Sorin Constantinescu: The biggest problem is the gross incompetence of those in government and the people put in positions of leadership!

Wednesday, 24 April 2024

The new law, the one to remove gambling from localities with less than 15,000 inhabitants, will not solve the problem of addicts!

We offer you an explosive interview with Sorin Constantinescu in which we discuss the latest legislative blows cold-bloodedly applied by the politicians in power to the gambling industry in Romania, which will leave thousands of people on the streets, drastic decreases in the state budget revenues from taxes and duties related to the gambling industry, and a new major boost to the black market after having been kept under control for the last ten years.

Sorin Constantinescu

How will the gambling industry be affected by the newly adopted law that removes gambling from towns with less than 15,000 inhabitants?

First and foremost it will affect small companies, small operators! On the other hand, large operators will be less or not at all affected because their gaming halls generally have 20, 25, 30 machines, which are not suitable in the areas “affected” by the new law.
In small towns there were machines in bars and betting shops …. slots will disappear and only betting shops will remain.
As I was saying, small gambling operators will be affected, but they are partly to blame for this situation, primarily because they have paid totally incompetent people to lobby them and they have not been able to come out publicly and expose their real problems, they have been content to pay a little money each month to small associations, which I do not wish to name.
The second mistake was that they did not comply when it was changed in the law and said type I and type II devices, making it so that type II devices that were with limited earnings made them unlimited, thus “fudging” the state, which is why there were scandals related to addiction by not complying with the law.
We are also in an election year and from my experience in gambling, I can say that at least once every 4 years (when there are elections) politicians campaign on the back of gambling.

You anticipated the next question. Politicians have been shouting loud and clear that they will solve the addiction problem by removing slot machines from towns with less than 15,000 inhabitants, will this do anything?

No, those who are addicted to gambling will get on the bus, take half an hour drive to town and play more slots or play the same games online. I repeat the stakes were purely electoral from which almost everyone stands to lose.

It is expected that about 35,000 slots will be taken out of the market. How will the industry be affected from your point of view? What about the state budget?

I don’t know if it’s really 35,000, maybe the real number will be 20,000, 25,000 machines. As far as the budget is concerned, the calculation is simple, considering that last year the Romanian state collected 1.6 billion euros and we assume that about 30% of the slot machines will disappear, it means that the budget will be affected by about 500 million euros.
The Romanian Lottery also has about 1,000 slot machines that they will have to remove, so the Romanian state will lose from this as well. So it’s a loss on all sides and I don’t know how much it helps this disastrous coalition from an electoral point of view to campaign with such a measure.
As far as the industry is concerned, it is clear that some people will be out of work and some operators will close their companies because many of them do not have the financial strength to sustain their business, having their machines in bars in the country, in pubs, in small gambling halls. They also won’t be able to migrate to bigger cities where they would have to compete with the big operators.
That’s not to say that of the 20,000 or so machines, some of them won’t be in towns with more than 15,000 inhabitants. I have spoken to some operators, smaller ones, who I still give free advice to and who are reorganising and reconfiguring their business to get into the cities.
A big problem is that the Romanian state has changed, again, the rules during the game as they did with the Tax Code, as we did with others, i.e. there is no predictability. Operators should have been allowed to operate at least until their permit expires because people have invested and paid their taxes in advance.

Last year the industry took a first hit and that was tax increases plus the imposition of huge guarantees, where did these “moves” come from? How have operators been impacted?

