“CHAOS” – THE NEW “ORDER” IN THE GAMBLING INDUSTRY

By Av. Prof. Habil. Marius PANTEA

First of all, we must inform you that the recent legislative changes in the field of gambling, namely GEO 82/2023 for the amendment and completion of Government Emergency Ordinance No. 77/2009 on the organization and operation of gambling, as well as for the amendment of Government Emergency Ordinance No. 20/2013 on the establishment, organization and operation of the National Gambling Office, and for the amendment and completion of Government Emergency Ordinance No. 77/2009, published in the Official Gazette of Romania, Part I, No. 905 of October 6, 2023, have caused chaos in the national gambling industry and it is not over yet, the second phase – the approval law, which has passed the Senate and is currently before the Chamber of Deputies, is still pending and it seems that it will be adopted with some changes by the decision-making chamber.

The chaos in traditional gambling, manifested by a significant movement of land-based gambling operators to abandon the activity (due to the very high taxes imposed and the new obligations towards the NGO due in January 2024), even if at this moment the option of abandoning the activity is considered a sanction (due to the absence of transitional measures in GEO 82/2023), will certainly lead to a significant reduction in revenues for the State budget. Another option that small operators are likely to take advantage of is to consolidate the activities of several companies into a single licensed operator and divide the costs of the license and other obligations among 2, 3 or 4 partners, which will allow to optimize the costs for the gaming operators and implicitly reduce the amounts to be paid to the budget.

First of all, the law does not provide for transitional measures, which are absolutely necessary in situations where there are gambling operators who will no longer be able to continue their activities. The rule does not provide for the possibility of interrupting the licensed activity of an operator, since the exit from the market is treated as a sanction (either not paying some newly established obligations, or falling below the minimum number of means of play, etc.). It also does not specify what will happen to the license (what will be its validity in case the activity is abandoned, what will be the amount to be paid for the license in case the activity will be carried out until the expiry of the authorizations existing at the date of publication of GEO 82/2023), what will happen if the operator abandoning the activity falls below the minimum number of gaming machines (less than 75 slot machines), what will be the payment obligations to the NGO [those provided for in art. 10, paragraph (4)], what will be done in case of technical checks of the gaming machines and a number of other situations. The only possibility of waiver is provided only for Class I licensees in Article 12 paragraph (11) of GEO 77/2009, with subsequent amendments and additions, and is a classic and brutal way, which does not take into account the payments made by the operator for authorizations issued until 06.10.2023 (date of publication of GEO 82 in the Official Gazette of Romania – date from which the amendments came into force).

Av. Prof. Habil. Marius PANTEA

The meess caused by the introduction of the rule has driven the NGO into a paroxysm, because it is necessary to issue implementing rules for provisions that even the officials of the Office do not understand [we take as an example the interpretations of the term “joint control” in Art. 1 (5), which in fact means joint venture – the legislator has only established the obligation that this type of joint venture is only allowed between first class licensees], or which they do not yet know how to apply [e.g. the approval of the removal of means of play provided for in Art. 16 (1) – whether it will be done by the DGAJN, which is natural since it is an opinion, or the requests will be submitted for approval to the Supervisory Committee – which means that only 2 moves/month will be allowed – according to the schedule of the Committee meetings]. and a bunch of other examples that are causing headaches for the Office and the industry.

In addition, a bottleneck has arisen, also caused by the changes made on the spot, the Supervisory Committee is not functioning due to the insufficient number of members (according to the regulation, the Committee consists of 11 members and can function with a minimum of 9 – currently only 8 members are appointed). For this reason, the meetings could not be held in October, which caused great problems for gambling operators (activities interrupted due to the fact that operating licenses were not renewed – poker clubs, slot machine companies that fell below the minimum number of 75 machines, specialized locations that fell below the minimum number of machines, etc.) and implicit costs for the state budget (no licensing fees were collected for a constant number of machines that were stopped from operating). This deadlock caused budgetary losses and high costs for the operators (rents, salaries, utilities for unused premises, employees without activity, etc.), whereas the MF should have proposed to the Prime Minister 4 persons to be part of the Committee, who should have been appointed by a decision of the Prime Minister published in the Official Gazette.

Even though the problems that have arisen are overwhelming, the NGO management has not convened an NGO Advisory Council this time, but has only consulted with a few people in the industry here and there.

The NGO should have been the initiator of GEO 82/2023 and not just the opinion maker, or at this point it seems that the Office did not understand what the legislator (in this case the MF) wanted with the newly introduced provisions, it had no say in certain aspects of the ordinance (transfer to the state budget of 70% of the unused funds from its own activity – money that should have been spent on prevention and combating gambling addiction), failed to notify the EC (as required by law through the European Affairs Service within the European Affairs Directorate of the Ministry of Economy, Entrepreneurship and Tourism – the authority acting as the national contact point with the European Commission for the procedure of notification of draft technical regulations under Directive 1535/2015/EU) and did not wait for the status quo period (three months from the date of receipt of the notification by the Commission). As a rule, the amendments to GEO 77/2009 have been submitted to the EC, the proof that this amendment is a technical rule, it is no longer necessary to make (notice for the relocation of means of gambling, mandatory registered office in Romania – contrary to the provisions of the Services Directive – Directive 2006/123/EC – on services in the internal market, etc.), this aspect will certainly be the subject of many lawsuits.

We conclude this article by reiterating the need to consult the national gambling market on future changes and implementing regulations, with the help of the NGO’s Advisory Council, and to appoint as soon as possible a President of the Office who knows the gambling market in depth and who will build a management team to face the very difficult period ahead.