Tax increase looms: FDJ and investors concerned
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10 Oct 2024 •
Reading time: 3 minutes The French gambling giant has seen its stock price plummet following rumours of an increase in gambling tax.
La Française des Jeux (FDJ) has had an eventful week. After the enthusiastic announcement of the acquisition of the Swedish group Kindred, owner of Unibet, a completely different scenario played out on the stock market. Indeed, persistent rumors of a possible increase in taxes on gambling have shaken the FDJ share price. Investors, worried about the future profitability of the group, rushed to the exits, leading to a spectacular fall in the share price.
A tax increase that shakes the sector
According to information from the newspaper Les Échos, the government is considering increasing social security contributions on gambling and online betting from 2025. The stated objective? Replenishing the social security funds and slowing the growth of a booming sector. This prospect is enough to worry market players, who see their margins shrinking and their attractiveness to investors eroding.
FDJ, as the main French operator, is particularly exposed to this threat. The group saw its stock price fall by 9.7% last Thursday, following the announcement of this tax increase in the French press. This reflects investors’ concerns. They fear that this tax increase will affect the group’s profitability and jeopardize its growth prospects.
FDJ denies it, but doubts persist
Faced with this media storm, FDJ quickly reacted by denying any information indicating a tax increase in 2025. The group assured that, to its knowledge, no bill to this effect was planned.
“To our knowledge, the PLFSS (Social Security Finance Bill), which will soon be presented to the Council of Ministers, will not contain any tax measures concerning gambling,” FDJ said in a statement sent by email in response to a question from Reuters.
However, investors remain cautious. Precedents show that tax policies can change quickly and that official announcements are not always a guarantee of the future. In addition, the increase in taxation on gambling is a measure that has already been adopted in other European countries, thus reinforcing fears of a similar development in France.
The FDJ is not the only one to fear this increase
Gambling industry players do not hide their concern about this bill. The Casinos de France association denounces a “direct attack” on employment and the local economy, recalling that casinos and gaming clubs are real drivers of development for many territories.
According to the association, this tax increase would lead to the closure of many establishments, with disastrous consequences for the 45,000 people who work in the sector. Parisian gaming clubs would be particularly affected, with the prospect of the loss of nearly 1,500 jobs. In addition, local authorities, which already benefit from significant tax revenues linked to gambling, would see their finances weakened.
What are the consequences for the FDJ and its competitors?
A tax increase would have significant consequences for the FDJ and the entire gambling sector. Operators’ margins would be reduced, which could force them to increase prices for their customers or reduce their investments. In addition, this measure could have a negative impact on gambling consumption, leading to a drop in revenue for operators.
In the longer term, this tax uncertainty could slow down investment in the sector and harm its attractiveness. Companies could be tempted to postpone their projects or reduce their growth ambitions.