Eye on Europe - March 28, 2007

28 March 2007

Too Many Products? -- The leading Greek gaming company Hellenic Organization of Football Prognostics, or OPAP, has reported another solid set of financial results for the twelve-month period ended Dec. 31, 2006. OPAP, which controls 52 percent of the Greek gaming market, has three sports betting products (stihima, propo and propo-goal) and six numerical games (joker, lotto, proto, extra, super 3 and kino) in its games offering, though stihima and kino are contributing approximately 90 percent to the company's total turnover. Revenues for the period grew to 4.6 million euros ($6.1 million), an increase of 25.4 percent over last year's figure. Revenues from stihima increased by 58.7 percent, year-on-year, to 2.2 million euros ($2.9 million) compared to 1.4 million euros ($1.8 million) in 2005, primarily due to the exceptional performance of the game during last summer's World Cup, the success of the rejuvenation measures since the second half of 2005 and the inclusion of Greek football matches on the ticket as of August 2006. Revenues from kino, the company’s second largest game, were up 7.9 percent and reached 1.8 million euros ($2.4 million) compared to 1.7 million euros ($2.2 million) in 2005, due mainly to the improvement in the performance of the game in the second half of the year.

Disadvantageous -- Finland, with its gambling monopoly and overpriced, state-owned alcohol company, Alko, has received a warning from the European Commission, which could lead to action by the European Court of Justice. However, the Minister of the Interior, Kari Rajamäki, released a prepared statement regarding the Reasoned Opinion of the commission, noting that the present well-functioning gaming system of Finland must be defended. The Ministry has already begun with preparatory work, and will make adjustments to the country's Lottery Act. Rajamäki will reportedly add provisions concerning the prevention of social disadvantages.

Privatization Wave? -- When Sweden's new center-right government kicked off in September 2006, it was clear that the government was on a mission, and that was the privatization of the Swedish state-owned stakes in 57 companies, which, together, employ 200,000 people. The first wave of privatization will take place in 2009, and will include the following prospects (among others): the wine and spirits manufacturer and owner of the Absolut brand, Vin & Sprit; the real estate company, Vasakronan; and the mortgage lender, SBAB, all of which are 100 percent state-owned. The second wave of privatizations includes Svenska Spel, the Swedish gambling monopoly, which had a turnover of 2.2 billion euros ($2.9 million) in 2005. Svenska Spel is the largest gaming company in Sweden with a 55 percent share of the market, and conducts business through its parent company, AB Svenska Spel, and its subsidiaries Casino Cosmopol AB, CC Casino Restaurant AB and Svenska Spel Fastighets AB. Sweden’s Finance Minister, Anders Borg, and Secretary of State Per Jansson are involved in creating a new draft, in consonance with the liberalization of European gaming markets, as well as their privatization and regulation. The government has in the meantime announced the law firms it wants to act as advisors: Cederquist, Delphi & Co.; Linklaters; Mannheimer Swartling; Setterwalls; and Vinge and Wistrand. If the planned date can not be realized or is delayed before 2010, then there will be a problem because the next elections will be held in September of that year. So, the new government has a limited time frame during which to complete the privatization of Svenska Spel.

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.