BFM Business partner. BFM Business and La Tribune present the HC interview with Edvis Chevrion and Lucy Robkin.
Welcome to the HC interview, which as every year takes place here in Aix-en-Provence as part of the economic meetings. The HC interview in collaboration with La Tribune, with HC of course, and the strategy firm B. We are together, as you know, for half an hour, and next to me Lucy Robkin, who is the editor-in-chief of La Tribune. Hello Lucy.
And to have a prominent figure take our oral exam. Our guest today is Stéphane Pallez. She is the chairwoman of FDJ United. That is the new name of the Française des Jeux, the French leader in gambling. Hello Stéphane Pallez.
Hello Edvis Chevrion. Hello Lucy Robkin.
Thank you for being with us. Hello Stéphane Pallez.
So the FDJ is a group that generates 3 billion euros in annual revenue. It is a group that has expanded greatly internationally with many acquisitions, notably that of Unibet in Sweden recently. You have a little over 5,000 employees worldwide but 33 million players. We are here for an interview that you can find, we remind you, on the websites of La Tribune and BFM Business. So you have completely changed. We will talk about dimension after having swallowed the Kindred Group, the parent company of Unibet, which Lucy mentioned. We briefly remind you how this interview works. There are four parts. The first part is news, we will come back to your acquisition, the business part, the B brief, and then a street interview carried out as in every episode by students from the HC campus. But right away, the news questions with a first question on the economic climate. Stéphane Pallez, the economic climate, we see it is not very good. In any case, the purchasing power of the French is not at its best. Does that have an impact on your business and on gambling?
So, I would say at this stage no. But it's not just a cyclical question. In fact, we are a company that historically, especially in France, is very little sensitive to the economic cycle in both directions. So when we did the IPO of the Française des Jeux in 2019, we showed a curve that demonstrated we were a so-called acyclical company with an average recurring growth of 5% per year. Obviously, that's what we sold to investors for 25 years. So there had been crises, there was the 2008 crisis. So there is no real correlation, in fact. There is no correlation between the macroeconomic cycle and gambling. And why? Fundamentally because, as you said, today we have 33 million customers, 27 million in France, and our model, both economic and what we call responsible gambling, is to have many customers who play moderate amounts and therefore in a responsible way and which consequently also represents a very small share of household budgets. So when they have trade-offs to make, we are not really affected by these trade-offs because we represent a much smaller share than the electricity bill, for example.
What we know nevertheless is that gambling sometimes causes addictive behaviors, especially among young people. You estimate that about 5% of your players have addiction behaviors. How do you concretely control minors' access to gambling? How do you reduce addictive behaviors?
So that is part of our mission, it is part of our economic model as well because we believe, and that has worked quite well for us, that there is no growth in this sector if we are not fully invested in this issue. The figures you cited are actually figures that are done by an independent organization. So it's not us who measure them, and in reality it's 5% of players who are at risk, and within that there are about 2% in our business who are so-called excessive players. So how do we do it? We can talk about it. Is it increasing or decreasing? It is increasing. On the lottery, it is stable, which is not the case for the entire gambling sector. So we are rather proud of that because in fact we have grown while stabilizing in absolute value and percentage the players at risk. So that is the result of our action, it is not by chance. So perhaps two examples, because we could talk about it at length. The first thing is obviously the prohibition of gambling by minors. So that is something to which we devote a lot of resources. Obviously online because online people have to prove their identity but sometimes some seek to impersonate. So we have to implement controls, technology controls on this subject. That is online and it concerns us more and more since we are increasingly digital, both in our points of sale and in our points of sale. For the latter, we have put in place both training, inspections. We are in fact the only gambling company that inspects all of its points of sale and also sanctions. And in fact, we are the only ones to do it and we are increasingly able to prevent minors from gambling, which is obviously more complicated in points of sale than online.
Online casinos are actually authorized in many European countries but they are not in France. The consequence is that the French access them, since it's online, sometimes illegally, and so there is a potential loss of revenue. What is your position on this? Do you think we should legalize these online casinos?
So our position is this. First of all, we are very well placed today to have an overall view of what online casinos are, because indeed, as you said, online casinos are authorized in many European countries and with Kindred we are online casino operators. So we have a fairly precise vision of the effects. The first thing to say is that just because you legalize online casinos does not mean illegal gambling disappears. That is what we see in other countries. So that alone is not enough. It may be a beginning of an answer. It is a start, but it is not a sufficient answer if we do not also fight against illegal gambling. Secondly, the online offer must be attractive enough so that people do not continue illegally. And again, in many European countries, there is a very large online market, especially when regulation is not very effective. So we are, I would say, open to this discussion, but we consider that it must be approached in a rather detailed manner, including obviously the economic effects on all gambling operators, because in fact there are still people in France called casinos. We are the one with the most physical casinos, and they themselves are quite reserved on this subject.
Yeah. And the tobacco press shops remain a major element. You still sell a lot of things in tobacco shops. They are disappearing in France. What will be the growth drivers? Where will you sell your games in five or ten years?
So, first of all, we are, and here too we are quite proud of this. We are a lottery that from the beginning affirmed that it believed in the development of the physical network at the same time as digital. That has been my strategy since I arrived at FDJ, that is, ten years ago. So in fact for ten years we have maintained a large proximity network with this network of retailers, especially the tobacco press shops, since we have nearly 29,000 of them in France today, and that's because we have constantly created new ones because indeed there is a certain fragility in this network. Where do you find them? So wait, the proximity network, 29,000, the largest proximity network in France. After that, there is a sort of attrition of this network which means that at some point we cannot necessarily continue to place our games only in this network, so we also go to other stores, including supermarkets, we are already there, we will continue to go there essentially when the proximity network is no longer available, and thirdly digital, because in fact for ten years we have gone from 3% of our turnover in digital to almost 15%.
