In a new series of in-depth feature articles being debuted by CasinoBeats we are going to be casting a spotlight on a number of up and coming regional markets, with Romania gaining the honour of being the first-up.
Quickly becoming a strategic target for many in recent times, we asked Phil Parry, CEO of Iforium, Claudia Melcaru, head of business development at BF Games and Andrei Andronic, general counsel at Playson, about Romania’s appeal, what’s proving popular and improving regulation moving forward.
CasinoBeats: How has the Romanian market grown and why has it become such an attractive base for operators and suppliers?
Claudia Melcaru: The legislation and regulation for online gaming in Romania that entered into force in 2016 offers an environment where all stakeholders including operators, suppliers and players benefit.
It allows for all types of games, sets a fairly reasonable tax level, requires third-party providers to hold a licence and blacklists unlicensed operators. The framework creates an environment where the industry is allowed to thrive and with the market now being four years old, it has maintained a level of competitiveness and profitability that continues to attract new companies.
BF Games received our supplier licence in Romania last year and with 23 operators active in the country and the market now being mature, it was the right time for us to enter especially with our strong affinity to retail gaming. Gaming machines have been available in slot halls and casinos in Romania for a few years, so our portfolio provides an attractive addition to the market as many players will already be accustomed to our titles.
Phil Parry: Romania is a very exciting emerging market for us. We’ve been there since 2017 and hold a class 2 B2B licence. Growth has been fantastic, as well as providing a launchpad for our wider reach and presence in the central and eastern European region.
Each of the CEE’s markets has different regulatory requirements, and the challenge for operators is to ensure they can be compliant in each jurisdiction they are active in, while offering games from the industry’s most popular content providers – which we do for them.
Andrei Andronic: Romania has witnessed formidable growth since adopting a robust legal framework which regulates gambling. With a large population who love sports and enjoy the occasional flutter, Romania became an interesting jurisdiction for both operators and suppliers. The fact that there is now a licence (class II) for suppliers makes it an even more desirable location.
CB: What’s the most popular form of gambling?
AA: With a rich sports history, the sports betting vertical is hugely popular. Due to ever-evolving regulations we’re now seeing a rise in popularity of online casino games, especially among the new generations who tend to spend more time online. While it’s exciting to see the rate at which online gaming is expanding, we must not forget to continue increasing safeguards accordingly in the online space for this younger generation.
CM: Betting is a very popular form of gaming in the country with football, basketball and tennis being some of the most popular sports to wager on. But since the online regulation entered into force, casino games have increasingly grown in popularity – a trend we have seen in markets across Europe.
There is currently a great offering of slots and table games on the market in terms of volatility, themes and complexity, with something to appeal to all player types. We believe that the popularity in these games will continue to grow as the market further matures and new generations start to play.
PP: Our operator demographic in Romania leans towards strong slot performance. While the most popular games vary, we’ve seen strong performance from both localised and basic slot content from the range we’ve introduced. Interestingly, popular land-based games that have been adapted to online also do consistently well here – most likely due to their familiarity with players.
CB: How do the tax rates compare to other markets?
PP: This is an interesting question in that we’ve seen an evolving regime over the past few years. Initially, Romanian tax rates were seen as far more palatable, which certainly ensured the leading operators were quick to enter. However, annual turnover based increases of two per cent initiated at the start of 2019 mean that operators are under far more pressure to justify the Romanian market as a profitable jurisdiction. I anticipate that this is going to require a fine balance going forward; with new market entrants needing a far more sustainable operation in which to ensure profitability.
AA: The current tax regime in Romania is a particularly complex one. A high inconsistency in the country’s tax system, coupled with short term measures and last year’s new tax regimes has made it complicated for companies who wish to operate there. Having a tax system which is perpetually flip-flopping causes confusion, costs-businesses money and has a destabilising effect on the sector making the country a little less attractive from this perspective.
“Two hot topics in the igaming world were tackled by the Romanian legislative: advertising and technical requirements“
CM: At 16 per cent of GGR, the Romanian gambling tax regime is one of the most competitive in Europe. However, a new 2 per cent turnover tax (the amount a player wagers) was introduced in 2019. Turnover taxes are hugely opposed by the industry as in most cases the tax burden is shifted onto players. The risk is that players will be driven to unlicensed sites which are not supervised or taxed, resulting in the opposite effect to the intentions of the regulation as it drives gambling offshore where players are less protected.
CB: How has regulation changed since 2016 and how can it be improved moving forward?
AA: The online gaming industry is dynamic and innovative, and the fact it moves at such a pace is why I enjoy it. While changes and amendments are generally for the better, I would prefer to see more details within current regulations. At the end of last year, two hot topics in the igaming world were tackled by the Romanian legislative: advertising and technical requirements.
Gambling advertising can only be broadcast after 11pm and there is more protection in place for minors imposing stricter marketing rules. It’s in cases like this that Romania has shown it takes regulation and player safety seriously. If its legislative framework can keep up and its tax system becomes more consistent, I don’t see any reason why Romania won’t become an increasingly desirable gambling market in the future.
CM: Apart from the introduction of the turnover tax, the regulation has not changed hugely. As in the rest of Europe, however, there have been discussions about implementing tougher rules and measures around responsible gaming. Among other things there has been political and media pressure to implement advertising restrictions.
I believe that this is a natural evolvement of any established regulatory framework and in many cases, the scrutiny is justified. But for the moment, Romania is enjoying a moment of regulatory stability with an overall well-functioning gaming market.
“A requirement for suppliers to get licensed for each country they operate in hinders more than it helps in my view”
CB: How does the fact that third-party providers need a licence (such as in in Romania), change the way you as a supplier operate in a jurisdiction? Does it hinder or help operations?
PP: Whilst there are certainly challenges to be faced as third-party provider, there are plenty of ways in which the ONJN has done well mitigate the situation. Having a stringent and rigid licence structure has worked wonders, ensuring providers who enter the market to service operators are not only appropriately licenced, but also recognised suppliers; which provides a level playing field for all.
Overall, we welcome the stance taken by the ONJN, as it supports our dedication towards a regulation-first approach. We’re a far cry away from the ‘Wild West’ of the 2000s, and seeing regulators taking an approach that ensures full player protection should always be commended.
As an aggregator, it is essential for us to give our partners the confidence that we’re able to deliver in line with complex requirements, no matter what the regulatory regime – with the ONJN being a classical example of an authority that provides a fair rulebook for us to adhere to.
CM: I believe it hinders operations by adding a licence on top of the required certifications. The most efficient way is when we can transfer our certifications from one country to another one or have them recognised or approved without an extra cost from the testing laboratory, like in Estonia. A requirement for suppliers to get licensed for each country they operate in hinders more than it helps in my view.