2020 Romanian Gaming Law

After for years from the reformation of the Romanian gambling framework, the local market can be characterized as being relatively mature in all its relevant sectors. At the moment there are 22 operators licensed for online gambling and more than 300 B2B licensed providers.

Regarding land-based gambling, the most developed areas remain those of slot-machine gaming (more than 270 licensed operators) and fixed-odds betting (27 licensed operators).

From a regulatory perspective, the sector-specific instructions that must be enacted by the gambling regulator for the application of the new AML national legislation, which transposes the 4th AML Directive, are likely to have an impact in the near future.

In the past year the Romanian gambling market has been affected by the introduction and increase of certain taxes:

• on a monthly bases, the online operators have to pay a 2% tax on players’ deposits has been introduced in relation to online gambling;
• the authorization tax for slot-machine gaming (the most developed land-based sector) has been increased from EUR2,600/machine/year to EUR3,600/machine/year.

Jurisdictional Overview

Online. The following sectors are allowed, this means that the respective categories of games of chance are allowed subject to obtain the necessary license and authorization.

• Betting activities are allowed by the Romanian law, and the gambling legislation expressly regulates three types of online betting: fixed-odds betting, exchange betting, and mutual betting;
• Online bingo is allowed, and the online bingo license covers also keno games;
• Online casino is allowed, and the casino license covers also the online poker and online slot-machine gaming;
• Online lottery games are restricted since this category falls under the monopoly of the Romanian National Lottery;
• Fantasy sports are not expressly regulated under the Romanian gambling legislation. If this activity does not fulfill the mandatory conditions of gambling, then fantasy sports should fall outside of the gambling legal framework;
• Social gaming is not expressly regulated under the Romanian gambling legislation. If this activity does not fulfill the mandatory conditions of gambling, then social gaming should fall outside of the gambling legal framework;
• Online poker is permitted and is included in the category of online casino games;
• Tombola/raffles games are permitted under the Romanian legislation as an express category of online gambling;
• Any other types of games of chance. In this generic category are included all products that fulfill the cumulative conditions of games of chance and is not expressly defined by the gambling regulation. The legal regime of such unregulated products will be established by the local regulator based on the game rules and description presented by the organizer.

Land-Based. The following sectors are marked as allowed, this means that the respective categories of games of chance are allowed and subject to obtain the necessary license and authorization/s.

• Betting activities are allowed under Romanian law, and the gambling legislation expressly regulates three types of land-based betting: fixed-odds betting, exchange betting, and mutual betting;
• Poker is allowed under Romanian law, and the gambling legislation expressly regulates land-based poker clubs;
• Bingo is allowed, with the Romanian legislation regulating two types of land-based bingo games: bingo performed in specialized bingo halls, and bingo organized via television networks;
• The Casino is allowed in Romania, with the gambling legislation regulating in detail the regime of the land-based casino license;
• Gaming machines are allowed in Romania, with the legislation regulating three categories of slot-machine gaming: slot-machines with unlimited stakes and winnings; electronic devices awarding winnings with limited risk (AWPs); and video-lottery machines (VLT).
• Land-based lottery games are restricted since this category falls under the monopoly of the Romanian National Lottery;
• Tombola/raffles games are allowed under the Romanian legislation as an express category of land-based gambling;
• Temporary games.  Land-based casino games, slot machine games with unlimited stakes and winnings, and land-based bingo that takes place in tourist resorts or on leisure crafts qualify as temporary games of chance and are subject to a special temporary license and authorization, which is valid for a period of three months. A distinct category of temporary games is represented by poker festivals, which are defined by the law as temporary events organized in tourist resorts or other locations, and consist of poker tournaments performed exclusively between the participants.

Any other types of games of chance, namely new games of chance or combinations of games

This generic category includes any product that fulfills the cumulative conditions of games of chance and is not expressly defined by the gambling regulation. The legal regime of such unregulated products will be established by the local regulator based on the game rules and description presented by the organizer.

