THE GAMBLING INDUSTRY - MICHELLE LEE CUMMINS, GENERAL MANAGER OF CASINOS AUSTRIA INTERNATIONAL (BUCHAREST AND GLASGOW) AND THE PRESIDENT OF THE ROMANIAN ASSOCIATION OF CASINOS: "The measures of the authorities only led to a rise in tax evasion"

Complicated regulations, an unfair taxation system and the rise of the underground gambling market are obstacles to the development of the gambling industry in Romania, considers Mrs. Michelle Lee Cummins, General Manager of Casinos Austria International (Bucharest and Glasgow) and the President of the Romanian Casino Association. She said: "Over the last 21 years, the gambling industry has developed in Romania. I can say that standards of customer service and the products offered are very high, easily competing with the best on offer anywhere in Europe.

Unfortunately the Romanian gaming industry is held back by very complicated, and at times absurd regulation, regulations which discourage gambling tourism, an unfair and uncompetitive tax system that discourages investment, and the increasing presence of a gaming black market".

Mrs. Michelle Lee Cummins considers that one of the major problems in operating casinos comes from unfair competition, and another is the ambiguous and interpretable legislation. "Some regulatory and fiscal requirements are punitive and make Romania uncompetitive as a gambling destination, leading to an increase in fiscal evasion and driving less ethical operators into the black market", Mrs. Cummins said, and she added: "The unclear legislation leads to inconsistent and unbalanced application and enforcement of the law. Lack of a proper due diligence process in the licensing process means that unfit operators who engage in unfair competitive practices and fiscal evasion are free to operate".

Michelle Lee Cummins thinks that the law should include a very strict pre-licensing process, whereby the background of shareholders is verified to assure that they are fit and proper to be involved in gaming. Also, the source of funding should be verified in order to reduce the possibility that gaming operations are being supported by the proceeds of criminal activities or used for the purposes of money laundering.

"A clean, fair and well-regulated gaming market would benefit the state, the private sector, and society as a whole", Mrs. Michelle Lee Cummins considers.

• The economic crisis, a very significant impact on the gambling industry

The recession in Romania and throughout Europe has had a very significant impact on the amount foreign and local gamblers are willing to spend since 2009, and recovery is very slow, said Michelle Lee Cummins.

In her opinion, increased taxation, incomplete and ambiguous legislation, the lack of harshness and consistency in enforcing the law, and an increase in illegal gaming (especially in the slots market) have all led to the decline in the number of casinos.

Gaming revenues have fallen by over 40% in that period. At the same time, in 2009, the new gaming law imposed significantly higher taxes on the gaming industry, an increase of about 400%. Mrs. Cummins went on to say: "We have had to restructure the operation, reduce staff, and have delayed planned investments and expansion. We have remained on the market as we see the potential, but have only survived through the financial support from our parent company in Austria. Since 2009 I believe over 5,000 employees in the gaming sector have lost their jobs, and revenues to the state budget have fallen significantly. Romania has incredible potential and we were planning to extend and expand our operations in 2009. The recession, increases in taxation, and gaps and anomalies in current legislation mean any plans to invest have to be placed on hold".

• Difficult relationship with the authorities

Mrs. Michelle Lee Cummins considers that the relationship of the gambling industry with the Romanian authorities is difficult. She told us that she has open and useful relations with some authorities, who understand that consultation and involvement are key to developing a sustainable and responsible gaming sector, but this is the exception. "In general, gaming operators are viewed with suspicion and treated as undesirables, and input from the industry, especially that working towards eliminating fiscal evasion and the black market, is ignored", Michelle Lee Cummins further said.

In her opinion, it is very unlikely that in the near future any other casino chains would enter Romania. "Under the current fiscal and legislative regime, it is impossible to plan and budget in the mid- to long-term, and the increasing presence of a black market makes investment unattractive".

• The measures taken by the authorities have pushed gambling underground

The gambling industry is considered one of the areas where tax evasion is very high. Mrs. Cummins said: "I believe there is a lot of truth to this statement, but it should be noted that there are some very responsible operators on the market who want to combat fiscal evasion just as much as the authorities.

Measures taken by the authorities have only served to increase fiscal evasion and drive gaming underground. Punitive taxes, ambiguous regulation, chaotic enforcement, and most importantly, a lack of due diligence on shareholders (a key tenant of any well-regulated gaming market's licensing process) all serve to encourage unfit operators to engage in fiscal evasion and have led to an increase in the black market. This makes it very difficult for responsible gaming operators to compete on this market".