Romania Issues Draft Emergency Ordinance To Introduce Changes In Gambling Industry

New measures offiicially adopted on October 5 via the Emergency Ordinance (GEO) that external advertising will be restricted to 35 square meters and that casinos can no longer use rewards to attract players, showed that the Romanian government is quite willing to restrict the triumph of the gambling industry in the country.

New measures:

The new measures were adopted by the mentioned Government “with automatic fire,” after they were published in a public debate on October 4, on the Ministry of Finance’s website. Additionally, the primary provision stays the fact that in order to be able to operate in the gaming market, firms of this profile need to have a lasting seat in the mentioned country, so that the income tax stays in Romania. Speaking about it, Marcel Ciolacu, Romanian Prime Minister, now fiercely before the Cabinet session where GEO was officially validated, said: “I want to end once and for all the situation in which betting companies make billions in Romania and send all the profit outside the country and even outside the EU.”

Moreover, some of the provisions of the Ordinance on “Panels” are:

• “Gambling companies will have to have a permanent headquarters in Romania. Most are now located in Malta or other European states.
• Gaming billboards will have a maximum size of 35 square meters
• It is forbidden to display the values ​​of vouchers and jackpots, or goods (for example cars) outside the gaming rooms to entice players.
• The amount transferred to the responsible gambling fund for first-class operators (includes bookmakers) increases to 500,000 euros / year, from 5,000 euros per year
• The amounts paid for licensing and annual authorization are increasing, as well as guarantees for the risk of non-payment.
• Alcoholic beverages may not be sold in gambling halls
• Vice tax for slot machines and video lotteries – 500 euros / post / year.”

However, there are more than 80.000 bread machines in Romania.

The main targets of the Ordinance are big sportsbooks. But, among the big online wagering operators, just ONE is present in Romania, said representatives of the National Gambling Office (ONJN, co-initiator of the Emergency Ordinance). The list of first-class licensed firms, which is accessible on the website of the institution, also confirmed this. As for other operators, they are mostly located in Malta, which is validated also by the representatives of the Association of Organizers of Distance Games, or in different countries that have more beneficial regulations. Also, in the information collected by Free Europe, it is stated: “If some well-known brands also have a registered office in the country, it belongs to another company in the group, registered with a different type of service.”

Commenting on this issue, Mihail- Silviu Pocora, head of the Oficiul National pentru Jocuri de Noroc (ONJN), said: “The profit of the big companies goes to other states, although they are active here, but without having a headquarters with a gambling profile. They have law firms, consultants, partners in conventions and, often, you don’t even have anyone to talk to directly, because they convey that they don’t have a mandate to provide more information.”

As for the measure that requires firms to have lasting seat in the country, the income from the state tax budget would grow from roughly 132 million lei/year to more than 400 million lei/year, Foundation Note of the Government said. In addition, the Ministry of Finance will issue the Norms for the implementation of the Ordinance in the next 30 days, said the spokesman of the Executive, Mihai Constantin. However, this will need to be validated by the Parliament, in the shape of Law, and will take effect when it is officially published in the Official Gazette. Furthermore, he added, mentioning the scandal with the discharge of the editor-in-chief of Gazeta Sporturilor: “Reality shows us that every limit has been exceeded. It’s not normal for the betting industry to have so much power. He threatens politicians and fires journalists. I think it is enough, it has gone too far.”

Regardless of the Prime Minister’s harsh tone, some of the measures appear to mainly influence medium-sized operators or ease measures already awaiting in Parliament. For example: “the size of billboards is limited to 35 square meters, compared to only 30 meters as stipulated by the controversial amendments submitted by the PNL to a project adopted in March 2023 by the Senate – which initially proposed a total ban on advertisements.” However, the mentioned project is blocked in the Chamber of Deputies in the moment.

The aforementioned Ordinance doesn’t involve a provision linked to the removal of off-site gaming halls, which is the subject of a law launched by the Partidul Social Democrat (PSD) that was also validated by the Senate. But for the aforementioned law, the Chamber of Deputies would implement the procedure of urgent adoption, said the Prime Minister. Mihail Pocora added: “We have not yet been asked for an opinion on this law, but is it difficult to say that you are taking the halls outside the towns? Where, in the suburbs? There will be problems with construction permits.”

Bigger fees and guarantees:

Following increases already applied last year, which caused industry discontent, the aforementioned GEO predicts the newest increase in yearly fees for authorization and licensing, for each category of operators.

The Ordinance enhances the level of taxes that operators have to pay. However, the way they are arranged is not a striking change when it comes to very big firms. An example of this is: “For class I gambling operators (operators who organize remote games, through direct contracts with players, where bookmakers are also included) the license will have a fixed amount – 300,000 euros, while until now the amount it varies depending on the turnover, between 15,600 euros / year for companies with a turnover of less than 500,000 euros, up to 312,000 euros / year for a turnover of more than 10 million euros annually.”

As for traditional games like fixed-odds wagering and lotto, licenses have increased twofold to 200.000 euros, and for casino games, they have risen from 115.000 euros to 150.000 euros.

The price of the second class license, which is for firms that offer many different services in the industry, has been increased twofold from 9.500 to 20.000 euros. As for the Class 3 licenses, which are for operators of remote lotto games, an activity created as a state monopoly, they will be worth 200.000 euros.

Simultaneously, the yearly authorization for the use of games of chance for Class 1 licenses will be 21% of income, but not below 400.000 euros. Till now, they amounted to 23% of the profit, but not below 120.000 euros, according to legestart.ro. Finally, for 3rd class operators, the authorization value has been increased to 400.000 euros. Simply put, operators for whom the % paid surpassed 400.000 euros in any case, will from now on pay just 21% of the income instead of 23%.

Enhanced guarantee, but not “locked” in amounts:

One of the biggest increases will be implemented to default risk guarantees and will differ according to revenue, calculated as the contrast between receipts and the worth of awards granted. Till now, the guarantee was 100.000 per form of activity.

Next year, for the online wagering, firms will need to guarantee between 500.000 to 2 million euros depending on revenue, (up to 5 million or more than 20 million euros). Then, as soon as 2025 starts, a flat tax of 2 million euros will be introduced, regardless of revenue.

Then, for an online casino, the guarantees will be 1 million to 5 million euros. Then, as soon as 2025 starts, 1 million and 5 million euros, regardless of profit.

Opponents:

However, not everyone is enthusiastic with the new measures. In this regard, Odeta Nestor, president of the Association of Distance Games Organizers, told Europa Libera: “The measure is unfair, as it would block large sums of money from the companies as a guarantee for non-payment, although they are not delinquent, i.e. debtors to the state.”

“First of all, the values ​​of the guarantees will be applied gradually. At the same time, we are not talking about an amount deposited in an account, but an amount for which the company has an insurance policy,” Mihail Pocora said.