The Legislative Framework

The conditions under which the organization and operation of games of chance are permitted in Romania are outlined in the following normative acts:

• Government Emergency Ordinance No. 77/2009 on the organization and operation of games of chance (GEO 77/2009);
• Government Decision No. 111/2016 for the approval of the Methodological Norms for the implementation of Government Emergency Ordinance No. 77/2009 on the organization and operation of games of chance (GD 111/2016);
• Government Emergency Ordinance No. 20/2013 on the establishment, organization, and functioning of the National Gambling Office;
• Government Decision No. 298/2013 on the organization and functioning of the National Gambling Office.

Gambling activities are also regulated by means of instructions, orders or decisions issued by the National Gambling Office in relation to various aspects of gambling activity, such as the certification of online gambling platforms, interconnection protocols and reporting requirements for slot-machines, reporting of the revenues obtained by both land-based and online operators, etc.

Moreover, certain specific requirements in the field of anti-money laundering and the prevention of terrorism are also applicable to gambling activities and are generally contained in Law. 129/2019, enacted in July 2019, which implements the 4th AML Directive.

The Gambling is defined by GEO 77/2009 as an activity that has to meet the following cumulative characteristics:

• participation fee;
• random selection of the results on which the game is based;
• monetary winnings;
• the public offering of the respective game by the organizer to the participants.

Land-based gambling activities are defined as all games of chance that fulfill the legal conditions related to a game of chance, are performed through gaming means installed in Romania, and are not transmitted or performed through any kind of communication system (internet, landline or mobile telephone or any other transmission systems).

Online gambling activities are defined as all games of chance that fulfill the legal conditions applicable for a game of chance and are performed through communication systems of any kind (internet, landline or mobile telephone or any other transmission system).

Gambling Offenses

Failure to observe the legal requirements in the field of gambling could lead to civil, administrative or criminal sanctions.

Administrative liability may be triggered when:

• the organizer of land-based gambling activities allows individuals to participate in games of chance without having valid identity documents in their possession;
• the gambling organizer, without distinction between land-based and online activities, does not pay the participants the winnings obtained from gambling in three business days, provided that the conditions imposed on the participant in relation to the proof of winnings are fulfilled;
• the gambling organizer, without distinction between land-based and online activities, fails to notify the National Gambling Office, within a certain deadline, about any modifications that have occurred to the data on the basis of which the license and the authorization were granted.

Failure of the gambling organizer to comply with the legal requirements can also lead to the suspension or revocation of the license by the National Gambling Office.

Operating games of chance without proper license and authorization constitutes a criminal offense. Criminal liability could be triggered when the following gaming products are offered to players:

• fraudulent games of chance;
• games of chance through radio channels or through other assimilated transmission means;
• games of chance based on the results of clandestine competitions (such as dog fighting, which is expressly forbidden by the Romanian legislation, illegal car racing, etc);
• clandestine games of chance, where the results of the game are influenced by the skill of the person handling the game for the purpose of obtaining revenues, rather than being random;
• competition games with winnings of any type through telephone lines or other communication systems, television or radio where the granting of prizes is based solely on the accuracy of the answers provided to general questions, which involve a participation fee.

According to GEO 77/2009, any individual who participates in online gambling operated by an unlicensed or unauthorized operator in Romania shall face administrative fines ranging from RON5,000 (approx. EUR1,000) to RON10,000 (approx. EUR2,000), thus triggering the administrative liability of the player (but not criminal liability).

Operating games of chance without license and authorization constitutes a criminal offense and shall be punished with imprisonment from one month to one year, or with a fine. Additional sanctions applicable to the criminal offense of unlicensed gambling are that the gambling operator company would be dissolved and the amounts derived from the unlawful activity would be confiscated.

Pending Legislation

There are some relevant changes in the gambling legislation pending enactment, as follows:

• the draft order of the National Gambling Office regulating the new set of certification requirements for land-based slot-machine gaming;
• the order/instructions of the National Gambling Office with respect to the application of the new AML regime in the gambling sector;
• a legislative proposal meant to introduce more restrictions in terms of gambling advertising and new obligations in terms of responsible gambling.

Licensing and Regulatory Framework

The National Gambling Office (NOG) is the public authority competent to supervise the Romanian gambling market. The NOG is a specialized body of the central public administration subordinated to the Romanian Government, which has enforcement prerogatives and is also competent to grant licenses and authorizations.

