Articles

Romania Chapter in ICLG “Gambling 2016”

Published in “The International Comparative Legal Guide to: Gambling 2016“, 2nd edition, Global Legal Group

Note

*Authors’ disclaimer: this article was written based on the Romanian legislation in effect as of 7 October 2015.

1 Relevant Authorities and Legislation

1.1 Which entities regulate what type of gambling activity in your jurisdiction?

The National Gambling Office (hereinafter referred to as “the Office”), an entity under the Romanian Government, is the regulatory authority for the gambling industry. A supervisory committee (the “Committee”) has been set up within the Office to grant to gambling operators the licences/authorisations required by law and to issue certificates to the operators for the manufacturing of various gambling machines (either for own use or for placing them on the market), as well as to enforce gaming regulations and internal rules applicable for such operators. The Committee has two executive members (the President and the Vice-President of the Office) and seven non-executive members, appointed by the Prime Minister, and proposed by: the Minister of Information Society and Technology; the Minister of Internal Affairs; the President of the National Agency for Fiscal Administration; the President of the Anti-Money-Laundering Office; the President of the Competition Council; the General Director of the Romanian Bureau of Legal Metrology; and the Chief of the Prime Minister’s Chancellery.

The following games are currently identified as gambling products under Romanian legislation:

• a) lottery games – traditional/remote games (both are placed under the legal monopoly of the National Company “Loteria Romana – S.A”);
• b) betting – traditional/remote games, including those involving:
  • (i) mutual betting;
  • (ii) fixed-odds betting; and
  • (iii) betting exchange;
• c) gambling games characteristic of casinos – traditional games;
• d) gambling games characteristic of poker clubs – traditional games;
• e) slot machine-type games – traditional games, including the following:
  • (i) slot machines;
  • (ii) electronic devices offering limited-risk winnings; and
  • (iii) video-lotteries;
• f) bingo games played in gaming rooms – traditional games;
• g) bingo games organised via television networks – traditional games;
• h) casino-type games – remote games, includes all of the gambling games defined in subparagraphs (c) and (d) above;
• i) bingo and keno games – remote games;
• j) a tombola – defined as the activity of drawing numbers, letters or other symbols, regardless of the characteristics of the equipment used to make the draw (cups, drums, wheels or other similar equipment), whether or not organised with the players physically present, whereby the prizes are fixed and do not depend on the number or the price of the tickets sold, or of the stubs, tokens and other evidence of participation in the tombola;
• k) any other type of gambling games – including new games or combinations of games mentioned above; and
• l) temporary gambling games – the gambling games described in subparagraphs (c), (e) and (f) taking place in tourist resorts or on cruise ships, for which a gambling organiser has obtained an organiser’s licence and an operator’s authorisation for a period of three months with the possibility of an extension of a maximum three more months. This category also includes The Poker Festival – traditional game – a temporary event consisting of a poker tournament which takes place exclusively between participants in rooms (premises) within accommodation establishments.

1.2 Specify all legislation which impacts upon any gambling activity (including skill and social games), and specify in broad terms whether it permits or prohibits gambling.

The main Romanian legislation which has an impact upon the gambling activity comprises the following acts:

• (i) Government Emergency Ordinance no. 77/2009 on the organization and operation of gambling activities, as further amended and supplemented (“EGO 77/2009”).
• (ii) Draft secondary legislation (notified to the European Commission with standstill period ended on August 10, 2015) recently amended and pending approval from the Romanian Government (“Draft Secondary Legislation”).
• (iii) Government Emergency Ordinance no. 20/2013 on the organisation and functioning of the National Gambling Office and in regard to the modification and supplementation of the Government Emergency Ordinance No. 77/2009 on the organization and operation of gambling activities (“EGO 20/2013”).
• (iv) Law no. 571/2003 regarding the Fiscal Code, as further amended and supplemented (“Romanian Fiscal Code”).
• (v) Government Ordinance no. 92/2003 on the Fiscal Procedure Code (“Romanian Fiscal Procedure Code”).
• (vi) Law no. 656/2002 on the prevention and sanctioning of money laundering, as well as for setting up some measures for prevention and combating of terrorism financing acts, republished.

