THE GAMBLING INDUSTRY "The new law of gambling does resolve issues, but it can be improved"

The new legislative amendments passed at the end of last year through Emergency Government Ordinance 92/2014, that concern the gambling market, resolves an entire range of problems that were reported over the last few years by the representatives of the gambling industry, of the civic society and of the mass-media, says Mr. Daniel Florea, PSD deputy, member on the Judicial Commission of the Chamber of Deputies.

However, there are representatives of the gambling market who claim that this ordinance contains some contradictory provisions as well.

Sorin Constantinescu, the president of the Association of Romanian Casino Organizers (AOCR) considers that the taxation through withholding tax on the payouts made to gamblers - one of the stipulations of the new gambling law - represents a mistake, which means that "losses are also taxed", not just winnings.

Deputy Daniel Florea considers that it is hard to find any sector that is perfectly regulated and that doesn't have unhappy parties, that criticize certain legislative aspects. On the other hand, the deputy considers that the law is perfectible. "We will be able to take into consideration the reaction and the feedback of the gambling market, the moment this emergency ordinance is debated in the Parliament", said Mr. Daniel Florea. The drafting of the norms for the application of the Government Emergency Ordinance 92/2014 is the government's responsibility, through its specialized body, The National Office for Games of Chance (ONJN).

Mr. Florea told us: "According to all the information I have, the Office has a tight cooperation with the representatives of the gambling associations of the Advisory Council of the ONJN. Thus, through their solidly argued proposals, I hope that game organizers will succeed, to contribute to the creation of a set of regulations that are as close as possible to the European realities of the gambling industry".

With the coming into effect of Government Emergency Ordinance 92/2014 and the expected passing of the norms for its application the foundation will be laid for the opening of the online gambling market in Romania as well.

Mr. Daniel Florea told us: "As long as the legislative framework offers a favorable, competitive environment, which presents some advantages compared to the regulations in other countries, we expect online gambling organizers to be motivated to invest in that sector. We hope that in the coming months we will have the concrete confirmation of the fairness of these legislative measures".

The PSD official thinks that Emergency Government Ordinance 92/2014 makes no distinction between the gamblers' level of taxation, depending on the various types of games of chance that they participate in. The only difference lies, according to the PSD deputy, in the manner of payment of this tax: for certain types of games, the obligation of reporting and paying the taxes lies with the gamblers (online games, slots, poker festivals and lottery tickets), while for the other types of games the taxes are withheld and paid by the gambling organizers through tax withholding.

Mr. Daniel Florea hopes that we will see as soon as possible, a significant expansion of the gambling market, including increased revenues to the state budget, if we take into account at least the perspective of licensing and authorizing online gambling, as well as gambling tourism. "This point of view has been shared and confirmed following the numerous meetings and talks that I've had constantly with the representatives of ROMBET as well", the deputy has further said.

• Ana-Maria Baciu, NNDKP: "The changes concerning the tax regulations are welcome"

Ana-Maria Baciu, partner at NNDKP, told us that the change in the legislation concerning gambling, that the government passed at the end of 2014 and which came into effect on February 13th, 2015, shows the interest of the Romanian authorities in the efficient regulation of this industry.

She told us: "From our point of view, this change had been needed for some time now, given the high interest of international operators in the Romanian gambling market (especially when it comes to online gambling), as well as the changes expected by the local operators which concerned traditional games of chance".

The NNDKP official claims that the changes concerning the fiscal regulations are welcome in an industry from which the authorities expect to collect significantly higher taxes in the future.

Mrs. Ana Maria Baciu told us: "Just like the entire industry, we too are waiting for the completion of the application norms, which will most probably be published sometimes before March 13th, and which, we hope, will clarify those aspects from the main legislation, which currently raise some doubts for operators, as well as for us, as lawyers".

• Cristian Radu - Ţuca Zbârcea & Asociaţii: "The online gambling market will remain closed until the secondary legislation is passed"

The changes made through the Government Emergency Ordinance no. 92/2014 can truly be considered a reform in the area of games of chance, especially on the online side, says Mr. Cristian Radu, partner at Ţuca Zbârcea & Asociaţii.

In his opinion, even though online gambling has been regulated in Romania since back in December 2010, the existence of requirements that were impossible to meet has led to the current situation, where there is no licensed organizer of online gambling. Mr. Radu said: "As an example, in order to get an exploitation license, among other things, the organizer of games of chance would be required to present to the National Gambling Office a contract concluded with an operator for the control and monitoring the activity of the organizer's activity, but no such operator has ever been authorized in Romania. Among the changes made to the Emergency Ordinance of the Government no. 92/2014, these requirements that are impossible to meet are eliminated, thus paving the way for the organizers of online gambling that are interested in the Romanian market. Also, the new changes cover certain issues reported by the European Commission, as the old version of the Emergency Ordinance nr. 77/2009 did not fully comply with the legislation of the European Union".

However, in order to be truly functional and to reach the objectives of the new regulations, the legislation should be supplemented with secondary legislation that is harmonized with the provisions of the main law concerning the sector. "The application norms are particularly important in this context, stipulating the requirements and the licensing procedure for the organizers of online gambling, as well as for other entities that conduct activities that are ancillary to this sector (payment processors, software makers and distributors, certification providers, auditors etc.)", Mr. Cristian Radu further says, and he said that the online gambling market will remain inactive until the time the secondary legislation gets passed, as filing applications for licenses/authorizations for organizing online gamboling is not possible in practice.

Cristian Radu mentions that the new legislation also regulates an intimidating concept, that of the «Black list», which will include the organizers of online gambling which have offered or will continue to offer gambling services to Romanian gamblers, without having a license and an authorization in that regard. He told us: "The main consequence of the presence on this list is the inability to obtain a license, at least until the clarification of the organizers' situation and their paying of the taxes owed for the period during which they provided gambling services without a license. Even though the legislation is modern, this concept of the «Blacklist» has the potential to prevent the elimination of the deadlock in the market, if its implementation doesn't take into account the interests of every involved party: the interest of the public authorities to collect taxes from the online gambling industry, that of reputable international operators and with the ability to pay the fees stipulated in the Romanian legislation (which are somewhat prohibitive for operators that aren't big enough to operate on an international scale) and not least of all of the gamblers, who are not attracted by the black market if major international operators are licensed to run gambling activities in Romania".

The Ţuca Zbârcea& Asociaţii partner says it would be desirable, for the law for the approval of the Emergency Government Ordinance no. 92/2014, to clarify the status of taxation of the gambling operators and revenues made by gamblers. Cristian Radu says that, despite the progress that has been made, many questions still remain when it comes to the actual application of some stipulations, and he mentions that it would be useful if a series of formalities were eliminated that could lead to an administrative deadlock at the regulator level.

According to Cristian Radu, one such negative example is the requirement to obtain a prior license for the advertising campaigns run by various economic operators - even if they do not have any connection to the area of gambling, in order to stimulate sales - and which do not involve any participation fee.