A tax on gambling? FDJ falls on the stock market in the face of the threat

The Française des Jeux (FDJ) is going through a tumultuous period on the financial markets. On October 3, 2024, the group's shares experienced a dizzying fall of 7.50%, reaching 34.02 euros. This fall follows information revealed by the newspaper The Echoes concerning a potential increase in social security contributions on the gambling sector from 2025.

A new tax that shakes the gambling sector

The French government is seriously considering introducing a new tax on gambling. This measure would have a dual objective:

• Halting the rapid expansion of the sector
• Replenish Social Security funds to the tune of 500 million euros

This initiative is part of a broader context of recovery of public finances, with an ambitious objective of 15 billion euros in savings for Social Security. The government justifies this approach by citing health concerns, in particular gaming addiction.

Horse racing and sports betting would be particularly affected by this measure. According to The Echoestheir social contributions could increase by 4 to 5 points, reaching 10% of gross gaming revenue (GRP) for physical betting and 15% for online sports betting. This significant increase risks upsetting the financial balance of many players in the sector.

The FDJ faces multiple challenges

The FDJ's stock market fall comes in an already tense context for the company. Indeed, the group must face several obstacles:

1. The downgrading of CIC Market Solutions advice from “buy” to “neutral”
2. The announcement of the takeover of Kindred, owner of Unibet, for 2.6 billion euros
3. The uncertainties linked to the new taxation

This acquisition of Kindred, if it materializes, would represent the largest transaction in the history of the FDJ since its creation in 1933. However, the timing of this announcement, coinciding with the threat of a new tax, raises questions about the long-term strategy of the company.

Like the recent TotalEnergies affair against NGOs, the FDJ could find itself at the heart of complex legal and financial debates in the months to come.

Impact on the entire gambling market

The new taxation envisaged by the government would not be limited to the FDJ. The entire gambling sector would be affected, which could lead to a major restructuring of the market. Here is an overview of the potential consequences:

This situation is reminiscent of the challenges faced by other economic sectors, as illustrated by the affair of the banks involved in the CumCum scandal. Companies in the gaming sector could also find themselves in the legal and media spotlight.

Prospects and challenges for the future

Faced with this turbulence, the FDJ and other players in the sector will have to demonstrateadaptability and innovation. Companies could be required to:

• Diversify their activities to reduce their dependence on traditional gambling
• Invest more in responsible gaming programs
• Exploring new markets, particularly internationally

The FDJ's situation is reminiscent of other cases of companies facing regulatory challenges, such as Disney facing the governor of Florida. These examples underline the growing importance of legal and political issues in the strategy of large companies.

Finally, this new tax could have unexpected repercussions on other economic sectors. For example, the construction sector, already under pressure as shown by the case of the construction giants taken to court for Paris 2024, could see its revenues linked to sports sponsorship decrease if betting operators reduce their investments.

The future of the gambling sector in France seems uncertain, and the coming months will be crucial in determining the scale and precise terms of this new taxation. The FDJ and its competitors will have to navigate these troubled waters skillfully to maintain their profitability while meeting growing demands for social and health responsibility.