IS GREECE ON A COLLISION COURSE WITH THE E.C. OVER ONLINE GAMBLING?
30th July, 2011 at 03:19:02
Finance minister's comments highlight an apparent disregard for the European Union's enforcement arm
One of the critical elements in the resolution of Greece's perilous financial situation (see previous reports) is the fate of state gambling monopoly OPAP and the legalisation of online gambling that could enhance its value. Both are essential components in the nation's undertakings to the EU and IMF to meet its debt obligations by selling off state assets.
However, developments in Greek politics this month have increased confusion over how the government intends to dig itself out of the worst financial crisis in its history.
Regarding online gambling, the Greek legislative proposals did not meet with the full approval of the European Commission and can therefore safely be regarded as not compliant with EU law. The Greeks have apparently decided to push ahead with their proposal despite this, risking infringement proceedings and a possible trip to the European Court of Justice; the bill is now being driven through parliament, wrapped in a must-pass financial bill.
In terms of the Greek proposal, licensed operators would have to set up a subsidiary based in Greece, locate gambling servers in the country, and process transactions exclusively through Greek banks all measures that appear to restrict the freedom to provide services within the EU, according to the EC opinion.
Earlier this week the Greek finance minister, Evangelos Venizelos, caused a stir by suggesting that the cash-strapped government may not sell its full 34% stake in gaming monopoly OPAP by the fourth quarter this year as promised.
"We have not pledged to sell OPAP; we have pledged that we will have revenues from OPAP (to reduce) the public debt," Venizelos told the Greek parliament. "The cabinet will appraise what is the best way to raise the revenues targeted."
Venizelos said a draft gaming law will considerably strengthen OPAP and the premium that goes with appointing the management of the company, which the government currently does through its controlling stake.
"This premium is very large," Venizelos told lawmakers. "OPAP's value is not only its shares but also the value of exercising its management," he added.
He revealed that the government additionally expects to raise about Euro 400 million from extending OPAP's licence, which currently expires in 2020.
Unlike most of the assets earmarked for sale in Greece's privatisation plan, OPAP is debt-free and profitable. The state's 34% stake has a market value of about Euro 1.17 billion.
The sale of a 34% stake in OPAP to a strategic investor that would also take over management is projected to raise at least Euro 1.2 billion, and the sale of the online gaming licenses could realise a further Euro 500 million, the finance ministry estimates.
Venizelos said that his country stood by its EU/IMF privatisation targets.
"We have a clear target to present Euro 1.7 billion from privatisations by the end of September and Euro 5 billion by the end of the year. If we don't come up with this we won't be credible and put the financial support package at risk," he said.
As part of measures to boost OPAP's value, Venizelos said that it will receive an exclusive licence to operate all the 35,000 video lotto machines (VLTs) to be set up in the country as part of gaming liberalisation.
OPAP will operate 16,500 of these machines itself and sub-contract the rest to between four and 10 other operators, he said.
However, this measure has itself come under attack by critics, who suggest that the move is intended to discourage international gaming operators from entering the Greek market, thereby allowing local interest groups to gain an unfair advantage in dividing it up, in conflict with the main goal of raising the most cash to address the country's crippling debt burden.
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