Radu Bălaș, Counsel, Head of Litigation & Arbitration – DLA Piper Dinu SCA
Raluca Tudoroiu, Associate, Litigation&Regulatory – DLA Piper Dinu SCA
The 2016 edition of ICE TotallyGaming (London, 2-4 February) has made a positive impression on us through its numerous expositions promoting the state-of-the-art developments in the gambling field, the high number of professionals attending and the diversity of seminars held. What surprised us even more was the exchange of information it potentiated through the round table discussions equally attended by the representatives of regulators, gambling operators / their affiliates and law practitioners.
Similar interaction with the representatives of regulators took place during the seminar organized by DLA Piper on 01 February at the London office purporting to debate together with the firm’s clients and on the verge of the ICE conferences, current issues from several jurisdictions. More than 70 representatives of the leading gambling operators attended the seminar and shared together with DLA Piper’s lawyers from Italy, Netherlands, Poland, Portugal, Spain, UK and Romania their experience from states with changing legislation. The seminar was divided into two interactive parts, the session on fiscal issues raising discussions on the impact of BEPS policies, potential amendments of the definition of permanent establishment and legislative changes regarding VAT for advertising and marketing activities, while the regulatory session offered an overview on the implementation of the gambling legislation in different Member States.
Sailing on stranger tides
We’ve been hearing for months about the efforts NOG has made for regulating remote gambling, “from scratch“. We have been told that the new legislation was conceived after NOG’s representatives investigated the model adopted by relevant regulators from other jurisdictions. However, the events referred to above have offered us a distinct perspective on how regulators from other jurisdictions understand the optimal functioning of the basic triangle for a good functioning of the market: state-operators-players.
During some discussions focused on the particularities of the technical conditions for issuing licenses to operate games of chance, the High Commissioner of Gibraltar recounted how the representatives of the authority held constant consultations with the operators and adjust the authorization requirements to market trend. ”The operators always know the market better than the authority”, he explained, also mentioning that the authority can never understand the market as goos as the operators who directly develop it and this is why the authority needs constant consultation with the operators and the support they may offer in identifying the best solutions for a functional market. Good sense had confirmed us that the operators have more insight on the industry they have created and now constantly innovate, but we prided ourselves for a few (brief) moments on Romania: here, the authority is the source of knowledge in the field, while its representatives never hesitate to affirm that the operators and their consultants should learn from the authority how to perform their activity. For instance, one of NOG’s distinguished representatives has recently stated during an interview that: “We stick to the opinion that there are still many consultants and lawyers who do not know the domain and its particularities“. An allegation probably supported by the long-standing experience gained by NOG since its establishing (2013) to date, opposed to the authority from Gibraltar which, established 16 years ago, seems not to share the same tools for understanding the scope of work.
Furthermore, we found out from the representative of the Italian regulator that they also had to “build” a system “from scratch” that allowed operators to obtain domestic licenses. And the operators were questioned if the conditions suggested by the authority can be implemented from a technical perspective or if the required information has any relevance at all for the authority. It might sound surprising, but no new versions of the same audit reports have been required nor any requests for information within the limits of the law (or even beyond) were formulated to provide to the authority any information that it deemed necessary, from time to time. Was it the Mediterranean breeze inspiring or is it possible that the authority has actually heard and supported the operators?
In UK, where the gambling market’s size is impressive, the regulator recruits its specialized personnel from the very gambling industry, so that the implementation measures proposed by the authority might be de facto complied with. This is again a proof of the regulator’s concerns to efficiently keep up with the operators and rather stimulate instead of preventing the development of the market.
Steering or floating adrift?
As concerns the status quo in Romania, the attendants of the ICE events were keen to find out about the transparency or non-transparency of the regulation, about the predictability or lack of predictability of the measures taken by the regulator and, generally speaking, about the fair relation they can build with the authority or not. Specifically, the mass actions taken by the authority against players, the exclusion from the market of several leading operators by administrative decisions, the discretionary requests for information and supplementary documents after the submission of the ones expressly provided by the law, the extension of the transition period following the failure to adopt the technical norms were some of the key subjects.
Irrespective of the questions and answers given under such circumstances, it is certain that some of the measures taken by the Romanian authority portrait the image of a ship floating adrift. This happens especially when the authority struggles to show everyone that it is actually behind the wheel. Some examples below:
The exemption of fiscal and criminal liability provided by Article II par. (8) of Law no. 124/2015 did not require one audit report containing the amounts collected from players broken down by type of games of chance and day / calendar month as the law provides. It required one initial audit report, two or three supplementary ones, a new ”upgraded” version by 31 March and predictably some additional future versions if the latter fails to correspond at some point to the permanently ascending standards of NOG. The same amnesty required, in the opinion of the authority, certain additional measures from the operators (such as providing information), which Law no. 124/2015 has failed to anticipate and provide.
The interim right to operate regulated by Article no. II par. (7) of Law no. 124/2015 has not been the instrument that would ensure continuous activity for those operators who, despite the back-taxes charged for the years in which Romania could not issue them licenses, have decided to remain on the market, but the perfect key to open Pandora’s box. And in December, when the authority’s calculations proved to be inaccurate and NOG still couldn’t issue licenses / authorizations for online gambling, it became the life belt which the authority inflated from “temporary” to “annual”.
The operators who have decided to close their Romanian operations receive periodic “homework” from the authority and are threatened with “expulsion” from the list of beneficiaries of fiscal and criminal exemption whenever the authority has a new request.
Maybe it would be advisable that at least now, when the market entered a new phase by the adoption of the most-expected technical norms, NOG also enters a new dimension of its relationship with operators and players and reflects on a more balanced approach of the triangle authority-operators-players. An image such as “beloved ship, amazing captain” has proven delusional even when it had been pictured long time ago in the hideous communist poem of Zaharia Stancu…