The governance of Romania’s gambling sector has come under scrutiny following revelations that the National Office for Gambling (ONJN) has failed in its supervision of licences and tax collection duties.
Grabbing national headlines, last week, Romania’s Court of Accounts (CCR), the body responsible for auditing government agencies, reprimanded ONJN for its failure to audit gambling licences and authorisation fees.
The CCR has submitted its audit of ONJN to the government for the period 2019 to 2023, uncovering severe discrepancies in the auditing of gambling licences and failures in regulatory oversight of the gambling sector.
The damning report cites numerous instances of ONJN failing in its basic compliance duties regarding licences, such as a failure to compile auditing data, to report on monthly fee allocations and to apply penalties.
Tax negligence of €630m-to-€900m ($674,1 млн до $963 млн)
The ONJN is accused of critical negligence concerning authorisation fees and unreported taxes, as the CCR has uncovered potential tax liabilities of between 3.3 billion to 4.3 billion lei (€630m to €900m/$674,1 млн до $963 млн).
The report states that, “ONJN did not access remote gambling operators’ servers to verify transaction data, despite having the credentials” – a process that could have been achieved via its IT terminal.
The report questions why ONJN had failed to verify clear instances of Return-to-Player (RTP) manipulations, where operators declared higher RTP rates to lower their tax liabilities for gambling activities in Romania.
Infringements were documented on the “ RTP filed by operators licensed in Romania but registered in Malta according to the online gambling licensing documents and the minimum level of 92% imposed by the Maltese authority until April 2021, and subsequently of a minimum of 85%, HAS NOT BEEN EVALUATED, which may mean:
No control of IT systems
Due to the absence of auditing controls, ONJN did not conduct even minimal verification on new authorisation fees imposed since 2019. This resulted in a discrepancy in paid taxes totalling 79 million lei (€16m), with additional penalties and interest amounting to 37 million lei (€7m). Despite clear disparities, ONJN “made no effort to correlate these indicators with the tax declarations submitted to ANAF, Romania’s National Agency for Fiscal Administration.”
The governance of Romania’s gambling sector has been deemed to lack proper oversight of fiscal duties, leading to severe discrepancies between declared authorisation fees and actual revenue, which will require government intervention.
In the report, ONJN argued that the audit misinterpreted the requirement for a monitoring terminal, suggesting it is not a mandatory condition for licensing. However, the law (GEO no. 77/2009) clearly states that remote operators must connect their IT systems to a terminal monitored by ONJN.
The audit refutes ONJN’s claim, pointing out that this obligation is not optional and that ONJN failed to enforce it. The report accused ONJN of trying to shift the blame for failed audits onto external agencies, yet Romania’s gambling authority cannot remove its “legal duty to ensure the terminal is in place and functioning.”
The CCR concludes its investigation by citing that ONJN’s negligence is serious enough to warrant potential criminal investigation, a decision that will be taken by Romania’s government.
Disruptive changes of a chaotic authority
Romanian developments have been closely followed by Ivan Kurochkin, Partner and Head of the Consulting Department at 4H Agency, who highlighted the severe implications of these findings for both the Romanian government and gambling operators. 4H emphasised that the lack of stringent controls could lead to significant tax revenue losses and undermine the credibility of Romania’s gambling regulations.
The report is of political significance, as the period 2019 to 2023 saw Romania overhaul its gambling tax regime, imposing new licence fees, a 2% monthly supervision fee, vice taxes and new thresholds on gambling revenue taxes.
A further dynamic showcases the disruptive context of ONJN’s authority of Romanian gambling, which has been overseen by five different Presidents since 2018. “It’s clear that stronger enforcement and system upgrades are needed to ensure that operators are compliant, especially given the cross-border nature of the online gambling industry,” said the expert.
A key issue identified in the audit is that ONJN allowed online gambling operators to function without fulfilling the legal requirement of providing a secure access terminal, which would allow uninterrupted, secure remote access to mirrored servers and central databases for real-time monitoring.
Romania’s systems lag behind Europe
Kurochkin noted that this discovery by the Court of Accounts is likely to prompt heightened scrutiny from local regulatory bodies. “The Romanian government could face pressure to reform its oversight practices, which could lead to more stringent regulations and compliance requirements in the future. This shift may result in higher operational costs for gambling operators, who would need to implement more robust reporting and monitoring systems to meet new standards.”
However, Kurochkin concluded that while the audit findings are concerning, they also present an opportunity for the industry to adopt advanced technologies and stricter compliance systems, as Romania is currently lagging behind other European nations.
“For operators, this will mean a need for more detailed reporting systems, but it could also pave the way for a more structured and competitive market in the region. If they adapt quickly, operators can gain a competitive edge,” he concluded.
Welcome to Gambling Consulting Authority (GCA) - Your Strategic Partner in Gambling Industry Advancement
