Romania Welcomes Regulation, on One Condition

Romania is allowing regulation to operators, and looking for payback.

Back Tax

Romania's legislation will require all licensees to pay back taxes on revenues earned from the country's online wagerers until now.

The new legislation was approved by the Romanian Chamber of Commerce earlier in May. However, all the newly eligible applicants are likely taking a hard look at the key amendment, in which they will automatically inherit a retroactive obligation to pay 20% in back taxes for all online revenue earned from Romanian players since 2009.

This means that operators will potentially be subject to immediate financial audits. Once each tax bill is calculated, operators will be given 90 days to submit payment in full; only after this clearance will operators legitimately be considered for new Romanian license. Failure to submit payment will land operators on the country's blacklist.

Revenue Hopes

The stiff regime seeks to generate an estimated €200m for the state. How much of that estimate is based on the back tax portion has not been indicated. The revised Act is currently on its way to the desk of the Romanian President, who could sign the bill into law by as early as next week.

Precedent Found

Somewhat of a precedent can be found by the Spanish government, who a few years back called all newly licensed online gambling operators to pay four years worth of back taxes. With consternation, operators complied with what was perceived as an 11^th hour cash grab.

Market Entry

The one casino pressing forward in Romania is Betfair, the global online providing giant which has indicated its preparedness to pay the back tax as the first entrant into the Romanian market.

Other large operators are not so bold. Due to “recent regulatory developments” in the country, UK's William Hill has pulled out of its plans for Romania, which Romanian players discovered Tuesday when their access to the company site was denied along with a message requesting withdrawal of funds.

Other operators such as Netbet are still going forward with licensing in Romania, so Romania's stiff regulations ultimately are not going to scare everyone off: a new market is a new market.