Gaming Law 2020

Last Updated November 24, 2020

Romania

Law and Practice

Authors



Simion & Baciu is a partnership formed by Cosmina Simion and Ana-Maria Baciu as a spin-off of several lawyers and consultants from the largest and oldest law firm in Romania. It strives to provide excellence in various areas of law and across multiple regulated industries, in particular media, technology, privacy and data protection, corporate and M&A, intellectual property and life sciences, with a particular focus on gambling and entertainment, consumer protection and advertising. The firm is currently made up of three partners, five associates and one counsel.

The Romanian regulatory framework for gaming was reformed in 2015–16; this created a gambling market that can be fairly characterised as robust in both its land-based and online sectors. The COVID-19 crisis has had a severe impact on the land-based gambling industry, which has faced continuous restrictions. Besides measures related to COVID-19, which will hopefully not be enforceable for a long period of time, there are also other regulatory developments that may have an impact on the gambling field in the future. Most notable in this respect are:

  • the sectorial norms for the application of anti-money laundering (AML) legislation for gambling operators (still not adopted even though almost a year has passed since the legal deadline);
  • a new certification regime for land-based gambling machines; and
  • a recent legislative proposal aimed at further regulating the responsible gambling requirements related to players' self-exclusion options.

The COVID-19 pandemic is obviously the most notable event that has had an impact on the Romanian land-based gambling sector in 2020. The crisis led to a complete shutdown of all land-based gambling locations from mid-March to mid-June 2020. Local restrictions have subsequently been enforced, and continue to be applied at the time of writing (October 2020). The impact of COVID-19 also led Romanian authorities to introduce certain supportive measures for land-based gambling operators, such as:

  • exemptions from the payment of authorisation taxes (which represent a significant regulatory cost);
  • extension of the validity of those authorisations; and
  • extension of the legal deadline for payment of taxes and duties.

The online gambling market has not been directly impacted by the restrictions related to COVID-19 so far; and it is interesting to note that the Romanian gambling regulator (Oficiul Național pentru Jocuri de Noroc, ONJN) has awarded two new online gambling licences during the very period when a state of emergency existed in Romania due to COVID-19.

Besides the impact of the pandemic, a recent development relevant to the gambling industry is that the Romanian AML Office has offered a written point of view (following an individual's request for clarification) indicating that the Romanian AML Law is not applicable to companies incorporated in a foreign jurisdiction that hold an online B2C licence in Romania. While this interpretation of the AML regulator is quite strong in its wording, it may be argued that it does not follow (at least) the literal terms of the Romanian AML Law, which does not make any distinction between online operators, local or foreign, that are licensed in Romania.

Where the following sectors are marked as permitted, this means that the respective game (or games) of chance are permitted subject to obtaining the necessary licence and authorisation.

Betting

Betting activities are permitted under Romanian law, and the gambling legislation expressly regulates three types of online betting:

  • fixed-odds betting;
  • exchange betting; and
  • mutual (pari-mutuel) betting.

Bingo

Online bingo is permitted, and the online bingo licence also covers keno games.

Casinos

Online casinos are permitted, and the casino licence also covers online poker and online slot-machine gaming.

Lotteries

Online lottery games are restricted since this category falls under the monopoly of the Romanian National Lottery.

Fantasy Sports

Fantasy sports are not expressly regulated under Romanian gambling legislation. If this activity does not fulfil the mandatory conditions of gambling (for further details of which, please see 3.2 Definition of Gambling), then fantasy sports should fall outside the purview of the gambling legal framework.

Social Gaming

Social gaming is not expressly regulated under Romanian gambling legislation. If this activity does not fulfil the mandatory conditions of gambling (for further details of which, please see 3.2 Definition of Gambling), then social gaming should fall outside the purview of the gambling legal framework.

Poker

Online poker is permitted, and is included in the category of online casino games.

Other Relevant Sectors

Tombola/raffles

Tombola games are permitted under the Romanian legislation as an express category of online gambling.

Any other types of games of chance, namely new games of chance or combinations of games

This generic category includes any product that fulfils the cumulative conditions of games of chance and is not expressly defined by the gambling regulation. The legal regime for such unregulated products will be established by the local regulator based on the game rules and description presented by the organiser.

Where the following sectors are marked as permitted, this means that the respective categories of games of chance are permitted subject to obtaining the necessary licence and authorisation(s).

Betting

Betting activities are permitted under Romanian law, and the gambling legislation expressly regulates three types of land-based betting: fixed-odds betting, exchange betting and mutual (pari-mutuel) betting.

Poker

Poker is permitted under Romanian law, and the gambling legislation expressly regulates land-based poker clubs.

Bingo

Bingo is permitted, with the Romanian legislation regulating two types of land-based bingo games: bingo performed in specialised bingo halls and bingo organised via television networks.

Casinos

Casinos are permitted in Romania, with the gambling legislation regulating in detail the regime for land-based casino licensing.

Gaming Machines

Gaming machines are permitted in Romania. The legislation regulates three categories of slot-machine gaming:

  • slot machines with unlimited stakes and winnings;
  • electronic devices awarding winnings with limited risk (amusement with prize (AWP) machines); and
  • video-lottery machines (VLT).

Lotteries

Land-based lottery games are restricted since this category falls under the monopoly of the Romanian National Lottery.

Other Relevant Sectors

Tombola/raffles

Tombola games are permitted under Romanian gambling legislation as an express category of land-based gambling.

