The French competition regulator, l’Autorite de la Concurrence has approved the national lottery operator Francaise des Jeux’s (FDJ’s) acquisition of online horse racing betting website ZeTurf Group.
FDJ must change several aspects to its operation to satisfy the regulator’s concerns regarding risks to competition.
FDJ, in particular, has pledged to separate its monopoly gaming operation from the competitive gaming operation. It has also said that any French licensed operator will be able to access its pool of horse race bets.
L’Autorite outlines competition concerns
FDJ, ZeTurf and other online sportsbooks offer betting services. However, the regulator was not concerned by this because of their combined low market share.
Instead, l’Autorite suggested that problems could arise from FDJ’s monopoly over lottery games and sports betting at retail.
The new business, which had exclusive rights to these segments, was argued to have been tempted by the exclusivity of the segment to limit the competition in online sports betting and horse racing.
This could be achieved by FDJ promoting sports betting and online horseracing to its monopoly clients or using a customer account that is used for all games.
Problems with horse race betting pools
The regulator highlighted issues of competition for horse racing specifically. The regulator noted that the new combined entity would make it harder for competitors to gain access to betting pools managed and controlled by the business. It also pointed out that the new entity had the option of removing bets placed by rivals from the pools.
The competition authority said that “the analysis performed by l’Autorite showed that the new entity was able and motivated to consider implementing these strategies, and that their effectiveness would have been to ZeTurf’s rivals’ detriment.”
“L’Autorite concluded that the risk of harming competition through conglomerate-effects could not be eliminated.”
FDJ accepts to separate monopoly gaming and competitive gaming
FDJ has agreed to separate the monopoly gaming operation from its competitive gaming operations due to the competition risks highlighted by the regulator.
It has therefore committed to creating separate websites and applications in each of its business areas. There will not be a common homepage or gateway connecting them. The company has also agreed that separate accounts will be maintained for each activity.
The lottery operator also said that it would refrain from creating customer databases to promote its competitive gaming, which could include player data for monopoly games.
FDJ has also stated that it will not promote any competitive gaming activities at its retail outlets, online lottery hubs or in its stores. Separate social media pages will be maintained, and the sales team will be trained on how to adhere to these commitments.
To create a greater distance between activities, the operator will offer its competitive gaming via a business subsidiary.
FDJ allows competitors to access common gaming pools
The company also agreed to let any licensed French operator access the pool of horse race betting stakes that it manages.
It will therefore continue to adhere to the pooling agreements in place at the time of acquisition. The FDJ has said that it will continue to pool its online horse race bets in the common pool available to third parties.
After these commitments, l’Autorite allowed FDJ’s planned purchase to proceed.
Purchase of ZeTurf
FDJ will announce in November 2022 that it has acquired ZeTurf for EUR175.0m. The company also said that a further consideration will be paid based on the performance of the business in 2023.
The French online gambling market is a part of the plans for expansion that the national lottery operator has previously stated.
ZeTurf has a market share of 20% and is the second-largest horse racing operator in France. It has 100 employees and generated EUR50.0m revenue in 2021.