With regards to skill and social games, the Romanian legislation currently in force does not expressly regulate such games. However, given Romania’s definition of gambling activities, we may say that any game (including skill games or social games) that lacks any of the elements falling within the legal definition of gambling will not be deemed as gambling, and thus shall be permitted in our jurisdiction without authorisation. Therefore, any skill or social game that does not involve (i) material winnings, (ii) a participation cost, or (iii) the random selection of the results of the events to which the game relates, regardless of how these results are achieved, shall not be regarded as gambling activity.

In addition, according to the gambling law, the following types of games are not considered games of chance and do not require authorisation:

• a) tombolas organised in schools, kindergartens or other such establishments, as well as those organised by non-profit organisations or foundations, that have an entertainment purpose or non-profit nature for the organisers. A tombola is considered non-profit when the total amount of participation fees is equal to the total value of prizes awarded; the same principle also applies in the case of prizes in the form of goods, etc.;
• b) games of an entertainment nature, operated via any kind of machines, apparatus or devices of any kind, that do not involve winning based on random elements, but which are intended to test the participant’s strength, intelligence or dexterity;
• c) activities legally organised by various businesses in order to stimulate sales and which do not involve any participation fee or any additional expenditure for the participants, or any increase in the price of the product relative to its price before the promotion; and
• d) amusement or sporting games whereby players are required to demonstrate knowledge and skills, and which are not based predominantly on chance.

2 Application for a Licence and Licence Restrictions

2.1 Who can apply for a licence to supply gambling facilities?

According to the current Romanian gambling legislation, an economic operator applying for a licence and authorisation to organise gambling games can be either a Romanian legal person established under the Romanian law or a legal person duly established in a Member State of the European Union, the European Economic Area or in the Swiss Confederation, having “gambling and betting” activities as its main object of activity and the share capital subscribed and paid-in to the amount stipulated by the law.

2.2 Who or what entity must apply for a licence and which entities or persons, apart from an operator, need to hold a licence? Are personal and premises licences needed? Do key suppliers need authorisation?

Apart from the legal entities which may apply for a Class 1 licence to organise gambling activities, as indicated in our answer to question 2.1 above, the following economic operators that perform auxiliary activities in the field of remote games of chance in Romania, (other than the network providers and electronic communications services providers), are also obliged to obtain a licence (i.e., a Class 2 licence) from the Office in order to lawfully carry out their type of activities:

• a) operators who hold management and integration platforms specific to remote games of chance, as well as the operators of server storage centres (data centre);
• b) economic operators who carry out activities relating to the manufacturing, distribution, repair and maintenance of gaming equipment, as well as import, export, intra-Community acquisition and intra-Community delivery or other related activities involving gaming equipment or components;
• c) payment processors;
• d) companies which develop and/or distribute specialised software for games of chance, as well as companies that broadcast images of games of chance characteristic to casinos;
• e) affiliates;
• f) certifiers;
• g) auditors; and
• h) conformity assessment bodies.

2.3 What restrictions are placed upon any licensee?

This is not applicable.

2.4 What is the process of applying for a gambling licence?

For organising gambling activities in Romania, a licence must be obtained from the Office upon request from the applicant. The application file will then be put forward for the review and approval of the Commission who will issue a decision for granting the licence and authorisation. The licence to organise gambling games will be valid for 10 years from the date on which it is granted, except for temporary gambling games, for which the licence will be valid for three months (provided that the authorisation fee is paid). The ten-year licence is subject to the payment of annual fees ranging between approximately EUR 2,500 and EUR 120,000.

In addition, an authorisation must be obtained annually and is subject to the payment of fees up to EUR 180,000, or, for certain activities, a fee expressed as a percentage of the amounts collected from the respective activity.

