Shares in La Francaise des Jeux gained almost 7 per cent in Paris Thursday after the European Commission ruled that the company did not benefit from state aid.
The ruling follows an investigation that was launched in July 2021 after the European Commission received two complaints alleging that FDJ benefited from state aid when it secured the exclusive right to offer lottery games and retail sports betting in France.
FDJ agreed in 2019 to pay €380 million for the exclusive 25-year licence, with the Commission now increasing that amount, despite concluding that the company did not benefit from state aid.
“The European Commission has concluded that the increased remuneration by Française des Jeux (‘FDJ’) to France for the modification of exclusive rights to operate offline and online lottery games and offline sports betting through 2019 PACTE law is in line with EU State aid rules,” the Commission said in a statement Thursday.
“Following an in-depth investigation, limited changes to parameters of the remuneration calculation methodology were made, which resulted in a total remuneration of €477 million, that is, an increase of €97 million from an initial amount of €380 million.”
The Commission said that France calculated the amount of the remuneration as a comparison of the estimated value of the exclusive rights before and after the 2019 reform.
“Following the discussions with the Commission, limited changes to the methodology’s parameters were made. According to these changes, the remuneration increased to €477 million from the initial amount of €380 million,” the EC explained.
“Following France’s commitment to increase the remuneration to be paid by FDJ to €477 million, the Commission concluded that the measure does not constitute aid.”
FDJ said it welcomes the closure of this case and the confirmation that the legal framework adopted during the privatization of the company was robust.
The company noted the additional amount of compensation, which will be amortised over the term of the licence. It also said that future results will be presented on an adjusted basis to reflect the group’s actual performance and allow for comparability with its competitors.
The adjustments include €17.9 million in 2024 related to the exclusive rights, as well as the effects of exchange rate hedging in relation to the acquisition of Kindred Group.
Shares in La Francaise des Jeux SA (EPA:FDJ) gained almost 7 per cent to close at €39.12 per share Thursday, and were down 0.51 per cent at €38.96 per share in Paris Friday morning.