In addition to the guarantees, the state also increased the addiction tax, which we have been paying since 2015 since we have the gaming law. If the state had good intentions, they would spend the millions that have been collected in the budget from the fees paid by operators for addiction prevention, but they have done nothing. Of the 8 million collected so far they haven’t spent anything and on top of that they have increased these fees becoming huge, 500.000€ for online operators, increased to 300€ per device at land based. If you add it up it adds up to somewhere over €40 million annually.
How will they use this huge amount of money if they have not been able to use 8 million so far? I am 100% sure that a large part of this money will go to election campaigns, when they make contracts to fight addiction. How many posters will be made to prevent the danger of gambling and how many to promote certain political parties?
As for the guarantee, they put 7 million euros for online when an online company owes the state budget an average of 700,000 euros in taxes. If you keep 7 million in the bank, in ten years you have doubled the money in interest alone, whereas you are forced by the guarantees to keep the money locked up in the State Treasury or in the bank and thus lose money.
At live casinos the guarantee is 3 million euros, when the average monthly fee is 300,000 euros, and in case of non-payment for 30 days the license is revoked, so where is the risk? So you can see it with the naked eye and you have to be an idiot or a moron or not have two classes not to realize that these huge guarantees were put in place to eliminate some players from the market and leave only some …they were clearly made with dedication!

As I was saying it seems like a series of concentrated hits on the industry, who is guilty in your opinion?

The big operators are not affected at all on the contrary they are making room to expand their business by closing small operators, including online a lot of companies have closed and players are redeploying elsewhere.

Is it still profitable for an economic operator to carry out this type of activity?

For big operators who have halls in big cities and good locations it is very profitable, for small operators it is no longer profitable because others are so big that they don’t earn. There is also the problem that small operators have more obsolete and uncompetitive equipment, they can no longer cope with the latest technology. To rent a state-of-the-art machine you end up with €500 a month to which if you add taxes, you produce nothing. To come back to the question, for operators with a few hundred machines, this type of business is no longer profitable, whereas operators with more than 1,000 to 2,000 machines have not been affected at all or very little.

How do you see the future of gambling in our country?

If those in the industry don’t join forces…Because here too there are, let’s say, associations that are competing and are in constant competition with each other. I saw what was going on about 6-7-8 years ago and I said – people, it’s mandatory to form a federation with all the associations because they all have the same interest to fight for their employees, for their taxes, for their business. But as I said that’s how it stayed, nothing was done. A federation has been set up in which there are two companies or two associations or three associations, the rest are free and independent and each one does its own thing, issues press releases, each one sends a lawyer instead of the operators who have paid their dues to these associations that have done nothing, and it can be seen that because they have closed the machines, they would no longer pay because the results are zero, that is to say, they have not demonstrated anything that they could defend any operator or do anything. The people gave the money for nothing, they kept promising that they would write a letter to Iohannis saying that they don’t know what to do to prevent the law from being enacted, that they would sue the Romanian state…simply nothing, just a charade to take some more money…they did absolutely nothing, zero, no results, nothing, nothing!
Yes, and the Romanian saying goes that the big fish always swallows the little one no matter how much it runs through the reeds, through the reeds you can’t escape.

Sorin Constantinescu

The conclusion would be that …

We will have a black market!, see Turkey, Israel, after the closure of the games, crime in the field has exploded. In Turkey until 1997 there were casinos, the Turkish state closed them and now there are more black games than were legal then. In Israel, people are going abroad with the money they would normally spend in the country.
The same situation we have encountered in terms of tax increases. I used to have poker tournaments, the last one we had 1,200 people from 35 countries who stayed for a week, went to the Old Town, went to the Mall, spent the money, rented hotel rooms, took a taxi, so a lot of money was brought into the country! They came with the 40% tax and all the players went to Bratislava, Munich, Berlin….unde taxation is normal.
Another problem faced by the industry is the lack of digitization of the ONJN, where even though you have a 10-year license, you have to go with a file on the rail full of documents already in the archives of the institution including documents that can be accessed with one click at ANAF or other state institutions.
The register of self-excluded players is another stupidity, because a player self-excludes in Militari, then goes and plays in Dristor, how do you notify the one at the hall in Dristor? ONJN should make a common database that can be consulted by all operators and by a simple scan of the CI to grant or deny the player access to the hall.
The new law, which removes gambling from towns with less than 15,000 inhabitants, will not solve the problem of addicts, we will have a negative budgetary impact, the gambling halls will be more visible by moving some of them to the cities and what is very serious, we will have many more illegal machines and with them crime.
The biggest problem, to draw a conclusion, is the gross incompetence of those in government and the people put in positions of leadership!

Author: Editor

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