Temporary games

Land-based casino games, slot-machine games with unlimited stakes and winnings, and land-based bingo that takes place in tourist resorts or on leisure crafts qualify as temporary games of chance and are subject to a special temporary licence and authorisation, which is valid for a period of three months.

A distinct category of temporary games is represented by poker festivals, which are defined by the law as temporary events organised in tourist resorts or other locations, and consist of poker tournaments performed exclusively between the participants.

Any other types of games of chance, namely new games of chance or combinations of games

This generic category includes any product that fulfils the cumulative conditions of games of chance and is not expressly defined by the gambling regulation. The legal regime for such unregulated products will be established by the local regulator based on the game rules and description presented by the organiser.

The conditions under which the organisation and operation of games of chance are permitted in Romania are outlined in the following normative acts:

  • Government Emergency Ordinance No 77/2009 on the organisation and operation of games of chance (GEO 77/2009);
  • Government Decision No 111/2016 for the approval of the methodological norms for the implementation of Government Emergency Ordinance No 77/2009 on the organisation and operation of games of chance (GD 111/2016);
  • Government Emergency Ordinance No 20/2013 on the establishment, organisation and functioning of the ONJN; and
  • Government Decision No 298/2013 on the organisation and functioning of the ONJN.

Gambling activities are also regulated by means of instructions, orders or decisions issued by the ONJN in relation to various aspects of gambling activity, such as:

  • the certification of online gambling platforms;
  • interconnection protocols and reporting requirements for slot machines; and
  • reporting of the revenues obtained by both land-based and online operators.

Moreover, certain specific requirements in the AML field are also applicable to gambling activities, and are contained in Law 129/2019, which implements the fourth and fifth AML Directives.

Gambling is defined by GEO 77/2009 as an activity that has the following cumulative characteristics:

  • a participation fee;
  • random selection of the results on which the game is based;
  • monetary winnings; and
  • a public offering of the respective game by the organiser to the participants.

Land-based gambling activities are defined as all games of chance – irrespective of whether or not they are expressly regulated by GEO 77/2009 – that:

  • fulfil the legal conditions related to a game of chance;
  • are performed through gaming means installed in Romania; and
  • are not transmitted or performed through any kind of communication system (internet, landline or mobile telephone, or any other transmission systems).

Online gambling activities are defined as all games of chance – irrespective of whether or not they are expressly regulated by GEO 77/2009 – that:

  • fulfil the legal conditions applicable for a game of chance; and
  • are performed through communication systems of any kind (internet, landline or mobile telephone, or any other transmission system).

In principle, failure to observe the legal requirements in the field of gambling may lead to civil, administrative or criminal sanctions.

Administrative Liability

By way of example, administrative liability may be triggered when:

  • the organiser of land-based gambling activities allows individuals to participate in games of chance without having valid identity documents in their possession;
  • the gambling organiser, without a distinction being made between land-based and online activities, does not pay the participants the winnings obtained from their gambling within three business days, provided that the conditions imposed on the participant in relation to the proof of winnings are fulfilled; or
  • the gambling organiser, without a distinction being made between land-based and online activities, fails to notify the ONJN, within a certain deadline, about any modifications that have occurred to the data on the basis of which the licence and the authorisation were granted.

Failure by a gambling organiser to comply with the legal requirements can also lead to the suspension or revocation of their licence by the ONJN.

Criminal Liability

Operating games of chance without being granted the required licence and authorisation constitutes a criminal offence. Criminal liability may also be triggered when the following gaming products are offered to players:

  • fraudulent games of chance;
  • games of chance through radio channels or through other assimilated transmission means;
  • games of chance based on the results of clandestine competitions, such as dog fighting, which is expressly forbidden by Romanian legislation, or illegal car racing;
  • clandestine games of chance, where the results of the game are influenced by the skill of the person handling the game for the purpose of obtaining revenues, rather than being random; and
  • competition games with winnings of any type – offered through telephone lines or other communication systems, television or radio – where the granting of prizes is based solely on the accuracy of the answers provided to general questions, which involve a participation fee.

Liability for Participants

With respect to the participants in games of chance, according to GEO 77/2009, any individual who participates in Romania in online gambling operated by an unlicensed or unauthorised operator shall face administrative fines ranging from RON5,000 (approximately EUR1,000) to RON10,000 (approximately EUR2,000), thus triggering the administrative liability of the player (but not criminal liability).

Operating games of chance without having been granted the required licence and authorisation constitutes a criminal offence and shall be punished with imprisonment from one month to one year, or with a fine. Additional sanctions applicable for the criminal offence of unlicensed gambling are that the gambling operator would be dissolved, and the amounts derived from the unlawful activity would be confiscated.

At the time of writing (October 2020), there are several pieces of legislation pending enactment that are relevant for the gambling industry. These include:

  • the draft order of the ONJN regulating the new set of certification requirements for land-based slot-machine gaming;
  • the order/instructions of the ONJN with respect to the application of the new AML regime in the gambling sector; and
  • a legislative proposal meant to introduce more restrictions on gambling advertising and new obligations regarding responsible gambling.

The public authority competent to supervise the Romanian gambling market is the National Gambling Office (Oficiul Național pentru Jocuri de Noroc, ONJN), a specialised body of the central public administration subordinated to the Romanian Ministry of Finance, which has enforcement prerogatives and is also competent to grant licences and authorisations.

