UPDATE 2-Greece's OPAP posts solid H1, outlook upbeat

(Adds details, analyst comment)

By Angeliki Koutantou

ATHENS, Aug 26 (Reuters) - Europe's biggest betting firm OPAP (OPAr.AT) increased first half profit by 35 percent, just beating market forecasts as it saw off rising competition from online betting, with analysts upbeat on the company's full-year outlook.

The Greek gaming monopoly said first-half net profit rose to 385.8 million euros ($567.6 million) versus an average forecast of 382 million in a recent Reuters poll.

Increased betting during June's Euro 2008 soccer championship boosted revenues from OPAP's two flagship games, fixed-odds sports betting format Stihima and its Kino lottery.

"The contribution from Kino and Stihima remains robust while we continue to make progress on optimising our cost base," OPAP's Chief Executive Christos Hadjiemmanuil said in a statement.

Under a major restructuring, OPAP has been trying to rein in costs and the move is paying off.

The firm said distribution expenses fell 18.3 percent to 59.6 million euros in the first half on lower advertising costs, with administrative expenditure coming in at 21.4 million, down 6.6 percent year-on-year.

Betting firms around the world have been facing stiff competition from Internet gambling, which is illegal in Greece.

OPAP, whose monopoly ends in 2020, has to date appeared little affected by illegal online betting and aims to offset any future loss of market share by developing its gaming products and expanding abroad.

OPAP launched a new Stihima coupon on Tuesday which offers players additional types of bets. In May it expressed an interest in Turkey's national lottery Milli Piyango, which is being privatised.

UPBEAT OUTLOOK

The group's sales rose 16.2 percent to 2.760 billion euros, with Stihima bets up 16.7 percent to 1.166 billion.

The firm said Stihima sales in June came at 233 million euros, while the payout ratio to the game's winners was 65.5 percent in the first half, down from 71.5 percent in the same period last year.

Looking ahead, a local analyst gave an upbeat full-year outlook for the company.

"Kino will continue outperforming in the third quarter because of the new terminals that have been deployed and...cost controls will remain tight", National P&K Securities analyst George Vitorakis said.

Revenues from Kino, about half of OPAP's total turnover, were also strong, up 20.6 percent, after the lottery speeded up coupon processing by leasing more terminals.

OPAP shares trade at around 11 times 2008 estimated earnings, compared with a P/E ratio of 8 for British bookmaker Ladbrokes (LAD.L) and 7 for William Hill (WMH.L), according to Reuters Estimates.

OPAP shares are down about 15 percent since the start of the year, compared with a 37 percent drop in the broader Greek market .ATG. The stock closed unchanged at 23.80 euros on Tuesday.

(Reporting by Angeliki Koutantou. Editing by John Stonestreet)