The legal framework for gambling was created in 2015-2016. The NOG has issued licenses and authorizations by applying the new legislation rather literally, so one may argue that the authority’s approach in terms of regulation is rather prescriptive.

Romanian legislation regulates the following types of licenses:

• Class 1 license and related authorization/s – these are the permits that must be obtained by a B2C operator in order to offer gambling services on the Romanian market;
• Class 2 license – this license is required for B2B providers specialized in the gambling industry which are supplying products/services to B2C operators licensed in Romania. The categories of B2B suppliers for which the NOG has issued Class 2 licenses are as follows:
  • • manufacturers, distributors and other entities performing activities with gaming means or gaming components;
    • software providers;
    • providers of platform management and hosting services;
    • providers of live casino streaming services;
    • certification laboratories, auditors and conformity assessment bodies;
    • payment processors; and
    • marketing affiliates.
• Class 3 license – this license is granted by the benefit of the law to the Romanian National Lottery, which has a legal monopoly over the organization of land-based and online lottery games.

Class 1 and Class 2 licenses are readily available, provided that the respective B2C or B2B operators meet the applicable licensing requirements. The Class 3 license is granted only to the Romanian National Lottery.

The Class 1 license is valid for ten years and may be renewed for identical periods of time, while the authorization is generally granted for one year and must be renewed/prolonged on an annual basis.

The Class 2 license is also valid for ten years, subject to the payment of the annual license fee within the applicable deadline.

Application Requirements

Only operators based in the EU, EEA or Swiss Confederation may apply for a license and authorization.

Licensing Process for Land-Based Gambling

The gambling operator that wants to offer land-based gambling activities must obtain a Class 1 license and one or several authorizations. While the licensing procedure is not product-specific, the authorization must be obtained for each type of gambling activity intended to be performed.

To obtain the license, the gambling operator must submit an application request along with several corporate and operational documents related to the legal entity itself, as well as its directors and shareholders. Such documentation includes criminal record checks for each director and shareholder and affidavits given by the director/s disclosing, among other aspects, the ultimate beneficial owner of the company (25% shareholding being the relevant threshold for the ultimate beneficial owner).

The authorization can be obtained by an operator that has previously been granted a Class 1 license. However, the regulation allows an operator to submit license and authorization applications at the same time, provided that the necessary conditions are fulfilled for each of these. The conditions for obtaining the authorization vary in accordance with the type of gambling activity sought to be performed, and refer to operational aspects (such as the game rules for each game offered to the players and the configuration of the gambling premises) or technical requirements (such as certification of the gambling equipment or development of the reporting solution to the NOG of the aggregated financial and operational data).

Licensing Process for Online Gambling

The licensing and authorization requirements for land-based gambling also apply to online activities; the observations mentioned above regarding the documentation for directors and shareholders are also applicable in connection with the online license.

While authorization must be obtained for each type of activity (or machine, as the case may be) in land-based gambling, in the case of online gambling, only one authorization is to be obtained for all activities conducted on the same gambling platform (which can be connected to one or several internet domain names).

Other particular conditions applicable for an operator applying for a license and authorization to perform online gambling relate mainly to technical and operational requirements.

The applicant is required to have its entire IT system audited by a specialized testing laboratory that holds a Class 2 license, while the gambling software must be certified by a Class 2 licensed certifier, as must the random number generator and return-to-player percentage for each game. In terms of the necessary infrastructure, if the main gaming server is not located in Romania, the operator must establish safe and mirror servers in Romania in order for the NOG to be able to monitor the activity related to the Romanian market and verify any incidents that occur. In brief, while the safe server stores rough replica data of the information from the gaming server, the mirror server must contain centralized reports summarising the daily activity and financial results obtained by the operator.

Application Timing

In accordance with the regulation, the complete licensing documentation must be submitted with the regulator at least nine business days before the NOG Supervisory Committee’s meeting. The Supervisory Committee is the body within the NOG that approves license applications during its periodical meetings; such meetings are generally organized twice a month.

