.svg)
As Romania exits weeks of political deadlock with the appointment of a new Prime Minister, the gambling industry waits anxiously for news of potential tax increases and rumours that its regulator may be shut down.
Romania has the EU’s largest budget deficit and is under intense pressure from Brussels to drum up additional funds.
Gambling finds itself firmly in the crosshairs of the hunt for state revenue, but had been granted a reprieve for the past month while the country reckoned with the outcome of a bitterly contested Presidential election.
On Friday, new President Nicușor Dan appointed his preferred Prime Minister, the centre-right politician Ilie Bolojan, in the process ensuring the formation of a new coalition government.
What unites the cross-party coalition, and the issue on which Dan largely ran for election, is a pro-EU position, meaning the government is highly motivated to find ways to plug the gaping hole at the centre of Romania’s finances.
That has led to widespread fears that gambling will be raided for additional tax revenue, with various plans having already been leaked.
These include increasing gross gambling revenue (GGR) taxes for operators, introducing Value Added Tax for gambling services, increasing B2B licence fees and stepping up player winnings taxes.
Local experts say there is considerable uncertainty about which proposals will win out, but that the direction of movement is clear.
“Nothing is set in stone at the moment, but there is a clear indication that somehow the taxes for the industry will increase,” said Andrei Cosma, a lawyer with Baciu Partners in Bucharest.
Intense political horse trading is expected in the coming days, but in the meantime, the EU is stepping up enforcement action and has threatened to withhold funds if Romania does not solve its budget crisis.
“The state needs to cover its high economic deficit and come clean on its commitment to the EU, which has disregarded for too long, but at the same time, as with any coalition, each party fights for its own interests and electorate,” said Cosmina Simion, a partner with the Romanian office of WH Partners.
“The status changes not just every day, but every few hours now. One thing seems to be clear, though, at the end of the day, the total bill for the gambling industry will not remain unchanged,” she said.
Romania’s gambling regulator, the ONJN, is also on the chopping block, as the government looks to cut civil service costs, but both lawyers poured cold water on reports that any move to eliminate the agency would result in disruption for the gambling industry.
Proposals are circling to fold the regulator into the Ministry of Finance, which is currently the ONJN’s sponsor department.
“It is worth mentioning that, historically speaking, the office of the gambling regulator used to be a department within the Ministry of Finance up until 2013 when ONJN was incepted,” said Simion.
Any project to re-absorb the regulator would likely result in a slimmed-down regulatory authority, but would not affect any existing licences, the lawyers said.
“In practice, similar to what happened in 2013, only the opposite direction this time, the same personnel will move from ONJN to the Ministry of Finance. There may be different management ... but there should be no impact on the licenses in force, or their validity and operation conditions,” said Simion.
“It is important to emphasize that this restructuring doesn’t mean the market will shut down or no regulator will exist. Quite frankly, I don’t believe the political stakeholders can afford this in the current context, because the industry is a significant contributor to the state budget,” said Cosma.
Meanwhile, there are still pending changes to Romania’s gambling laws lingering in parliament.
A proposal to establish a mandatory online self-exclusion regime was passed at its first reading, but has since stalled, in part due to the past few weeks of political uncertainty.
With Romania’s parliament set to enter its Summer recess on July 1, the bill is likely to remain in limbo for months, unless it is picked up and expedited by the incoming government.
That could also mean delays for the Romanian National Audio Visual Council’s project to heavily restrict gambling advertising.
Restrictions that would include banning influencer advertising were scheduled for a vote in May, but have since been delayed to an unspecified date.
