Romania: Licensing Process Lacks Transparency and Causes Uncertainty

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Published in “iGaming Business”

Romania’s ongoing regulation of its igaming sector has caused many ructions for international operators, from interim licences being revoked to being included on black lists.

The regulatory process is continuing now, with software suppliers and hosting services next in line to go through the process. However, there have been cases where the procedures have apparently lacked transparency and caused uncertainty.

The Romanian legislator finally managed to revitalise the local gambling market at the beginning of 2015.

This was done by adopting several normative acts aimed at creating a flexible, modern and attractive legal framework for all the economic operators with interests in the Romanian market.

After a long period that started in June 2009, during which time the legal framework did not appeal to online gambling operators, an emergency government ordinance from February 2015 brought a series of changes to the regulatory regime of gambling activities in Romania.

Some four months later this emergency ordinance was amended and approved and brought a series of long-awaited new provisions.

The first and probably most requested-for measure was the fiscal and criminal amnesty for the gambling operators that had provided gambling services to Romanian consumers in the past without a licence and authorisation issued by the Romanian state.

The fiscal and criminal amnesty was meant to benefit all the operators that had submitted an audit report to cover their past performance, paid a tax of 20% of the gross gaming revenue for the period during which they operated without a Romanian licence, as well as the amount related to the licence fee for the said period, all within 90 days from the entry into force of the new law, respectively by September 10, 2015.

Interim licences cancelled

Online gambling operators could also apply for an interim right (licence) to organise and operate remote gambling activities in Romania until the end of December 2015.

A large number of actors in the gambling market have applied for such a licence but, in some cases, the lack of transparency in the licensing procedure has led to them having their interim licences cancelled.

The duration of the interim licence is yet to be established, as while the initial decisions to grant the interim right were all issued for a period to last up to 31 December 2015, taking that neither the secondary legislation nor the technical order detailing the technical requirements to be complied with by the operators are in force today.

The regulator indicated that the terms will be prolonged to 12 months; to be calculated from the initial date of each individual decision that was granted to the operators.

It is yet to be seen how this would be implemented in practice and whether or not the interim right will be prolonged automatically or by individual request. It is certain though that no normative act expressly provides for this prolongation today.

The draft secondary legislation posted on the regulator’s website in its current form, after having been notified to the EU Commission and discussed with industry representatives, is the only one that contains a provision in this sense.

It has been discussed with industry representatives and is the only one that contains a provision in this sense.

Such a draft was posted on the website of the Romanian regulator in early September and apparently has already been sent for final approval to the Romanian Government and subsequent publication.

However more than a month has passed and it still has not been enacted.

Intimidating black list

Another rather intimidating provision of the new gambling legislative framework is the “black list” concept.

The National Office for Gambling (“NOG”) so far has included on the black list all the operators it identified that do not have an interim online gambling licence but have continued to provide gambling services to Romanian consumers (or still have not blocked access to their website to Romanian consumers), irrespective of whether or not they have applied for and benefited from the fiscal and criminal amnesty.

To ensure that the black listed operators can no longer provide gambling services to Romanian consumers, the NOG has ordered internet service providers to block access to the websites of these operators and redirect all traffic to an IP address belonging to the government’s Special Telecommunications Service.

The list of operators that have obtained interim licences includes 14 local and international groups.

The licensing process so far has lacked transparency and with the secondary legislation and technical order still to be enacted, continues to be unpredictable.

The measures taken against some operators, whose newly-issued interim licences have been cancelled for technical administrative reasons (it is yet to be decided in Court if the government’s actions are legally justified), as well as the witch hunts that have been started by the NOG against those Romanian players who have allegedly committed the (seemingly minor) offense of playing on online gaming sites for a 20-day period in September, seem unparalleled in Europe and have shocked the gambling industry.

The waters are far from settled but one thing is for sure, the NOG is taking an aggressive stance and the rules it makes must be strictly obeyed or else an operator will not find its place on the market.

Many things are yet to be accomplished now as further to the enactment of the secondary legislation, the application for second class licences opens up for software suppliers and platform hosting services as well as for payment processors and marketing affiliates.

And when that finishes, the full licensing process will have opened for the gambling operators, and by then the interim licences might have expired.

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