Clarifications expected from the ONJN regarding the amendments brought by Law 107/2024

Tuesday, 9 July 2024

Not so long ago, the gambling industry resounded, once again, by the significant changes brought by the legislator through GEO 82/2023, which entered into force on October 6, 2023, which established, among other things, the requirement of registering a permanent establishment in Romania in accordance with the relevant provisions of the Tax Code, at the level of which the income from the organization and operation of the gambling activity in Romania should be fully recognized.

► Cosmina-Maria Simion Managing Partner WH Simion & Partners

► Alina Tace
Partner WH Simion & Partners

Approximately 6 months after the entry into force of GEO 82/2023, more precisely on April 18, 2024, it was published, in the Official Gazette no. 370, Law 107/2024 on the approval of GEO 82/2023, a law that entered into force within 10 days of its publication in the Official Gazette, respectively on April 28, 2024, and which brought, in turn, changes to the previous provisions of GEO 82/2023 (applicable since October 6, 2023), while also establishing new restrictions,  some of them requiring, as provided for by Law 107/2024, additional clarifications that should be brought by ONJN by Order of the President within 90 days from the entry into force of Law 107/2024 (deadline that would expire on July 26, 2024).

 

 

 

  • Geofencing obligation imposed on providers of ancillary services in the gambling field

One of the main additions brought by Law 107/2024 concerns a new obligation imposed on providers of ancillary services in the gambling field, with the consequence of applying severe sanctions in case of non-compliance. The text of the law provides:

„It is forbidden to provide, directly or indirectly, activities related to gambling to entities that do not hold the class I license issued by the O.N.J.N. and that allow access to gambling by the game parti­cipants who access the gaming platform on the territory of Romania and/or the game participants who are Romanian citizens who do not have tax residence in another state. The technical measures necessary to prevent and combat the access of the participants to the games in violation of the provisions of this paragraph shall be established by order of the President of the O.N.J.N., within 90 days from the date of entry into force of the law for the approval of the Government Emergency Ordinance no. 82/2023. Until the adoption of the order of the President of the O.N.J.N. provided for in this paragraph, the economic operators holding the class II license issued by the O.N.J.N. have the obligation to implement any available technical measures to prevent and combat the access of participants to gambling in violation of the provi­sions of this paragraph.”

As we have already become accustomed to, the wording of the text of the law is not the clearest, and, in a strictly literal reading, it can be interpreted in the sense that this new obligation imposed on providers of ancillary services in the gambling field, which are class II licensed (regardless of the type of B2B services they offer – game providers,  platform providers, payment processors, affiliates, etc.), implies that the service provider must ensure that each of its clients remote gambling organizers (regardless of the jurisdiction in which it has its registered office and regardless of the licenses held by such in other jurisdictions outside Romania) does not offer gambling services that are not licensed in Romania or for Romanian citizens who are not tax resident in another state. By way of example, the provider servicing a gambling orga­nizer that holds a license in Curacao or Malta (but does not have a license in Romania) must imple­ment technical means to prevent that organizer from offering its services in Romania/to Romanian citizens. Such an action could prove difficult (if not impossible) to implement from an operational point of view as the service provider does not have such visibility over the operations carried out by the organizer.

However, we consider that the intention of the legislator regarding the new obligation imposed on B2B providers is to bring the responsibility of geofencing from the scope of obligations that fall strictly on gambling organizers into the scope of obligations of their providers as well, in an effort to diminish and prevent illegal activities. This involves, in our opinion, actions to be taken at the level of their own operations whereby service providers (who, in most cases, have a multi-jurisdictional approach, providing services and the same content in several jurisdictions) restrict the content offered (e.g. games) so that it is accessible in compliance with the legal restriction imposed.

