FDJ cleared of wrongdoing in lottery and sports betting rights bid by European Commission
Regulatory body concluded the operator received no state aid during its privatisation process, although there will be an adjustment in the fee paid for exclusive rights, from €380m to €477m
The European Commission has ruled La Française des Jeux (FDJ) was not the recipient of state aid from France to bring an end to a three-year investigation.
The Commission first launched its investigation back in 2021 after receiving two separate complaints against the operator in 2020.
The complaints concerned the €380m payment made by FDJ to the French state in April 2020 to secure its 25-year exclusive rights agreement to operate both retail and online lottery games, in addition to retail sports betting.
In exchange for the exclusive rights, FDJ was required to make a payment to the French state under the PACTE Act 2019.
The fee was set at €380m in October 2019, leading FDJ to take out a loan of that sum from five leading French banks, which is to be paid back over a 20-year period.
FDJ then privatised at the end of 2019 after previously being a state-owned operator.
The Commission’s investigation stemmed around whether or not the process gave FDJ an unfair advantage over its competitors when it came to securing exclusive lottery and sports betting rights.
The investigation concluded that although FDJ didn’t receive any untoward state aid for the bidding rights process, the fee the operator paid would have to be adjusted in kind – rising from €380m to €477m.
The €97m fee increase came after the European Commission explored whether the total was “in line with the market price” and would have equated to an “undue economic advantage”.
Following the European Commission’s decision yesterday, 31 October, FDJ’s shares spiked from €36.40 to €38.40, with the group’s stock now sitting at €38.86.
A statement from the European Commission said: “France calculated the amount of the remuneration as a comparison of the estimated value of the exclusive rights before and after the 2019 reform.
“Following the discussions with the Commission, limited changes to the methodology’s parameters were made. According to these changes, the remuneration increased to €477m from the initial amount of €380m.
“Following France’s commitment to increase the remuneration to be paid by FDJ to €477m, the Commission concluded that the measure does not constitute aid.
“On this basis, the Commission has cleared the French measure under EU State aid rules.”
An FDJ statement said: “FDJ welcomes the closure of this investigation and the European Commission’s confirmation, in line with the French Conseil d’Etat’s decision of 14 April 2023, that the legal framework adopted when the group was privatised was robust.
“FDJ has also taken note of the additional equalisation amount, valued by the European Commission at €97m.”
The operator added that the additional payment will be recognised as an intangible asset and amortised over a 25-year period starting from May 2019.