Stéphane Pallez, France has increased the tax on online gambling. I think it came into effect this week. What does that represent as an additional cost for you, for FDJ? And do you pass it on to players through the price of games, for example?
So, yes, indeed, the tax in France is already the highest in Europe on the gambling sector. How much is it? No, but it is the highest, I mean, for online betting, for example, we are twice as high in terms of levy on games. We are over 50% while others are around 20%, just as an example. So unfortunately, although I tried to explain, and all my fellow operators have also said it, that it was absurd to increase the tax on our sector, which is a sector that brings a lot of money to the state, we paid 4.7 billion to the state in 2024 for FDJ alone. So who can beat that? So nonetheless, the tax increased in the 2025 Finance Law and applied as of July 1. The problem is that this tax in effect consists of capturing our growth. So this year we announced that we would have no growth this year. That is the first time in history. Okay. Secondly. Thirdly, no, this tax we do not pass on to players because it is a tax that takes our turnover directly, and our players, our objective is to sell them a diversified offer, not to pass on the tax.
But right away, we will continue our HC interview with the brief from B & Company. Thank you.
Hello and hello Stéphane Pallez. So today I would like to talk to you about transformation. In 10 years, you have profoundly transformed FDJ from a national lottery into a diversified, listed and international group. As we said, the acquisition of Kindred in particular has made FDJ a European champion in online gambling and betting. And you reaffirmed during your Capital Markets Day last week the ambition for FDJ United, now for this controlled growth in the global online gambling and betting market. The market is promising, more than 9% growth in recent years in Europe, 5-6% still expected in a difficult macroeconomic context. So more than honorable figures and a global market expected to be around 500 billion dollars worldwide, largely driven by the continued opening of the United States to online gambling and betting. This growth is also accompanied by important transformations. The business is more technological than ever. 30% of FDJ's turnover is already online, and you mentioned it, omnichannel and personalization of the experience is increasingly important in the market. To face these challenges, we see a real consolidation movement. Obviously, FDJ-Kindred is an example, but we could also mention the English champions Flutter, Entain or Lottomatica in Italy, which very early went international and diversified, notably to the United States. Such external growth actions are not without risk and require robust governance. As we said, you mentioned regulation plays an important role, taxation as well, and Kindred experienced that last year in the Netherlands. And the challenge is not only economic. Let us remember, as mentioned, FDJ's significant commitments to responsible gambling, but also the very important redistribution logics that are in the DNA of the company. If we add to that, as you mentioned, the density of the local network, the 29,000 points of sale in 11,000 communes in France, we get the measure of the economic and social importance of the group's transformation. So I come to my question for you, Stéphane Pallez. In 10 years, you have evolved FDJ from a mainly French group focused on a monopoly market and you have added international, competitive and diversified activities, thus truly transforming the group's metabolism. And my question is: in such a short time, how do you orchestrate such a change for the historical employees but also for welcoming new talents into the group, and what new transformation are you preparing them for today?
So, thank you for this synthesis and this question. Here at Aix, we have talked a lot about the need for European champions, and ultimately what you said is that others left before us to form large international groups. So I think the first thing to rely on when you want to transform a company is the meaning of that transformation. And the meaning is that for me there is not much future for a French company, certainly formidable and in which we have continued to invest, but which does not project itself into a world where it is confronted with international competitors, European or even beyond, investing in the United States. So that is the conviction on which we relied and which led us to gradually make these transformations with, I think, a very important dimension for us, which is also the conviction that we must keep our proximity, keep our vocation of redistribution, keep our convictions and transform continuously. And that is what we have done. So how do we get employees to adhere to this? First, at FDJ, I think there is something very strong that we have cultivated well, which is that this conviction is shared. This conviction that development, acquisitions, internationalization is actually a source of pride for employees. The first to support me on this subject are my unions. They have the conviction that it is like that we remain a leader. It is by investing. Second thing, quickly, sorry. The second thing is to recognize that today it is a new group, so a new name, new values on which we have all worked together, so FDJ United, values on which the 5000 employees, 70 different nationalities have worked together. And third, continue to project ourselves into new transformation strategies. The first one is to show that this new group works, that it becomes this recognized European leader. That gives it other possibilities to continue to grow and transform. And as you also said, it is investing in technological progress, especially in AI. And that is what we are projecting on today.
Maybe one last question, you mentioned it. A very quick answer, forgive me Stéphane Pallez, but you mentioned it and I would not be a consultant if in 2025 I did not talk about AI. AI is a magnificent transformation lever in many respects, but also obviously in the field of gambling, there are things to take into account and guardrails to create. Today it is a big subject at FDJ.
So yes, it is a big subject. So yes, we have given ourselves the means and skills to approach it, including people we have gone to find to do so. Yes, it concerns all of our business, it concerns player support, personalization of the player experience, fight against fraud, fight against minors playing, and it also concerns all the functions of any company. So we are investing fully in this subject and that too is transformative.
Thank you Laurent Colombani for being with us. Stéphane Pallez, right away we will go to the HC campus. What are all these games? What do they inspire in these young people?
If I say Loto, sports betting, or Euromillions, do you know which company is behind these games?