Pursuant to GEO 77/2009, license applications shall be resolved within 30 days from the date of submission of the complete documentation. However, considering that the NOG has the competence to request any additional documents or information deemed necessary, in practice the licensing and authorization procedure generally exceeds the initial 30-day timeframe provided by the law.

Application Fees

The regulation does not impose any fees in relation to the application for a land-based license and/or authorization.

However, for an online license, the applicant is required to pay an administrative fee of EUR2,500 for the review of the licensing documentation. Online operators are also required to pay a EUR8,500 fee for the issuance of the license.

Ongoing Annual Fees

Annual Fees for Land-Based Gambling. The licensed operators are required to pay an annual license tax in the form of a flat-fee for a specific amount, depending on the type of land-based games operated. The license tax may range from EUR5,000/year for tombola or poker clubs, to EUR95,000/year for land-based casinos. Land-based operators must also pay an annual authorization tax, which is calculated by reference to the following criteria:

• operator’s revenue: in the case of betting activities, bingo broadcast on television and tombola/raffles, the authorization tax represents 16% of the operator’s revenue, but can be no less than a specific amount varying depending on the type of game (EUR90,000 for betting; EUR115,000 for bingo on television);
• number of locations/gaming means: land-based casinos incur an authorization tax of EUR60,000/table (for Bucharest) or EUR30,000/table (for outside of Bucharest), and each slot-machine with unlimited winnings requires an authorization tax of EUR3,600; for bingo performed in gaming halls, the operator is bound to pay an authorization tax of EUR7,000/location + 3% of the value of the printed cards mandatorily purchased from the Romanian National Printing House.

The legislation also imposes certain special taxes for the following categories of land-based gambling:

• entry fee for casinos (RON50 – approx. EUR10) and poker clubs (RON30 – approx. EUR7); and
• vice tax for unlimited winnings slot-machines and video-lottery machines of EUR 400/post(terminal)/year.

As a separate payment obligation, organizers of land-based games of chance are required to pay a responsible gambling contribution of EUR1,000/year.

Annual Fees for Online Gambling. An online gambling operator must pay an annual license tax calculated by reference to the operator’s turnover, ranging from EUR6,000/year (for an annual turnover of less than EUR500,000) to EUR120,000/year (for a turnover exceeding EUR10 million). The authorization tax for online gambling is also paid on an annual basis and amounts to 16% of the income obtained from gambling activities (GGR), but can not be less than EUR100,000/year.

Online licensed operators are also required to pay an annual responsible gambling contribution of EUR5,000.

Taxes for Licensed B2B Providers. B2B providers holding a Class 2 license are obliged to pay an annual license tax of EUR6,000/licence and also a responsible gambling contribution of EUR1,000/year. Based on the regulator’s practice, this contribution is calculated based on the number of Class 2 licenses held by a certain B2B supplier.

Land-Based Gambling Premises Licensing

As stated by the GEO 77/2009 and GD 111/2016, land-based gambling activities may be operated only in specialized locations, which are outlined below.

Casinos are the specialized locations used for the operation of games of chance characteristics to casinos. The surface area and structure of casinos must enable the installation of gaming equipment and other technical devices needed to carry out the specific activity, and they must be located in buildings intended for use as business premises or in hotels with a minimum 3-star rating. Casinos are subject to minimal legal requirements with regard to the location of the premises, surface and safety equipment.

Betting Agencies are the specialized locations for betting activities in which at least one dependent betting terminal must be operated and that cumulatively meet several specific conditions in terms of minimum surface, mandatory equipment, etc.

All premises used for the operation of slot-machine gaming, irrespective of the type of slot-machine, are subject to certain restrictions in relation to the advertising of the premises, as follows:

• organizers will prevent viewing of the activities carried out within the respective premises;
• organizers will not suggest gambling activities by using images, text or other symbols.

As stated by GD 111/2016, bingo games performed in specialized gaming halls may only take place in locations within specialized premises or business premises, which are registered as the organizer’s main or secondary office and which meet a set of mandatory conditions in relation to the logistic organization – sufficient electrical lighting system, air-conditioning system, sound system, safety-related requirements, back-up electrical circuit, etc.

