French gaming group FDJ United announced its financial results for the third quarter of fiscal year 2025, with revenue down 3% year-on-year to 864 million euros (approximately $1.01 billion). The company attributed the decline in revenue primarily to an increase in gambling taxes in Europe, especially in France, with the tax impact reaching 21 million euros, of which France accounted for 18 million euros. France has raised the online gambling tax rate from 54.9% of total revenue to 59.3% since July 1, expected to reduce FDJ's annual EBITDA by 45 million euros. In the third quarter, revenue from French lotteries and sports betting grew by 2.1% to 595 million euros, but online gambling and gaming revenue fell by 15.6% to 209 million euros. FDJ's revenue for the first nine months was 2.73 billion euros, down 2.1% year-on-year, and the company expects annual revenue to exceed 3.7 billion euros and announced an increase in cost-cutting efforts.
Revenue Overview and Reasons for Decline
FDJ United's revenue for the third quarter was 864 million euros, down 3% from 890 million euros in the same period last year. The decline in revenue was mainly affected by the increase in gambling taxes in the European market, especially the tax rate adjustment implemented in France on July 1.
The company stated that without considering the tax increase, revenue should remain stable. The total tax impact reached 21 million euros, with the French market contributing 18 million euros.
Tax Increase Impact and Regional Differences
France has raised the gambling tax rate from 54.9% to 59.3% since July 1, 2025. This tax increase covers both physical and online gambling activities, with the online sector seeing the largest increase.
In addition to France, Romania has also increased gambling taxes, while the UK and the Netherlands have implemented stricter regulatory measures, collectively affecting the company's performance.
Performance in the French Market
As the core business, French lottery and sports betting revenue grew by 2.1% to 595 million euros. Excluding the tax impact, the actual growth rate could reach 4.5%.
Lottery revenue grew by 2.5% to 508 million euros, mainly benefiting from draw games and instant games; sports betting revenue remained at 87 million euros, despite facing challenges in the later stages of the 2024 European Championship.
Online Business and International Performance
Online gambling and gaming revenue fell by 15.6% to 209 million euros, mainly affected by an additional 7 million euros in taxes. Tighter regulations and increased taxes together led to a decline in this segment's performance.
International lottery revenue slightly increased by 0.3% to 44 million euros, while payment and service revenue fell by 1.8% to 16 million euros, showing a flat overall international business performance.
Cumulative Performance for the First Nine Months
As of the end of September, FDJ's revenue for the first nine months was 2.73 billion euros, down 2.1% year-on-year. French lottery and retail sports betting grew by 3.1% to 1.89 billion euros, with lottery revenue growing by 4.8%.
Online gambling and gaming revenue fell by 12.9% to 675 million euros, international lottery revenue decreased by 11.5% due to the sale of Sporting Group, and payment and service revenue slipped by 1.6%.
Future Outlook and Performance Expectations
FDJ expects revenue to slightly decline in the fourth quarter, mainly due to a reduction in French lottery and retail sports betting revenue. Online gambling and gaming revenue may remain stable.
The company expects annual revenue to "exceed 3.7 billion euros," with recurring EBITDA around 900 million euros and a profit margin over 24%, all possibly lower than last year's levels.
Cost Control and Strategic Adjustments
FDJ announced an increase in cost-cutting efforts as part of its performance plan for 2025-2028. The company stated it would deepen transformation and performance plans to drive strategic implementation.
Chairman and CEO Stéphane Pallez emphasized: "The group will drive strategic execution according to the growth targets of the 'Forward to 2028' plan."
Market Environment and Regulatory Challenges
The European gambling market faces an increasingly strict regulatory environment, with rising taxes and compliance requirements becoming common challenges in the industry. The adjustment of tax rates in France particularly affects the profitability of operators.
Social welfare payments have also been implemented since last July, further increasing the financial burden on operators.
Business Segment Analysis and Adjustments
FDJ's business segments show clear performance differences, with traditional lottery business relatively stable and online business facing greater pressure. The company needs to adjust its business structure to respond to market changes.
International expansion and business diversification remain long-term strategic focuses to reduce dependence on a single market.
Management Perspectives and Responses
Pallez stated: "The changes in FDJ United's revenue reflect the long-term decline in some markets' online business and the impact of increased gaming taxes. We will address these challenges through performance plans and cost control."
Management emphasized continuing to focus on growth targets while adapting to the changing regulatory environment.
Investor Impact and Market Reaction
The decline in revenue and the impact of increased taxes may attract investor attention, especially concerns about future profitability. The company's cost-cutting plan and strategic adjustments will become focal points of interest.
The market will closely monitor fourth-quarter performance and the 2026 outlook to assess the company's effectiveness in addressing challenges.
Industry Trends and the European Market
The European gambling market overall faces trends of stricter regulation and increased taxes, with operators needing to adapt to higher compliance costs and tax burdens. Online business is particularly impacted, while traditional business remains relatively stable.
Industry consolidation and cost optimization may become major trends in the coming years to enhance competitiveness and profitability.
