Romania issues draft Emergency Ordinance that could significantly impact gambling industry

As part of Romania’s new focus on safeguarding vulnerable gamblers and increasing taxes on gambling companies, the government has published a draft Emergency Ordinance (GEO) on the gambling industry, which represents one of the most significant challenges to the sector since 2009.

The GEO, published on 3 October 2023, includes the following measures:

• The right to organise and operate gambling will be granted only to companies registered in Romania or to legal entities legally incorporated in EU/EEA or in the Swiss Confederation, which have registered permanent establishments in Romania;
• The joint operation of gambling can only be carried out between gambling operators (i.e. Class I licence holders) or legal persons under joint control with the same licensed operators;
• Outdoor gambling advertisements exceeding 25 square metres of panel are prohibited;
• A legal entity (i.e. a Romanian legal entity or one with a permanent establishment in Romania) that organises and operates gambling for a period of three months in tourist resorts may acquire the status of temporary operator of casino gambling;
• The annual fee known in the industry as the “responsible gambling tax” has been increased. For example, Class I licence holders will pay EUR 500,000 (instead of the current EUR 5,000) and Class II licence holders will pay EUR 15,000 (instead of the current EUR 1,000);
• 70% of the income from the contributions of licensed gambling operators collected by the National Office for Gambling (NOG) will be transferred to the state budget and the remaining 30% will be used to fund the NOG’s activities;
• Gambling operators who are required to pay the monthly licensing fee are entitled to a 10% bonus if they pay for the entire year in advance (i.e. by the 25th of the month following the month when the documentation was approved);
• In order to implement this new GEO, licensed economic operators must submit, within 12 months from the entry into force of the GEO, to the NOG, proof of operation through a company registered in Romania or through a permanent establishment. As an exception, they are entitled, within a maximum of 12 months from the entry into force of the GEO:
  • to request approval to transfer the licence held in Romania and the authorisation to operate gambling for the remaining period of its validity, together with all the legal obligations related to them, to an existing or newly registered company on the territory of Romania or to a legal entity that has registered a permanent establishment; or
  • to register the permanent establishment in Romania and request the NOG to allocate the licence held to the permanent establishment, for the remaining period of its validity, as well as the authorisation to operate gambling, together with all legal obligations related to them; or
  • to obtain a new licence under the terms of the GEO;
• There will be a database of self-excluded and ineligible persons created, managed and continuously updated by the NOG, which gambling organisers will have access to in real time;
• Gambling operators must transmit to the NOG all requests for self-exclusion received within two working days from the date of registration, and the lists of persons who, by internal decisions of the said operators, have been declared undesirable, together with the reasons, within five working days;
• The staff of the NOG and the members of the Supervisory Committee of the NOG may not participate in gambling operated in Romania by private legal entities;
• In order to cover the risk of non-payment of the obligations towards the general consolidated budget, gambling operators/authorised economic operators may now set up the guarantee fund required by GEO 77/2009 for the territorial tax authority, in addition to the existing means (e.g., a bank guarantee letter), also through a guarantee insurance policy issued by an insurance company established in EU/EEA or in the Swiss Confederation;
• The amount and the basis of the calculation for the establishment of the guarantee levels to cover risk of default will be amended. For example, for the year 2024, the level of guarantees to cover the risk of non-payment for traditional gambling activity, with the exception of casinos, will be calculated on the basis of the operator's level of revenue. From 1 January 2025, the guarantee will be EUR 1 million, regardless of the operator's level of revenue.
• The annual fees for gambling activities will be amended. For example, the annual gambling licence fees for remote gambling (i.e. Class I operators) will be EUR 300,000 (currently calculated on the basis of turnover) and EUR 20,000 for Class II holders (increased from EUR 9,500). Also, the fees for the annual gambling operating licence will be modified. For example, for remote gambling (i.e. Class I operators), the fees will be a minimum of EUR 400,000 (instead of the current minimum ceiling of  EUR 120,000).
• Special taxes will be modified. For example, the documentation examination fee is increased to EUR 3,500 (from EUR 3,000) and the licence fee increased to EUR 10,500 (from EUR 9,500).

Apart from this current GEO draft, a substantial number of bills and legislative proposals have reached the Chamber of Deputies that could influence gambling regulations. These drafts have been officially recorded on the Chamber's website for 2023.

