Retroactive Taxes Slash OPAP’s Profits

Greece’s new GGR contributions drop OPAP’s profits by 36.4%.

One of the biggest gaming operators in Europe, OPAP, confirmed this Tuesday that they continued to suffer profit losses in 2016 when they posted their quarterly financial report. As was reported, the company saw a 36.4% drop in net profits during their second quarter.

The net profit of OPAP thus far amounted to €33 million, which shows a major difference in earnings when compared to the same period last year, when the company reported a profit of €52 million. The downward trend started at the beginning of the year, when a 26.3% drop in profits was noticed during the first quarter after new taxation regulations struck the Greek operator.

Tough Times for Greek Economy and OPAP

The sudden change in profits for the Greek betting operator was triggered by a stricter taxation law that was introduced as a measure to help boost the country’s frail economy.  Greece is now in under a third international bailout, one which was agreed in July 2015 and turned the government to introduce severe saving measures.

The new measures lead to a retroactive increase in taxation on the Gross Gaming Revenue generated by the operator from the beginning of the year and raised the tax from 5% to a staggering 35%. This inflicted a heavy blow on OPAP, as the operator was already suffering a 14% drop in sport betting revenue, most probably due to the economic crisis and the launch of smaller online betting providers.

According to the official financial report for the second quarter, the operator has suffered a decrease across several performance indicators, but still remains stable with the help of new adjustments within the company.

Solid Performance Despite Severe Measures

The Gross Gaming Revenue generated by OPAP hasn’t changed much this year and now amounts to €338.1 million (as opposed to the €340.8 of last year) but their net revenue has significantly dropped by 17.7% since the second quarter in 2015.

This year’s changes are most clearly visible in the EBITDA indicator (Earnings Before Interest, Taxes, Depreciation and Amortization), which shows that during the second quarter, the operator made €68.5 million in earnings, a number much lower than last year’s €93.2. The change is directly attributed to the 35% GGR contribution imposed to the operator by the Greek Government.

However, when the GGR contribution is excluded, the company actually has a 3.7% higher adjusted EBITDA than in the second quarter of 2015, which is mostly owed to the relentless effort of the Management to lower costs and deal with the challenges the company is facing this year. The same conclusion can be reached for the adjusted net profits, which are up by 2.1%.

Damian Cope, the CEO of OPAP commented on the changes by saying that the company has had a stable performance regardless of the difficulties, and that the largest reason for their loss in profits is due to the participation rate set by the Hellenic Republic which is higher than the “European market norm”.