unfair state aid, scrutinized whether the terms of FDJ’s privatization gave the company an unfair advantage through a disproportionately low monopoly fee.
Investigation Results in Increased Monopoly Fee
The Commission found that FDJ’s initial payment of €15.2 million annually, which totaled €380 million over a 25-year period, fell short of EU competition standards. To rectify this, the Commission raised the required fee by €97 million, bringing FDJ’s total payment to €477 million for its 25-year monopoly rights. According to the EU Commission, this adjustment ensures that FDJ’s exclusivity aligns with EU competition laws and eliminates any perceived advantage as state aid.
FDJ welcomed the decision, citing its consistency with the French Conseil d’Etat’s ruling from April 2023, which had previously upheld the terms of FDJ’s privatization framework. In a statement, FDJ affirmed its commitment to operating within this compliant structure, noting, “FDJ welcomes the closure of this investigation and the European Commission’s confirmation… that the legal framework adopted when the Group was privatised was robust.”
Positive Market Reaction and Strategic Acquisitions
Investors responded positively to the EU’s announcement, with FDJ shares rising by 5.6% on the Paris stock exchange. This boost underscores investor confidence in FDJ’s long-term stability now that the Commission has cleared its monopoly. The ruling also coincides with FDJ’s recent acquisition of Kindred Group, a major player in online gambling. FDJ’s controlling stake of over 90% in Kindred has prompted some high-profile departures from Kindred’s board, including Chairman Evert Carlsson, as FDJ integrates its new acquisition into its business.
This acquisition positions FDJ to strengthen its online gaming presence and diversify its offerings as it absorbs Kindred’s digital expertise. However, the integration process may present challenges, especially with new regulatory possibilities on the horizon.
French Market May Open to New Players
While FDJ has secured its monopoly for now, the French government may introduce more competition in the near future. In its 2025 budget discussions, France has signaled openness to expanding the gambling market by potentially legalizing additional forms of online gaming. A public consultation is scheduled for early November, bringing together industry stakeholders to discuss the possible regulatory adjustments.
The outcome of this consultation could reshape France’s gambling market, potentially allowing new operators to enter and compete alongside FDJ. For FDJ, this could mean facing increased competition in online gambling, an area where the company has been actively expanding, especially following its acquisition of Kindred.
Implications for FDJ and the European Gambling Landscape
The EU Commission’s ruling is not only a relief for FDJ but also a landmark decision that could impact similar state-backed gambling monopolies across Europe. The revised fee for FDJ’s monopoly rights sets a precedent, reinforcing the need for transparent and competitive pricing in monopolistic agreements. Other EU member states with similar monopolies may face increased scrutiny to ensure compliance with state aid regulations.
For now, FDJ’s monopoly remains intact, and the company is poised to expand its footprint in online gambling through its integration with Kindred. However, the French government’s potential shift towards a more open market in 2025 could bring changes to FDJ’s competitive standing, especially in the digital space. As the landscape evolves, FDJ’s strategic acquisitions and regulatory compliance position it well to navigate future market shifts and regulatory challenges.
