OPAP...a winning company spins for success

OPAP, the foremost Greek lottery and gaming company, has transformed itself into one of the country’s most successful and innovative companies. From humble beginnings as a state-operator in 1958, the company now provides a range of popular games for the sports betting, wagering, and gaming markets as well as running the state lottery.

The company is almost semi-privatized following a successful Initial Public Offering in 2001. Shares listed on the Athens Stock Exchange have been some of the best performing in Europe and investors have received good returns. And today the company is eagerly looking to the future. It is not only seeking to maintain and increase its market share within Greece but also to expand across the Mediterranean region and eventually the Balkans.

Converting from a public organization to a limited company, OPAP is now 49% owned by private investors, mostly institutional, attracted by high cash flow and dividend policy. The company’s initial public offerings were as much as five times oversubscribed. The share price has performed admirably since, unaffected by much of the recent market turbulence, and has attracted plenty of international attention. Indeed revenue has steadily increased and in the first half of 2003 was up 25.6%.

OPAP currently holds a 42% share in the Greek gaming and wagering market. The company has introduced several successful games over the years and one of OPAP’s competitive strengths lies in the fact that it holds exclusive rights over nine games for a twenty-year period. The company also has the right of first refusal to operate any future games within the country.

However, with this 42% market share the company does not operate a monopoly. In fact, OPAP is a supporter of monopoly control within the gaming market. While part of the company is open for private investors and vested interests, OPAP also operates under state guidelines, which in turn allow the company to support community projects and cultural events.

OPAP operates through an extensive network of dedicated agents and has over 5,000 extended throughout Greece and Cyprus. Many are not owned by OPAP itself but are authorized to sell only the company’s products. As a testament to its modernization and transformation, OPAP now boasts the largest on-line retail network of its kind in Greece. Such a network also has the potential to serve OPAP in a non-gaming retail manner (for example, advertising and tickets for sport events).

KONSTANTINOS KOSKINAS Chairman and CEO of OPAP

OPAP’s management team brings with it a wealth of experience, and can take a share of the credit for OPAP’s success. Of the company’s position as a leader in the field, Dr. Konstantinos Koskinas, Associate Professor, Chairman, and CEO of OPAP, states, “Only private European companies seem to be able to compete on a par, basically because they operate on a more global field.”

Under Dr. Koskinas’ guidance OPAP has undergone a radical transformation. The company’s successful agency network has been restructured through the consolidation of existing outlets within each region in order to increase the network’s operational efficiency and to maximize its ability to sell not only existing products but any new ones as well. Dr. Koskinas also plans to establish a subsidiary in the near future to focus exclusively on new concepts and the design of new games.

The business strategy of OPAP is primarily to maintain the leading market share in the Greek gaming industry, but the company is also casting an eye toward other Mediterranean countries with a view to expansion. Constant redesigning of games and innovation is vital to the company. With such new ideas OPAP is looking to expand its customer base. For just this reason OPAP hopes to introduce TV Bingo this year. The company views its operation in Cyprus as a gateway to the Middle East and North Africa.

Dr. Koskinas states, “The Middle East is an interesting market because there is potential in sport operations. Eventually all countries will realize that they can make money from the lotteries to cover public debt or to deal with fiscal crisis.” Indeed Dr. Koskinas believes that OPAP is in an excellent position to assist and provide consultancy services and help lottery operations in other countries. With regard to the Balkan Countries, OPAP recognizes the potential of the region but for the minute is waiting until government and state guarantees in terms of legislation and banking transactions are more securely in place. However, the company is taking a more immediate look at Bulgaria and Romania where the situation has improved immensely.

OPAP holds exclusive rights over nine games for a twenty-year period and has the right of first refusal to operate any future games

The future looks positive for OPAP. Dr. Koskinas sees the company playing an increasingly influential role on the Athens Stock Exchange. Its balance sheet is a model for transparency and the company has applied international standards in all areas. It takes pride in the fact that 51% of its dividend goes to the state to support sports and cultural activities.

When questioned on management philosophy, Dr. Koskinas is proud to state that, “We believe in youth. We employ young people, highly motivated, with new ideas and initiatives.” Through continuous investment, brand promotion, and focused advertising the performance of the company has accelerated, and under the guidance of experienced management OPAP is sure to be a winner on the European gaming stage.