Moreover, the organisers of gambling activities must create a security fund for each electronic machine, casino gambling table or location in order to cover risk of non-payment of their financial obligations to the Romanian State.

On top of all of the above, the organisers of gambling activity must pay some additional administrative fees and also have a subscribed and paid-up share capital ranging between approximately EUR 6,700 and EUR 450,000, depending on the type of activity for which the licence is requested.

Furthermore, the current gambling framework imposes a minimum number of game means, locations and technical equipment for which an authorisation may be requested.

Specific for remote gambling, the applicant must pay (i) a documentation analysis fee of 2,500 EUR, paid upon submission of the application for a remote gambling licence, together with the submission of the documents provided by the new legislation on gambling, and (ii) a licence issuance fee of EUR 8,500/year/licence.

In addition, the organisers of online gambling must have a bank account opened with a Romanian bank in which the operator must at all times hold (as guarantee) the equivalent of the players’ money. For the application process, the amount may be guaranteed with a bank guarantee letter.

Further to obtaining the right to operate, the organisers of gambling activities must also contribute to the newly created Fund for the prevention of addiction to gambling with an annual contribution of EUR 1,000 for land-based gambling and EUR 5,000 for organisers of online gambling.

2.5 Please give a summary of applicable time limits and revocation.

The licence to organise gambling games is valid for ten years, subject to the payment of annual fees. The Office may decide to revoke the licence to organise gambling games for cases such as: (i) failure to comply with the payment obligations to the general consolidated budget or payment of the respective obligations, in accordance with the legal provisions in force, more than 30 days from the date on which they become due in accordance with the law; (ii) the organiser no longer has the organising of gambling games as its main object of activity; (iii) after the approval issued by the police authorities for the legal representatives of the legal entity has been withdrawn, the latter keeps the respective position for more than 30 days from the date on which the withdrawal of the approval was communicated; (iv) a final judgment of conviction without rehabilitation was issued against the legal entity; (v) the legal representatives of the economic operator are in a situation of incompatibility for more than 30 days, calculated from the date on which the incompatibility occurred; (vi) any of the shareholders or legal representatives of the legal entity keep their position for more than 30 days, when a final judgment of conviction without rehabilitation was issued against the respective entity, in Romania or in a foreign state, for a crime stipulated by the Romanian gambling legislation or for any other crime committed with intent for which a minimum two-year prison sentence was applied; (vii) the organisation of fraudulent gambling games; (viii) the security fund was not created to the amount, format or by the deadline provided by law, (ix) where there are irregularities with regard to the way the winnings awarded have been recorded, withholding the related sums of money and not paying them, or paying them after a delay of more than 30 days, as well as with regard to failure to comply with any requirements for licensing and authorisation established by gambling legislation in force; and (x) it is found that gambling activities do not comply with the provisions of Law no. 656/2002 for the prevention and sanctioning of money laundering.

After the licence to organise gambling games has been revoked, a new application can be submitted after at least one year from the date on which the revocation decisions became irrevocable in the appeal system.

Moreover, the Office may decide to cancel the licence to organise gambling games or the authorisation to operate gambling games, as the case may be, if the Office finds that, on the date these documents were granted, the applicants provided incorrect or inaccurate information which, if known, would have led to the licence to organise gambling games or the authorisation to operate gambling games, as applicable, not being granted. In this situation, a new application for authorisation can be submitted after at least five years from the date on which the cancellation decision becomes final in the administrative appeal system or from the date on which the court judgment becomes final and irrevocable.

The Office may also decide to suspend or revoke the licence to organise gambling games, as the case may be, at the request of the National Tax Administration, the Fraud Investigations Directorate within the General Inspectorate of the Romanian Police, the Minister of Administration and Interior, or the National Office for the Prevention and Control of Money Laundering, due to failure to comply with the provisions of the legislation regarding the prevention and control of money laundering and financing of terrorist activities, determined by administrative documents that have remained final in the administrative appeal system, or by court judgments that are final and irrevocable.

