The Council of Mandatory Deductions (CPO),associated with the Court of Auditors,has released a significant report recommending new taxation measures for gambling and gaming. Among its six proposals,the CPO suggests taxing players’ winnings and the promotional expenses of operators,which have previously been exempt from taxes and social contributions.This initiative follows heated discussions surrounding the 2025 Budget and the Social Security financing bill, where various amendments aimed to increase taxes on the gambling sector. The potential for heightened taxation has already caused a stir, leading to a drop in stock prices for Française des Jeux and prompting protests from industry professionals. The CPO’s recommendations aim to create a more equitable tax framework within the gambling ecosystem, but they face skepticism from both players and operators.
High but “justified” taxation.
In 2023, the gambling sector, encompassing lotteries, sports betting, and casino games, generated a staggering 7 billion euros in revenue, largely due to a hefty 45% tax on the gross gaming product (GRP). This taxation is deemed necessary as it addresses the unique challenges posed by gambling activities,which are often associated with addiction and crime. With approximately 6% of players engaging in problematic gambling behaviors, experts argue that the state must regulate and limit access to these activities. The high tax rate not only helps mitigate the adverse effects of gambling but also captures a portion of the substantial profits generated by operators in a largely monopolistic market.
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Discourage advertising
In a push for reform, the French Council for public Order (CPO) is advocating for a new taxation framework on gaming operators and player winnings. Highlighting the excessive marketing expenditures that disproportionately target vulnerable demographics, the CPO supports a proposed 15% tax on advertising costs but calls for a broader approach that includes bonuses, which accounted for 58% of marketing spending in 2022. Additionally, the CPO is urging the goverment to impose taxes on player winnings, which currently evade income tax and social security contributions. This move aligns with practices in several European nations and could generate over 1 billion euros annually, while exempting small earnings to ease tax management. The CPO’s recommendations aim to create a more equitable gaming surroundings and enhance funding for social security initiatives.
The Council for Public Oversight (CPO) has proposed significant reforms to gambling taxation, aiming to streamline a convoluted system currently comprising 33 disparate tax samples. This overhaul seeks to establish a unified tax on operators’ gross gaming revenue (GGR),addressing concerns that existing rates lack coherence and fairness. Notably, sports betting, which is particularly popular among minors, currently enjoys one of the lowest tax rates. The CPO emphasizes that tax structures should reflect the societal impacts of gambling, advocating for a reallocation of funds to social security, which presently receives less than 23% of gambling revenues. This initiative not only aims to enhance public health funding but also to close the so-called “Security Hole” in the current system, ensuring that the financial burdens of gambling are equitably shared.
Discussion Between the Time.news Editor and a Gambling Taxation Expert
Editor: Welcome to this discussion,where we delve into the recent report by the Council of mandatory Deductions (CPO) regarding new taxation measures for gambling and gaming. The report recommends taxing players’ winnings and the promotional expenses of operators. This is a meaningful shift, isn’t it?
expert: Absolutely, it’s a notable advancement in the gaming sector.For years, many players and operators have enjoyed tax exemptions on winnings and promotional expenses, which has raised questions about fairness and revenue generation. The CPO’s proposals aim to level the playing field, ensuring that the gaming industry contributes adequately to public finances.
Editor: Many have been affected by the gambling industry’s rapid growth, and this report seems timely. What should we make of the CPO’s rationale? They mention the need for social contribution as part of their justification.
Expert: The social aspect is crucial. The CPO highlights that while the industry has boomed,its social costs,including problem gambling,have not been adequately addressed through taxation. By implementing these new measures, they aim to create a more responsible gaming surroundings. Taxing operators on their promotional expenses could also limit aggressive marketing tactics that often lure vulnerable populations into gambling.
Editor: That makes a lot of sense. Though, what do you think the implications are for players? Taxing winnings could discourage participation in gambling activities.
Expert: Indeed, that’s a valid concern. The potential downside is that higher taxes on winnings could lead to reduced engagement, especially among casual players.It’s a balance that policymakers must consider—while generating revenue is crucial, they also need to ensure that gaming remains a form of entertainment rather than a deterrent.
Editor: And what about the operational side? How might gambling operators react to these proposed changes?
Expert: Operators will likely face increased scrutiny and pressure. Some may pass the costs onto consumers through higher fees or reduced promotions.Conversely, others might adapt by enhancing their offerings to ensure customer retention despite tighter margins. It will be interesting to see how innovative operators respond to what some may view as an overreach.
Editor: You mentioned fairness earlier. There are certainly arguments from both sides about taxing these winnings. How could this shift affect the overall gaming landscape?
Expert: This initiative could significantly alter the dynamics of the gaming sector. If players are taxed on winnings, it might shift some of them towards unregulated betting avenues, which pose risks not just to them, but also undermine the legal market. Policymakers must tread carefully to implement regulations that safeguard the integrity of legal gambling while ensuring responsible taxation.
Editor: That’s a critical point. What recommendations would you give to lawmakers considering the CPO’s proposals?
Expert: I would advise a comprehensive stakeholder consultation process, involving players, operators, and addiction specialists. Additionally, they should consider a tiered tax system based on the type of games and winnings. Implementing educational campaigns about responsible gambling could also be beneficial in tandem with any tax changes. This way, they can enhance public trust while promoting healthy gaming practices.
Editor: Thank you for your insights. The implications of these taxation proposals could reshape the gambling landscape. It’s vital that any changes be well thought out and inclusive of multiple perspectives to foster a balanced environment.
Expert: Thank you for having me! It’s a critical conversation, and it will be interesting to see how things develop in the coming months.