FDJ begins auditing actions to accommodate €90m tax hit

Groupe Française des Jeux (Groupe FDJ) has initiated a multi-year action plan to offset French gambling taxes, which are set to take effect from 1 July 2025.

At the close of 2024, French Senators approved a new gambling framework proposed by the 2025 Budget of former Prime Minister Michel Barnier.

Tax increases across all French betting and gaming activities were approved as part of the government’s Social Security Funding Act, with initiatives aimed at raising an additional €500 million from French gambling operators.

A new framework will see Lottery GGR (online and retail) taxed at 7.2%, up from the current rate of 6.2%, retail sports bets at 10% (from 7%), and online sports bets at 15% (from 10.5%).

New taxes will also apply to online poker stakes, taxed at 10% of GGR. Additionally, the framework proposes a 15% tax on advertising expenditure by gaming operators.

As the operator of France’s national lottery and retail betting network, FDJ views itself as having the highest exposure to the new tax regime. The Paris Euronext-listed gambling group “estimates that the increase in betting and gaming levies, effective from 1 July 2025, will reduce its revenue and recurring EBITDA by approximately €45 million in financial year 2025, with a full-year impact of nearly €90 million.”

To adjust to France’s new tax framework, FDJ will implement a multi-year strategy aimed at absorbing tax increases by 2027, in which it will require its auditing to be adjusted from 2025 onwards.

FDJ maintains its 2024 guidance, having integrated the Kindred Group’s business from 11 October. The M&A deal resulted in an enlarged FDJ, generating total revenues of €3.07 billion (+17%). Excluding Kindred, revenue growth was 10%.

For FY2024 trading, the Group generated recurring EBITDA of €792 million, up 21%, with a margin of 25.8%.

“On a pro forma basis, assuming Kindred had been acquired on 1 January 2024 and based on the scope of business actually retained by FDJ, Group revenue would amount to nearly €3.8 billion, with a current EBITDA margin of around 25.5%.”

FDJ concluded its statement by providing a breakdown of the 2025 tax increases on French gambling GGR by segment, determined as “Total Stakes – Player Winnings”. In 2024, revenue from gaming in France totalled over €2.6 billion, after public levies of more than €4.4 billion.

FDJ estimates that each 1-point increase in lottery taxes automatically reduces lottery revenue by around 2%. Stakes remain unaffected by tax increases, but the full impact of reduced revenue is reflected in recurring EBITDA.

FDJ will publish its FY2024 accounts and FY2025 guidance on 6 March, marking its first report combining Kindred Group results. Incorporating Kindred Group assets, FDJ faces higher tax exposure in Sweden, which implemented a new 22% income tax rate on gambling businesses from July 2024.

Kindred Group de-listed from the Nasdaq Stockholm Exchange on 11 November 2024. Publishing its final accounts, Kindred citied confidence in achieving an EBITDA of £196m, up 33%, with profit before tax at £107m, impacted by strategic review costs of £34m