Published in “European Gaming Lawyer Magazine”, Autumn 2015
A New Beginning
The end of December 2014 has brought us, here in Romania, not only the New Year’s Eve, but also a brand new and long awaited new legislation on gambling.
Thus, on December 29, in the last meeting of 2014, the Government approved an emergency ordinance that brought major changes to the gambling regime in Romania. The new ordinance came into force in February 2015, and remained unchanged for almost 4 months. After a period when, at least in theory, the online gambling regime had finally become operational, but in which no application was made, the Parliament adopted a law that approved and amended the ordinance previously in place.
The law has provided what, later on, has become obvious that everybody was waiting for – the criminal and fiscal amnesty.
And this was not all, as the operators were also given the possibility to apply, based on a simplified and abridged procedure, to be granted an interim right to operate and organize remote gambling activities in Romania.
Following this – hopefully last – amendment of the primary legislation, operators have developed an increased appetite for Romania.
At the time of writing this article, 13 operators had already been granted the right to organize and operate remote gambling in Romania.
Considering the high effervescence of the market during these last days of the amnesty period, at the moment when you will be reading this article, hopefully the number will have increased dramatically. But you don’t have to take our word for it – you can check for yourself on the official website of the National Gambling Office, at http:// onjn.gov.ro/home/lista-operatorilor-ce-au-obtinutdrept- provizoriu.
In addition, a few selected others – that have been present in the Romanian market at different times in the past, but which do not intend to continue their operations here in the (near) future – will have probably submitted the documents and paid the fees in order to clear the past and benefit from the amnesty provisions.
The state budget has probably become richer by several tens of million euros. And the authorities are finally having (or at least should have) the satisfaction of reaching the goals that have been pursued by all Governments in the past 7 years – they have obtained money from online gambling while also turning a black market into a white one.
New taxation system for players’ money
The new primary legislation in force as of February 2015 and later amended in June this year also brings novelty that the taxation system is based on players’ revenue.
Thus, the taxation base was changed from the players’ winning to the players’ revenue.
Further, while the rule remains that the tax on players’ revenue is still to be withheld by the organizer of gambling activity, for online gambling the tax must be declared and paid directly by players, on an annual basis.
However, each online gambling organiser will need to keep evidence of players earning revenues higher than a certain threshold and communicate such to the tax authorities on a yearly basis. In addition, the organizer will have to transmit to the players annually the information referring to revenue within the respective fiscal year.
Class 2 Licenses – new source of income
According to the new legal provisions, the economic operators which conduct activities auxiliary to online gambling activities in Romania, namely the operators which offer management and hosting facilities on their gambling platform, payment processors, manufacturers and distributors of soft ware, affiliates, certifiers and auditors are also obliged to obtain a license from the National Gambling Office in order to carry out these type of activities, subject to a yearly license fee.
A promise for the future
The National Gambling Office is welcoming the visitors of its website with a promise. Or should we call it a threat?
“Please note that after the expiry of the 90 days provided by law, as period in which the operators may submit documents and make payment of the amounts due to the Romanian state for operating from 24 December 2010, to comply with the amnesty period provided for by art.II par.8 of Law no.124/2015 approving Government Emergency Ordinance no.92/2014 regulating fiscal measures and amendment of legislation, which amends GEO no.77/2009, the access from Romania to domains that offer gambling or to affiliates domains that do not meet the legal requirements, will be restricted, and criminal proceedings will be initiated against those who trespassed the Romanian law, to recover the amounts due and to bring to justice all those responsible, both in Romania and abroad.”
We are still to learn how the authorities will put in practice this rather unprecedented approach, and what the consequences of taking these actions will be.
As a first step, the regulator has already blacklisted 48 operators (full list available at http://www.onjn.gov.ro/home/lista-neagra) and has instructed all internet service providers to block access to their websites, and redirect all traffic to an IP address that is publicly known to belong to the Special Telecommunications Service (the central specialized structure which organizes and coordinates the activities in the special telecommunications field for the Romanian public authorities, and is part of the national defence system).
This bold step is being aggressively criticized by the major local associations and organizations aimed to protect the human rights which claim that the fundamental problem of blocking measures at the ISP level is that they can be considered as a type of censorship of online content, which raises serious concerns on human rights issues, freedom of speech in particular. They also claim that the implementation of such a website blocking system means that the tools for Internet censorship will be created and deployed, and it would be extremely easy to expand the censorship measures to other subjects and other fields.
While the (extended) standstill period for the Norms for implementation of the legislation in the gaming filed has elapsed in early August, such has not yet been approved by the Government. Hopefully, this will happen soon.
In the meantime, a new relevant standstill period has started to run when the Government has notified technical norms related to both online and landbased gambling. The standstill is due to expire in November, unless, of course, extended by one month following to a detailed opinion submitted by the Member States or by the European Commission.
In any case, none of us here would be surprised if a new piece of legislation on gambling is released during the winter holiday.
Last, but not least
As you may imagine, once the primary legislation changed dramatically for the better at the end of last year, the gaming sector became extremely dynamic in 2015. The efforts made by the Romanian Gambling Office in delivering this new and modern legislation, the openness they showed and continue to show when consulting with professional industry associations throughout the legislative process, as well as when liaising with operators throughout the licensing process are remarkable.
On the less positive side of things, the novelty of the remote gambling activities and lack of prior experience continues to raise significant difficulties in practice where the necessity for new secondary legislation, technical norms and generally detailed guidance provided in a timely manner rather than at the last moment continues to remain a work-in-progress issue.
We put Romania on the map. Now, please, place your bets!