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Severe Problems for Greek Online Gambling

By: Adam Richards, Sunday July 31st 2011
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In order to resolve its perilous financial situation the Greek government will have to meet its debt obligations to the European Union (EU) and the International Monetary Fund. As per the original proposal Greece was supposed to generate a part of the required funds by legalization of online gambling and by selling its stake in the state gambling monopoly OPAP

The process of legalization of online gambling took a hit earlier this month when the European Commission (EC) declared that the draft proposal was not compliant with the EU laws. But instead of addressing the issues raised, the Greeks have decided to carry on with their proposal. It is being fast tracked through the parliament attached to a must pass financial bill. This means that the EC can launch infringement proceedings and take the Greek government to the European Court of Justice. It seems that the Greek government is willing to take their chances with this scenario.

Perhaps the bigger problem is the selling of the 34% controlling stake that the government has in OPAP. Earlier this week the Greek finance minister, Evangelos Venizelos, surprised the online gambling industry watchers by stating that his government may not sell its full stake in OPAP by the fourth quarter this year as promised. He clarified that the government had not pledged to sell OPAP, but to generate revenues from OPAP to reduce the public debt. The cabinet is appraising what is the best way to raise the revenues targeted. But Venizelos hit the nail on the head when he told the Greek parliament, "OPAP's value is not only its shares but also the value of exercising its management." It is this control of the management that the politicians are not willing to let go.

OPAP is debt-free and profitable. The state's 34% stake has a market value of about €1.17 billion. The sale of the state's stake in OPAP to a strategic investor that would also take over management is projected to raise at least €1.2 billion, and the sale of the online gaming licenses could add additional €500 million. Venizelos said, "We have a clear target to present €1.7 billion from privatizations by the end of September and €5 billion by the end of the year." If the government does not do that it puts the financial support package at risk. But the options being discussed do not amount to much. One option is to raise about €400 million from extending OPAP's license, which currently expires in 2020. Another option is to give OPAP an exclusive license to operate all the 35,000 video lotto machines to be set up in the country as part of gaming liberalization.

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