Malta: Romania – Next From ex Eastern Bloc to Legalise Online Gaming

A new gambling legislation, the Government Emergency Ordinance (GEO 92/2014), is to enter into force in Romania on 13th February 2015, after the government approved amendments, right before the end of 2014, to the country's main piece of legislation on gambling, Government Emergency Ordinance (GEO 77/2009). The amendments in the legislation seem like a revolution for the Romanian gambling industry, and more particularly, for online gaming. Following requests from the European Commission, as well as, foreign operators, Romanian Government is now ready to abandon the restrictive measures that it had previously adopted.

The new regulation amends the taxes payable by the gaming operators (taxes expressed in Euro currency), the payment methods, as well as, other aspects relating to the uniform taxation of all amounts of money collected by players from gambling organisers for all types of games of chance: mutual betting, fixed-odds betting, matched betting, games of chance specific to casinos, games of chance specific to poker clubs, slot-machine games, video lottery (VLT), online casino games, online fixed-odds betting, online mutual betting, online matched betting and online bingo.

The legislative act establishes the obligation of the gaming operators to actively engage, including financially, in activities intended to prevent gambling addiction and the participation of minors and gambling-addicted persons in games of chance, by creating a Foundation with the main objective of ensuring compliance with the measures regarding socially-responsible games of chance, adopted by the European Committee for Standardisation.

Taxation

Amongst the most remarkable amendments in the new regulation, is the new taxation on gambling that removes the 25% tax on winnings that is applicable today with a three tier system: 1% tax for all players that generate revenues between €133 and €15,000, 16% tax on revenues between €15,000 and €100,000, and, 25% tax on revenues over €100,000.

With regards to players' winnings, the amendment emposes a tax rate of 1% of all winnings by the players, collected at source, while for remote gaming, the regulation stipulates that the winnings by players from remote (online) games of chance and slot machines, received by natural persons, are not taxable at source.

One of the most important amendments relate to online gaming, which will enable gaming operators to legalise their online gaming operation in Romania.

Classes of Licences

For online gaming operations, the legislation proposes three classes of licence:

Class 1 licence is granted to operators organising remote games of chance, who have direct contracts with players. An annual licence fee based on turnover is applicable for Class 1 licensees, with the lowest fee of €6,000 applicable to turnover of not more than €500,000 a year. The licensing fee increases incrementally in accordance to the company's turnover, to a maximum annual licence fee of €120,000 for operators with a turnover in excess of €10,000.001 a year. 

Class 2 licence applies to companies involved in traditional or remote gambling, including businesses offering game platform management and hosting facilities, payment processors, companies producing and/or distributing specialised gambling software, testing labs, affiliates, and auditors. The applicable annual licensing fee is set at €6,000 per year.

Class 3 licence applies to operators of lottery games, which remain the exclusive monopoly of the National Lottery "Romanian Lottery S.A". 

In addition to the licence fees, the amendments impose an annual authorisation fee equal to 16% of Gross Gaming Revenue (GGR) for remote operators. The amendments also introduce a special 2% of GGR fee for video lottery terminal (VLT) operators and 5% fee for televised bingo.

A change in the duration of the licences has also been implemented, whereby, the licences will be valid for 10 years, instead of the current duration of 5 years.

Another novelty is the possibility of a company legally established in an EU Member State, or the European Economic Area (EEA), or in the Swiss Confederation, of applying for an online gaming licence. Also, the applicant company has to hold a bank account in which to deposit players' money and winnings payments, with a bank licensed in Romania, or with an authorised bank in another EU Member State or in the EEA, or in the Swiss Confederation, but which operates on the Romanian territory.

Technical Requirements

The legislation also contains detailed technical and operational requirements for the operation of a remote gaming company, such as: 

(i) identical to the Bulgarian Gambling Act of 2014, the gaming operator's central IT system has a system for recording and identifying participants in the game, as well as, a system whereby simultaneous gambling sessions, every participation fee paid by every player, and, the winnings paid out to every player are transmitted and saved in real time to a mirror server and a backup server in Romanian, both of which are made available to the National Office of Gambling (ONJN) free of charge. The central ICT system must automatically record every transaction, in real time, to the mirror server made available to the ONJN and transmits periodic summary reports to the backup server;

(ii) the game server and the mirror server store all data relating to the provision of remote gambling services, including records and identification of the players, the stakes placed and the winnings paid out. Information must be stored using data storage equipment (mirror server) situated on Romanian territory, in compliance with the procedure established under the application norms of GEO 92/2014. The data will be stored in the form in which it was created, for a period of five years;

(iii) the software used to run remote games of chance, as well as, any new software version used to run remote games of chance, has to be approved in advance by the ONJN on the basis of tests carried out by an authorised laboratory, in compliance with the list approved by the ONJN Monitoring Committee, as well as, under the conditions and in compliance with a procedure established under the applicable norms of GEO 92/2014;

(iv) the communication equipment must record the geographical location of a player's IP address, as well as, the date, time and duration of their game session, once they have registered as a participant in a game on the operator's website. The data will be stored for a period of no less than five years from the date of its collection and processing;

(v) the communication equipment and the central location at which the operator's central IT system is to be installed is Romania or on the territory of another EU Member State, the EEA, or in the Swiss Confederation;

(vi) similar to the Malta Remote Gaming Regulations 2004, there is the requirement for the existence of an authorised representative of the company who must be a resident in Romanian and has powers of representation to the extent that he/she is empowered to sign contracts in the name of the licensee and to represent the same before Romanian courts and State authorities.

Other amendments relate to sanctions relating to unlicensed gambling and marketing activities.

The new regulation is expected to come into force shortly after the end of the EC standstill period on February 12th, 2015.

by Denitza Dimitrova LL.B., LL.M., Mag.Jur

This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.

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