2.6 By product, what are the key limits on providing services to customers?

One of the key limits is the prohibition for minors under 18 years old to take part in gambling activities.

In addition, the current Romanian legislation incriminates as a criminal offence the deed committed by an individual who participates as a player in a remote game of chance, while as a member of staff or part of the management of a legal entity that is a contractual party with the licensed gambling organiser on Romanian territory, regarding any activity connected or associated with that game of chance, or being an associate or shareholder of this legal entity.

2.7 What are the tax and other compulsory levies?

Gambling activities are generally subject to the following taxes and fees:

• An annual licensing fee and annual authorisation fee – as indicated in question 2.4 above.

Both the annual licensing fee and the annual authorisation fee need to be paid before commencing gambling activities in Romania.

• Corporate income tax.

Where applicable, the general corporate income tax rate is 16%, applied to the taxable profit (i.e., accounting profit adjusted with non-taxable revenues and non-deductible expenses). Tax payers carrying out activities in the nature of casinos or sports betting must pay as corporate income tax at least 5%, applied to the revenue derived from those activities.

• Income tax on players’ gains.

Generally, the tax on players’ revenue is still to be withheld by the organiser of the gambling activity; for online gambling, the tax must be declared and paid directly by players on an annual basis. Each online gambling organiser will need to keep a record of players’ earning revenues higher than a certain threshold, and communicate such to the tax authorities on a yearly basis. In addition, the organiser will have to annually communicate to the players the information referring to the revenue achieved within the respective fiscal year.

The annual authorisation tax for online gambling will be calculated as 16% of the gambling gross revenues; whereas the annual authorisation tax for offline betting will be calculated as 16% of the gross revenue earned from gambling, but not less than EUR 90,000.

The value of the licensing and authorisation fees, as well as the minimum level of the security funds, are established in Euros for all gambling products and activities.

The law also regulates other special taxes, such as: (i) 3% applied on the video lottery operators’ revenues; (ii) a vice tax for slot machines in amount of EUR 400/authorised post/year; and (iii) administrative taxes for obtaining the licence for remote games, namely (a) a tax of EUR 2,500 for analysing the file, and (b) a tax of EUR 8,500 a year for each licence issued.

2.8 What are the broad social responsibility requirements?

The gambling regulatory framework is focused on protecting minors and preventing their access to gambling, preventing fraud, money laundering and financing of terrorist actions, as well as ensuring the integrity and transparency of gambling activities, and maintaining a fair game system which is constantly supervised.

2.9 How do any AML financial services regulations or payment restrictions restrict or impact on entities supplying gambling?

Payment instruments used in the financial-banking system (payment orders, bills of exchange, promissory notes, bank transfers, payingin slips, etc.) and money, including bank cards, are accepted forms of payment that contribute to the operation of gambling games. For online gambling, payment instruments and bank cards must operated by banks that are located in Romania.

In addition, all the payments to players should be made only through a payment processor which is licensed by the Office. It remains to be seen how payment processors will be defined in the secondary legislation, yet to be enacted.

3 The Restrictions on Online Supply/Technology Support/Machines

3.1 Does the law restrict, permit or prohibit certain online activity and, if so, how?

According to the Romanian gambling legislation, the permitted online products defined as “remote products” (in Romanian “la distanta”), are as follows:

