Fdj: The FDJ risks having to pay even more than one billion euros to the State, according to Citigroup

(BFM Bourse) – The title FDJ accuses one of the largest declines in the Parisian market on Friday, penalized by a deterioration of Citigroup. The research department points out the risk induced by the European survey on the conditions of exclusivity of lottery games in France. The FDJ could have to pay 1.06 billion euros more than the amount paid during the privatization in November 2019.

If the daring will try their luck on Friday at the lottery for the Super Holiday Jackpot of 13 million euros, the shareholders of the FDJ make the soup with grimaces because of a degradation of Citigroup, which trades its opinion to the purchase against a negative opinion on the case. The design office immediately slashed its target price to drop it from 52 to 31 euros in its note for the day.

The title of the operator of the national lottery shows one of the largest declines on the SRD and loses more than 4% around 5:05 p.m. in reaction to this deterioration. Analysts justify this change of gear by the risks linked to an unfavorable decision by the European Commission on the attribution by the State of exclusive rights to the company.

As part of this investigation opened in July 2021, the European Commission intends to verify whether the amount of the consideration paid by the FDJ to the State in compensation for the granting of exclusive rights for the operation of lottery games is sufficient, compared to the 25-year exclusivity period. In return for this 25-year exclusivity (i.e. until 2045), the company has undertaken to “ensure the integrity, security and reliability of its gaming operations and to ensure the transparency of their exploitation” and, above all, it paid the State financial compensation of 380 million euros.

Following the receipt of two complaints, the Commission decided to launch an investigation to verify whether this remuneration is in line with market conditions. At this stage, the European executive “does not rule out that the measure could provide an undue economic advantage to the Française des Jeux” – in other words that this exclusivity has been granted by the State to the FDJ on conditions that are a little too advantageous.

And if the very principle of exclusivity is in no way called into question, there is a risk that the investigation will conclude that there is an undue advantage, requiring the payment of a possible cash payment, of an amount estimated at 1.06 billion euros. by Citigroup analysts – even 1.4 billion euros taking into account potential interest on arrears…

Sabrina Sadgui – ©2022 BFM Bourse

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