The new legal framework for gambling activities was created in 2015–16, when several pieces of legislation regulating the performance of gambling in Romania were enacted. The ONJN has issued licences and authorisations by applying the new legislation rather literally, so one may argue that the authority’s approach in terms of regulation is quite prescriptive.

Romanian legislation regulates the following types of licences.

  • Class 1 licence and related authorisation/s – these are the permits that must be obtained by a B2C operator in order to offer gambling services on the Romanian market (irrespective of whether it relates to land-based or online gambling).
  • Class 2 licence – this licence is required for B2B providers, specialising in the gambling industry, that supply products/services to B2C operators licensed in Romania; the categories of B2B suppliers for which the ONJN has issued Class 2 licences are as follows:
    1. manufacturers, distributors and other entities performing activities with gaming qualities or gaming components (note that this type of Class 2 licence is relevant for the land-based sector);
    2. software providers;
    3. providers of platform management and hosting services;
    4. providers of live casino streaming services;
    5. certification laboratories, auditors and conformity assessment bodies;
    6. payment processors; and
    7. marketing affiliates.
  • Class 3 licence – this licence is granted by the benefit of the law to the Romanian National Lottery, which has a legal monopoly over the organisation of land-based and online lottery games.

Class 1 and Class 2 licences are readily available, provided that the respective B2C or B2B operators meet the applicable licensing requirements. The Class 3 licence is granted only to the Romanian National Lottery.

The Class 1 licence is valid for ten years and may be renewed for identical periods of time, while the authorisation is generally granted for one year (with the exception of the authorisation for land-based temporary games, which is valid for three months) and must be renewed/prolonged on an annual basis.

The Class 2 licence is also valid for ten years, subject to the payment of the annual licence fee within the applicable deadline.

As a core rule, only operators based in the EU, EEA or Swiss Confederation may apply for a B2C licence and authorisation.

Licensing Process for Land-Based Gambling

In order to perform land-based gambling activities, a gambling operator must obtain a Class 1 licence and one or several authorisations. While the licensing procedure is not product-specific, the authorisation must be obtained for each type of gambling activity intended to be performed.

In order to obtain the licence, the operator must submit an application request along with several corporate and operational documents related to the legal entity itself, as well as its directors and shareholders. Such documentation includes criminal record checks for each director and shareholder, and affidavits given by the director(s) disclosing, among other aspects, the ultimate beneficial owner of the company (a 25% shareholding being the relevant threshold for such an ultimate beneficial owner).

The authorisation can be obtained by an operator that has previously been granted a Class 1 licence. However, the regulation allows an operator to submit licence and authorisation applications at the same time, provided that the necessary conditions are fulfilled for each of these. The conditions for obtaining the authorisation vary in accordance with the type of gambling activity sought to be performed, and refer to operational aspects (such as the game rules for each game offered to the players and the configuration of the gambling premises) or technical requirements (such as the certification of the gambling equipment or the development of the reporting solution to the ONJN of the aggregated financial and operational data).

Licensing Process for Online Gambling

To a certain extent, the licensing and authorisation requirements for land-based gambling also apply to online activities; the observations mentioned above regarding the documentation for directors and shareholders are also applicable in connection with the online licence.

However, while authorisation must be obtained for each type of activity (or machine, as the case may be) in land-based gambling, in the case of online gambling, only one authorisation needs to be obtained for all activities conducted on the same gambling platform (which can be connected to one or several internet domain names).

Other particular conditions applicable to an operator applying for a licence and authorisation to perform online gambling relate mainly to technical and operational requirements.

Thus, the applicant is required to have its entire IT system audited by a specialised testing laboratory that holds a Class 2 licence, while the gambling software must be certified by a Class 2 licensed certifier, as must the random number generator and return-to-player percentage for each game. In terms of the necessary infrastructure, if the main gaming server is not located in Romania, the operator must establish safe and mirror servers in Romania in order for the ONJN to be able to monitor the activity related to the Romanian market and verify any incidents that occur. In brief, while the safe server stores a rough replica of the data from the gaming server, the mirror server must contain centralised reports summarising the daily activity and financial results obtained by the operator.

On the operational side, among other requirements, operators that are not Romanian-based companies are required to appoint an authorised representative (a Romanian legal or natural person) to act as the representative of the operator in relation to the Romanian state authorities.

In accordance with the regulation, the complete licensing documentation must be submitted to the regulator at least nine business days before the ONJN Supervisory Committee’s meeting. The Supervisory Committee is the body within the ONJN that approves licence applications during its periodic meetings; such meetings are generally organised twice a month.

Pursuant to GEO 77/2009, licence applications shall be resolved within 30 days from the date of submission of the complete documentation. However, considering that the ONJN has the competence to request any additional documents or information deemed necessary, in practice the licensing and authorisation procedure generally exceeds the initial 30-day timeframe provided by the law.

The regulation does not impose any fees in relation to the application for a land-based licence and/or authorisation.

However, for an online licence, the applicant is required to pay an administrative fee of EUR2,500 for the review of the licensing documentation. Online operators are also required to pay an EUR8,500 fee for the issuance of the licence.       

Annual Fees for Land-Based Gambling

In the case of land-based gambling, licensed operators are required to pay an annual licence tax in the form of a flat fee for a specific amount, depending on the type of land-based games operated. The licence tax may range from EUR5,000 per year for tombola or poker clubs, to EUR95,000 per year for land-based casinos.

