Gaming operator Olympic Entertainment Group (OEG) is facing a fresh threat to its bottom line after Latvia’s government announced plans to hike gambling taxes by nearly one-third next year.
On Thursday, local media reported on Latvia’s ongoing tax reform plans, which now include proposals to hike gambling taxes by 30%. The Finance Ministry is seeking to boost the annual tax on electronic gaming machines from €3,204 to €4,164, while annual levies on gaming tables would rise from €18k to €23,400.
The Ministry said the taxes, which would apply to 13 operators licensed to conduct gaming in Latvia, would provide additional tax revenue of €8.25m in 2018 and €9m per year after 2018.
Latvia is OEG’s largest market, and OEG was already facing a hit after the Riga City Council voted this spring to ban gambling halls in the center district of the nation’s capital city. OEG’s Latvian operations span 54 gaming venues, seven of which will be forced to close their doors in the coming years as their current licenses expire.
Reports of the new taxes came the same day that OEG released its Q2 earnings report, which showed gaming revenue in the three months ending June 30 rising a mere 0.2% year-on-year to €47.3m. Latvian market revenue was up 9% to €15.1m, while OEG’s second-largest market Estonia reported revenue up 15.7% to €11.2m.
OEG’s overall revenue figure would have been significantly more positive were it not for the company’s forced exit from Poland. OEG’s Polish subsidiary, which contributed €4.6m to OEG’s Q1 2016 report, filed for bankruptcy in January after its flagship casino in Warsaw was unable to renew its gaming license.
In fact, only OEG’s Slovakian operations were in negative territory in Q2, falling 12.2% to €3.8m. OEG’s Italian subsidiaries, Slottery and Jackpot Game, which merged into a single entity earlier this month, improved 21% to €7.7m, while Lithuanian operations gained 9.5% to €6.3m and Maltese operations were up nearly 23% to €3.1m.
