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French government's new gambling law bans Betfair and all exchanges 08/10/2009
Owen Gibson

The French government has effectively outlawed the online betting exchange Betfair after passing an amendment to new gambling laws. These are being closely watched by sports bodies in the UK which are lobbying the government to bring in similar regulations.

Under a surprise last-minute amendment, betting exchanges such as Betfair that allow punters to lay as well as place bets were excluded from the legislation in a move that the company described as "discriminatory".

Since its launch in 2000 Betfair has grown to become by far the biggest online betting exchange, with more than two million customers.

France's new laws have opened up the betting market for the first time, but also enshrined the principle that any bookmaker must apply for a licence and agree to pay a proportion of their revenues to sport. Online betting exchanges will not be able to apply for one of the new licences after it was ruled that allowing punters to lay bets contradicted this principle.

Passing the amendment, the French parliament also referred to a 2007 report from the British Gambling Commission that said 9.8% of punters using betting exchanges developed gambling addictions, compared to a rate of between one and three per cent among the general gambling population.

Betfair's managing director, Mark Davies, said: "We will consider our position. It is fairly clearly discriminatory against the biggest and most competitive online operator in Europe. It is a slap in the face for the consumer."

The company also disputes the figures in the 2007 BGC report, which it said were based on such a small sample that they were close to meaningless.

The French legislation has been closely watched by a coalition of British sports governing bodies that hope to persuade the government to introduce a similar system here. They argue that bookmakers should be forced to pay a levy to offer odds on their sport, a proportion of which would then be spent on fighting corruption.

But bookmakers say corruption would exist regardless and believe they help bring potential cases of match-fixing to light, as well as investing in sport through sponsorship and betting partnerships.

There had been doubts about whether France's stance would comply with European law, but the European Commission appeared to signal its cautious approval earlier this year. However, bookmakers are expected to challenge the new rules, which require them to pay 1.8% of their revenues to the French sports commission and negotiate separate licences with each sport they want to offer bets on.

Sports administrators, including the England and Wales Cricket Board's chief executive, David Collier, and his counterpart at the British Horseracing Authority, Nic Coward, last month met the sports minister, Gerry Sutcliffe, to advance their case.

Two parallel government reviews are both expected to report before the end of the year. The former Liverpool chief executive Rick Parry is chairing a panel of senior industry figures looking at issues of sporting integrity in the wake of several high profile match-fixing cases in snooker, tennis and football. Meanwhile a separate review is looking into whether overseas bookmakers can be forced to contribute towards the fight against corruption, issues surrounding the horse racing levy and problem gambling.

The stakes were raised by the recent decisions by the two biggest high street bookmakers, William Hill and Ladbrokes, to move their online operations offshore for tax reasons.