Land-based operators must also pay an annual authorisation tax, which is calculated by reference to the following criteria.

  • Operator’s revenue – in the case of betting activities, bingo broadcast on television and tombola/raffles, the authorisation tax represents 16% of the operator’s revenue, but can be no less than a specific amount varying depending on the type of game (EUR90,000 for betting and EUR115,000 for bingo on television).
  • Number of locations/gaming means – land-based casinos incur an authorisation tax of EUR60,000 per table (in Bucharest) or EUR30,000/table (outside of Bucharest), and each slot machine with unlimited winnings requires an authorisation tax of EUR3,600; for bingo performed in gaming halls, the operator is bound to pay an authorisation tax of EUR7,000 per location + 3% of the value of the printed cards mandatorily purchased from the Romanian National Printing House.

The legislation also imposes certain special taxes for the following categories of land-based gambling:

  • an entry fee for casinos (RON50, approximately EUR10) and poker clubs (RON30, approximately EUR7); and
  • a vice tax for unlimited winnings slot machines and video-lottery machines of EUR400 per post (terminal) per year.

As a separate payment obligation, organisers of land-based games of chance are required to pay a responsible gambling contribution of EUR1,000 per year.

Annual Fees for Online Gambling

An operator of online gambling must pay an annual licence tax calculated by reference to the operator’s turnover, ranging from EUR6,000 per year (for an annual turnover of less than EUR500,000) to EUR120,000 per year (for a turnover exceeding EUR10 million).

The authorisation tax for online gambling is also paid on an annual basis and amounts to 16% of the income obtained from gambling activities (gross gaming revenue, GGR), but cannot be less than EUR100,000 per year.

Online licensed operators are also required to pay an annual responsible gambling contribution of EUR5,000.

Taxes for Licensed B2B Providers

B2B providers holding a Class 2 licence are obliged to pay an annual licence tax of EUR6,000 per licence and also a responsible gambling contribution of EUR1,000. Based on the regulator’s practice, this contribution is calculated based on the number of Class 2 licences held by a certain B2B supplier.

Pursuant to GEO 77/2009 and GD 111/2016, land-based gambling activities may be operated only in specialised locations, which are outlined below.

Casinos

Casinos are the specialised locations used for the operation of games of chance characteristic to casinos. The surface area and structure of casinos must enable the installation of gaming equipment and other technical devices needed to carry out the specific activity, and they must be located in buildings intended for use as business premises or in hotels with a minimum 3-star rating. Casinos are subject to minimal legal requirements with regard to the location of the premises, surface and safety equipment.

Betting Agencies

Betting agencies are the specialised locations for betting activities in which at least one dependent (fixed-odds) betting terminal is operated and that cumulatively meet several specific conditions in terms of minimum surface area, mandatory equipment, etc.

Locations for Operation of Slot Machines

All premises used for the operation of slot-machine gaming, irrespective of the type of slot machine, are subject to certain restrictions in relation to the advertising of the premises, as follows:

  • organisers will prevent viewing of the activities carried out within the respective premises; and
  • organisers will not suggest gambling activities by using images, text or other symbols.

Locations for Operation of Bingo Games

Pursuant to GD 111/2016, bingo games performed in specialised gaming halls may only take place in locations within specialised premises or business premises, which are registered as the organiser’s main or secondary office and which meet a set of mandatory conditions in relation to logistics and organisation: sufficient electrical lighting, air-conditioning, sound system, safety-related requirements, back-up electrical circuit, etc.

The legislative changes likely to occur in the near future for the land-based gambling sector stem from the following pieces of pending legislation:

  • the draft order of the ONJN regulating the new set of certification requirements for land-based slot-machine gaming; and
  • the order/instructions of the ONJN with respect to the application of the new AML regime in the gambling sector.

In addition, land-based gambling has been quite heavily impacted by the COVID-19 crisis, with activities being completely suspended by Romanian authorities for almost three months (mid-March to mid-June 2020) and subsequent local restrictions still being applied at the time of writing (October 2020).

The online B2C licence allows the operator to offer the products/activities covered by the respective licence on a Romanian platform. The Romanian platform must cover all players with Romanian IP addresses as well as all Romanian citizens who do not have their fiscal residence established in a foreign jurisdiction.

The B2B licence allows the licensed supplier to perform the activities covered by the respective licence in Romania. As a particularity of the Romanian legislation, B2B licences are not granted for specific products (such as a specific set of games, gambling platforms) but refer to generic B2B activities – for example, “production and distribution of gambling software” or “provision of hosting facilities”.

As mentioned in 4.3 Types of Licences, affiliates wishing to operate on the Romanian market are required to obtain a specific Class 2 licence from the ONJN. The regulation defines an affiliate as any natural or legal person who obtains revenues on the basis of a contract concluded with a B2C online operator as a result of the participation in gambling by players redirected by the affiliate onto the website/platform of the B2C operator.

Besides the general obligation of paying the annual licence fee and responsible gambling contribution, licensed affiliates also have an express legal obligation to send all affiliation contracts concluded with B2C operators to the ONJN.

The Romanian gambling legislation does not specifically regulate the possibility of using white-label providers. 

The regulation sets forth that licences are nominal and allow operation only for the holder of the licence. As an exception to this general rule, GD 111/2016 provides the possibility to create joint ventures, in which it is sufficient for only one of the entities involved to hold the gambling licence. However, joint operation entails joint liability for all parties involved.

