OPAP’s share price started to fall after Greek authorities announced the introduction of a flat 10 percent tax rate on gambling, Greek gambling news sources reported yesterday.
According to a report by Reuters, an agreement between the Greek Finance Ministry and the European Commission (EC) levies a flat 10 percent online and land based slot machine player winnings tax.
Currently, only the winnings above Euro 100 are subject to a 10 percent tax. Yesterday an OPAP spokesperson confirmed that the new regulation will tax the first cent of any winnings.
The new agreement is due to be implemented on January 1st, 2013.
On top of the flat gaming tax, the winnings will also be subject to a 30 percent tax on gross earnings, Reuters reports. This new 30 percent levy is above the existing corporate tax rate of 21 percent gambling companies already pay.
Greek authorities claim the taxes were brought in line with European market prior to the expected privatization of the country’s gambling monopoly. However, industry analysts noted that the 30 percent gross earnings tax was very high compared to other EU countries, where this levy is usually between 15 and 25 percent.
OPAP’s shares started to drop immediately after the news of the agreement Greek and the EC.
Dimitris Birbos, an analyst for the Investment Bank of Greece commented: “Overall, the agreement is negative on OPAP’s shareholders. As things stand, I think it would be better for the state not to go ahead with its sale, as its valuation is going down.”
Birbos estimates: “The new levy would strip around Euro 280 million from OPAP’s 2013 net profit.”
OPAP, the Hellenic Football Prognostics Organization was established in 1958. Currently, the Greek government manages the company. OPAP’s exclusivity s for running the national lotteries was ensured by Greek gambling laws until the end of this year.
Following a series of economic crisis in the Hellenic country, the government decided to privatize the firm, and end its exclusive rights to bet on sports in Greece.