Political Incompetence Hurting the Online Gambling and Betting Market in Romania

Romania is wasting the opportunity to help the gambling industry grow and bring in some extra profits to the state’s budget.

With the European Union promoting a uniform legislation, as well as a fair and liberal market for all businesses – including gambling – across member states, the online and mobile casino market has slowly grown into one of the most profitable and powerful industries. Several European countries still have a long way to go until they reached their full potential and Romania falls into this category.

As far as tourism is concerned, the state certainly has a lot to offer and everyone knows gambling and tourism make a perfect match. There is no shortage of gamblers here either. There are plenty of heavy slot machine players, poker fans and bettors fond of online sportsbooks in Romania.

Unfortunately, the country’s political class has a reputation of being unreliable and corrupt. All these have a negative effect on the online gambling industry, which seems to be caught in a legislative tangle that won’t let it fully spread its wings and fly.

Taxing gambling profits: mission impossible

Romanian authorities are planning to raise current gambling taxes and introduce new fees:

• Casino entry fee: raised from EUR 4.4 to EUR 11
• EUR 200 a year for each slot machine
• 2% tax on net earnings from bets and VLTs
• 0.1% on each hand played on websites

At the moment, there are no Romanian poker rooms, and playing casino card games is only allowed in gambling venues, where visitors are required by law to pay an entrance fee. Whether they actually pay it or not, is a whole different thing.

According to the country’s fiscal policy, there is a 25% tax on all personal winnings from slot machines, video lottery terminals, casino games and online gambling. But there is really no way of determining and verifying how much each player pockets and, as it is up to them to declare their earnings at the beginning of each year, nobody really pays these taxes.

This vague taxing policy has been in place for about a decade, but now Romanian lawmakers are trying to figure one a new system that would actually work. Last year, the gambling authority drew up a proposal that calls for increased taxes.

According to it, taxes paid by gambling operators would increase by 2%, companies would pay a yearly EUR 200 fee for each betting machine, casino entry fees would double and a 0.1% tax would apply to each hand played online.

Hazy gambling regulations

Online gambling has been regulated since 2010. The authorities then decided they would hand out licenses to virtual casino operators, but only to those based in the country. While foreign internet gambling services are still accessible, it’s technically illegal to use them.

That being said, several years had to pass until Romanian lawmakers realized that there was no legal framework to actually enforce these regulations. Until April 2013, when the Government passed an emergency ordinance to create the National Gambling Office, there was no regulating body to monitor online gambling.

Meanwhile, as the law requires every public institution to set up a website providing citizens with all the necessary information, the National Gambling Office went live with their own. Unfortunately, almost a year after the regulatory body was created, most relevant sections of the website are still under construction. Apart from the institution’s address, a few laws and a short introduction, the site offers no useful information.

Last year, when the ordinance passed, online operators were hoping that the Romanian gambling market will finally open up for business. After all, the government had promised to relax its policies and make room for a competitive industry. In fact, it did the exact opposite.

Legal, but nonexistent

Famous for a plagiarism scandal and for turning his back on promises to stop environmentally risky projects, Romanian Prime Minister Victor Ponta made Odeta Nestor president of the gambling authority. And just when everyone was expecting the gambling market to be liberalized, the new chief announced: “I hope we’ll manage to block the access of foreign websites.”

There aren’t many companies willing to move their headquarters and servers to Romania. According to Odeta Nestor, there are no authorized online casinos in the country and there are no licensing requests waiting to be approved either. This makes Romania the owner of a “unique” internet gambling market: one that is regulated, but practically nonexistent.

As far as local authorities are concerned, services that operate from different countries should not be allowed to cater to Romanian players. However, the European Commission has a different opinion. “Member States must demonstrate the suitability and necessity of the measure in question,” they reminded lawmakers.

The Romanian gambling market has a lot of potential and could bring the state a significant income, yet the Government keeps failing to figure out an efficient way to profit off the gambling industry. It looks like it will be a long time before Romania has a flourishing and productive gambling industry.