The online gambling sector is likely to be affected in the near future by the fact that the ONJN is required to issue sector-specific guidelines/instructions for the application of the new AML regime in Romania. The ONJN should have issued these norms by the end of 2019, but at the date of writing (October 2020), this new regulation has still not been adopted.

The primary tool to prevent unlicensed gambling activities is the “blacklist” of unlicensed gambling websites, which is managed by the ONJN and currently comprises more than 1,300 internet domain names. The legislation sets forth that internet service providers (ISPs) and all service suppliers for the gambling industry, including payment processors, are bound to comply with the decisions taken by the regulator in relation to unlicensed websites. Specific reference is made to ISPs, which are required to ban access to the blacklisted websites (as well as to those websites promoting unlicensed gambling) under the threat of a fine ranging from RON50,000 (approximately EUR10,500) to RON100,000 (approximately EUR21,000).

The gambling regulatory framework is focused on protecting minors and preventing their access to gambling, as well as ensuring the integrity and transparency of gambling activities and maintaining a fair game system that is constantly supervised.

All entities that are involved in the gambling industry and hold a licence granted by the Romanian regulator (both land-based and online operators, as well as licensed B2B providers) are required, pursuant to GEO 77/2009, to pay an annual responsible gambling contribution to a public body whose main purpose is to finance programmes and activities aimed at ensuring a responsible gambling environment and preventing gambling addiction cases.

Regarding online gambling, the legislation specifically provides that the platforms must be designed to enable responsible gambling functions, such as:

  • the setting of daily, weekly or monthly deposit limits; or
  • the possibility of players permanently or temporarily self-excluding from gambling.

Furthermore, the platform must also have embedded a “reality-check” feature in the form of a warning message posted automatically every 60 minutes, which must inform the player about the amount of time spent gambling.

Online operators are also obliged to inform a player who has opted to self-exclude about the possibility of receiving counselling and treatment for gambling addiction in a treatment centre.

The fourth and fifth AML Directives have been transposed in Romania by Law 129/2019 and the new AML regime is technically in force at the time of writing (October 2020). However, by the end of November 2019, the ONJN was required to issue instructions regarding the application of the new AML obligations in the gambling sector. These norms have not been issued so far, even though almost one year has passed since the legal deadline.

The AML legislation imposes various obligations, such as:

  • specific customer due diligence;
  • reporting of suspicious transactions;
  • implementation of AML policies; and
  • record-keeping in a specific format.

However, the exact implementation of the AML requirements in the gambling field is inherently determined by the sectorial norms that must be (and have not yet been) issued by the ONJN.

The observance of the advertising regime for gambling activities is primarily supervised by the ONJN. The National Audio-Visual Council and the National Authority for Consumer Protection can also technically supervise certain aspects of gambling advertising, depending on the situation.

In accordance with Law 158/2008, advertising is defined as any form of presentation of a trade, business, craft or profession, with the purpose of promoting the sale of goods or services, including immovable goods, rights or obligations.

Pursuant to GD 111/2016, any advertising of gambling activities must be performed in accordance with the legal principles in terms of the protection of minors and responsible gambling. Advertising materials cannot be placed within or on the boundaries of educational, religious or social-cultural premises, and must depict, in a visible manner:

  • the minors' interdiction from participating in gambling, shown through visual signs;
  • the series and number of the gambling licence; and
  • the ONJN logo.

The most notable restrictions in terms of advertising are the following:

  • the advertising of bonuses offered by online operators may be shown only on limited channels, namely on the operator’s website, on the websites of its licensed affiliates or via e-messages sent to active players who have opted-in to receiving this type of commercial communication; and
  • based on a decision of the National Audio-Visual Council, corroborated by the interpretation of the audio-visual regulator, TV advertising for gambling may be shown only after 11pm, with the exception of betting activities, which may also be promoted during live sports events.

The sanctions for infringing the advertising regime for gambling activities start with administrative fines and can theoretically lead up to the suspension or revocation of the licence.

In accordance with the regulation, licensed operators are required to notify the ONJN about any amendments to the initial information on the basis of which the licence and authorisation were granted. As per the licensing requirements, such initial information includes the details of the operator’s directors, shareholders and the shareholding structure, ultimate beneficial owners, etc. Therefore, if an acquisition/change of control affects the initial information presented at the licensing stage, this triggers a disclosure requirement towards the ONJN.

Romanian gambling legislation does not contain particular guidelines on this matter, so the applicable implications should be assessed by reference to the general regime summarised under 10.1 Disclosure Requirements.

The Romanian gambling legislation does not contain any explicit requirements in relation to passive investors in acquisitions or changes of control. The applicable obligations (if any) are to be determined on a case-by-case basis.

Depending on the type and severity of the breach, the ONJN has the power to suspend, revoke or even cancel gambling licences. Furthermore, the gambling regulator also has the competence to apply administrative fines if an operator infringes the licensing and authorisation conditions.

If a breach committed by an operator may represent a criminal offence, the ONJN is legally obliged to refer the case to the relevant criminal investigation bodies.

Sanctions are enforced either directly by the ONJN (in the case of a suspension, revocation or cancellation of the licence or other regulatory breaches) or in co-operation with other public authorities (eg, the tax authority, police bodies).

