French bill would open and regulate the market in response to 25,000 illegal gambling sites accessible in France

U.K.-based gambling companies could reap new revenues if neighboring France opens its online-betting market to foreign operators next year as planned.

A bill that comes before the French parliament Oct. 7 would let foreign companies offer sports betting and poker, ending the monopolies of state lottery provider Groupe Francaise des Jeux and Pari Mutuel Urbain, which runs gambling on horseracing. All other online betting is currently banned.

France began plans to open and regulate its market in response to 25,000 illegal gambling sites accessible in France, of which a quarter are in French, accounting for 75 percent of Web bets, Budget Minister Eric Woerth said in a March statement.

“The size of the population and the appetite for gambling, and the group’s historically cautious approach to France make this a particularly exciting opportunity for us,” said Jim Ryan, chief executive officer of PartyGaming, said in a Bloomberg report. PartyGaming owns the brand and the U.K.’s biggest online-gaming company by revenue.

Sales from electronic gambling in France would more than double to 671 million euros ($992 million) in 2010 if new rules come into effect in the middle of next year, according to estimates from H2 Gambling Capital, a Manchester, England-based consulting company. In 2011, the market will be worth 1.03 billion euros, an additional 53 percent increase.

“The U.K. is fairly flat if you like, or at least slowing down,” Simon Holliday, director at the researcher H2, said in the Bloomberg report. France is “the largest single market on the horizon.”

U.K. gambling companies struggled this year as the worst recession since World War II restrained spending. First-half net income fell by 26 percent to 58.7 million pounds ($95.8 million) at William Hill, the country’s second-largest online- gaming company, and by 57 percent to $8.1 million at 888 Holdings. PartyGaming posted a net loss of $66.9 million.

The European Commission has also pressured European Union states to reform gambling markets, threatening to sue France over the issue in 2007. Italy is now implementing rules that allow online gambling, and this month Portugal defeated a court challenge against its sports-betting monopoly by BWin Interactive Entertainment AG at the European Court of Justice.

The attractiveness of France to foreign operators will depend in part on tax rates and other regulations.

France’s original proposal in March included a 7.5 percent tax on sports bets and a 2 percent tax on poker. Final tax levels will be set by parliament.