Romania Gambling Regulation Rolls the Dice with Tax HikesPublished January 29, 2015 by Lee R
Local operators will try to cash in while they can.
Romania is seeking to rescue its struggling economy with new gambling regulations through a risky program of high tax rates.
Ambitious Economic Goals for Struggling State
The goal of the gambling measures, as agreed to with the International Monetary Fund, is for one of the EU's poorest member states to reduce its deficit by four-tenths of a point to 1.83 percent of gross domestic product.
The head of Romania's gambling regulator ONJN estimates that the new regulation will bring in upwards of 100 million Euros in direct taxes this year, explaining how the new laws aim “to increase public revenue and stimulate the market” while harmonising “Romanian legislation with European norms.”
Apart from online gambling, Romania's gaming market is estimated to be worth 800 million Euros to the government after bringing in 150 million euros in tax revenues last year, a figure ONJN places at 0.1 percent of total national economic output.
Gaming operators expressed their obvious satisfaction with the government's decision to “open the tap,” as trade association gaming operator head Cristian Pascu called it.
The decision certainly provides relief to the approximate several hundred thousand Romanians who to this point have continued to risk two-year jail terms by connecting to foreign online gambling sites to keep playing, with poker websites the most popular gaming sites frequented.
Romanian gaming operators are now looking forward to hosting poker tournaments which could attract thousands of foreign free-spending tourists.
Exorbitant Tax Rates?
The problem is that behind the new freedoms is a tax hike that could cripple operators if expectations are not met, with potential annual license fees reaching 180,000 euros ($205,000), and fixed directly to operator revenue levels.
Other exorbitant fees and taxes include a hike on slot machine licenses from 5,700 to 20,000 euros per year and a new "sin tax" from 1,000 to 5,000 euros to fund a new gambling addiction foundation, measures which Director of Romanian Bookmakers Association Alexandru Debrezeni claims will contract the market without bringing in significant if any added revenue.