• a. lottery games are under the legal monopoly of, and may be carried out only by, the National Company Loteria Romana;
• b. casino-type games defined as gambling activities characteristic to games played in casinos and poker clubs, played entirely without the players being physically present, organised by the same operator, on the same gaming platform, using a single internet domain, and which are organised and transmitted via any communication system (internet, fixed or mobile telephone system or any other transmission system);
• c. fixed betting;
• d. mutual betting;
• e. betting exchange;
• f. bingo and keno games;
• g. tombola defined as the activity of drawing numbers, letters or other symbols, regardless of the characteristics of the equipment used to make the draw (cups, drums, wheels or other similar equipment), organised without the players being physically present, whereby the prizes are fixed and do not depend on the number or the price of the tickets sold, or of the stubs, tokens and other evidence of participation in the tombola. The winners – a predetermined number of participants – will be established by means of a random draw of at least 50% of the total value of the stakes paid to participate in the game in compliance with rules posted in advance and approved by the NOG’s Supervisory Committee. The prizes may only be issued in kind and must have a minimum value; and
• h. any other type of gambling games, such as (i) new games, or (ii) combinations of games regulated by the gambling legislation and for which an organiser obtains a licence and an authorisation from the NOG’s Supervisory Committee.

3.2 What other restrictions have an impact on online supplies?

In order to protect consumers from unlicensed operators, the Office has the responsibility and obligation to identify the websites that enable access to online gambling games which do not hold a licence to organise/an authorisation to operate gambling games in accordance with Romanian legislation. Moreover, the Office will identify the websites used for carrying out marketing, advertising and publicity activities, or any other promotional activities relating to the online gambling games or activities and services related to these, which are not authorised in accordance with Romanian legislation. In such cases, the Office shall immediately communicate all information regarding any unauthorised activities identified to the internet providers, so that access to these websites can be blocked, and in addition shall also communicate the information about these unauthorised websites to payment institutions and services so that any payments to and from these unauthorised websites can be blocked.

The operators carrying out unauthorised online gambling activities will be literally blacklisted, along with their unlawful websites.

3.3 What terminal/machine-based gaming is permitted and where?

The Romanian gambling legislation in force covers terminal/machine-based gaming as follows:

• Slot-machine-type games can be grouped into three categories:
  • (i) slot-machine-type games with unlimited stakes and winnings;
  • (ii) slot-machine-type games played via electronic devices offering limited-risk winnings (also known as AWP – Amusement with Price); and
  • (iii) video lottery or VLT gaming activity, carried out via specialised terminals, which attributes winnings randomly, the result of the participation to the game being relevant to the player via the video lottery terminal, the dexterity or the ability of the player not having any influence/relevance in obtaining the winnings. The video lottery game is being performed via an unitary network of terminals with closed circuit that functions only when connected to the central national level system via the internet.

For slot machine-type games, the minimum number of pieces of gaming equipment that may be operated by the same gambling operator will be 75 slot machines (electronic devices with unlimited stakes and winnings and/or electronic devices offering limited-risk winnings, including gaming stations or terminals constituted as a single entity), which may be operated in the same or different premises.

According to the provisions of the primary law in force, the number of slot machines for each location is as follows:

 

• (i) a minimum of 20 slot machines for gambling halls located in Bucharest, or a minimum of 12 slot machines for those in locations other than Bucharest;
• (ii) a maximum of three electronic devices offering limitedrisk winnings for spaces in which other business activities take place, with only a single organiser placing, organising and operating the gaming equipment in question at the premises;
• (iii) a maximum of five slot machines for premises authorised for betting activities;
• (iv) a minimum of 50 pieces of gaming equipment interconnected within the jackpot gaming system where the gaming equipment is operated in at least two premises;
• (v) a minimum of two gaming terminals (stations) for slot machine-type games that are built as a single entity and operated from multiple gaming terminals (stations); and
• (vi) a minimum of two slot machines for premises authorised for temporary games.
• Betting activities:
  For betting activity, the minimum number of locations in which the activity can be carried out by the same economic operator is 15; whereas the minimum number of specialised terminals that an economic operator may have is 30.
  Note: According to the Draft Secondary Legislation, depending on their operating method, betting terminals can be grouped in two categories: (i) dependent terminals, which are operated by the organiser’s personnel working within the betting agency; and (ii) autonomous terminals, which are operated directly by the game participants. A betting agency is a specialised location used for betting activities – traditional games – such as mutual betting, fixed-odds betting or betting exchange, in which at least one dependent betting terminal is operated.
  These games of chance will be operated directly within the agency via dependent or autonomous betting terminals, or at premises specialised in gambling activities via autonomous terminals, providing that the activity is centralised and the results are reported through the respective work point or through a work point or betting agency belonging to the organiser, designated for collection operations, if the results homologation and winnings validation operations cannot be performed directly by the player by operating the terminal.