Two pieces of draft legislation, PL-x No 166/2023 and PL-x No 495/2023, have already been adopted by the Senate and have received favourable opinions from the specialised committees (i.e. the Committee on Human Rights and Cults and National Minorities).

In its current form as adopted by the Senate, PL-x No 166/2023 provides that point c) of Article 15 para. (2) of GEO 77/2009 will be amended as follows:

"(c) the proposed space is not located on the premises of or within 300 metres walking distance of educational establishments and institutions, including their campuses, children's playgrounds defined as any enclosed or open-air space intended for use by children, credit or non-banking financial institutions, cultural, health, social, religious and similar establishments or within the perimeter of the premises designated for their use; it is forbidden to conduct gambling in places which, due to their location, would obstruct traffic or limit free access to other places of interest (entrances to buildings, pedestrian walkways, public transport stops, etc.).); exceptionally, gambling is allowed in cinemas, concert halls, sports halls, houses of culture and the like, provided that the following conditions are met: separate access for gamblers, no disturbance of other activities and total restriction of access for minors".

Para. (9) of Article 20 of GEO 77/2009 will be introduced as follows:

"(9) It is forbidden to conduct gambling through slot-machine means of play by legal entities which at the date of entry into force of this law do not have authorised gambling and betting activities, CAEN 9200 class, at their registered or secondary offices."

According to the draft law, a legal entity that, at the date of the draft law’s entry into force, has at its registered office or secondary office of authorised gambling and betting activities, a class CAEN 9200, the future law will apply within one year from its date of publication in the Official Gazette of Romania, Part I, but only for those registered offices or secondary offices.

The other draft law, PL-x No 495/2023, brings a wide range of amendments and additions to GEO 77/2009. Initiated by the President of the Chamber of Deputies and 133 other MPs, this draft law provides drastic limitations for the slot-machine industry, including requirements that betting shops can only be located on the outskirts of towns, they can only exist in towns with more than 5,000 inhabitants and in cities there can only be one betting shop for every 20,000 inhabitants.

Although the Romanian Prime Minister signed a negative government position on the initiative when the bill was tabled in parliament, the PM has recently declared support for the bill, saying it will "soon pass the Chamber of Deputies".

Important legislative changes introduced by PL-x No 495/2023 include the following:

The introduction of para. (1^1) of Art. 12 of GEO 77/2009 to stipulate that:

"(1^1) The gambling licence shall be granted according to the number of inhabitants, proven by a certificate issued by the local public administration authority, so that there is at most one gambling establishment per 20,000 inhabitants."

The amendment of point (iii) of lit. B of para. (1) of Art. 15 of GEO 77/2009 with the following text:

"(iii) that the organiser's central computer system has a system for registering and identifying participants in the game, as well as a system for keeping and transmitting in real time to a mirrored server and a backup server, located on the territory of Romania and made available free of charge to the NOG, the simultaneous gambling sessions, each participation fee placed by each player, as well as the winnings paid to each player. The central computer system must ensure the automatic recording, in real time, of all transactions, receipts and payments made in relation to the players, as well as other financial operations, in the security server and transmit centralised reports periodically, in the mirror server, at the disposal of the NOG, in accordance with the procedure regulated by the implementing rules of this Emergency Ordinance."

Article 15 is further amended by adding two new points to the paragraph. 2), respectively b^1) and b^2), as follows:

"(b1) the proposed space is located no more than 50 metres from the territorial boundary of the city/municipality or commune, including the municipality of Bucharest, as provided for in Article 95 of Government Emergency Ordinance No. 57/2019 on the Administrative Code, as amended;

b2) they hold a site permit issued by the local council of the competent administrative-territorial unit. The content of the permit and the procedure for obtaining it shall be laid down in the methodological rules implementing this Emergency Ordinance."

Lastly, also in Art. 15, after para. (5), two new paragraphs are inserted, para. (5^1) and (5^2), with the following content:

"(5^1) in localities with less than 5,000 inhabitants, no gambling licence may be granted.

(5^2) The provisions of Article 15 (2) (b1) and (b2) do not apply to premises where traditional and remote lottery, chance, chance plus and super chance, express and lotto games are conducted, as provided for in Article 1 (21)."

The Senate rejected three other initiatives: PL-x no. 197/2023, PL-x no. 381/2023 and PL-x no. 395/2023. Because they were promoted by MPs who are not part of the governing coalition, parliament is unlikely to adopt them.

