(Updates closing share price starting in first paragraph.)
Jan. 24 (Bloomberg) -- Greece’s gambling monopoly, owned by Opap SA, was ruled illegal by the European Union’s highest court, sending shares of the company down 11 percent.
EU law bars national rules granting exclusive gambling rights without cutting the opportunities to bet, the EU Court of Justice in Luxembourg ruled today. The case was filed by Opap competitors Stanleybet International Ltd., William Hill Plc and Sportingbet Plc.
The EU’s top court has examined a series of cases brought by betting companies including Bwin.Party Digital Entertainment Plc, Ladbrokes Plc and Betfair Ltd. over whether state monopolies may block them from operating freely across the 27- nation bloc. Online companies have also called on the EU to take action against what they say are unjustified national restrictions on cross-border Internet gambling.
The decision “clearly shows that the expansion of Opap’s activities is not EU compliant,” Clive Hawkswood, chief executive of the Remote Gambling Association, which includes the three Opap competitors, said in an e-mailed statement. “We hope that this ruling will spur the Greek authorities into action and to bring their legislation into line with EU regulations.”
The decision was in line with the company’s expectations, Opap Chief Executive Officer Constantine Louropoulos said in an e-mail to Bloomberg today.
The EU court said that Greece could preserve the monopoly by subjecting it to stricter controls to ensure consumer protection. If it fails to do that, the country would have to open it up to competition from other EU companies.
Opap closed 11 percent down in Athens trading, after falling as much as 21 percent earlier in the day. Shares of the other gaming companies rose after the ruling. Ladbrokes gained 3.4 percent while William Hill rose 1.5 percent in London. Bwin.party Digital Entertainment Plc rose 12 percent, the most in the Stoxx Europe 600.
The sale of the Greek government’s stake in Opap is one of the key state asset sales planned for this year, part of the commitments made by the government to the EU and International Monetary Fund in return for loans to avert a default.
Sportingbet declined to comment and William Hill spokesmen didn’t immediately respond to a call and e-mail seeking comment. Stanleybet in an e-mailed statement that the ruling “clarifies beyond doubt the inconsistency of the sports betting monopoly granted to OPAP.”
“For short-term trading it leaves open concerns for Opap,” said Yiannis Sinapis, an analyst at Athens-based Euroxx Securities. “However, in our view the ECJ leaves the case open, although with limitations, for Greece’s high court council to have the final verdict.”
An adviser to the EU court in a non-binding opinion on the case in September said the national court can’t conclude the legislation is trying to restrict gambling in Greece if Opap, in which the government is a minority shareholder, pursues an expansionist policy.
The Greek tribunal handling the appeals sought guidance from the EU court in 2011. EU Internal Market Commissioner Michel Barnier said last year he is working on an action plan to rein in illegal and “unregulated” online gambling.
“Greece is currently undertaking a review of its gambling legislation with the aim of ensuring compliance of their national rules with EU rules,” Stefaan De Rynck, a spokesman for Barnier, said in an e-mailed statement. The “judgment should stimulate the review process.”
The EU court has said in previous cases that gambling monopolies can be justified if they reduce betting addiction or criminal activities.
Stanleybet, Sportingbet and William Hill -- all U.K.-based companies -- applied separately for Greek licenses to offer gambling in stores and online. Their applications were rejected based on national law, which they argued violated EU rules guaranteeing freedom to provide services and set up business anywhere in the bloc.
The cases are: C-186/11, Stanleybet International Ltd, William Hill Organisation Ltd. and William Hill Plc v. Ipourgos Ikonomias kai Ikonomikon and Ipourgos Politismou; C-209/11, Sportingbet plc v. Ipourgos Politismou and Ipourgos Ikonomias kai Ikonomikon.
--With assistance from Natalie Weeks, Tom Stoukas and Maria Petrakis in Athens. Editors: Christopher Scinta, Peter Chapman