Romania: Affiliate Legal Update
Published 29th April 2015
As we previously reported in iGaming Business (Issue 90), major changes to the Romanian main piece of gambling legislation were recently brought forward by means of the Government Emergency Ordinance no. 92/2014 (“GEO 92/2014”). Given that the amendments to the main gambling act were brought by way of a government emergency ordinance, the act also needs to be passed by the Romanian Parliament who may approve, approve in an amended form or reject it. The Senate, as the first designated Chamber of the Romanian bicameral parliament, approved GEO 92/2014 in its current form, disregarding the proposed amendments from the Senate Finance and Budget Commission. Therefore, the law has been sent to the second Parliament Chamber that has the decisional vote, the Chamber of Deputies, and is currently under debate and reports in the parliamentary commissions. Up until this moment, the Juridical, Discipline and Immunities Commission has consented to the adoption of the law for the approval of GEO 92/2014 with one amendment. This amendment concerns the insertion of a provision whereby a retrospective tax of 20% of their revenues (defined under the law as GGR) is applied to remote gambling operators who performed gambling activities in Romania without licence and authorization prior to 1 August 2015. Payment of such tax would exonerate them from criminal and fiscal liability. It remains to be seen if this amendment will also meet the approval of the Budget, Finance and Banks Commission, which is also the commission designated to draw up the report and submit the law to the plenary and final vote of the Chamber of Deputies, or be amended further. Other changes are likely to be made as well. As regards its implementation norms, on 9 April 2015, Romania notified the gambling secondary legislation draft to the European Commission, with the standstill period due to end on 10 July 2015. Alongside others, the secondary legislation develops the legal framework that should be applicable to affiliates, defined under this piece of legislation: “As the natural or legal persons who obtain incomes pursuant to a contract concluded with a remote gambling operator, as a result of the participation in the game of the players redirected by the affiliate on the site or platform of the operator.”
Overall, this legal regime is rather restrictive and strictly controls the ancillary online gambling activity of the affiliates. As such, in order to operate under Romanian jurisdiction, affiliates must apply for a Class 2 licence to be issued by the Romanian National Gambling Office (“NOG”). The licence will be valid for 10 years with a fee of €6,000 per year. We estimate that, if not amended, the fee amount will have a dissuasive effect, at least for small affiliates, or be too cumbersome and not proportionate to the revenues likely to be generated to justify going through the process for some affiliates. The licence will be granted from the first day of the month following which, after the approval of the documentation, the operator must undertake payment of the licence fee. Among the documentation affiliates will have to submit are an activity description, as well as a criminal record or similar documents issued by the foreign competent authorities, in order to exhibit that the affiliate and its legal representatives have not been sanctioned for committing an intentional criminal offence. Moreover, affiliates are bound to make available to NOG the affiliation agreement concluded with the remote gambling operator within 15 days of its conclusion. With regard to what affiliate activity will be allowed, it is worth mentioning that they are expressly allowed to advertise bonuses, defined as: “[T]he additional benefit that may be obtained by the player, with no additional fees or costs, under the conditions set forth in the game rules of the organizer, in a determined period of time or for certain events.” The secondary norms provide that advertising of bonuses granted to participants is allowed only on the operator’s own premises, on its own or its affiliates websites, as well as through the means of electronic communication sent to players. We emphasise once again that both the main legislation and the implementation norms are subject to changes, and therefore the legal framework for affiliates is not set in stone at this time. It remains to be seen what the final outcome will be of the legislative process as it applies to affiliates, as well as more widely. Nevertheless, all the eyes of the gambling industry are on Romania at the moment, from affiliates to payment processors and software providers, as well of course of those companies most interested of all - the gambling operators. Pending legislative resolution that will enable them to make their final assessment of the commercial viability of Romanian online gambling, they all eagerly await the start of a functional, modern market.