The legislative changes likely to occur in the near future for the land-based gambling sector stem from the following pieces of pending legislation:

• the draft order of the National Gambling Office regulating the new set of certification requirements for land-based slot-machine gaming;
• the order/instructions of the National Gambling Office with respect to the application of the new AML regime in the gambling sector.

Online Gambling B2C Licences allow the operator to offer the products/activities covered by the respective license on the Romanian platform. The Romanian platform must encapsulate all players with Romanian IP addresses as well as all Romanian citizens who do not have their fiscal residence established in a foreign jurisdiction.

B2B Licences (Suppliers, Software, etc) allow the licensed supplier to perform the activities covered by the respective license in Romania. As a particularity of the Romanian legislation, B2B licenses are not granted for specific products (such as a specific set of games, gambling platforms, etc) but refer to generic B2B activities – for example, “production and distribution of gambling software”, “provision of hosting facilities”, etc.

Affiliates wishing to operate on the Romanian market are required to obtain a specific Class 2 license from the National Gambling Office. The regulation defines an affiliate as any natural or legal person who obtains revenues on the basis of a contract concluded with a B2C online operator as a result of the participation in gambling of players redirected by the affiliate on the website/platform of the B2C operator.

Besides the general obligation of paying the annual license fee and responsible gambling contribution, licensed affiliates also have the express legal obligation of sending all affiliation contracts concluded with B2C operators to the NOG.

White Labels are not specifically regulated by the Romanian gambling legislation.

The regulation sets forth that licenses are nominal and allow operation only for the holder of the license. As an exception to this general rule, GD 111/2016 provides the possibility to create joint ventures, in which it is sufficient for only one of the entities involved to hold the gambling license. However, joint operation entails joint liability for all parties involved.

The online gambling sector is likely to be affected in the near future by the fact that the National Gambling Office is required to issue sector-specific guidelines/instructions for the application of the new AML regime in Romania (transposing the 4th AML Directive).

The primary tool to prevent unlicensed gambling activities is the “blacklist” of unlicensed gambling websites, which is managed by the NOG and currently comprises more than 1,100 internet domain names. The legislation sets forth that internet service providers (ISPs) and all service suppliers for the gambling industry, including payment processors, are bound to comply with the decisions taken by the regulator in relation to unlicensed websites. Specific reference is made to ISPs that are required to ban access to the blacklisted websites (as well as to those websites promoting unlicensed gambling) under the sanction of a fine ranging from RON50,000 (approx. EUR10,500) to RON100,000 (approx. EUR21,000).

Responsible Gambling

The gambling regulatory framework is focused on protecting minors and preventing their access to gambling, as well as ensuring the integrity and transparency of gambling activities and maintaining a fair game system that is constantly supervised.

All entities that are involved in the gambling industry and hold a license granted by the Romanian regulator (both land-based and online operators, as well as licensed B2B providers) are required, pursuant to GEO 77/2009, to pay an annual responsible gambling contribution to a public activity whose main purpose is to finance programs and activities aimed at ensuring a responsible gambling environment and preventing gambling addiction cases.

Regarding online gambling, the legislation specifically provides that the platforms must be designed to enable responsible gambling functions, such as setting daily, weekly or monthly deposit limits, the possibility of players permanently or temporarily self-excluding from gambling, etc. Further on, the platform must also have embedded a “reality-check” feature in the form of a warning message posted automatically every 60 minutes, which must inform the player about the amount of time spent gambling.

Online operators are also obliged to inform a player who opted to self-exclude about the possibility of receiving counseling and treatment against gambling addiction in a treatment centre.

Anti-money Laundering

The 4th AML Directive has been transposed in Romania by Law 129/2019, and the new AML legal regime shall be fully in force from January 2020. By the end of November 2019, the NOG is legally required to issue instructions regarding the application of the new AML obligations in the gambling sector.

Once the new AML legal framework is fully in force, all licensed gambling operators (both land-based and online) shall be required to comply with several AML/CFT-related obligations, such as specific customer due diligence, reporting of suspicious transactions, implementation of AML policies in accordance with the new legislation, record-keeping in a specific format, etc.