Since 2015, when the regulatory framework was reformed, there have been several notable cases where the ONJN suspended or revoked both land-based and online licences, or even cancelled two interim online licences.

Financial penalties are generally enforced through the co-operation of the ONJN with the fiscal authorities.

In addition, it must be noted that all licensed operators are required to post a guarantee for securing the risk of non-payment of their tax obligations owed towards the state budget. If an operator fails to pay the applicable taxes, the authorities are entitled to enforce the respective guarantee.

There are no recent regulatory trends or updates in Romania in relation to social gaming.

There are no recent regulatory trends or updates in Romania in relation to esports.

There are no recent regulatory trends or updates in Romania in relation to fantasy sports.

There are no recent regulatory trends or updates in Romania in relation to skill gaming.

There are no recent regulatory trends or updates in Romania in relation to blockchain.

Since the new legal framework in the field of gambling has been enacted for only a few years, no significant regulatory reforms are expected, at least not in the near future.

In accordance with the gambling regulation, land-based gambling operations entail a physical presence in Romania. Thus, operators holding a land-based licence are established as Romanian companies and, as a result, they become subject to the general corporate tax provided by Romanian fiscal legislation. At the time of writing, the general corporate tax is established as a 16% profit tax.

Exceptionally, for operators of land-based casinos only, in case the profit tax deriving from this activity does not exceed 5% of the revenues, the respective casino operator is subject to corporate tax capped at 5% of total revenues (turnover not GGR).

In the case of online gambling operations, the fiscal regime may differ depending on the jurisdiction of incorporation. Obtaining an online licence does not necessarily require operation under a Romanian incorporated vehicle. Any company established in an EU or EEA member state (or under the Swiss Confederation) may apply for a licence in Romania. In fact, at the time of writing, most operators holding an online licence in Romania are incorporated outside Romania, in other EU jurisdictions.

As such, an operator holding an online licence in Romania as a foreign company is not subject to corporate tax in Romania, unless the respective operation generates a permanent establishment in Romania. However, if the online operator is incorporated as a Romanian company, the respective operator will generally be subject to the 16% profit tax indicated above.

The tax regime and rules/distinctions summarised above apply also to B2B providers holding a Class 2 licence in Romania.

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Trends and Developments


Authors



Simion & Baciu is a partnership formed by Cosmina Simion and Ana-Maria Baciu as a spin-off of several lawyers and consultants from the largest and oldest law firm in Romania. It strives to provide excellence in various areas of law and across multiple regulated industries, in particular media, technology, privacy and data protection, corporate and M&A, intellectual property and life sciences, with a particular focus on gambling and entertainment, consumer protection and advertising. The firm is currently made up of three partners, five associates and one counsel.

Introduction

If one were to have looked at the Romanian gambling market at the end of 2019 and the beginning of 2020, a fair representation would have been that the local industry was quite mature and diverse in both its online and land-based sectors and the general key performance indicators would have suggested that operations would continue to grow, as seen in the previous years.

However, starting in March 2020, the COVID-19 pandemic erupted in Romania and the crisis triggered by this continues to severely impact the industry (as has happened across the globe). Against this infamous background, this piece shall first analyse the regulatory impact that the pandemic generated for the local gambling industry and then focus on other developments that may potentially affect the jurisdiction. These are not related to COVID-19 but may show certain trends in the post-pandemic world.

COVID-19 Impact

As a preliminary remark, it must be emphasised that the COVID-19 crisis has generated an unprecedented amount of legislation in Romania during the past several months, and the measures adopted by the authorities/legislators have dramatically changed during very short timeframes. At the time of writing this article (October 2020), the epidemiological situation appears to be in full swing, which inherently generates severe volatility on the regulatory front, with new restrictions on gambling operations starting to be enforced just a few days ago.

Therefore, the below remarks should be read while taking into account that measures and restrictions are to be modified on a continuous basis and that the status quo is not necessarily equivalent to a regulatory trend that is to be maintained in the future. An exceptional situation requires exceptional measures.

On a general level, the measures taken by Romanian authorities in relation to gambling operations may be labelled as either restrictions or benefits/exemptions generated by those restrictions and the general situation of the economy during COVID-19 times.

Restrictions

Given the increase of COVID-19 cases, on 16 March 2020, a state of emergency was established in Romania. In this context, certain measures started to be imposed and several types of businesses were ordered to temporarily cease their activities. Starting from 18 March 2020, an Emergency Ordinance entered into force stipulating, among other things, that all types of land-based gambling activities were to be suspended during the state of emergency. 

The state of emergency ended on 14 May 2020 and was almost immediately followed by the state of alert (still ongoing at this date, with no sign of the government intending to cease it).

Land-based gambling continued to be completely suspended during the first month of the state of alert, legal provisions prohibiting these operations being in force until 15 June 2020.

Starting from 15 June 2020, the provision that previously stipulated that land-based gambling was to be suspended was replaced by a legal text providing that land-based operators must observe a set of measures meant to prevent the effects of COVID-19.

Among these measures, the following may be highlighted.

  • Gambling machines and tables must be placed to ensure a distance of 1.5 metres between players or separation barriers must be installed.
  • The maximum number of players allowed in any location at the same time is one person per four square metres.
  • Temperature screening must be performed on both employees and players and those having a fever exceeding 37.3°C, or displaying breathing difficulties, a frequent cough, fatigue or an altered state are not allowed in the gambling location.
  • Players must wear face masks during their entire stay in the location.

