SLOT MACHINE TAX – INCOMPATIBILITY WITH EUROPEAN LAW. PROTECTION OF THE SLOT MACHINE GAMBLING INDUSTRY THROUGH EUROPEAN MECHANISMS

by Asist.univ.dr. Vidrean – Căpușan Tudor Dumitru Lawyer specialising in European law and tax law Lecturer, Faculty of European Studies, UBB Cluj – Napoca

Asist.univ.dr. Vidrean – Căpușan Tudor Dumitru Lawyer specialising in European law and tax law Lecturer, Faculty of European Studies, UBB Cluj – Napoca

An analysis of the provisions of Article II(4) of Law No. 124/2015 and point 3(C) of the annex to Government Emergency Ordinance No. 77/2009 reveals that, in order to operate slot machines, gambling operators of slot machines on the territory of Romania owe an annual tax of EUR 1,000 per gaming station (prior to August 1, 2025, the tax amount was EUR 500 per station). From the official title, it seems that the Romanian legislator’s goal was to fight gambling addiction. Obviously, applying this tax regulation for over 10 years has brought in a lot of money for the state budget.

Under such circumstances, the legitimate question arises as to whether such a regulation complies with European standards and whether the Romanian State had the right to levy the slot machine tax. Based on an analysis of European court case law, the answer to the above question is negative. Firstly, it can be observed that the way in which the tax on slot machines is regulated is contrary to the principles of free movement within the internal market guaranteed by the Treaty on the Functioning of the European Union.

According to our information, Romania is the only EU member state that applies such a tax, which puts Romanian gambling operators at a disadvantage compared to their competitors in other EU member states, given that the other member states do not apply a vice tax on slot machines.

In fact, all EU member states apply a regulation known as the “responsible gaming tax” with the aim of combating gambling addiction. The responsible gaming tax is regulated by Government Emergency Ordinance No. 77/2009 and is paid in connection with the winnings generated by the operation of slot machines.

Under such circumstances, doubling the regulation on responsible gaming tax serves no other purpose than to unjustifiably discourage slot machine operators from remaining on the market, as it is clear that despite its official name, the slot machine vice tax does not aim to combat any addiction.

Furthermore, no specific purpose or concrete destination can be identified for the sums of money collected from the vice tax. Under these circumstances, it is clear that such a tax burden (currently unique in the EU) is incompatible with European standards in this area, being merely another instrument through which the Romanian State seeks to increase state budget revenues.

In this context, we believe it is important to mention that at the beginning of 2025, Romanian courts decided to bring the issue of the slot machine tax in Romania to the attention of the Court of Justice of the European Union in Luxembourg. It is important to note that this is the first time since Romania’s accession to the EU (2007) that the European court has been asked to rule on an issue in the Romanian gambling industry.

The European court, in accordance with the provisions of Article 267 TFEU, will examine whether Romanian national legislation is compatible with European standards. Our assessment is that the European court’s response must be negative, both in relation to the points outlined above and in relation to other specific arguments arising from the analysis of European legislation.

However, the most important aspect to be highlighted is that the proceedings before the European court will focus on demonstrating that the regulation on the vice tax on slot is a systemic problem affecting the entire traditional gambling industry with the aim of destroying this industry, which blatantly contravenes the principles of free movement specific to the single market.

As such, the key to the success of this procedure is to bring together as many slot machine operators in Romania as possible to register and participate in the proceedings before the European court. In the ideal situation, where the entire slot machine gambling industry would participate in the proceedings before the European court, it could be argued much more successfully that the purpose of the slot machine vice tax is discriminatory, contrary to European standards, with the sole aim of destroying the traditional gambling industry in Romania. Furthermore, the participation of each affected operator represents an opportunity to explain to the European court how it has been economically affected by the application of excessive and unjustified taxation on the gambling industry.

At the same time, it is important to highlight the benefits that may result from a favorable ruling by the European court. A favorable ruling by the European court will have beneficial effects on Romanian slot machine operators for several reasons. Firstly, according to Article 267 TFEU, preliminary rulings issued by the CJEU have the force of law and are binding throughout the EU, including Romania. No Member State, including Romania, has the right or the capacity to refuse to implement preliminary rulings issued by Romania.

Secondly, a favorable ruling will necessarily lead to the elimination of national legislation on slot machine tax, which means that in the period following the ruling at European level, gambling operators in Romania will no longer pay slot machine tax.

Thirdly, those who paid the slot machine tax will have the right and the basis to request a refund of the amounts paid as slot machine tax for the last 5 years (please note that the 5-year period starts from the date of payment and not from the date of the CJEU ruling, so the recommendation is that the recovery procedure be initiated as quickly as possible in order to access the longest possible period of time), with the possibility of recovering significant financial amounts that will have a beneficial impact on gambling operators in Romania.

In conclusion, we believe that by bringing the issue of the slot machine tax to the attention of the EU’s highest court, the resilience and ability of the traditional gambling industry to ensure its survival on the Romanian market by aligning itself with European standards, which represent the last bastion of defense of the freedom to provide gambling services within the EU single market, is being put to the test. Our assessment is that by presenting calibrated and effective arguments, a victory can be achieved for the traditional gambling industry in Romania with the broad support of the European court.

CONTACT:

Asist.univ.dr. Vidrean – Căpușan Tudor Dumitru

Lawyer specialising in European law and tax law

Lecturer, Faculty of European Studies, UBB Cluj – Napoca

 Tel: 0748.048.104

e-mail: tudorvidrean@yahoo.com