By Evie Andreou
The House plenum on Friday passed a law which puts an end to the monopoly of Opap Cyprus in lottery games and provides for a new procedure of granting exclusive use of this right to the most qualified interested party.
The adoption of a law was deemed necessary after a letter of formal notice by the European Commission, which cited, among others, an infringement by the Cypriot authorities due to lack of equal treatment of Opap Ltd over other providers of games of chance. Opap was exempt from national legislation regulating lottery games as its operations in Cyprus was the result of a transnational agreement.
Based on an interstate agreement entered into between Cyprus and Greece, Opap has been the only company allowed to run lottery games on the island. The deal was signed when Opap belonged to the Greek state. In 2013, the cash-strapped Greek state sold the majority of stocks to Emma Delta Hellenic Holding Limited, a Greek-Czech group.
The new law aimed at harmonising national legislation with that of the EU and replaces the agreement between Greece and Cyprus on the management and organisation of lottery games by Opap Cyprus, with a new regulatory framework providing for the granting of an exclusive right to carry out, under specific terms and conditions, games of chance to a provider selected following a specific process and subject to strict regulatory control. It also aims at ensuring public interest.
After the law enters into force – by its publication in the official gazette – the cabinet will authorise a coordinating committee for choosing and recommending a lottery games provider to the finance minister to grant to it the exclusive organisation, operation and provision of games of chance.
The committee will consist of the permanent secretaries of the finance and industry ministries, the state treasurer, and an official of the finance ministry as the secretary.
The contract defines that games of chance concern lottery and games based on the correct prediction of combinations of results of sporting events with variable odds.
The coordinating committee will initially assess if the current provider – Opap Cyprus – qualifies for receiving the exclusive right to lottery games. If yes, it will submit to the finance minister a report justifying their decision and, in his turn, the minister will submit the name of the provider to the cabinet for approval.
If Opap Cyprus does not qualify, the committee will go to a tender competition and after assessing proposals and limit the number to five, they will assess results based on criteria and propose the best contender to the minister, who, in his turn will submit to the cabinet for approval. The exclusive right is not transferable.
The successful candidate will be called in to pay a fee which, is payable to the National Betting Authority (EAS) which also has the right to revoke the licence in the case of violation of any contract term. The service provider will have to also submit to EAS a bank guarantee from a credit institution equal to five per cent of its expected annual turnover.
It will also pay to the Republic a tax for lottery games carried out both by it and its agents set at 22.5 per cent of the gross profit of the provider from lottery games for each audit year.
The provider is also required to pay five per cent of its gross profit to activities in the Republic, of sports, social or welfare interests.
If the total annual amount collected by the Republic is less than €20m, at the end of the year the provider is obliged to pay the remaining amount to the Republic within a month, to supplement the above amount.