Something has been happening in Paris, and few in the international gaming industry have heard about it. Casino gambling has historically not been legal in the city of Paris. In 1920, a French government decree stated that no casinos could be within 100 kilometres of the city, after an earlier decree had banished casinos to the seaside and spa towns where the rich congregated. It was an effort to make sure the poor did not gamble. But in 1931, after pressure was applied, an exception was made for Enghien les Bains, a commune in the northern suburbs of Paris. A clue in the name, les Bains, indicates a spa. It is 14 kilometres from the centre of the city, but it is not within the city limits. Today the Enghien casino is, unsurprisingly, France’s largest casino, with 500 slot machines and 40 table games, operated by Groupe Lucien Barriere. The operator has the monopoly for Paris; however, the number of slot machines is capped, and it is not possible to operate additional games.
Although there was a ban on casino gambling in Paris, unbanked games were allowed. Unbanked games include Chemin de Fer (the game James Bond plays), a variation thereof called Baccarat en Banque, and poker, where players are not betting against the house but against each other. The clubs made their money by charging a “rake,” which is a percentage of the amount bet on each game. Several clubs offered these games prior to the 1920 decree, the most famous being the Aviation Club on the Champs Elysee, which opened in 1907. Although they were members clubs, i.e. owned by their members, they were privately operated.
These clubs were known as Cercle des Jeux, and they flourished. At one point 15 were in operation around the capital. The boom in poker in the first decade of this century added a new clientele. But all good things… Unfortunately, the due diligence on the ownership was lacking, and some operators had links to Corsican organized crime. Ironically, according to one article I read, the Corsican involvement was originally allowed because of “services rendered” by the Corsicans during the Resistance!
The most serious concern was that the Corsican mafia was using the clubs to launder the illegal proceeds from drug distribution and prostitution that they ran in the city. In 2014, the police carried out a series of raids of the clubs and sought to close them down. More than 200 people were arrested and, not surprisingly, some members of the police who were in charge of monitoring the clubs were also implicated during the investigations. The Aviation Club, one of the last of these clubs to close their doors, ended business in 2015, having operated for 107 years.
Obviously, that did not stop gambling in Paris, it just went underground and completed unregulated. These concerns along with lobbying from the existing French casino operators pushed the French government to reform the law and allow the clubs to reopen. The difference this time being that the games no longer had to be unbanked. Players could bet against the house on games like Punto Banco, or Baccarat as it is called in the U.S., and unbanked variations of poker. Blackjack was still not allowed.
Tranchant, the fourth largest operator in France, opened the first of this new type of club, the Paris Elysées Club, in April. The club, as its name suggests, is near the Champs Elysee and offers 23 table games, mainly poker. There will not be any slot machines. Each of the main operators, Groupe Lucien Barriere, Groupe Partouche, and Groupe Joa, have plans to open a club. Groupe Lucien Barriere’s will be the rebirth of the Aviation Club and is scheduled to open later this year.
One of the challenges operators will face is the high cost to operate. Gaming tax rates in France are relatively high (and complex) and can average around 50 percent of revenue. Combined with labour costs and the rents in central Paris, it will likely be difficult to make a decent return. Don’t forget that, although the French casino market is dominated by slot machines – approximately 90 percent of gross gaming revenue is from slot machines – in these clubs they are not allowed.