Sizable VLT orders in limbo
OPAP, the public company that exclusively operates all lottery games in Greece, has delayed the launch of 16,500 video lottery terminals across the country.
The delay is the result of a protest by OPAP to new rules implemented by the Hellenic Gaming Commission on June 12, which mandate lower jackpot levels, delay loss limits and limits on the length of play time involved. However, it coincided with the worst financial crisis in Greece’s history, coming a few days before more than 61 percent of Greek citizens voted against accepting deep spending cuts, tax hikes and other demands of European creditors.
OPAP won the exclusive right to operate VLTs in Greece in 2011, under a 10-year contract. Company officials say the new rules will make it impossible to operate profitably.
“The new regulation, decided by the Gaming Commission only a few days prior to the scheduled launch of the VLTs, and without prior consultation with OPAP, contains a number of unprecedented restrictions, which defy international best practices of responsible gaming, render the project no longer economically viable and contain technical requirements that make timely implementation impossible,” said a statement from OPAP.
“In any case, OPAP assures its investors, its partners and its employees that it remains absolutely focused on its investment and shall continue to take all appropriate actions to arrive at a reasonable and balanced regulatory framework that secures public interest and public revenues and at the same time allows the economic viability of the VLT business for OPAP and its operators.”
In light of the nation’s financial crisis, the Greek government will be under new pressure to ease the regulations and get the VLT revenue flowing. However, the situation also harms the two largest suppliers of the gaming industry, International Game Technology and Scientific Games, each of which received sizable orders from OPAP for VLTs—5,500 for IGT and 5,000 for Scientific Games.
In an interview with the Las Vegas Review-Journal, gaming analyst Todd Eilers of Eilers Research estimated that the IGT video lottery terminals will generate $20 million to $30 million in annual recurring revenue and $16 million to $24 million in recurring cash flow. Scientific Games’ VLTs will generate between $18 million and $27 million a year in revenue and $16 million to $23 million in cash flow.
Eilers said the financial crisis should spark a compromise solution. “We still believe the VLT market will move forward, and its represents a sizable growth opportunity for vendors,” Eilers told the Review-Journal.
Meanwhile, other international gaming entities with a stake in what happened in Greece included bookmakers who took bets on the outcome. Irish bookmaker Paddy Power made tens of thousands in incorrect early payouts to gamblers who incorrectly bet that Greek voters would back the austerity referendum.
Paddy Power, like many bookmakers, pays out early on some sporting event when they regard the result as a foregone conclusion. In this case, the bookmaker was wrong. “Paddy Power is feeling a little red-faced this morning after calling the Greek referendum wildly wrong,” Paddy Power said in a email statement to Bloomberg.