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State of emergency in the gambling industry

Tuesday, 6 April 2021

by Teodora Luca, Senior Associate, L.P. Luca Mihai Cătălin

At the time of writing, more than ever since the outbreak of the SARS-CoV2 epidemic, the epidemiological situation seems to be out of the authorities’ control, the number of illnesses and the number of people in need of medical care in ATI departments has been increasing rapidly in recent weeks. Facing the possibility of quarantining Bucharest, the authorities still seem surprised and are considering the option to change the criteria for imposing new restrictions.

 

Traditional gambling activities are still, one year after the onset of the health situation, among the first activities restricted to each increase in the incidence rate, despite the fact that strict sanitary conditions have been established since last summer to carry out the activity, which involved substantial investments from the operators. Also, this situation occurs despite the fact that this industry has a very high degree of compliance and the causal link between gambling activity and the increase in the number of diseases has never been proven.

 

At the same time, the legislative regulation of the obligations to pay taxes due in advance, expected in particular by the operators of slot machines, in order to adapt the tax obligations to the new reality (in which the long period of restrictions has resulted in a serious financial trouble over these companies) seems that it no longer fits in the Government’s agenda.

 

A timid step in this direction was taken by the National Gambling Office, which, as the initiator, brought to public debate the draft ordinance which, among other amendments to the relevant normative acts, it is intended to solve the great problem of the advance payment of fees by slot machine gambling organizers, at a time when the activity of these companies is severely affected by restrictions.

In the proposed form, the project will only solve this problem at an insignificant level, being regulated the monthly advance payment only for the first month before the entry into force of the authorization. However, the legal regime applicable to the other payments, including for the 2 months of the first quarterly installment, remains unchanged, and the provision, in this form, would not constitute real support for the industry.

 

It is also important to define a uniform way of compensating for payments made in advance, relating to periods when the activity was not allowed, with other tax obligations. The draft ordinance regulates at the proposal level that the effective method of calculation should be established by order, by the president of the National Gambling Office.

Such an approach is surprising, given that the body responsible for administering tax claims is the National Agency for Fiscal Administration, but most likely the solution was preferred in view of the powers of the Office of Supervision and Control of Gambling Organizers.

 

Beyond the financial problems, the lack of predictability and coherence of the authorities seems to be the main factor affecting the industry that until recently voluntarily fulfilled its fiscal obligations, the degree of compliance being higher than 95% -98%.

 

The decisions of the county committees for emergency situations, respectively of the Bucharest Municipality Committee for Emergency Situations, although they have normative value, are exempted from the obligation to be published in the Official Gazette. Therefore, it is a real challenge to identify the decisions issued by the health authorities, which apply measures to relax the restrictions/restrict the activity, some of which are made public by posting on the website, through social media or through the local press.

 

Most likely, the task of the organizers and the authorities would be significantly simplified if the data were centralized and made available to the public through a single communication channel. It seems, however, that the issue is not of interest to the authorities, which in the attempt to decentralize, did not take into account the major difficulties in communicating information to those who are obliged to implement it.

 

The restrictions on the activity and its financial consequences are complemented by the undesirable prospect of relocating gambling halls, if The Draft Law for amending and supplementing the Government Emergency Ordinance no. 77/2009 on the organization and operation of gambling (PL-x 559/2019) would be adopted.

The initiator aimed to impose increased measures of social responsibility and protection of minors, by maintaining a minimum distance of 200 m (the distance being increased in the Committee on Budget, Finance of the Chamber of Deputies to 400 m) from schools.

In addition, the project contains rules that aim to restrict advertising for gambling, both in the form of commercial communications broadcast through television stations and through billboards.

Apparently, the initiators omitted from the analysis the norms mentioned by the Government Emergency Ordinance no. 77/2009 on the organization and operation of gambling, already in force, which require compliance with social responsibility rules and the adoption of protective conduct against minors and other vulnerable groups.

 

In the category of good news that we are happy to share during this period, we include the decisions adopted by the county committees for emergency situations, which, following the proposal of the National Committee for Emergency Situations no. 60/2020, allowed the fixed odds betting activities (traditional game), consisting in the registration of bets (ticket sales) including if the incidence rate exceeds 3/1000, provided that the sanitary measures are observed.

 

However, it seems that the gambling industry will also undergo important transformations this year, and companies will once again face financial and legislative challenges, which were unfortunately triggered by superficial analyzes and lack of real consultation with the business community.

 

We can only hope that, on the one hand, the authorities will adapt their message and measures to the real needs of the market and gambling consumers, and on the other hand, the organizers will have learned in previous years the lesson of solidarity and responsibility.

Author: Editor

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