In the shifting landscape of European gambling regulation, two jurisdictions stand increasingly alone: France and Cyprus. While nearly every EU member state has embraced regulated online casino frameworks—albeit with varied tax rates, licensing structures, and responsible gaming provisions—France and Cyprus continue to enforce blanket prohibitions. This position, once defensible in the name of consumer protection, is now undermining both fiscal policy and market credibility, leaving these countries politically and economically isolated.
The case of France illustrates the tension most vividly. The French government’s abrupt withdrawal of its proposed 2025 budget amendment, which would have legalized online casinos under a 55.6% effective tax rate, sent shockwaves through the sector. On one hand, policymakers emphasized the risks of cannibalization, warning that land-based casino revenues could fall 20–30%, endangering up to 15,000 jobs, as highlighted by Gregory Rabuel, president of Casinos de France. On the other hand, data from ANJ (Autorité Nationale des Jeux) paints a stark reality: France’s illegal online casino market generated between €748 million and €1.5 billion in gross gaming revenue (GGR) in 2023, with nearly 50% of underground play attributed to casino products and 79% of high-risk players engaged in unlawful activity.
The contradiction is clear. By maintaining prohibition, France channels billions into unregulated offshore sites while depriving its treasury of potential revenues at a time when the country faces one of the EU’s largest fiscal deficits. Even under a burdensome tax framework, regulated online casinos could contribute meaningfully to public finances, as proven by Italy, Spain, and Germany—jurisdictions that initially resisted full legalization but now benefit from controlled revenue streams and greater oversight of consumer protections.
Cyprus presents a smaller but no less illustrative case. Although the country has cultivated a successful integrated resort model with the City of Dreams Mediterranean, it continues to block online casino licensing beyond sports betting. The result is a thriving grey market where local demand is served by offshore operators, unchecked by local compliance or tax capture. In a single-market environment where digital entertainment knows no borders, Cyprus’s prohibition looks increasingly unsustainable.
Across the EU, the political narrative has shifted toward channelization—the principle that effective regulation captures consumer demand within the legal market. Yield Sec’s 2025 study estimated that 71% of Europe’s online gambling revenue flows to unlicensed operators, costing governments an estimated €20 billion annually in lost taxation. France and Cyprus, by opting out of legalization, not only exacerbate this channelization crisis but also weaken the EU’s collective credibility in combating illicit markets.
For policymakers in Paris and Nicosia, the argument that prohibition safeguards social welfare no longer holds. Unregulated markets are thriving, player protection is absent, and fiscal opportunities are squandered. By contrast, countries such as the Netherlands and Sweden—both of which introduced tighter restrictions in 2023–2024—demonstrate that calibrated regulation, not outright bans, is the path forward.
The broader European gaming industry, from Malta-based B2B suppliers to Spanish operators, increasingly views France and Cyprus as outliers. The risk is not just economic isolation but reputational damage: as the EU consolidates regulatory standards under the Digital Services Act and AML directives, member states refusing to engage with online casino licensing will find themselves marginalized in policy discussions and industry investments alike.
In the long run, prohibition is not protection—it is abdication. Unless France and Cyprus align with the prevailing European consensus, they risk being remembered not as cautious regulators, but as jurisdictions that ceded control of their digital gambling markets to offshore actors.
