Opinion: Changes to Romania's online gambling framework

Just before the turn of the year, the Romanian government published an emergency ordinance which will amend, among other things, its gambling regulatory regime.

Effective from today (13 February), the legislative act will enable the government to develop a legal framework that is more appealing for gambling operators and players, to help eliminate the black market of gambling, and to eliminate tax avoidance in this field.

Although the amendments target both land-based gambling and online gambling, the substantive and most awaited changes of the gambling legislative framework relate to the online industry.

Technical requirements

The new regulation provides for technical and financial requirements imposed on the remote gambling operators that should be deemed as reasonable by the latter. First of all, operators who hold their technical equipment in an EU Member State are not required to locate their equipment within Romania’s borders.

In order to offer gambling activities to Romanian players, operators are required to connect already existing equipment to a mirror central IT system connected and made available for free to the Romanian National Gambling Office (RNGO).

Another important advantage for European operators is requirements that have previously been addressed in order to obtain a licence under the legislation of another European member state where they are authorised may be considered sufficient for the purposes of examination of their application in front of the Romanian authorities.

Licensing

The regulation provides for three distinct classes of licences to operate remote gambling. The first class of licence is granted to remote gambling operators, the annual licence fee ranges from €6,000 to €120,000, depending on the turnover of the operator.

The second class is awarded to other legal persons involved in the field of remote gambling, such as manufacturers and distributors of gambling software, affiliates, certifiers or auditors. Finally, the third class of licence is awarded operators of remote lottery, which constitutes a state monopoly.

Also, another welcomed change concerns the duration of the licence to operate gambling, which will be 10 years instead of five years, as previously regulated.

Beside the licence, operators must apply for an authorisation to provide gambling activities. The authorisation fee (tax) is 16% of the gaming gross revenues of the operator, a rate that should represent a reasonable level of taxation for remote gambling operators.

Blacklisting

Following the method already implemented by other European jurisdictions, Romanian gambling legislation provides for the inception of a blacklist where unlicensed gambling operators who perform unauthorized activities targeting the Romanian customers will be listed. Delisting will only be possible based on the conditions established by the RNGO.

As stated by the president of RNGO during a gambling conference in December, the conditions to be included or removed from the list will be similar to those provided by other jurisdictions where blacklists have been implemented.

Nonetheless, according to the latest unofficial information, there are negotiations for a transitory period to be implemented during which the operators should commence the proceedings for obtaining a licence.

If this proposal is adopted, only those operators that perform online gambling in Romania and do not request the licence and the authorisation to provide such activities during the transitory period should be included on the blacklist.

Player taxation

Another noticeable improvement brought in concerns taxation of gambling revenues at the level of player. The 25% income tax universal quota, previously in force, has been lowered to 1% for all players’ revenues up to the amount of €15,000, 16% for revenues higher than €15,000, and revenues higher than €100,000 remain subject to a 25% quota.

In what concerns remote gambling, the incomes of the players are not taxable at source, a measure which will be much appreciated by the operators.

The provisions of the new legislation should be further detailed by the means of the implementation norms to the primary legislation. The implementation norms should enter into force in 30 days as of today and efforts are made for these provisions to be adopted as swiftly as possible.