FDJ addresses speculation on gambling tax hike
The incident highlights the sensitivity of gaming stocks to regulatory changes.
Key points:
– The company’s stock price fell amid speculation of potential tax increases on online gaming and betting
– FDJ denies knowledge of any planned gambling tax hikes in the upcoming Social Security finance bill
French gaming group La Française des Jeux (FDJ) has responded to market concerns regarding a potential increase in gambling taxes, causing significant fluctuations in its stock price.
FDJ issued a statement countering media reports that suggested the French government was planning to implement a tax hike on online gaming and betting starting in 2025, saying: “To our knowledge, the PLFSS (Social Security Finance Bill), which will shortly be presented to the Council of Ministers, will not contain any tax measures concerning gambling.”
FDJ’s shares experienced a sharp decline following speculation that the government intended to raise taxes on gambling to bolster the Social Security budget.
The company’s statement appears to have been based on high-level communications with the Ministry of Finance, according to Lucas Excoffier, a European equity trader at Oddo BHF Corporate & Markets.
Excoffier also added: “The market reaction is very severe, even though this type of news of course feeds the risk of regulation on the gaming sector, in particular FDJ.”
Despite FDJ’s reassurances, the market impact was notable. The company’s share price closed at €36.78 ($40.36) on 2 October and fell to €34.44 by the close of trading on 3 October, representing a 6.4% decrease.
This news comes after FDJ completed its tender offer for Kindred Group earlier today, securing 90.66% of the company’s share capital. The nearly €2.5bn ($2.7bn) transaction will allow FDJ to move forward with a squeeze-out procedure on Nasdaq Stockholm to acquire the remaining shares.
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