In parallel, the Senate has another series of legislative proposals in the legislative process registered on their website in 2023, which include:

L401/2023: a legislative proposal that has received favourable opinions from the Economic and Social Council, the Legislative Council (with amendments) and the Committee on Culture and Media.

According to this legislative proposal, the following paragraph will be inserted in Article 1^2 of GEO 77/2009 with the following content:

"(1^1) The advertising of games of chance, regulated under Art. 10 para. (1) of the Government Emergency Ordinance no.77/2009 on the organisation and operation of gambling, approved with amendments and additions by Law no.246/2010, as amended, shall be accompanied by the alternative presence of one of the following messages:

1. Family, social life, welfare: are you ready to risk it all?
2. Gambling involves risks: debt, addiction, loneliness."

The legislative proposal also aims to introduce an Article 13^2 to Law 148/2000 on advertising, with an additional set of requirements for gambling advertising.

L406/2023: a legislative proposal that has received favourable opinions from the Economic and Social Council and the Legislative Council (with amendments from the latter).

According to the text, para. (6) of Art. 21 of GEO 77/2009 will be amended as follows:

"(6) Partners, significant shareholders, members of the management team and of the controlling body of the licensed gambling organiser, the owner or tenant of an establishment where gambling is carried out, employees of the gambling operator may not participate in gambling organised by the legal person with which they are in an interdependent relationship. The staff of the NOG and the members of the Supervisory Committee of the NOG may not participate in games of chance operated in Romania by private legal persons."

L412/2023: another legislative proposal that has received favourable opinions from the Legislative Council and the representatives of non-governmental civil society associations and foundations in the Economic and Social Council, but has also received negative opinions from the Committee on Public Administration and from the representatives of the employers and trade union in the Economic and Social Council.

According to the text as submitted by the initiators, para. (2) of Article 1 of GEO 77/2009 will be amended as follows:

"(2) The State may grant the right to organise and operate gambling activities under the terms of this Emergency Ordinance, on the basis of a gambling licence for each type of activity, as classified by this Emergency Ordinance, and a gambling operating licence, nominal and time-limited documents, which will be directly operated by the licence holder, with the mention that casino type games (traditional game) and slot machine type games can only take place in locations located on the territory of tourist resorts of national or local interest, respectively, listed in Annex no. 2 of Government Decision No 377/2020."

B517/2023: a recent legislative proposal that was registered in the Senate on 19 September 2023. As of the publication of this article, no opinion has been issued on this legislative proposal.

According to the explanatory memorandum:

"Recently, a possible conflict of interest regarding gambling in Romania has been publicised. A representative of the Ministry of Finance, who is a member of the Supervisory Committee of the National Office for Gambling (NOG), won an amount of approximately EUR 100,000 in bets played at the same gambling operator, raising questions about the independence and objectivity of the members of the Supervisory Committee. (...) This regulation is intended to prevent any conflict of interest, giving additional guarantees for the respect of integrity standards by gambling operators. In addition, this regulation will help to strengthen public confidence in the State authorities. In these circumstances, we believe that our proposal for a stricter regulation of the relationship between those involved in the authorisation, supervision and control of gambling and gambling operators in Romania is an imperative necessity".

According to the text as submitted by the initiators, para. (6) of Art. 21 of GEO 77/2009 will be amended as follows:

"(6) Partners, significant shareholders, members of the management team and of the controlling body of the licensed gambling organiser, the owner or tenant of an establishment where gambling is carried out, employees of the gambling operator may not participate in gambling organised by the legal person with which they are in an interdependent relationship. The staff of the NOG and the members of the Supervisory Committee of the NOG may not participate in games of chance operated in Romania by private legal persons."

B519/2023, also registered in the Senate on 19 September 2023, has similar subject matter to the proposal registered under L401/2023. It remains to be seen whether these two bills will receive the "yes" vote of Senators.

Although the course of these proposals registered in the Senate looks promising, neither B519/2023 nor L401/2023 were initiated by MPs who are members of the governing coalition. Hence, the likelihood that they will be implemented as laws remains low.

For more information on this GEO, the draft legislation before parliament and Romania’s gaming sector, contact you CMS client partner or these local CMS experts: Cristina Popescu and Sorin Predescu.