French Government Hits Jackpot With $2.2 Billion Sale of State Lottery Company Stake
Posted on: November 22, 2019, 02:05h.
Last updated on: November 22, 2019, 02:51h.
The French government cashed in some €2 billion ($2.2 billion) on Thursday from the sale of 52 percent of its stake in lottery operator, Francaise des Jeux (FDJ). It is the second-biggest lottery company in Europe, after Italy’s Lottomatica, and the fourth-biggest in the world.
The de facto privatization of the French lottery was greeted enthusiastically by investors as FDJ debuted on the Paris Stock Exchange yesterday.
Stocks rose by more than 15 percent in the opening minutes of trading, as investors vied to get a piece of a company that is guaranteed to hold its monopoly on lottery products, live and online, and retail sports betting for the next 25 years.
FDJ’s also offers online sports betting within an open commercial market.
The government retains around 21 percent of FDJ, which was established in 1933 as a national lottery to help injured WW1 soldiers.
Privatization Plan Takes Flak
In 2008, FDJ recorded gross gaming revenues of around $5.6 billion, which amounted to a roughly 50 percent share of the entire French gambling market. The contribution to the public purse was around $3.86 billion, of which $3.6 billion was public levies on stakes.
The 21 percent retained by the government has now significantly increased in value – the benefit, perhaps, of having a former investment banker, Emmanuel Macron, as a president.
But the decision to offload a state enterprise that, for once, actually makes a profit has been criticized in some quarters as short-sighted.
Others have suggested that reducing the state’s role in the company could leave gamblers prey to corporate greed.
But the IPO — which attracted 500,000 retail investors who were given a discount over corporations — has been hailed as a success for Macron’s privatization plans, amid political opposition.
€10 Billion Spending Plan
The administration has announced it will privatize several state-owned ventures — including the Groupe ADP airports company, which owns Charles De Gaulle Airport outside Paris, and energy company, Engie — to finance a €10 billion ($11 billion) capital plan to reduce the national debt and foster technological innovation.
“When we decided with Emmanuel Macron to launch this IPO, there was a lot of doubt, skepticism, and criticism against the decision. I strongly believe that this decision is a fair and efficient one for the French economy,” Bruno Le Maire, France’s finance minister, said Wednesday, as translated by The Financial Times.
“I clearly think that the role for the French state is not to be part of the French lottery … our role is to invest in the future of young people in innovation and in new technologies,” he added.