The industry realised that implementing the prevention measures represents the new normal and an inevitable condition for them to be able to resume activity in mid-June 2020. As such, the vast majority of operators seem to have understood and complied with the rules.

However, the health situation in Romania started to get worse once again, less than two months from the moment when the full suspension ended.

The strategy of the Romanian government regarding COVID-19 changed in July 2020, when it was decided that enforcement measures were no longer to be decided (only) by central authorities, but that some of the decision-making powers and responsibility were to be devolved to local/county authorities, which were to determine the measures that must be applied at a local level.

This shift of power from central to local authorities has impacted, among others (restaurant, clubs, schools, etc), the gambling field.

In a first phase (until the end of August 2020), a legislative framework was enacted obliging gambling operators to observe the restrictions and working hours established by national or local authorities. However, this legal framework did not detail the criteria that local authorities must take into consideration for enforcing restrictions, so applying measures against the industry was also a matter of local (political) opportunity or caution.

This initial legislative logic led, in practice, to excessively diverse and unpredictable situations, where several local authorities decided to restrict the working hours for land-based gambling (usually within the timeframe of 6am to 10/11pm) even if some of the decisions lacked a proper legal basis or solid justification.

The industry took another hit with this new restriction (having already been shut down for almost three months), especially since the main revenue drivers specific to land-based gambling are the round-the-clock opening hours, with a large portion of the profits achieved after midnight.

The second phase of restrictions started on 1 September 2020 and is still ongoing at the time of writing this article.

The previous regime was changed again, this time in the sense that state or local authorities may restrict land-based gambling by taking into account the number of positive COVID-19 cases occurring in a certain area/municipality (number of confirmed cases per 1,000 inhabitants).

While this new criterion for imposing restrictions seems to have an objective nature, in practice, certain local authorities have construed the current regime in the sense that restrictions can still be applied even if the legal threshold is not exceeded. An example of this was seen in the western part of Romania, where a local authority decided to limit the working hours for gambling halls in one specific county, even though the criterion regarding the number of positive cases had not (yet) been met.

After that, things escalated quickly.

The pandemic has dramatically and rapidly increased in Romania in the past month and this led the authorities in Bucharest (the city worst affected at the moment) to shut down gambling halls in the capital completely, with the exception of betting shops and lottery agencies (the latter being operated only by the National State Lottery). More and more local authorities have followed the same approach and started to suspend land-based locations operating in their area, following, in principle, the same pattern.

The above summary of the restrictions imposed so far in relation to the Romanian land-based gambling industry shows that such an unprecedented crisis has led to extreme and unpredictable measures (which are not, and probably cannot be, entirely consistent) and the only trend one can actually see at this stage is that when the pandemic gets worse, the restrictions follow the same rhythm.

While land-based activities have been hit hard by COVID-19, online operations have managed to stay afloat. Romanian authorities have not imposed COVID-related restrictions on online gambling (it would have been absurd to do so) and some voices are saying that the shutdown of land-based gambling (especially during the state of emergency) has significantly increased the usual gross gaming revenue (GGR) of online operators. An indication of this seems to be that two new B2C licences were granted by the Romanian gambling regulator (Oficiul Național pentru Jocuri de Noroc, ONJN) during the very time of the state of emergency, the total number of licensed operators now reaching 25, a robust figure for an emerging market like Romania. The number of B2B licensees also increased considerably, with several software providers, marketing affiliates or payment processors obtaining Class 2 supplier licences in Q2 and Q3 of 2020.

Furthermore, the ONJN, like most public authorities in Romania, managed to adapt its institutional activity during the pandemic, switching to online filings and limiting contact with the public.

Benefits and exemptions

Since the very beginning of the COVID-19 crisis, Romanian authorities have designed benefits packages aimed to counteract the effects of the pandemic.

These packages mainly involved:

  • payment, from state funds, of a certain portion of employees’ salaries during the state of emergency;
  • stimulus packages;
  • incentives regarding payment of leases in the private sector;
  • certain restructuring of the tax regime; and
  • prolonging of payment deadlines.

Some benefits and exemptions are generally available for all Romanian companies affected by the crisis, while others were available only for companies that were obliged to cease their activity. The local land-based  gambling industry falls within both scopes. Among the measures relevant in the gambling field, the following should be noted.

  • The gambling authorisation tax for land-based gambling, which represents a significant regulatory cost, is not due during the state of emergency and for the period(s) falling under the state of alert when activities are suspended.
  • The validity of gambling authorisations may be theoretically prolonged by 90 days, calculated from the end of the state of alert (which is still ongoing at this date).
  • The payment deadline for fiscal obligations that came due starting on 21 March 2020, (so including gambling-related taxes, but also taxes from other business sectors) was extended until 25 October 2020 and the possibility of legislators granting another prolongation cannot be excluded in the current context.

While the local gambling industry has requested various other incentives (eg, a switch from upfront quarterly payment of the authorisation tax to a monthly schedule), discussions have not yet led to a favourable decision from the authorities.

Anti-money Laundering (AML)

Romania implemented the Fourth EU AML Directive with over two years' delay (only in mid-2019), but at least the authorities set a better pace in 2020 and the Fifth AML Directive was transposed into national law in July 2020.

The Romania AML legislation sets forth that its regime applies to all providers of gambling services, both land-based and online.

