EC approved France plans to impose parafiscal levy on online horse-race betting

Brussels, 19-6-2013 — /europawire.eu/ — The European Commission has approved a French proposal for a parafiscal levy on online horse-race betting to finance horse‑racing companies. The changes made to the proposal by the French authorities after the opening of the Commission investigation ensure fair competition between horse‑race betting operators.

As part of the opening‑up to competition of online horse‑race betting, France notified the Commission of a proposal for a parafiscal levy of 8% on stakes from this betting in order to finance a service to improve the bloodline and promote horse‑breeding, which would be entrusted to horse‑racing companies. France considered this service to be a service of general economic interest (SGEI).

In 2010 the Commission opened a detailed investigation because it had doubts about whether the task entrusted to horse‑racing companies could be classified as an SGEI. As a result of the investigation, the French authorities submitted an amended proposal to the Commission.

The new scheme comprises assistance to the horse‑racing sector, based on the common interest that the PMU (Pari Mutuel Urbain) and the competing operators of online horse‑race betting attach to the organisation of horse races on which bets are taken. Only the costs directly associated with the organisation of these races enter into the calculation of the level of the levy. This approach reduces the levy to approximately 5.6% from the 8% originally planned.

The Commission takes the view that the new scheme is compatible with the internal market under the exception provided for in Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which authorises aid to facilitate the development of certain economic activities, subject to certain conditions. The Commission has authorised a number of measures of the same type, funded by a tax on companies in a given sector, and intended to finance joint activities carried out for the benefit of the sector as a whole. The Commission also takes the view that, by spreading the burden of financing races equitably between the different operators, the measure allows fair competition between these operators in the newly liberalised market for online horse‑race betting.

The authorisation of the measure is also based on the specific commitments by the French authorities to ensure that there is no excessive increase in the costs in the common interest and that the contribution from ‘bricks and mortar’ PMU bets to the funding of horse races is at least equal to that asked from the operators of online betting. Lastly, the French authorities have undertaken to provide an implementation report to the Commission two years after the entry into force of the new measure, which is scheduled for 1 January 2014.

Background

Before horse‑race betting was opened up to competition, the monopoly was held by the PMU (Pari Mutuel Urbain), which is an economic interest grouping formed by two horse‑racing parent companies and 49 regional racing companies. In 2010, the horse‑racing bets placed with the PMU, the leading totalisator operator in Europe and the second‑largest in the world, were worth EUR 9 342 million. The PMU’s net income, which came to EUR 790.9 million in 2010, finances 80% of the horse sector (breeding, training centres, equestrian centres, etc.), which employs some 74 000 people and is present throughout France with a total of 250 racecourses.

In June 2010 France opened online horse‑race betting to competition, thus ending the PMU’s monopoly.

A non-confidential version of today’s decision will be made available under case number SA.30753 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. The electronic newsletter State Aid Weekly e-News lists the most recent decisions on state aid published in the Official Journal and on the website.