LEXIQUE

Ť Theoretical ť Gross Gaming Revenue	It includes the table games and slot machines revenue
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Levies (State, Local Council ...)	The State and the Local Authorities levy on fixed or variable rates.
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Net Gaming Revenue	This represents the total sum of the theoretical GGR and the slide, i.e. the difference between the winnings and the losses of the players less the levies.

	LICENSES TO OPEN CASINOS :
		Licenses to open casinos are granted by the Ministry of the Interior with due notice from the Local Council of the area in which the activity is to be carried out, following an investigation and on the basis of a list of specifications drawn up by the City Hall. The latter delivers a business concession to the rewarded company once the tender procedure, as introduced by the Act 93-122 of 29 January 1993 (the so-called Sapin Act), has been complied with. A national Gaming Board made up of senior civil servants (14) and Members of Parliament (5) is responsible for examining gaming licence applications and renewals. An Order issued by the Ministry of the Interior fixes the period of concession, the authorised games and the operating conditions for the casino. A licence may be cancelled by the Ministry of the Interior in the event of failure to comply with specifications or provisions of the Order. Casinos that have obtained the necessary licence must operate under a manager and executive committee, personally responsible, for ensuring that the regulations and provisions in the list of specifications are complied with. The manager responsible and members of the executive committee must be approved beforehand by the Ministry of the Interior. If this approval is withdrawn, they can no longer continue their activities. Approval is also required for hiring all gaming employees. The latter must also be holders of their own professional cards.
	LEVY APPLICABLE :
		The applicable levy relates to the additional revenue earned by the casinos using the new progressive levy scale (27 November 1986) , 50% of which must be earmarked for capital works designed to improve tourist facilities, as provided by Decree.

	OTHER ACTIVITIES :
		In addition to its gaming activities (cf. Slot Machines and table games), the Partouche Group also produces part of its turnover from hotels and restaurants, a complementary activity to its core business and an important way of offering its clientele the very best in accommodation and hospitality.

PROFESSION :

France authorises the following games:

Table games: They include French roulette, English and American roulette, Black-Jack, Baccarat - Chemin de Fer, Trente et Quarante (cards), Craps (dice), Boule, Casino Stud Poker and Punto Banco
Slot machines: Slot Machines are legally defined as automatic machines incorporating games of chance and coming within the categories known as " roll machines " and " video games ". The Group has a large number of slot machines.
Other activities: In addition to its gaming activities (cf. Slot Machines and table games), the Partouche Group also produces part of its turnover from hotels and restaurants, a complementary activity to its core business and an important way of offering its clientele the very best in accommodation and hospitality.

	REGULATORY AGENCIES :
		Ministry of the Interior: They grant licences to operate casinos, including those concerning slot machines, approvals concerning the manager and the gaming employees. Racing and gaming department : attached to the security branch, it mostly ensures the control of casinos and see that the regulations are complied with.
	REGULATORY FRAMEWORK OF CASINOS
		According to French Law, gaming activity is strictly prohibited and can result in prosecution under the terms set out in Article 410 of the old Penal Code. The Act of 15 June 1907 created an exception to this prohibition, allowing casinos to be opened in seaside and health resorts and thermal spa. The Act 88-13 of 15 January 1988 extends this authorisation to include major city areas with a population of more than 500 000, and having specific tourist and cultural activities. Licenses to open casinos are granted by the Ministry of the Interior with due notice from the Local Council of the area in which the activity is to be carried out, following an investigation and on the basis of a list of specifications drawn up by the City Hall. The latter delivers a business concession to the enterprise once the tender procedure, as introduced by the Act 93-122 of 29 January 1993 (the so-called Sapin Act), has been complied with. A national Gaming Board made up of senior civil servants (14) and Members of Parliament (5) is responsible for examining gaming licence applications and renewals. An Order issued by the Ministry of the Interior fixes the period of concession, the authorised games and the operating conditions for the casino. A licence may be cancelled by the Ministry of the Interior in the event of failure to comply with specifications or provisions of the Order. Casinos that have obtained the necessary licence must operate under a manager and executive committee, personally responsible, for ensuring that the regulations and provisions in the list of specifications are complied with. The manager responsible and members of the executive committee must be approved beforehand by the Ministry of the Interior. If this approval is withdrawn, they can no longer continue their activities. Approval is also required for hiring all gaming employees. The latter must also be holders of their own professional cards.Each game is subject to a very detailed set of regulations.
	REDISTRIBUTION RATE:
		Slot machines are parameterised to redistribute to the customers a percentage of the bets made. This percentage is called redistribution rate. The statutory payout rate is of at least 85%. Within Partouche Group, this rate is about 95%.

