Cyprus Mail

‘Sweet deal for Opap’ but not the state, audit boss says

BETTING giant OPAP – who under an interstate agreement between Cyprus and Greece has a monopoly on lottery number games here – should be paying the state some €25 million more than it actually is, the auditor-general said on Thursday.

Odysseas Michaelides was giving MPs updated information he has gathered on the agreement with Opap, which he considers to be heavily skewed against Cyprus.

The once state-run betting giant – founded in Greece in 1958 – turned into a joint stock company in 1999, and in 2013 the cash-strapped Greek state sold the majority of stocks to Emma Delta Hellenic Holding Limited, a Greek-Czech group.

Based on an interstate agreement entered into between Cyprus and Greece, Opap is the only company allowed to run lottery games on the island.  The deal was signed when Opap belonged to the Greek state.

Critics argue that since the Greek state is no longer a shareholder, Opap’s special status should be abolished.

Earlier, Michaelides had revealed that up until the year 2013 the state’s revenues from Opap had averaged out at some €10 million a year. But during the same period Opap’s gross receipts shot up from under €50 million to nearly €200 million.

In May 2014, Cyprus moved to withdraw from the interstate agreement, and requested a year to prepare legislation regulating the lottery market. But it subsequently reversed its decision to terminate the agreement.

A bill that had in the meantime been prepared was scrapped, and more recently the finance ministry completed another piece of legislation that has been submitted to the House for consideration.

Under the new bill, Opap would retain operation of the lottery number games, but would so via a licensing agreement for a specific length of time and with revised terms and conditions, more favourable to the Cypriot state.

It further stipulates that the provider must pay the state 24 per cent tax on its gross profits (by comparison, Opap pays 30 per cent tax in Greece), or at least €20 million per year, depending on which is greater.

Once the legislation is enacted by parliament, the state will be able to repudiate the interstate agreement with Greece.

Under the current arrangement, Opap in Cyprus pays some €10 million in taxes – meaning the state is currently losing out on potential additional tax revenues of €10 million a year, the auditor-general has said.

Moreover, Michaelides told the House watchdog committee on Thursday, under the terms of the current agreement, Opap must pay out about 70 per cent of its proceeds to punters – but in reality Opap distributes only about 60 per cent of the revenues, pocketing the difference.

This alone accounts for an estimated €11 million a year.

Another ‘distortion’ in the deal allows Opap to deduct its operating expenses from the amount it pays the state annually – estimated at €5 million.

In addition, the company retains some €0.5 million a year from unclaimed winnings.

The data cited by the auditor-general relate to 2015.

All told, said Michaelides, an extra €25 million could and should be ending up in state coffers from the Opap deal.

For her part, state treasurer Rea Georgiou mentioned that Opap has declined to be audited.

Michaelides said he would be asking the attorney-general’s office to look into the matter, for example on whether Opap can be forced to give access to its accounts.

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