Romanian Government Targets Gambling To Tackle Budget Deficit

August 31, 2023
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Romania’s government is proposing a raft of changes to its gambling laws, including increasing fees and introducing new requirements for online licensees.

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Romania’s government is proposing a raft of changes to its gambling laws, including increasing fees and introducing new requirements for online licensees.

A change in legislation has been floated in the form of an Emergency Government Ordinance, meaning it does not have to be submitted to parliament.

The proposals are aimed at helping to tackle the country’s budgetary deficit, which has been predicted to rise to 6.4 percent by the end of 2023.

The draft ordinance proposes that online gambling licensees must be registered companies in Romania, as opposed to just having an authorised representative based in the country, as is currently the case.

There are also a raft of proposed tax and fee changes.

Annual licence fees for online operators will be set at €300,000 as opposed to the existing progressive scale used to determine the fee now.

Responsible gambling contributions for online licensees are set to increase from €5,000 to €200,000 per year, while Class II licensees covering companies providing services to the gambling industry will cost €15,000 per year compared with the current rate of €1,000 per year.

Online licence application fees will increase from €3,000 to €3,500, and the licence issuance tax will also increase from €9,500 to €10,500.

However, Cristina Popescu, a partner at CMS, told VIXIO GamblingCompliance that she does not expect all the provisions of the ordinance to be approved in their current wording.

“The requirement for online gambling operators to establish a Romanian-based company through which to carry out gambling operations in Romania appears to be particularly problematic and potentially in breach of fundamental EU principles, such as the freedom to provide services within the EU,” Popescu said.

Romania’s government could need to consider whether there are other less restrictive and more proportionate methods to achieve its goals, she said.

The lawyer added that it is likely that the government will try to collect more money from gambling operators, as the country is struggling to address its increasing budgetary deficit and the gambling sector is “one of the more flourishing industries”.

“It is debatable whether the government will be able to push through the draft with the currently envisaged increases in taxes and contributions, as there has been widespread opposition from industry players since the draft initiative came to light, but some degree of tax increases is probably to be expected,” Popescu said.

Gambling industry representatives based in Romania told VIXIO they see the proposals as tough but unlikely to come into effect in their current form.

There have been several proposals submitted to the Romanian legislature over the past year that would introduce advertising restrictions or other changes that have failed to receive political approval.

The latest ordinance proposal requirements would also apply to existing online licensees, many of which are not companies based in Romania. These operators will have six months after the law is enacted to ensure they set up a Romanian company, according to CMS.

Questions remain about how these Romanian-based companies would be able to have an existing licence transferred to them.

Additionally, Romania licensees apply annually for “re-authorisation” alongside their licences, which some lawyers predict could be blocked until licensees establish a local presence, regardless of the six-month grace period.

Communication systems and central IT systems of online gambling operators will also have to be located on Romanian territory, as opposed to the current requirement of being located anywhere in the European Economic Area (EEA).

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