4H Agency: A breakdown of the new Romanian regulations

On 6 October, new ordinance (the Ordinance) adopted by the Romanian Government was published in the Official Gazette of Romania, making new amendments legal. According to the government. this Ordinance was adopted with the following key objectives, inter alia:

• decrease of the projected government budget deficit;• prevent and combat unauthorised gambling;• combat tax evasion in the Romanian market;• make the control of the operation of the activities more efficient in order to reduce the risk of deviations from the strategies, policies, programmes and plans of the National Gambling Office (the Regulator).

To shed some light on how the Romanian government is going to achieve the abovementioned objectives, 4H will share some information on:

(i) how regulations have changed by comparing what regime was established prior to new regulations and the current regime that entered into force on 6 October 2023, together with

(ii) 4H’s assessment on how these changes will affect gambling market.

KEY CHANGES

No.How was it regulated?How is it regulated?Operation requirements 1An operator could apply for a licence either with its foreign company (that is incorporated in the EU or EEA) with the fiscal representative in Romania or with a Romanian company.An operator can apply for a licence either with its foreign company (that is incorporated in the EU or EEA) that has a registered a permanent establishment or with a Romanian company. 2Not applicableOutdoor advertising of gambling exceeding 35 m2 in size/panel/ advertising material is prohibited. 3Provided that the future operator already had a gambling licence in the EU or EEA state, the Regulator had an opportunity to issue a licence in Romania in a facilitated manner.Repealed. 4Not applicableThe Regulator must create and keep an up-to-date online register which should include, inter alia (i) the trade name and company name, for operators licensed/authorised to carry out activities regulated by this normative act; (ii) the address of the operator’s headquarters; (iii) the address of each commercial space where the operator conducts its activities, indicating the types of games authorised for that location. 5Not applicableIt is prohibited to sell alcohol in gambling premises.Financial requirements 1Obligatory contributions for responsible gambling and the Regulator’s work varied from €1,000 (annually) to €5,000 (annually), depending on the vertical.Obligatory contributions for responsible gambling and the Regulator’s work vary from €4,000 (annually) to €500,000 (annually), depending on the vertical. 2Not applicableOperators who have a monthly tax payment obligation of authorisation benefit from a 10% bonus if they make the payment for the entire year in advance. 3No specific requirements in relation to the type of company issuing a guarantee.It is required to have an insurance policy issued by a registered insurance company in a member state of the EU or EEA сovering the operator’s risk of non-payment of its obligations.4 The size of guarantees to cover the risk of non-payment varies from €167 to €250,000, depending on the vertical.The size of the insurance to cover the risk of non-payment varies from €500,000 to €5m, depending on the vertical and the operator’s income. 5For B2C operations, annual licence fees vary from €11,500 to €312,000, depending on the vertical and the operator’s turnover. For B2B operations, the annual licence fee is €9,500.For B2C operations, annual licence fees vary from €15,000 to €300,000, depending on the vertical and the operator’s turnover. For B2B operations the annual licence fee is €20,000.

A cursory examination of the new regulations allows us to affirm that recently enacted provisions are designed to replenish the Romanian government’s budget from gambling activities (eg, increased licence fees, augmented insurance amounts and contributions to responsible gambling measures).

However, it should be noted that one of the key changes is the requirement for EU/EEA companies wishing to apply for a licence to establish a fully-fledged permanent representative of such companies responsible for the administration and payment of all gambling taxes in Romania.

Prior to the introduction of this provision, EU/EEA companies would appoint an authorised representative and pay taxes from Romanian gambling activities in their own jurisdiction. If we scrutinise the current list of licences, we observe that around 80% of the licence holders (especially online operators) were incorporated in Malta.

From 4H’s perspective, we anticipate the popularity of the Romanian market may be significantly affected by the revised financial burden and will undoubtedly entail some efforts for existing licence holders to align their operations with the new regime.

Vladimir Negine, founder and CEO of content aggregator St8.io, said: “Despite these changes, Romania is still a really attractive market, but the increasing tax burden means operators will need to be smarter about the way they approach it.

“There’s significant competition in Romania right now, but limited differentiation. The tax burden and RG obligations means endless bonusing won’t be enough, but offering great content and an engaging experience to players will still reap rewards.”