Greek Finance Minister Makes Wild €500m iGambling Tax Claim

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Tuesday, March 24th, 2015 | Written by Charles Washington

The European Union has been demanding Greece’s ruling party, Syriza, provides it with an economic reform package before unlocking the cash the country needs to avoid defaulting on its debts. One of the proposals made by Greek finance minister Varoufakis involved recruiting “non-professional inspectors”, such as students and tourists to act as undercover tax inspectors, a proposal which was ultimately received with incredulity by eurozone officials. As one such official told the Financial Times:

“It’s quite hilarious, if it were not so tragic, that this is what a government in an industrialized country comes up with.”

However, Varoufakis’ latest suggestion is likely to be met with even less seriousness by the EU, as the finance minister has asserted that Greece may be able to generate in excess of €500 million each year by means of online gambling tax revenues, which could then be diverted towards meeting the country’s financial obligations. Nevertheless, few analysts believe such a wildly inflated projection has any basis in reality.

Ambitious Calculation

Varoufakis made his €500 million per annum iGaming projection in a letter sent to the Eurogroup, but the informal body consisting of EU ministers for Economic and Financial Affairs is unlikely to be convinced by such an inflated figure, especially as the 28 members of the European Union only generate a combined €13 billion themselves from regulated online gambling revenues. From that tally, an average of 10% is then collected as tax revenues, or roughly €130 million, and so Varoufakis’s annual target of around €500 million in taxes would represents far in excess of the continent’s total iGaming taxes.

A More Realistic Calculation

In 2011 Greece generated just €250 million in online gambling revenues, and with Greece’s internet gambling economy presently far from booming it is hard to see how Varoufakis came up with his ambitious calculations. Admittedly, back in 2011 there were around 60 unregulated internet gambling companies operating in Greece producing an estimated €2 billion euros in annual turnover, but as Greek daily morning newspaper ekathimerini, explains:

“After deducting the 80-90 percent payout to punters, 160-240 million euros in gross revenues is left to be taxed by the Greek authorities. Therefore, the actual amount the Greek state can expect from taxing the gross revenues of the until recently illegal online gambling companies will be some eight to 10 times smaller than the 500 million euros the Greek finance minister promised to collect in the letter to his eurozone peers last week.”

Suffering From Chris Christie Syndrome

Despite Greek finance minister Varoufakis’s prediction, this is not the first time politicians have presented wildly inflated estimates to further their aims, and pre-regulation New Jersey Governor Chris Christie estimated that the Garden State could expect to generate $13.4 billion from iGaming over a five-year period. Needless to say, such impressive numbers would have given New Jersey’s state coffers an enormous boost, but in reality NJ generated just $122 million in Gross Gaming Revenue in Year 1, a mere 1/10th of Christie’s foolhardy forecast, of which 15% or $18.4 million was collected by way of taxes.

In fairness, Varoufakis has yet to reveal the details of his ambitious plan and the means by which the Greek government would then go about boosting its gambling revenues. Admittedly, the country reorganizing and regulating the iGambling industry with clear and precise legislation would go a long way towards improving the country’s overall gambling environment, but is still seems improbable a country of just 11.03 million people could generate anywhere near the €500 million figure Varoufakis sees as possible.

Greece’s Betting Monopoly

Greece’s gambling market is currently run by state owned monopoly OPAP, which also happens to be Europe’s largest betting firm with a market value of around €3.5 billion, and more than 5,000 outlets spread out across Greece and Cyprus. As part of the country’s latest plan to meet its debt obligations, the Greek government is considering allowing foreign operators to apply for a five year remote gambling licenses, which would then be seen as moving more in step with European law which insists upon freedom of services across member states. Up until now, however, Greece has fought EU and international operator allegations that its betting markets was illegal, stating that the monopoly was necessary in order to combat illegal betting and protect Greek players from illegal internet operators.