As provided for in the aforementioned legal text, the technical measures that B2B suppliers will be obliged to apply are to be regulated by order of the President of the ONJN, but until the adoption of the order, suppliers are obliged to implement „any available technical measures” so as to ensure that they comply with their obligation as of April 28, 2024 when the law entered into force and whose non-compliance is sanctioned „with a fine from 150,000 lei to 200,000 lei and the confis­cation of the amounts derived from the contra­vention activity”, and in all cases in which the contravention is found, „the Supervisory Committee orders the revocation of the class II license held by the economic operator that carries out activities related to gambling”.

With regard to „any available technical measures”, they may include (but are not limited to), in our opinion: blocking IP addresses in Romania, using other geolocation technologies to prevent access from restricted regions, applying advanced traffic filtering solutions to block unauthorized access. However, without specific clarifications from the authority (which are expected by the issuance of the order provided for by Law 107/2024), the implementation of these measures remains at the discretion of each provider, which can lead to various interpretations and applications in practice.

  • Joint operation of gambling activities

Law 107/2024 also changed the logic introduced by GEO 82/2023 regarding the joint operation of gambling activities. If GEO 82/2023 established the basic condition of „common control” between the licensed operator and the unlicensed partner, Law 107/2024 stipulates that all partners involved in the joint operation must hold „a class I and/or class II license”. Although it no longer indicates the rule of common control, Law 107/2024 has nevertheless introduced another restriction in the sense that „the interaction with the customer/beneficiary of gambling services can be carried out exclusively through the qualified personnel employed by the gambling organizer or a company affiliated  to the gambling organizer”, without, however, defining the notion of affiliated company in any way or referring to other existing regulations in which this notion is defined (e.g. the Fiscal Code).

These clarifications (which are expected from the ONJN) are crucial for the unitary, correct and non-discriminatory application of the legal provisions in the gambling field, a principle that the ONJN is required to comply with in its activity, however, until this moment, although the deadline given to the regulatory authority for issuing the order necessary to clarify the above aspects expires in one month, no draft normative act was published in the decision-making transparency process.

Although the industry is looking forward to the clarifications needed to ensure compliance with the new regulations, we remind you that this order is not the only one which is awaited.

  • „Black List”

According to art. 15 para. (4) letter c) of GEO 77/2009, „the conditions for introducing and removing gam­bling plat­forms/brands/logos/applications in/from the „blacklist” will be regulated by order of the President of the ONJN”. Although the authority published, 2 years ago (more precisely on December 8, 2022), on its website, the draft normative act in this regard in order to submit it to public debate, the order remained at the draft stage and there was no further progress. The con­ditions for removing sites from the blacklist remain thus unregulated (with the conse­quence of further blocking the access to the Romanian mar­ket of those entities that would fall under the applica­bility of this order).

In line with the provisions of art. 12 para. (2) of the same normative act, the ope­rators (B2C or B2B) have the obli­ga­tion to notify the ONJN, within 48 hours (by online sub­mission) or within 5 wor­king days (for submission by mail or at the ONJN registry) from the date of regis­tration, about „any significant change to the initial data on the basis of which the gambling license or the gambling autho­rization was issued,  res­pec­tively the class II license”, and „the significant changes will be established by order of the President of the ONJN within 30 days from the date of entry into force of this ordinance.” This provision was introduced in GEO 77/2009 in July 2022, but so far there is not even a draft normative act that has been published in decision-making transparency process by the ONJN.

WH Simion & Partners

  • Guarantee fund for players’ deposits

Art. 12 para. (8) of GEO 77/2009 also provides that in order to obtain the license for remote gambling, it is mandatory to establish a guarantee fund for players’ deposits, for each organizer, under the conditions provided by order of the President of the ONJN. This provision has existed in the legislation since February 2015, but the order was never issued.

We emphasize once again the importance of issuing these secondary normative acts, which lies in the need to ensure a clear and uniform legal framework for all market actors, and we look forward to seeing if and how this legislative effort on the part of the authority will materialize in practice.





Author: Editor

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