* Govt sets 30 pct tax on gross earnings, 10 pct on winnings
* New taxes align OPAP with European rivals
* Shares in privatisation candidate OPAP dive
(Adds details, quotes)
By Lefteris Papadimas
ATHENS, Sept 19 Greece will hike taxes on OPAP
, the state-controlled betting agency slated for
privatisation, following rivals' complaints to the European
Commission that tax provisions of Greek gaming legislation
favoured the company.
The move triggered a sharp drop in shares of OPAP - one of
Europe's biggest listed gambling companies - and sent the stock
plunging more than 18 percent as investors took fright at the
size of the levies.
The finance ministry said on Wednesday it had agreed with
the European Commission to set a new 30 percent levy on gross
earnings from all its games and a flat 10 percent rate on all
player winnings from Jan. 1, 2013.
The decision brings tax on so-called land-based or offline
gambling like sports betting, lotteries and slot machines, into
line with levies on earnings from its online games, which were
already subject to a 30 percent levy under a 2011 gaming law.
The move came after online gaming operators complained to
European authorities about the favourable tax regime offered to
OPAP, one of the cash-strapped government's prime candidates for
sale as part of its debt-reduction drive.
Last year, RGA, an association representing online gambling
operators, complained to the Commission that a new Greek
gambling law would leave OPAP's offline operations exempt from
the 30 percent levy on gross profits which online operators were
required to pay.
Income from offline gaming was previously treated as
ordinary revenue and taxed under the normal corporate tax rate
of around 21 percent. Player winnings above 100 euros are
currently taxed at 10 percent and the rate will now be imposed
from the first euro.
Manos Hatzidakis, an analyst at Beta Securities, said the
market was expecting the taxes on the offline games to go up but
not by so much.
"The percentage is very high," he said, noting that
competitors in other European countries typically paid rates of
between 15-25 percent.
"Overall, the agreement is negative on OPAP's shareholders,"
Dimitris Birbos, an analyst at the Investment Bank of Greece
said. "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."
He estimated that the 30 percent levy would hit 2013
earnings before interest, tax, depreciation and amortization by
350 million euros ($456.94 million) and strip 280 million euros
from net profit, which last year totalled 537.5 million euros.
The 10 percent levy on winnings is also expected to reduce
so-called "recycling" activity, or repeated bets from players'
wins, he said.
An OPAP official said the decision would impact both
earnings and sales at the company, one of Greece's most
profitable companies, in which the state holds a 34 percent
"It's a big hit for the company," he said.
The tax hike, which comes ahead of an expected ruling by the
European Court of Justice over whether OPAP can retain its
monopoly in the Greek market, could limit competition in the
market, said Beta Securities Hatzidakis.
"The tax rate -- the highest ever imposed on a eurozone
member state -- poses a serious problem to the entrance of other
online betting organisers," he said in a note.
The government is currently hammering out the details of its
privatization programme, a central element in its efforts to
reduce its crippling debt burden and meet the demands of its
However revenues have badly lagged expectations, with just
1.6 billion euros raised so far from the goal of 19 billion
euros targeted by the end of 2015.
The privatisation agency board met on Wednesday and began
proceedings for the sale of a 29 percent stake in OPAP, a deal
expected to be completed by the end of the year. It also invited
interested parties to submit bids for the state lottery to be
submitted with 45 days.
($1 = 0.7660 euros)
(Additional reporting by Tatiana Fragou and Lila Chotzoglou;
writing by James Mackenzie; Editing by David Holmes and