The practice of gambling in 2022
Harmonization of national and European regulations
Article from the series “Gambling practice“, by Anchidim Zăgrean, President of ROMBET
At European level, gambling is not regulated by sectoral rules, but nevertheless, the Court of Justice of the European Union (CJEU), in accordance with European Union (EU) law, has ruled that gambling services fall under Article 56 of the Treaty on the Functioning of the European Union (TFEU) and are therefore governed by the rules on the provision of services. Under these rules, operators authorized in one Member State may provide services to consumers in other Member States, unless they impose justified restrictions on imperative grounds of public interest, such as consumer protection or the general need to maintain law and order. These restrictions must also be compatible with EU secondary legislation and the general gambling policy of the Member States must be proportionate and consistently and systematically applied.
The Green Paper on online gambling in the internal market, published by the European Commission, discusses the way in which the activity of gambling services has been normalized, the special rules governing it and the practical interpretation of those rules, for the entire industry.
“Although gambling services are not subject to sectoral regulation at EU level or to horizontal acts such as the Services Directive (Directive 2006/123 / EC) or the Electronic Commerce Directive (Directive 2000/31 / EC), they are subject to a number of rules in EU secondary legislation.
Article 56 TFEU prohibits restrictions on the freedom to provide services to beneficiaries in other Member States.
In the case of Schindler, the CJEU confirmed for the first time that the provision and use of cross-border offers of gambling is an economic activity falling within the scope of the Treaty. In Gambelli’s case, the Court also stated that services provided by electronic means are covered by the Treaty and that national law prohibits operators established in one Member State from providing online gambling services to consumers in another Member State, or who restricts the freedom to receive or benefit as a recipient of services provided by a provider established in another Member State, constitutes a restriction on the freedom to provide services.
Restrictions may be accepted only as exceptional measures, expressly provided for in Articles 51 and 52 TFEU, or may be justified in accordance with the case-law of the Court on imperative grounds of public interest.
The Court recognized a number of overriding reasons in the public interest, such as the objectives of consumer protection and the prevention of both fraud and the incentive to overspend gambling, as well as the general need to maintain law and order.
However, the reduction in tax revenue is not one of the reasons mentioned in Article 52 TFEU and does not constitute an overriding reason in the public interest. All recognized societal aspects can serve to justify the need for national authorities to have a sufficient discretion to determine the requirements of consumer protection and law enforcement in relation to the type of service provided in this area.
The case law also calls for such services and cross-border restrictions that may result from the regulatory approach to lead to a real reduction in gambling opportunities and to be applied consistently and systematically to all service offerings in the field.
To the extent that the authorities of a Member State encourage and encourage consumers to participate, for the benefit of public finances, in lotteries, games of chance and gambling, the authorities of that State may not invoke, in order to justify restrictions, public policy the need to reduce the chances of betting.
Restrictions must be applied without discrimination and must be proportionate and appropriate to the achievement of the objective pursued and must not go beyond what is necessary to achieve it.
The licensing procedure must respect the principles of equal treatment and non-discrimination, as well as the resulting obligation of transparency.”
In the EU secondary legislation, relevant in the field of gambling, we find the provisions of Regulation (EU) no. No 549/2013 of the European Parliament and of the Council of 21 May 2013 on the European system of national and regional accounts in the European Union, which sets out, by way of clear definitions, how to harmonize the internal rules of this activity with binding European rules, as follows:
„Lotteries and gambling, 4,135. Definition:
“The amounts paid for lottery tickets or bets consist of two elements: payment for a service to the unit that organizes the lottery or gambling and a residual current transfer to the winners.
Payment for the service can be substantial and includes taxes on the production of gambling services. In the system, transfers are considered to be made directly between participants in lotteries or games of chance, ie between households.
In the case of non-resident households, there may be significant net transfers between the household sector and the rest of the world.
TAXES ON PRODUCTION AND IMPORTS (D.2)
4.14. Definition: taxes on production and imports (D.2) consist of compulsory payments without consideration, in cash or in kind, collected by general government or institutions of the European Union, depending on the production and import of goods and services, employment labor, right to own or use land, buildings or other assets used in production. Such taxes are paid regardless of the profit made.
Taxes on products (D.21)
4.16. Definition: taxes on products (D.21) are taxes payable per unit of goods or services produced or traded. The tax may be a specific amount per unit quantity of a good or service or may be calculated as a specified percentage of the unit price or value of goods and services produced or traded. Taxes assessed for a product, regardless of which institutional unit pays the tax, are included in taxes on products, unless they are specifically included under another heading.
Taxes on products, excluding VAT and taxes on imports (D.214)
4.19. Definition: taxes on goods, excluding VAT and taxes on imports (D.214) consist of taxes on goods and services which are payable as a result of the production, export, sale, transfer, leasing or delivery of those goods or services or as a result of their use for their own consumption or the formation of capital for their own use.
4.20. This heading includes in particular:
(f) taxes on lotteries, gambling and betting, other than on taxes;
Income taxes (D.51)
4.78. Definition: Income taxes (D.51) consist of taxes on income, profits and capital gains. They are valued in relation to the actual or assumed income of individuals, households, companies and IFSL. They include taxes assessed in relation to holdings of property, land or real estate assets where such holdings are used as a basis for estimating the income of their owners.
Income taxes include:
(d) taxes on lottery or gambling winnings payable in relation to the amounts received by the winners, excluding taxes on the turnover of the producers who organize these activities, which are treated as taxes on products.”
At national level, starting from the provision of art. 2 of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, and according to which “this Directive shall not apply to gambling activities involving in gambling, including lottery, casino games and betting transactions” gambling is governed by national sectoral rules, constituted in a special package, in the form of: Emergency Ordinance, no. 77 of June 24, 2009, updated, which stipulates that the organization and operation of the gambling activity, on the territory of Romania, constitutes a state monopoly and is carried out under the conditions of this emergency ordinance; Emergency Ordinance, no. 20 of March 27, 2013, regarding the establishment, organization and functioning of the National Office for Gambling (ONJN); Government Decision no. 111, of 2016, comprising the Methodological Norms for the implementation of the Government Emergency Ordinance no. 77/2009 on the organization and operation of gambling; Government Decision, no. 298 of May 29, 2013, implementing the Emergency Ordinance, no. 20/2013 on the organization and functioning of the National Office for Gambling; a series of Orders, instructions and clarifications, of the ONJN, for the implementation of the main or secondary rules.
The conclusion that emerges, after reviewing the national and European norms, is a clear and urgent one: the special regulation of gambling in Romania must be revised and modernized, in order to correspond to the principle of quality of internal norms, but especially to correlate with the principles and objectives to be achieved, in order to harmonize with the rules contained in the official documents of the European Union.
We return with other opinions, in the next issue of the magazine…
