Banning Gambling in Small Towns: A Challenge and Opportunity for Romania’s Gambling Industry
by Codrin Scutaru, CEO at Public Affairs Solutions
Introduction
by CODRIN SCUTARU, CEO AT PUBLIC AFFAIRS SOLUTIONS
In April 2024, President Klaus Iohannis signed a new law banning gambling activities in Romanian towns with fewer than 15,000 inhabitants. This measure presents a significant challenge for gambling operators but also an opportunity for adaptation and innovation in the sector. In a European context where gambling regulation is rapidly evolving, this change can lead to important transformations for both traditional operators and those in the online space.
Economic Impact and Operator Adaptation
Redirecting Investments
The restriction on gambling in small towns will force operators to reconsider their market strategies. According to European Gaming and Betting Association (EGBA), in 2023, small towns accounted for approximately 20% of the total revenue for operators in Romania. This measure will redirect investments to larger cities and online platforms, where growth potential remains considerable.
Gambling operators now have the opportunity to focus resources on developing online platforms, which are becoming increasingly attractive to players. According to a report by H2 Gambling Capital, the online gambling market in Europe grew by 16% in 2023 and is expected to continue this upward trend. In this context, Romanian operators can capitalize on the growth of the online segment, offering extensive possibilities for personalization and accessibility for users.
Comparisons with Other European Countries
Romania follows a general European trend towards strict regulation of gambling in small towns. In Sweden and Denmark, similar measures have been implemented with positive outcomes for operators. For example, in Sweden, according to Spelinspektionen, stricter regulations have led to market consolidation and improved service quality, resulting in increased public trust and revenue.
In Denmark, measures adopted in 2012 have stimulated innovation in the sector, according to Spillemyndigheden. Operators have invested in online platforms and responsible gaming solutions, leading to a diversification of offerings and increased profitability. These examples suggest that, while challenging, strict regulations can also offer growth and adaptation opportunities for the gambling industry.
Banning Gambling in Small Towns
Challenges and Opportunities for Gambling Operators
Shifting Focus to Urban and Online Markets
Operators will need to redirect operations to large urban markets, where there is a more diversified customer base and more developed infrastructure. According to the National Institute of Statistics, the urban population in Romania accounts for approximately 54% of the total population, offering significant potential for business expansion.
At the same time, expanding into the online environment becomes essential. Online platforms allow operators to reach a wide audience, including in small towns affected by the new legislation. According to Statista, the online gambling market in Romania is estimated to reach €1.2 billion by 2025, reflecting rapid and continuous growth.
Benefits of Consolidation and Innovation
While the ban on gambling in small towns may seem restrictive, it offers operators the chance to consolidate and innovate. Market consolidation can lead to healthier competition and higher-quality services for consumers. Investments in technology and innovation can enhance user experience and increase customer loyalty.
Examples from other European countries show that adapting to strict regulations can stimulate innovation. In the UK, operators have developed advanced responsible gaming solutions and age verification technologies, improving user safety and satisfaction, according to the British Gambling Commission.
Operator Response and Industry Future
Adaptation Strategies
Operators in Romania must adapt their strategies to meet new challenges. This includes:
Developing Online Platforms: Investments in online platform development will allow operators to expand their customer base and offer personalized services. According to H2 Gambling Capital, operators who invested in technology and user experience saw a 20% increase in online revenue.
Consolidating Urban Operations: Shifting focus to large cities can provide access to a more diversified market and support infrastructure. Operators can benefit from partnerships with top physical locations and creating integrated player experiences.
Innovating in Responsible Gaming: Developing responsible gaming solutions, such as self-exclusion options and personalized limits, can enhance operator reputation and attract new users concerned with personal safety.
Public Affairs Solutions
Collaboration with Authorities
Close collaboration with authorities will be essential for ensuring compliance and adaptation to new regulations. The National Gambling Office (ONJN) will play a crucial role in implementing and monitoring new measures. Operators can work with ONJN to develop effective regulatory solutions and contribute to a safer and more transparent market.
Conclusion
The new legislation banning gambling in small towns in Romania represents a major challenge but also a significant opportunity for gambling operators. Although it initially requires substantial adjustments, this measure can stimulate long-term innovation, consolidation, and growth in the industry. By adapting strategies and investing in technology and quality services, operators can turn this challenge into an opportunity to redefine the gambling landscape in Romania, benefiting from a safer and more diversified market.
