Romanian regulator’s failures cost state $1bn in lost tax revenue
Romania’s Gambling Regulator Faces Scrutiny: A Missed Revenue Opportunity of Nearly $1 Billion
A recent report from Romania’s Court of Auditors has revealed alarming deficiencies within the National Office for Gambling (ONJN) that may have cost the country up to $1 billion in potential revenue since its inception in 2013. This analysis underscores the critical role of effective regulation in the gambling industry and the repercussions of regulatory failings.
According to the February 21 report, the ONJN has consistently failed to fulfill its legal obligations to monitor and oversee the activities of online gambling operators. This lack of oversight poses serious implications for the integrity of the gambling sector and the financial health of the state.
Regulatory Lapses and Financial Implications
The Court of Auditors is contemplating notifying Romania’s criminal prosecution authorities regarding these alarming oversights. Central to these concerns is the ONJN’s failure to enforce a statutory requirement to maintain remote access to the systems of all licensed operators. This oversight has raised questions about the accuracy of revenue collection from authorization fees, particularly in light of discrepancies noted between taxation and actual Return to Player (RTP) levels.
The report highlights that the ONJN did not investigate the ramifications of reduced RTP requirements adopted in Malta in 2021, where many Romanian operators are registered. This oversight has directly impacted state budget revenues, with over 78 million lei (approximately $16.4 million/ £13 million) in unpaid taxes identified for the years 2022 and 2023 alone. Alarmingly, there is potential for non-declared authorization fees to reach as high as 4.8 billion lei ($1 billion) from 2019 to 2023.
Consequences of Regulatory Inadequacies
The Court of Auditors explicitly stated, “Since its establishment, the National Office for Gambling (ONJN) has not monitored or controlled the activities of remote (online) gambling operators and has neglected duties such as analyzing data stored by the gaming organizers or verifying the accuracy of their periodic reports.” This lapse not only undermines operator accountability but jeopardizes the financial contributions that the gambling sector can provide to the national budget.
During the audit process, multiple irregularities were uncovered within the ONJN’s operations. The repercussions of these inconsistencies have stymied the potential for state budget revenues that should rightfully stem from a robust and well-regulated gambling industry.
Recommended Revisions for ONJN
In light of these findings, the Court of Auditors has proposed a series of recommendations aimed at rectifying the identified deficiencies within the ONJN. These encompass:
- Implementing updated operational procedures for licensed gambling operators to enhance compliance and transparency.
- Establishing the capability for remote access to online gambling servers based in Romania, thereby ensuring continuous oversight and regulation.
As the gambling sector continues to evolve, the ONJN’s commitment to effective regulation will be critical in not only safeguarding players’ interests but also optimizing revenue streams that can significantly contribute to Romania’s economy. The path forward demands a concerted effort to address these shortcomings and ensure that regulatory frameworks are robust enough to adapt to the dynamic nature of the online gambling landscape.