	SLIDE :
		In the case of slot machines, casinos benefit from a " slide " phenomenon. This means that although the State levy is calculated on the basis of the theoretical amount that the machines are designed to redistribute, in fact the real generated return is slightly lower than the theoretical amount, given that the players do not bet the maximum number of coins on each go (a parameter taken into account when calculating the theoretical redistribution rate). The difference between the theoretical and real amounts is called " slide ", with a ceiling of 15% of the slot machines' GGR, it is not subject to levies and thus it remains totally earned by the casino and liable to company income tax. (cf. Gross Gaming Revenue for more information)

	SLOT MACHINES :
		Slot Machines are legally defined as automatic machines incorporating games of chance and coming within the categories known as " roll machines " and " video games ". The Group has a large number of slot machines.

TABLE GAMES :

They include French roulette, English and American roulette, Black-Jack, Baccarat - Chemin de Fer, Trente et Quarante (cards), Craps (dice), Boule, Casino Stud Poker and Punto Banco.

TAX ALLOWANCE :

The progressive scale of the tax levy (cf tax levies) applies after the deduction of 25% on the gaming revenue.

TAX LEVIES

The progressive tax levied on gross gaming revenue in casinos is as follows :

Gross Gaming Revenue:

10%	Up to	58 000
15%	from	58 001	to	114 000
25%	from	114 001	to	338 000
35%	from	338 001	to	629 000
45%	from	629 001	to	1 048 000
55%	from	1 048 001	to	3 144 000
60%	from	3 144 001	to	5 240 000
65%	from	5 240 001	to	7 337 000
70%	from	7 337 001	to	9 443 000
80%	above	9 443 000

This progressive scale applies after the deduction of 25% of the taxable income of the gross gaming revenue according to the applicable method of calculation. Local authorities levy a maximum rate of 15% on the same bases as the State levy. In addition, there is a fixed levy of 0,5% on the very first franc generated on table games and of 2% on slot machine income. In 1996, a 3% CRDS (Contribution to the Repayment of Social Debt) tax was levied on gross gaming revenue, followed, in 1997, by the 3,40% CSG (General Social Contribution) of slot machines gross gaming income. Since January 1998, the CSG has been increased to 7,5% and is now calculated on a reduced basis of 68% of slot machines gross gaming revenue

TAX REFORM

The basis of the levies on the slot machines is modified as from the 1st may 2002, following the decree published in the French Gazette on the 16th April 2002 relating to the amendment of the casinos' gaming regulations.
Slot machines have a statutory theoretical payout rate of at least 85%.
Within the Partouche Group, this rate reaches approximately 95%.
In fact the real generated return is lower than the theoretical amount. The difference between the theoretical and real amounts is called " slide ". The later was not previously subject to the levy.
The tax reform led to the following change : the slide has a ceiling of 15% of the GGR. The average sliding rate within the Partouche Group being over 15%, this resulted in an increase of the tax basis and a reduction of the net turnover.

TAX STAMP :

Entrance fees to the table games, equalling 10 , are meant for the Government.

TENDER PROCEDURE :

The Local Council delivers a business concession to the rewarded company once the tender procedure, as introduced by the Act 93-122 of 29 January 1993 (the so-called Sapin Act), has been complied with.

	VAT :
		Casinos games that constitutes the Partouche Group's core business, are not subject to value added tax (VAT).