Raffle gambling – licensing and authorisation conditions
By Andreea Ciocanaru
Lawer within C.A Luca Mihai Catalin
- Legislative framework
Raffle is a category of gambling expressly provided for, regulated by Emergency Ordinance 77/2009 on the organization and operation of gambling (GEO 77/2009) and the 2016 Methodological Norms for the implementation of GEO 77/2009 (Methodological Norms). According to art. 10 para. (1) let. n) of GEO 77/2009, the raffle has the following characteristics:
· Represents an activity of extracting numbers, letters or other symbols, regardless of the characteristics of mechanical, electronic, digital or video devices, used for their generation or for performing extractions (cups, urns, wheels and other such means);
· It can be played as a traditional gamble or as a remote gamble (online);
· It can be organized or not in the physical presence of the players;
· Prizes in the raffle can only be awarded in kind, being fixed, and do not depend on the number and price of tickets sold, coupons, chips and other means of participation in the raffle;
· The value of the prizes cannot be less than 50% of the total value of the stakes paid for participation in the raffle;
· The number of winners is determined in advance, and they are designated by random draw;
· The raffle is organized based on a regulation posted in advance (on location or on the website) and approved by the Supervisory Committee of the O.N.J.N.
The legislator also dedicated a special section, but only for the raffle – traditional game, respectively art. 108-110 of the Methodological Norms. Thus, in art. 108 is defined raffle – traditional game, the definition being similar to the one provided in art. 10 para. (1) let. n) of GEO 77/2009, specifying that the extractions from the raffle are made by using an independent computer system of specific mechanical or electronic devices, and in art. 109-110 establish a series of specific conditions for the organization of traditional games with raffles.
First of all, the economic operators that intend to organize a raffle – traditional game, must hold the raffle participation tickets printed only by the National Company “Imprimeria Naționala” – S.A.
A 5-member committee must also be set up to manage and validate each game edition (raffle), editions that will be highlighted on the computer printer’s paper. The computer printer paper is an accounting document and will provide a series of data, namely: chronological enumeration of draws organized during the game edition, as appropriate, the date and time of start of each draw, end time, price of tickets sold for each game, the range of series sold for each draw, the range of canceled ticket series for each draw, the prize awarded for each game, the individual value of each prize awarded, the number and series of winning tickets designated for each game, the validation of each game.
At the end of each game edition, the computer system owned by the organizer will operate the synthesis of the games, the number of games played, the amounts collected, the value of the prizes awarded and other synthetic data. After this synthesis, the printer paper will be crossed out, and the status of the game edition will be checked and signed by each member of the validation committee. Each of the signatories will personally enter the name, time of signing, position, followed by the signature.
At the end of this procedure, the prize validation committee will draw up minutes for each edition of the game. The minutes are also sent to the ONJN, in maximum 3 working days, together with the record of the participation tickets from the management of the organizer with the highlighting of the participation tickets sold for the respective game of chance. The organizer must draw up a monthly statement for the raffle game (included in the monthly income statement).
- License and authorization for organizing raffle gambling
Being an express category of gambling, economic operators must have an organization license and operating permit issued by ONJN to conduct the raffle. It should be noted that, according to the legislation, the raffle is considered a game of chance only if its development generates income / profit for the organizer from the collection of player participation fees. This conclusion follows from the provisions of art. 11 para. (1) lit. a) of GEO 77/2009, which establish that raffle games are not considered and therefore are allowed without authorization, raffles organized in schools, kindergartens or other communities, as well as those organized by non-profit associations or foundations and which are fun and non-profit for the organizers. The character of the raffle is considered non-profit when the total amount of the participation fee is equal to the total amount of the prizes won, the same principle being applied when it comes to goods or similar.
On this occasion, we mention that in the case of remote gambling (online), the organization license is not specific to the product, unlike the authorization which is specific and must be obtained for each individual gambling activity that is intended to be carried out, respectively the games of chance provided in art. 10 para. (1) lit. a) -n) of GEO 77/2009. Therefore, for the organization and operation of the raffle – remote game, if an operator holds a class I license for the organization of remote gambling (online), it will be necessary to obtain only authorization for the operation of the raffle – remote game, otherwise having to obtain both a license and a specific authorization. On the other hand, with regard to the raffle – a traditional game, economic operators, whether or not they hold a license (class I) to organize and an operating license for another category of gambling, must obtain both a license to organize a raffle and specific authorization for the operation of the raffle – traditional game.
2.1. License to organize raffle games
In order to obtain a license to organize a raffle, traditional gambling or remote gambling, the legislation does not provide for special provisions, so the general rules for obtaining a license to organize gambling class I will apply. Broadly speaking, obtaining of the license is regulated by art. 15 of GEO 77/2009 and the provisions of Annex no. 6a to the Methodological Norms.
Thus, in order to obtain the license to organize traditional or remote gambling, an economic operator must prove: i) the existence as a main object of activity the organization of gambling; ii) the existence of the approval of the police bodies granted to the legal representatives, as well as to the associates / shareholders of the legal person; iii) the constitution of the subscribed and paid-in share capital and of the guarantees in the amount provided in this emergency ordinance, iv) the lack of facts registered in the criminal or fiscal record.
An important role in the licensing process is played by the legal representative, who, through a statement on his own responsibility, will certify that the operator, as well as the administrator and the real beneficiaries, have not been criminally convicted and are not in a state of incompatibility for the organization of gambling, the fact that no administrative measures (cancellation, revocation, suspension of license or authorization) have been taken against the operator, that the shareholders / directors have not performed these functions at a bankrupt company, that the administrator has experience in the field of gambling and knows the legislation of gambling.
The economic operator must also prove the existence of the centralized computer system and the proof of the right of ownership or use over the intellectual property rights used.
In addition, only for remote gambling, economic operators to prove the cumulative fulfillment of: i) the existence of a bank account for depositing players’ funds opened with a bank in Romania; ii) certification of the entire computer system used; iii) the location on the national territory of the firewall and in the mirror. As mentioned, operators who already have a class I license for the organization of remote gambling will no longer go through this procedure.
Considering that for the granting of the class I license, the obligation for the economic operator to have a subscribed share capital within the limit provided by GEO 77/2009, from the analysis of legal provisions, in particular the provisions of point 2 of the Annex to GEO 77/2009, we note that there is no such limit for raffle gambling, from which it can be concluded that in order to obtain a license to organize raffle gambling, either traditional or online, there is no obligation to hold a capital social minimum.
Regarding the costs of obtaining the license, for the raffle – traditional game, the license fee is 5,000 euros (point 1, sub-point I, letter O of the Annex to GEO 77/2009). For raffle – remote game, if the operator does not have a license for remote gambling, you will have to pay the license fee, the value of which is calculated according to the turnover of the organizer and can vary from 6,000 euros to 120,000 euro (point 1 letter J of the Annex to GEO 77/2009). If the operator holds such a license, as the license is not specific to the product, there will be no obligation to pay the license fee and to organize the raffle – remote play.
2.2. Authorization to operate raffle gambling
Starting from the applicable legislation, it is observed that the obtaining of the authorization for the exploitation of raffle-type gambling – traditional game is expressly regulated in Annex no. 7 Chap. 1 subchap. 1 point I subpct. (7) let. G), but the raffle-type gambling – remote game does not enjoy such an express regulation regarding the obtaining of the exploitation authorization. Therefore, for the authorization of the raffle – remote gambling will apply the provisions for the authorization of remote gambling in general. However, in principle, the authorization of both types of raffle involves the possession, preparation and submission of similar documents, the differences being determined more by the specific differences between traditional and remote gambling.
First of all, for the authorization of the raffle – traditional gambling, the gambling regulations applicable to the raffle must be established and submitted for the approval of the Supervisory Committee of the ONJN. It must include:
· provisions on how to carry out the activity;
· the percentage granted for earnings from the total turnover of receipts;
· the nature and total value of the winnings granted (which may not be less than 50% of the total value of the stakes paid for participation in the raffle);
· the minimum number of participants in each edition of the game;
· the period provided for the purchase of game participation tickets;
· the date of extraction and the location where it is carried out.
The rules of the game are also mandatory in the case of authorizing the raffle – remote gambling, taking into account, on the one hand, the provisions of art. 10 para. (1) lit. n of GEO 77/2009, according to which the winners – a predetermined number of participants – will be determined by random draw in accordance with a pre-posted regulation approved by the O.N.J.N. Supervisory Committee, and, on the other hand, the general provisions on the authorization of remote gambling, which state that in order to be authorized, the rules of operation of each game (point 3 of Annex 7 chapter 2 subchapter 2 point II (1).
At the same time, all the obligatory mentions that must be included in the game regulation for the raffle – traditional game, specified above, although not expressly provided for the raffle – remote game, will be necessary to be found, in fact, in the game applicable to the raffle – remote game, because only in this way can be guaranteed the fulfillment of all the requirements expressly provided in art. 10 para. (1) lit. n) of GEO 77/2009. As a mention, while the rules of the game for the raffle – traditional game must provide the location where the raffle will be organized, the rules of the game for the raffle – remote game must provide the online platform through which the raffle will be organized.
In order to obtain the authorization for the raffle – traditional gambling, a detailed description of the activity must be submitted, including a sketch of the gambling spaces, with the location of the basic and auxiliary gambling means. In addition, the economic operator must prove the right of ownership or use of the gaming space and proof that the space in which the raffle will take place is registered as a working point at the competent Trade Register Office.
With regard to the means of play used for the organization of the raffle, operators must ensure that the means of play are technically verified by a licensed assessment body class II and prove the legal origin of the basic and auxiliary means of play.
Specifically for the raffle – traditional game, the operator must develop a set of rules on the organization and conduct of the raffle, which will be contained in a by-law. This regulation is structured in two parts: the general part, in which the obligatory provisions according to the labor legislation will be mentioned, and the special part, in which the tasks and attributions of the staff, the financial-accounting system, the way of ensuring document security, values and more.
With regard to the authorization of the raffle – remote play, operators must legally have the right to use the software. With regard to the means of play, it is necessary to prove the right of ownership or use over the means of play and over the technical equipment that provides support for the organization, operation and transmission of games of chance. These technical equipments must be audited and the game schedule, the theoretical percentage reward (RTP) and the random number generator (RNG) must be certified by a class II licensed body by the ONJN.
Specifically for the authorization of the raffle – remote gambling, the operator must regulate the conditions for the use of the gaming platform (terms and conditions).
In the case of both types of raffle, in order to obtain the authorization, a guarantee fund must be set up to cover the risk of default on the general consolidated budget and certify, by a declaration on one’s own responsibility, that the space in which to be exploited the means of play, in the case of the raffle – traditional game, respectively in the case of the raffle – remote game, in case they have the technical equipment on the Romanian territory, that the space / spaces in which the technical equipment to be installed and used support for the organization, operation and transmission of gambling, complies / complies from a sanitary point of view and complies with PSI rules.
It should not be overlooked that the operator must own the goods awarded as prizes and be awarded to the winners free of any encumbrances.
In view of the obligation to set up a guarantee fund for both types of raffle and given that there is no express provision on the level of the guarantee fund for raffle games, we consider that in order to establish the level of guarantee to cover the risk of default will apply the level of the guarantee fund provided by law for bingo games, respectively 5,000 euros, as the regime applicable to raffle-type gambling has the most similarities with the regime applicable to bingo games.
Regarding the costs of obtaining the authorization, for the raffle – traditional game, the fee for obtaining the authorization is worth 16% of the revenues from gambling, made at the level of the organizer (Chapter 1, Subchapter II, letter P of the Annex to OUG 77/2009). For the raffle – remote play, the authorization fee is worth 16% of the gambling income, made at the level of the organizer, but not less than 100,000 euros (Chapter II letter G of the Annex to GEO 77/2009), with the same specification as in the case of the license fee, namely that the authorization fee will be paid only by operators who do not have a remote gambling license at the time the raffle is authorized.
In conclusion, an economic operator can conduct the raffle – gambling only on the basis of holding a license and authorizations for the organization and operation of gambling class I, validly issued by ONJN, as long as it is intended to obtain a profit from the collection of gambling fees participation. The raffle regulation occupies an important place, on the one hand in the licensing and authorization process, its elaboration being mandatory to be carried out in compliance with all legal conditions, and on the other hand, in relation to raffle participants, as the raffle mechanism must be explained in regulation in a clear and predictable manner so that players understand the conditions of participation. For the organization of a raffle, it should not be lost sight of the fact that the means of play underlying the raffle are certified / audited by a conformity assessment body, licensed class II, which ensures the designation of winners random.