Opinion: France moves to reduce threat of Black Friday repeat

A new step has been taken in France in order to further secure the online gambling offers provided to French players through the enactment of the French Consumer Law no.2014-344¹.

The scope of the Consumer Law is quite broad as the French legislators took this opportunity to further amend the regulations applicable to various sectors including the online gambling industry.

Indeed, the Consumer Law has made a few amendments in the Law no.2010-476 of 12 May 2010 on the opening to competition and online gambling regulation. Among these amendments which main purposes are to strengthen the online players’ protection, the most significant amendment sets out new obligations on licensed operators regarding the protection and guarantees of players’ assets repayment.

This amendment had been strongly sponsored by ARJEL during the parliamentary discussions prior to the enactment of the Consumer Law, as the regulator was hoping for the enforcement of further guarantees undertaken by licensed operators regarding the recoverability of players’ funds.

More precisely, Article 15 of the Law no.2010-476 has been completed with a new paragraph stating that “operators applying for an online gambling licence shall evidence the existence of a financial security, trust, insurance, escrow account or of any other instrument or mechanism ensuring, at all times, the repayment of all players’ payable assets“. In addition, “operators shall ensure that the scope of their guarantee is always consistent with the players’ payable assets“.

ARJEL will be in charge of monitoring the licensed operators’ compliance with these new provisions as (i) the latter shall inform the regulator without delay of the variations impacting the scope of their guarantee and as (ii) ARJEL will be entitled, on its own initiative, to require from licensed operators to conduct all necessary adjustments to the scope of their guarantee, within a time period fixed by ARJEL.

The trust remains somehow a recent concept under French law as it results from a Law no.2007-211 dated 19 February 2007 and as it still rarely used in France. In fact, even though this was not expressly stated in applicable laws, ARJEL started in 2011 to require from new applicants, as a preliminary condition to the grant of an online gambling license in France, to justify the existence of such type of guarantee.

Such a requirement appeared in response to the Black Friday, where the US Department of Justice shut down three major online gambling websites, including Full Tilt Poker, and seized no less than 75 bank accounts, resulting in great difficulties for online players to recover their assets. This case revealed the strong need for online gambling authorities to further protect players against the operators’ default and mingling players’ funds with their own.

Licensed operators have six months from the publication of the Consumer Law to implement such guarantee, before ARJEL can start any sanction proceedings.

1 French Consumer Law no.2014-344 dated 17 March 2014 which transposes under French law the Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights