“We expect that in the near future the European Commission, which has been informed about this issue, will initiate infringement proceedings against Romania“
The gambling industry in Romania, and in particular the remote gambling operators, have been “hit” at the beginning of October by the Emergency Ordinance no. 82/2023 amending GEO 77/2009, an ordinance that will directly affect the current development of this industry. What do you think are the main problems that this GEO will bring to remote gambling operators operating in our country?
First of all, as has happened in the past (for example in 2022, with the previous tax changes made to the gambling sector), this time there was no real consultation with the industry, and the Government chose to adopt legislation that does not take into account the particularities and needs of operators and, worse still, does not respond to the interests of the authorities. Moreover, it is unfortunate that we have recently witnessed the demonization of all efforts to initiate a dialogue between the industry and the authorities.
Regarding the specific content of the new ordinance, I would mention two main issues. On the one hand, the fact that it is mandatory to have the registered office in Romania violates the provisions of the European legislation to which Romania is a party. We expect that in the near future the European Commission, which has been informed about this issue, will initiate infringement proceedings against Romania.
The second issue relates to the obligation imposed on gambling operators to provide a guarantee to cover the risk of non-payment of fees in the amount of €5,000,000 from 1 January 2025, regardless of the operator’s income. With this provision, smaller operators will practically be driven out of the market, so we are talking about a measure that creates an imbalance in the market, which will ultimately affect consumers and the quality and diversity of services offered to them.
It should also be noted that this guarantee, which practically means the unavailability of certain amounts, does not bring any benefit to the Government in terms of revenue collected. On the contrary, as the number of operators on the market decreases, the amount of money collected to the budget will also decrease.
This new GEO changes the way gambling operates and is organized in our country, although many operators are also licensed at European level. Is there a risk for the Romanian state, perhaps the opening of infringement proceedings against Romania? Does AOJND intend to take Romania to the European Court of Justice to defend its rights?
As we have already said, this legislation contains provisions that violate European law and we are confident that the EC will intervene to remedy the situation. Moreover, EGBA – the European association under which AOJND operates – has already sent a notification to the European Commission on the situation in Romania, mentioning cases of violation of European legislation in the new ordinance. We expect a reaction from the Commission as soon as possible.
The main provision that infringes European law is the one concerning the obligation to establish the registered office in Romania
Lately in the mainstream media there has been more and more talk about player protection. Of course, we know very well that in the accounts of the ONJN there is a significant amount of money, in the order of millions of euros, which remains unused although it should be accessed and used for education programs and player empowerment. What happens to this money? Also, the new GEO requires that a substantial part (70%) of the money collected by the ONJN from taxing and levying gambling operators goes to the state budget, the rest will be used by the Office. There is a possibility that a good part (70%) of the money that the operators will pay as a “vice tax” will go to the state budget! The question is: Does the state want to help citizens with problems caused by Luddomania, or does it actually want to increase budget revenues using this pretext?
It is not the role of the AOJND to say what the state wants. What I can tell you is that online gambling operators have taken significant steps to promote responsible gambling using only their own funds. For example, online, licensed operators have software in place that automatically removes players with suspicious behaviour from the platform (e.g. after a certain time, players are automatically excluded). Also online, minors can be effectively prevented from gambling. It is also much easier for online operators to keep and comply with the exclusion register.
What makes the difference, in my opinion, is artificial intelligence. The online environment, unlike the land base, allows for tighter control of players and amounts played. The licensed operators in Romania are largely part of international groups that have significant experience in research, that have invested significant amounts in this direction and that have already implemented for many years responsible gaming software that has proven its usefulness. Basically, some already tested models have been imported and they are a step forward. I would like to point out that in the local market, in the online segment, there are significant companies that are present in many other European countries, and their procedures have already been applied in other countries and have proven their functionality.
However, despite these occasional advances online, the issue of responsible gambling remains an issue that the Romanian authorities only address at a rhetorical level in public speeches. There is a need for funding, a need for coordinated action from the central level, a need for expertise, but I would say that first of all there is a need for sincerity in action. We see from the political class a generalized discourse of hatred towards gambling. It is an incorrect, populist approach that will benefit no one in the long run. As a man with more than 20 years of experience in the field, I notice that the first thing missing is a correct understanding of what gambling is. Just as it is wrong to view gambling as a source of income, it is wrong and unproductive to demonize gambling. Gambling should be understood and treated strictly as a method of entertainment, fun and pleasure. Any other kind of reporting on gambling is wrong. This nuance I think needs to be explained more and more clearly to consumers.
Since the end of the pandemic, the gambling industry in our country has “faced” a wave of negative publicity that has intensified, both from the general media, various “stars”, influencers and politicians. What do you think are the reasons for this media lynching? Have they got a basis?
Gambling has always been a sensitive topic and one of the reasons for this is precisely the misperception I mentioned earlier, that far too many consumers misunderstand gambling as a source of income, not entertainment. Political discourse, intentionally or not, perpetuates this misperception and so we find ourselves in a spiral with negative effects for all parties.
My belief is that truth can be restored over time through honest, transparent, and consistent messaging. Informing and educating consumers is essential, but it must be done honestly, not to gain popularity or short-term votes.
As far as the industry is concerned, AOJND has from the outset shown its readiness and willingness to engage and dialogue. We have common interests in the industry and want to be a trusted partner to the authorities.
How do you think the online gambling market in Romania will evolve in the next 2 years, taking into account all the changes brought to the gambling sector by the new Emergency Ordinance recently adopted?
Expectations are low.
On the one hand, the challenging, volatile economic situation is taking its toll on the entire business environment, including gambling operators. The last few years – marked by pandemics, economic crisis and armed conflict – have shown us all how dramatically and rapidly things can change, with a significant impact on business.
On the other hand, it is difficult to make a prediction for the next two years as we are constantly faced with a lack of transparency from government authorities. In addition, the complete lack of willingness to engage in dialog leaves operators with the feeling that they are operating in an unpredictable business environment where long-term planning is difficult.
As an immediate effect of the ordinance, I expect a reduction in the number of operators. The obligation to provide a €5 million guarantee will be burdensome for smaller operators who are likely to choose to leave the local market temporarily. On the other hand, even for large operators, the unavailability of such a large amount is a problem and it is foreseeable that they will have to adjust their business, with immediate effects on advertising budgets and sponsorship amounts for sports competitions.