Furthermore, there is no distinction made in the law regarding applicability being limited only to gambling operators that are incorporated as Romanian legal entities.

In the past, both the ONJN and the AML Office, during several public events, expressed the opinion that the Romanian AML Law also applied to foreign online operators that hold a B2C licence in Romania. It is worth emphasising here that 21 out of the 25 B2C online operators currently licensed in Romania are incorporated in a foreign jurisdiction.

However, just one month ago, the AML Office, in a written point of view following an individual request for clarification, stated the Romanian AML Law only applies to Romanian natural and legal persons, save for the exceptions expressly mentioned in the Law (ie, branches of foreign credit and financial institutions). Based on this opinion, the AML Office seems to believe that Romanian AML Law does not apply to foreign online operators that hold a licence in Romania because, in the Office’s view, these entities do not offer their gambling services on Romanian territory.

While this interpretation of the AML regulator is quite strongly expressed, one may argue that it does not follow (at least) the literal terms of the Romanian AML law, which does not make any distinction between local or foreign online operators that are licensed by the ONJN.

In line with this interpretation, all instruments provided by the AML Office to obliged entities for online access are only structured to fit the organisational structure of Romanian entities.

The scope of the AML Law is not the only problem that may create confusion in the gambling sector, another pressing issue being that the ONJN has still not issued the sectorial norms for the application of the AML legislation in the gambling field, norms which, by the letter of the law, should have been formally adopted by the end of 2019 at the latest.

In short, the AML regime for the Romanian gambling industry is currently work (or, better said, confusion) in progress…

Responsible gambling

In September 2020, the leader of the liberal parliamentary group initiated a legislative proposal in front of the Romanian Senate (as the first chamber of the Parliament in this situation) aiming to amend the primary gambling legislation. This proposal sets forth that:

  • gambling operators must identify the individuals entering the gambling location and must keep an electronic database containing their identification details;
  • gambling operators (both land-based and online) must keep an electronic database with self-excluded and undesirable players; and
  • the above databases are to be created at the level of the operator and must be kept for at least five years.

While this bill is still in its very early stages and it will take a while until it becomes law (there are numerous examples where legislative proposals sit in Parliament for several years), if enacted, it may create quite an impact for the industry, especially for land-based operators, which currently do not have such responsible gambling requirements.

For online operators, the effects should not be too dramatic since similar obligations already exist in the regulation.

Advertising

A legislative proposal for the amendment of the primary gambling legislation was initiated in 2019, the majority of the initiators being members of the liberal party.

The proposal was tacitly adopted by the Senate in October 2019 and currently stands, one year later, with the Chamber of Deputies.

This legislative proposal aims to introduce further restrictions on advertising for gambling operations, the most notable being set out below.

  • Gambling TV commercials can be broadcasted only after 11pm; this restriction partially overlaps a current regulation issued by the National Audio-Visual Council, which is implemented in practice in the sense that gambling advertisements cannot be aired from 6am to 11pm. However, the legislation imposed by the audio-visual regulator creates an exception for commercials related to sports betting, which can be broadcast during live sport events, an exception that is not included in the proposal currently under discussion in the Parliament.
  • Outdoor advertising of large dimensions for gambling is prohibited; the proposal does not clarify what “large dimensions” means.
  • Sound and visual signals from gambling locations cannot be visible from outside the locations.
  • Gambling locations must be placed at least 200 metres away from any educational establishment of pre-university level.
  • Gambling halls located at the ground level of a residential building must be designed with a separate entrance.
  • Online gambling platforms must show a pop-up message for responsible gambling purposes upon accessing the platform; responsible gambling messages must also be shown in each room of a land-based location.

Conclusion

It is well known that Romania has been, for a few years now, one of the most attractive jurisdictions in Central and Eastern Europe for gambling operations.

The reformation of gambling regulation, which took place over five years ago, created an open market and the continuous growth in recent years stands as proof that gambling businesses still have potential.

The impact of COVID-19 is inherently severe for land-based operations, but online activities seem to be doing better than just surviving and we all hope that brighter days will come for everyone.

Of course, gambling will always face challenges on the regulatory front, with tax increases or advertising restrictions being the recurring topics; however, so far, the industry has managed to keep a reasonable balance between benefits and burden.

Simion & Baciu

11 Maior Alexandru Campeanu St
1st floor, Unit 3
Bucharest 011235
Romania

+40-31 419 04 88

+40-31 419 04 88

office@simionbaciu.ro www.simionbaciu.ro
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Law and Practice

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Simion & Baciu is a partnership formed by Cosmina Simion and Ana-Maria Baciu as a spin-off of several lawyers and consultants from the largest and oldest law firm in Romania. It strives to provide excellence in various areas of law and across multiple regulated industries, in particular media, technology, privacy and data protection, corporate and M&A, intellectual property and life sciences, with a particular focus on gambling and entertainment, consumer protection and advertising. The firm is currently made up of three partners, five associates and one counsel.

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Authors



Simion & Baciu is a partnership formed by Cosmina Simion and Ana-Maria Baciu as a spin-off of several lawyers and consultants from the largest and oldest law firm in Romania. It strives to provide excellence in various areas of law and across multiple regulated industries, in particular media, technology, privacy and data protection, corporate and M&A, intellectual property and life sciences, with a particular focus on gambling and entertainment, consumer protection and advertising. The firm is currently made up of three partners, five associates and one counsel.

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