Romania’s government has approved legal changes to the country’s gambling laws that will increase licence costs and add new “special fees” to tackle gambling harms, alongside other restrictive requirements.
The “Emergency Government Ordinance (EGO) 82/2023” was published in the Romanian official gazette on Friday (October 6).
Cristina Popescu, a partner at CMS Romania, explained that the new legislation entered into force upon its publication and “produces full effects as of that moment”.
The EGO must be submitted to parliament for approval.
However, “this approval does not impact or delay the effectiveness of it pending such approval. In fact, there are known instances in Romania where EGOs have sat in the parliament awaiting approval for years,” Popescu said.
The lawyer thinks challenging or reversing the law in Parliament is “unlikely”, due to the tightening of gambling restrictions in the country over the past few years and the government’s desire to help fund its budget.
Licence fees for online operators are now set at €300,000, as opposed to the existing progressive scale used to determine the cost.
The annual authorisation fee for online operators has changed from 23 percent of gross gaming revenue (GGR), subject to a minimum payment of €120,000, to 21 percent of GGR that's subject to a minimum payment of €400,000.
The online operator’s annual responsible gambling contribution has also jumped from €5,000 to €500,000.
The licence issuance tax increased from €9,500 to €10,500.
B2B license fees will increase from €9,500 to €20,000, while their annual responsible gambling contribution will increase from €1,000 to €15,000.
The Ministry of Finance predicts that it will raise an additional RON132m (€26.59m) in taxes collected by the end of this year, RON450m in 2024 and RON470m in 2025.
Taxes collected from the gambling industry will be split, with 70 percent going to the state budget and 30 percent to be used to fund gambling addiction prevention measures and promote responsible gambling.
Following its approval by the government, the Ministry of Finance said in a press release on October 5 that the changes are necessary to help “prevent and combat unlicensed gambling and combat tax evasion.”
The ministry also noted that under the new law, “all operators will be required to have their fiscal headquarters in Romania and to pay taxes in Romania”.
Popescu pointed out that since its original draft, the law’s wording has changed. The new text introduces the ability for online licensees to have “only a permanent establishment as an alternative to being effectively based in Romania. In both cases, the government’s end goal (i.e. to tax profits in this industry) is met.”
“That said, EGO 82/2023 does indicate that the gambling activities must be 'exploited directly by the license holder'. It is yet to be seen whether this wording will be read in the sense that online gambling companies will be required to operationally function from their base or permanent establishment in Romania. Out of the 30-plus online gambling companies already licensed in Romania, the large majority are based in Malta,” Popescu said.
Online operators have six months since the law came into effect to either apply before the gambling regulator to transfer the licence to a Romanian company, or register a permanent establishment in Romania and request the regulator re-allocates the existing licence to the permanent establishment, or apply for a new licence altogether through a Romanian company, according to Popescu.
The lawyer warned that: “The six-month term for compliance is extremely short and potentially not feasible for many operators.”
Ultimately, the lawyer says the EGO does not address a big question: “What happens with online gambling operators that need to re-apply for the annual gambling authorisation within that six-month grace period?”
“Since the issuance of the authorisation is conditional on the licensee being either a Romanian company or having a permanent establishment in Romania, how are gambling operators whose authorisation is up for renewal in, say, the following month, expected to comply with this requirement?”, she asked.
A ban on the sale of alcohol in gambling venues will also be introduced alongside new self-exclusion requirements for land-based venues.
Changes were first floated in August, designed to help tackle the country’s budget deficit, which has been predicted to rise to 6.4 percent by the end of 2023.
Last week, Prime Minister Marcel Ciolacu was vocal in his support for the changes, claiming some land-based venues are operated by a “gambling mafia”, in particular, providing examples of companies based in Romania but headquartered "through Transnistria".
In the past few months, it has also come to light that operators in Romania have been struggling to get much-needed bank guarantees, due to the anti-money laundering risks associated with the industry.