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OPAP hails “healthy” Q3 despite revenue decline

| By Robert Fletcher
OPAP CEO Jan Karas has praised a “healthy” performance by the Greek gambling group in Q3 despite reporting a fall in revenue, EBITDA and net profit.
OPAP 2023

Group revenue for the three months to 30 September was €481.0m (£418.5m/$524.4m). This was 3.6% less than OPAP reported in Q3 of last year.

Karas said tough year-on-year comparatives in Q3 led to the declines at OPAP. However, he was keen to highlight several key developments that he said will support long-term growth plans.

Among those was ongoing growth within the Opaponline.gr new online lottery proposition. He also referenced the impact of revamping OPAP draw-based games and the success of repositioning of Lotto as an annuity game.

Karas said these achievements, coupled with other developments in Q3, will help drive year-on-year growth for the 2023 financial year.

“OPAP reported a healthy performance in Q3, marked by continuing online growth, despite tough year-on-year comparatives and headwinds to the top line,” Karas said. “During the quarter, we remained focused on implementing our strategic priorities, aiming to further enhance our product portfolio and strengthen our online business.

“In this framework, Opaponline.gr, our new ilottery proposition, continued to record double-digit growth rates. Emphasis was given to the revamp of our draw-based games. The recent repositioning of Lotto as an annuity game has been welcomed by our customers and agents, delivering encouraging initial results.

“As we are moving towards the end of the year, we remain confident that our resilient business model will continue to generate strong returns for our shareholders, while delivering on our sustainability and social responsibility commitments.”

Lottery and betting declines push revenue down in Q3

Breaking down OPAP’s performance in Q3, lottery remained its primary source of gross gaming revenue at €166.0m. However, this was 8.0% less than last year mainly due to unfavourable jackpot roll-over cycles in Tzoker and strong performance in 2022.

Betting revenue also declined 7.8% to €144.0m. OPAP put this down to a narrowed event calendar and customer friendly sports results. However, OPAP also noted a promising expansion in its customer base, helped by footfall to its stores.

Elsewhere and there was positive news within the video lottery terminals (VLTs) business, where revenue climbed 2.3% to €82.9m. This, OPAP said, continued an upward trend that it has noted within this segment.

Online casinos revenue was also 13.4% higher at €62.5m. This was attributed to higher player engagement levels coupled with cross-playability of sports betting players.

However, instant and passives revenue dipped 1.7% to €25.6m, primarily due to a drop in scratch games.

Expansion efforts lead to spending hike at OPAP

Turning to costs, gaming revenue-related costs hit €134.8m, lower year-on-year. However, operating expenses were 44.4% higher at €114.6. OPAP said this was due to increased spending to support its expansion efforts across retail and online.  

Depreciation and amortisation costs reached €33.4m and net finance expenses €3.7m. This left a pre-tax profit of €108.3m, down 30.9% from last year.

OPAP paid €21.1m in tax during Q3, resulting in a net profit of €87.1m, a drop of 28.3% from 2022. In addition, EBITDA declined 26.4% from €197.6m last year to €145.4m in Q3 of the current year.

Year-to-date figures make for more positive reading 

As to how Q3 impacted year-to-date performance, revenue in the nine months through to 30 September was €1.51bn. This was 7.8% more than at the same point in 2022.

Lottery revenue was 3.3% higher at €532.4m and betting revenue jumped 4.9% to €464.6m. VLT revenue increased by 10.4% to €248.3m and online casino revenue climbed 26.4% to €175.5m. A further €85.7m came from instant and passives, a year-on-year rise of 12.7%.

Looking at spending, gaming revenue related costs jumped 10.1% to €420.5m and operating expenses were 19.0% higher at €299.0m. However, depreciation and amortisation costs were slightly down at €98.2m and net finance expenses reached €8.8m.

Revenue growth offset higher spending to push pre-tax profit up 9.0% to €412.9m in the period. Income tax payments totalled €21.7m, meaning net profit totalled €315.8m, a 9.4% increase from 2022.

However, OPAP said EBITDA for the nine months decreased by 2.5% to €519.9m. 

OPAP faces heavy Hellenic Gaming Commission fine

In the weeks after Q3 ended, OPAP was dealt a blow in the form of a €24.5m from the Hellenic Gaming Commission. The regulator said this was in relation to OPAP breaching elements of Greek law, ruling it had abused its position in the market.

Stand-out breaches included article 2 of law 3959/2011. This governs the protection of free competition in Greece. It prohibits companies from abusing their “dominant position” within the national market. Formerly, OPAP held a monopoly in the Greek market.

Article 2 also bans setting unfair selling prices or limiting the distribution of technical equipment. Trading unfairly with other parties or agreeing to contracts subject to acceptance of supplementary obligations also infringes this law.

OPAP was also found to have infringed article 1. This states that all companies trading in Greece must not fix purchase prices, limit investment opportunities or unfairly apply conditions to transactions.

The HGC also ruled OPAP breached articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). These outline the same requirements as articles 1 and 2 of law 3959/2011.

In response, OPAP said the decision to impose the fine was inaccurate. It said that this was because the decision was based on its core operations in the gaming market. Instead, OPAP said it was based on services provided by its agencies.

OPAP added that it “strongly disagrees” with the content of the decision.

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