Advertising

The observance of the advertising regime for gambling activities is primarily supervised by NOG. The National Audiovisual Council and the National Authority for Consumers’ Protection can also technically supervise certain aspects of gambling advertising, depending on the situation.

In accordance with Law 158/2008, advertising is defined as any form of presentation for a commercial, industrial, crafting or liberal activity, with the purpose of promoting the sale of goods or services, including immovable goods, rights or obligations.

Pursuant to GD 111/2016, any advertising of gambling activities must be performed in accordance with the legal principles in terms of the protection of minors and responsible gambling. Advertising materials cannot be placed within or on the boundaries of educational, religious or social-cultural premises, and must depict, in a visible manner, the minors’ interdiction to participate in gambling, signaled through visual signs, the series and number of the gambling license, and the NOG logo.

The most notable restrictions in terms of advertising are the following:

• the advertising of bonuses offered by online operators may be performed only on limited channels, namely on the operator’s website, on the websites of its licensed affiliates or via e-messages sent to active players who opted-in to receive this type of commercial communications;
• based on a recent decision of the National Audiovisual Council, corroborated with the interpretation of the audiovisual regulator, TV advertising for gambling may be performed only after 11 pm, with the exception of betting activities, which may also be promoted during live sports events.

The sanctions for infringing the advertising regime for gambling activities start with administrative fines and can theoretically lead up to the suspension or revocation of the license.

Acquisitions and Changes of Control

In accordance with the regulation, licensed operators are required to notify the NOG about any amendments to the initial information on the basis of which the license and authorization were granted. As per the licensing requirements, such initial information includes the details of the operator’s directors, shareholders and the shareholding structure, ultimate beneficial owners, etc. Therefore, if the acquisition/change of control affects the initial information presented at the licensing stage, this triggers a disclosure requirement towards the NOG.

Enforcement

Depending on the type and severity of the breach, the NOG has the power to suspend, revoke or even cancel gambling licenses. Furthermore, the gambling regulator also has the competence to apply administrative fines if an operator infringes the licensing and authorization conditions.

If a breach committed by an operator may represent a criminal offense, the NOG is legally obliged to defer the case to the criminal investigation bodies.

Sanctions are enforced either directly by the NOG (in case of the suspension, revocation or cancellation of the license or other regulatory breaches) or in co-operation with other public authorities (eg, the tax authority, police bodies, etc).

Since 2015 when the regulatory framework was reformed, there have been several notable cases where the NOG suspended or revoked both land-based and online licenses, or even canceled two interim online licenses.

Financial penalties are generally enforced through the co-operation of the NOG with the fiscal authorities.

In addition, it must be noted that all licensed operators are required to post a guarantee for securing the risk of non-payment of their tax obligations owed towards the state budget. If an operator fails to pay the applicable taxes, the authorities are entitled to enforce the respective guarantee.

Tax

In accordance with the gambling regulation, land-based gambling operations entail a physical presence in Romania. Thus, operators holding a land-based license are established as Romanian companies and, as a result, become subject to the general corporate tax provided by the Romanian fiscal legislation. At the time of writing, the general corporate tax is established as a 16% profit tax.

Exceptionally, for operators of land-based casinos only, if the profit tax deriving from this activity does not exceed 5% of the revenues, the respective casino operator is subject to corporate tax capped at 5% of total revenues (turnover not GGR).

For online gambling operations, the fiscal regime may differ depending on the jurisdiction of incorporation. Obtaining an online license does not necessarily require operation under a Romanian incorporated vehicle. Any company established in an EU or EEA Member State (or under the Swiss Confederation) may apply for a license in Romania. In fact, at the time of writing, most operators holding an online license in Romania are incorporated outside Romania, in other EU jurisdictions.

As such, an operator holding an online license in Romania as a foreign company is not subject to corporate tax in Romania, unless the respective operation generates a permanent establishment in Romania. However, if the online operator is incorporated as a Romanian company, the respective operator will generally be subject to the 16% profit tax indicated above.

The tax regime and rules/distinctions summarised above apply also to B2B providers holding a Class 2 license in Romania.