4 Enforcement and Liability

4.1 Who is liable for breaches of the relevant gambling legislation?

Carrying out any of the activities in the gambling sector without a licence or authorisation is considered a criminal offence and is punished with a prison sentence of between one month and one year or a criminal fine. According to the provisions of the Romanian criminal code, the sanction applied to a legal entity for committing such a crime is a fine of between approximately EUR 2,250 and EUR 22,500, as well as the additional sanction of dissolving the legal entity. Additional measures, such as the confiscation of the revenues arising from the illicit activity, may be imposed.

Based on the provisions of the Romanian Criminal Code, when the elements of a criminal offence are met, the criminal liability arises. In order for a criminal offence to exist, the deed provided for by the criminal law must be committed with guilt, unjustifiable (e.g. not in self-defence) and imputable to the person who committed it (e.g. not under exterior constraints). The criminal infringement, provided for in Romanian gambling legislation, is presumed to have been committed with intentional guilt, as there can be no actions committed by fault under EGO 77/2009. Furthermore, the persons having committed the criminal offences may be either authors or co-authors, or even instigators and accomplices, provided that all elements of the criminal offence are fulfilled for each one of them.

In addition, carrying out any of the activities related to online gambling activities in Romania (namely the activities of the operators which offer management and hosting facilities on their gambling platform, payment processors, manufacturers and distributors of software, affiliates, certifiers and auditors to the gambling sector) without a Class 2 licence is considered a minor offence and is sanctioned with a fine of between RON 50,000 and RON 100,000, and confiscation of the amounts derived from the illicit activity.

In what concerns the players, participation in remote gambling activities not authorised by the Office by natural persons – in Romanian territory – represents a minor offence. The sanction for this offence is a fine of between RON 5,000 and RON 10,000.

4.2 What is the approach of authorities to unregulated supplies?

During the recent years, less than 30 civil and criminal cases pertaining to gambling activities have been finalised (in some of the cases, with a court’s decision for conviction to imprisonment) or are currently pending before the Romanian courts. In addition, the first sanction for TV advertising was imposed in November 2013 by the National Audiovisual Council with respect to two adverts for online poker. It was decided that the online operators were promoting gambling activities not authorised in Romania.

The regulator has already blacklisted 48 operators (the full list is available at http://www.onjn.gov.ro/home/lista-neagra) and has instructed all internet service providers to block access to their websites, and redirect all traffic to an IP address that is publicly known to belong to the Special Telecommunications Service (the central specialised structure which organises and coordinates the activities in the special telecommunications field for the Romanian public authorities, having military structure and being part of the national defence system).

4.3 Do other non-national laws impact upon enforcement?

Under Directive 98/34/EC, when laying down a procedure for the provision of information in the field of technical standards and regulations, Member States (thus, including the Romanian State) must notify the European Commission and other Member States of the draft regulations regarding products and Information Society services (such as online gaming and betting) before adopting them.

4.4 Are gambling debts enforceable in your jurisdiction?

Only debts arising from authorised gambling games are enforceable.

5 Anticipated Reforms

5.1 What (if any) intended changes to the gambling legislation/regulations are being discussed currently?

Draft secondary legislation, notified to the European Commission with a standstill period that ended on 10 August 2015 and recently amended, is pending approval from the Romanian Government (“Draft Secondary Legislation”). In addition, a technical order issued by the President of the Office was recently notified to the EU Commission on 26 August 2015, and is currently under a standstill period which is due to expire on the 26 November 2015.