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Online games: why esport gaming and betting industry earn money

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On June 8, 2010, a state monopoly over the 471-year-old games ended with the opening of competition and regulation of the online gambling industry. The area was placed under the patronage of ARJEL (Regulatory Authority of Online Games), encouraging the greed of many operators already established or new. Three years later, its president, Jean-François Villote, returns to market stagnation, smells of poker breath, but also announces Partouche and the carbabatic affair.

What is your assessment of the three years of opening the online gaming market ?

Today there is an online legal market that has captured most of the demand. The gamble of transferring an illegal proposal to the legislator’s legal proposal is won. (2,000 illegal sites have been identified by Arjel in two years). In terms of numbers, the market is generally stable. We are at -1% in the first quarter of 2013 compared to 2012. But nothing sinister. If we take the Italian market, which is quite comparable to us on a steady perimeter (Italy has opened online casinos in addition to smart betting guide , horse riding and poker), it has declined by 14% over the same period.

It is said all the time that the French market is sluggish, it is retreating due to its regulatory conditions, but these figures prove that it is wrong. I would like to remind you that in 2010, it was estimated (based on the bets collected by the PMU and FDJ which was then a monopoly of online games), the horse and game market for a share of 650 million euros. In fact, they are much more important. For the year 2012, there was 705 million euros placed just for sports betting. Horse betting has attracted over 1.1 billion euros in betting and poker at 6.1 billion euros.

The horse industry grew in the first quarter of 2013 (+ 5%). Isn’t it very difficult for operators to attract horse bookies used for physical betting?

The profile of the players is actually different from those who are going towards poker or sports betting. They are older, they are “quinquas” instead of thirty. There are also more women (20% of bets are placed by players compared to 5% for poker or sports betting). Geographical question is also very important. The department that has the highest density of games (the number of players by population) is Mayne’s department, which breeds ground traitors.

These figures are a real surprise in any case. There is more horse racing betting than online sports betting, despite there being no livebetting (unlikely to bet live) competition during the race.

However, since the beginning of the year, like physical networks, online horse betting has been steady. In the first quarter of 2013, growth was only 3% compared to the same period in 2012. And for the last five weeks, for the first time in three years, the number of horse bookies has not increased. There is an economic crisis effect that is noticeable in the context of horse betting and is the same for poker. These are two areas which are very sensitive to economic conditions

With regard to poker, being very fashionable, the general public’s interest for the game decreases rapidly. This is reflected in the figures (cash-game activity declined by 13% in the first quarter of 2013). Apart from the economic context, how do you explain it?

The reasons are many. If we exclude conjuncts and whims, two subjects should be dealt with. First, there are more poker game variations that are open online. Only three have been proposed by the Ministry of the Interior that keep this list of poker variants (ARJEL is responsible for the list of sports bets), which is also a pity for accountability.

Secondly, we should think of opening liquidity to foreign operators, but they are clearly controlled and regulated under the same conditions as French operators. We must therefore compromise between regulators, as in the case of the Italians and the British, and then open the tables for international liquidity.

But we should not fight erratically, the regulator’s goal is not to develop this market without control. We should not forget that there is a high risk of key addiction. Our goal, especially to avoid big players, is to find the way to illegal operators. And for that, the best solution is to work on the charm of online poker.

The boss of the Partoche group announced last week to “finalize their online site”. Among other things, he also complained that “online poker is offered to everyone”, not to casino operators. He also spoke of “unfairly reduced taxation”. What inspires you?

First, it has not yet gone because the approval has not been revoked. The situation will allow for players with this operator’s account when we estimate what we will do. I do not want to get into controversy. Each operator is free to take a look at the general market conditions, the tax rate …

But what I notice is that the position of the players of this region is very different. Some have gained market share, reaching a financial balance, created strategies that take into account the level of taxation. Therefore, we cannot make a particular case a general rule.

The online markets were inaugurated a few weeks before the 2010 World Cup. What exactly is the impact of the World Cup, the impact of the Olympic Games in terms of online betting?

This is actually a calendar events sensitive market. This is what distinguishes it from the poker and horse markets, and may explain why it is low. First, there is a criminal investigation, so we cannot conclude today. But what I did notice is that the rule forbidding actors of a contest to participate in a contest in which it is required to participate is enacted by the MLA 2010 law. However, it seems to me that this is the rule of common sense. Apart from the Tennis Federation, the sports movement was never involved. It is clear that it was too late on these issues. More generally, when it comes to sports betting, analysts of the sports movement usually make a mistake: assuming that it was the 2010 law that created sports betting. They already existed around the world, so there is no reality to deny. The question is not whether we are for or against it, but how can we control them at the national and international level. Those who claim that sports betting on ostrich politics should be banned. It would be like leaving the market only for illegal operators.When we opened the online gaming market, we introduced the sports betting market as an area that was lush and less profitable … We cry a lot for an Eldrado who did not come. A number of figures were quoted at the opening of the market. But games are very low margin activities. Depending on whether it is macro wagering or gambling (once the bookies are distributed by the bookies), we divide the numbers by five. Subsequently, self-proclaimed experts detected infrequent numbers and never thought about the quality of their forecasts.

Outside this old one, it was not desirable to anyone. Like other online gaming sectors, this market needs to be integrated and demand should not explode to avoid dependency and morality risks.

Today, 22 operators have shared 33 approvals. How do you explain this phenomenon of progressive concentration?

This makes perfect sense as long as the market is open to competition. Some have been merged, others have been removed, new ones will be eliminated…

However, we must be attentive to the attractiveness of the proposal. ARJEL voted in favor of a change in the tax base that would restore operators’ margins. This involves shifting the betting base to sports gross product, which is more likely to be the operators’ actual business. So that they have air. This plate is also one that has been chosen by the majority of European countries.

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When the bet of the game is determined, we can place a lot of bets (which allows the speculator to determine the exact amount to pay when the expected result is true). But if the bookies are smarter than the “odds”, then the game’s gross product could be negative. The operator then loses money and pays the tax, resulting in double punishment. But this reform should not reduce tax revenue for the state, which currently cannot reduce the fiscal gap.

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