Vive La France?

Online poker is the only sector of the online gambling industry regulated by the French government in June 2010 that can be said to be working in anything approaching a normal way.  That may seem overly dramatic, but it only takes a short scan of the French business press to realise how bad the situation is for newly-licensed sports betting and horse racing operators. They can frequently be found giving vent to their serious discontent with regard to how their sectors have (not) developed under regulation.

Again, one has to take into account the message many of these executives want to convey (less taxes and more products to be offered on the main), but there seems to be little doubt over the difficulties they face when operating their key products. However, this is considerably less true for online poker, and there are some good reasons for this. Most notable is that from a historical point of view, France’s ex-monopolies were never active in the field and therefore never had any market share to protect.

This of course was never the case for sports bets and Pari Mutuel horse racing, with both Française des Jeux (FDJ) and Pari Mutuel Urbain (PMU) going the extra mile to make sure they could get most out of the legislation; utilising their land-based assets to subsidise and advertise their online activities, imposing the right to bet, or making sure they are able to abuse their already-dominant positions in the market.

However, online poker has been different in France. It could even be said that the normal laws of commercial competition have applied to this newly-regulated product, with most of the big players pre-regulation dominating the landscape post-regulation, and the field levelling out according to the strategies they implement rather than the existing dominance of monopolies.

A thriving sector?
To describe the sector as thriving would be an exaggeration but it certainly has made more progress in France than its sports betting counterpart. And that is no mean feat in itself when one thinks of the working environment French legislation imposes on such a tightly controlled industry. The leading poker operator, unsurprisingly, is PokerStars. However, it must be noted that the world leader in online poker made sure its French-licensed offering was ready and launched by the end of June 2010.

This contrasts with other major operators such as Full Tilt Poker, with many observers unclear on its plans for the French market; or BarrièrePoker.fr, the site set up by FDJ and the Barrière casino group. It has only just launched its affiliate programme and in February announced its franchise agreement with the World Series of Poker to operate wsop.fr and run the WSOP Europe live events in France.  

Speaking to those involved in the French poker scene, the overriding feeling is the regulation of the sector has made it possible to do business in the territory. Alexandre Dreyfus, founder and chief executive of Chilipoker, says this will be reflected in unchanged regulation when the review clause of the online gaming legislation comes up at the end of 2012.

'The review clause will not have anything in it because it’s too close to the Presidential elections in 2012,' Dreyfus says. 'The only changes we can expect will be on the 2012 budget, which is going to be discussed in the next few months. We think they will change the taxes on betting but not on poker, as poker is clearly working. On poker, we just hope to remove the no flop, no drop tax.'

Some observers might have something to say about poker 'clearly working' in France, but these things are relative and one can understand where Dreyfus is coming from.  The other key impression one gets from talking to operators such as Titan Partners is that a split is happening in the marketing mix operators are using.

Beni Issembert is chief executive of Titan Partners, the affiliate arm of Titanpoker.fr, itself one of the largest French poker sites pre-regulation, and oversaw the whole company’s regulatory project which saw it receive its ARJEL license in November 2010. He says Titan will continue to focus on online affiliates. 'That is where our knowledge-base and savoir-faire lie and what made our success in France. We have already signed major partnerships with the leading French portals and plan to grow our business that way.'

The same goes for Everest Poker, whose director of affiliate marketing Itsik Akiva says: 'Everest Gaming in general has always focused more on online affiliates than mainstream advertising and that is how we are going to drive customers to the site on the whole.' This of course contrasts sharply with how the two leading sites in France currently operate. If it is not a major surprise that PokerStars leads the sector but Winamax, much like PokerStars, has managed to grab second spot thanks to heavy print, billboard and TV advertising campaigns.

The cost of doing business
Winamax, interestingly, has not made big use of online affiliates in its marketing and has managed to push on through mainstream promotions. According to media research group Kantar Media, FDJ and PMU lead the way in advertising spend in 2010, with €37.9 million and €29.6m respectively, while Winamax had a budget of €19.9m for the year, the third largest marketing budget behind BetClic (€27.3m) and bwin (€21m).

The company refused to comment on rumours that it would be reducing its levels of advertising as it has reached levels of liquidity with which it is happy. Although such a rumour could also be interpreted as meaning the return on investment has not met with the company’s expectations so far. All Canel Frichet, managing director for Winamax, would say is that 'the company is very happy with its activity levels in France and is not going to divulge what it has planned in the coming months'.   

Whether the site can continue to stay among the top two in the industry in France with taxes at close to 40% of gross revenues is what everyone wants to know, especially as it isn’t active in any other markets and offers no other products.

As for PokerStars, Alexis Laipsker, spokesperson for the group in France, says the site sponsors TV programmes that have massive reach. 'This allows us to be known and to recruit from a broad audience. Thus, we have less need than others to be present on the internet,' he says. 'However, our affiliate program is comprehensive and present on poker-oriented media, which of course means targeting regular and confirmed players. This way we address all players but by different means.'

Meanwhile Barrière Poker hopes its deal with the WSOP will help it make its mark on the French poker scene. Deputy director Jean-Etienne Bouedec is confident the site can be a dominant force, although it has experienced fairly serious technical problems up to now:  lost connections, cards not appearing on screen, inability to register players for games and so on. 'We chose to develop our own technology from the start and take full responsibility for this strategic choice,' he says and adds that it is too early to pass any kind of judgment on the French poker sector.

'We are working to a long-term strategy, it is too early to draw conclusions. The market is still young and it’s not about catching up with the leaders but building up our online brands and live events [chiefly the Barrière Poker Tour held at Barrière casinos across France) for the long term.'

If PokerStars’ lead in .com poker enables it to do the same in regulated markets, it is difficult to speak of all the other operators with as much certainty. As Bouedec says above, the market is too young to draw definite conclusions about it, but the (re)launch of .fr sites such as Titan Poker, Unibet Poker later in the year and Chilipoker brings French specialists back into the fold. There is still much to play for in the next two years and as Laipsker says, 'it is still too early to know who will be on the other steps of the podium. I think there will be some surprises!'