VLTs and KINO drive revenue growth at OPAP

28 March 2019

Greek gaming operator OPAP has cited a higher contribution from video lottery terminals and an improved performance by its KINO lottery game as the main factors behind a 6.3% year-on-year increase in revenue for 2018.

Gross gaming revenue for the 12 months through to December 31, 2018, came in at €1.55bn (£1.33bn/$1.74bn), compared to €1.46bn in the previous year.

OPAP said revenue from VLTs continued their strong performance in the fourth quarter of the year, reaching €68.4m in Q4 and €208.7m for 2018, representing an increase of 262.6% on the 2017 total.

New game features for the fixed-odds KINO offering in the fourth quarter also helped improve its performance, though overall lottery revenue was down 4.7% year-on-year to €779.9m.

OPAP also reported year-on-year revenue declines across both its betting and instant and passives operations.

Betting revenue dropped 3.5% to €406.2m, although OPAP has said that actions taken during the second half of 2018 should help boost betting revenue in 2019. Instant and passives revenue, meanwhile, fell 4.2% to €152.2m.

In terms of expenses, OPAP spent a total of €289.1m in 2018. Gaming-related costs were up 6.3% year-on-year to €434m mainly due to higher spend on commission related to net gaming revenue, which was up 38.4% to €53.0m. Agents’ commission also increased 3.0% to €381.1m.

Payroll expense at OPAP reached €76.1m in 2018, up by 19.2% on the previous year. However, the operator has said headcount is “now very close to anticipated levels” and, as such, personnel-related expenses should level out going forward.

OPAP was able to cut marketing costs by 2.4% to €65.8m, with corporate social responsibility and sponsorship expenses down 18.3% to €22.4m. However, the operator spent 8.5% more on advertising last year, committing a total of €43.5m to such activities.

Other operating costs were also down 5.0% to €147.2m, with OPAP cutting IT-related costs and inventory consumption. Utilities and telco costs and rentals increased year-on-year, though OPAP noted that this had been offset in parts by the IT and inventory consumption savings.

Despite an overall higher spend on expenses, the increase in revenue helped push profit for the year up from €131.5m to €145.3m.

Profit before interest, tax, depreciation, amortisation and impairment was also up from €306.5m in 2017 to €353.6m, while profit before tax increased from €193.1m to €215.9m.

Reflecting on the results, OPAP CEO Damian Cope said the operator delivered on all key business objectives including what he described as a “complex technology transformation” and the move to a new, mutually beneficial relationship with its agents.

“Our young Play Games VLT business finished the year with an excellent Q4 performance, driven by an encouraging increase in the number of active players,” Cope said.

“We are now operating over 350 dedicated Gaming Halls and remain on track to install all 25,000 machines by the end of 2019 as planned. Online we re-launched OPAP’s own sportsbook and we also made a strategically important investment in Stoiximan Group, and via both paths we believe we will be able to rapidly grow our presence online.”

Cope also noted that OPAP continues to maintain both its overall cost discipline and focus on operating as a responsible corporate citizen, something he said is reflected in the WLA Level 4 certification of its responsible gaming approach and via its sustained commitment to CSR activities –part of its 2020 Vision initiative.

“Thanks to this collective effort we remain well placed to deliver another positive year in 2019, the next step in the delivery of our 2020 Vision,” he said.