The share price of La Française des Jeux (FDJ) has fallen after Goldman Sachs changed its recommendation to “sell” from “neutral” after the European Commission announced it is investigating the French lottery operator.
In July, the European Commission announced it would investigate FDJ over a $380m payment to the French state in 2019 for “remuneration for exclusive rights granted” in respect of the lottery and of sports betting at points of sale.
The lottery operator was partly privatised in 2019 by the Macron administration and it claims that the payment was in line with the terms of the privatisation agreement.
Following this, FDJ shares were down 2.1% in early session trading, although stock is still up about 13% year-on-year and has gained over 87% since a November 2019 IPO.
“FDJ is now trading at a premium to the broader gaming space despite lower-earning growth potential,” wrote Goldman Sachs in a statement
“We think current news flow on the EU investigation into the French government granting exclusive rights to FDJ…highlights a different risk profile for FDJ.”
Following the announcement of the European Commission investigation, FDJ released a statement which read: “FDJ reiterates that as part of its privatisation and under the French Pacte Law, the French State secured, for a period of 25 years, the exclusive rights that the Group had previously held for an unlimited period.”