“The big operators are relatively happy with the new regulations and the timing of their arrival”

By Mihnea Popescu-Grisogono

➤ How long have you been in the gaming industry and how did you get started?
Since 1988, at that time I was working at the Institute of Atomic Physics and I was an evening student in electronics.
Because I had problems with the people at IFA in the sense that they didn’t really give me permission to leave college early, I decided to look for another job. I found an announcement about a competition at IAPIT (Enterprise of Leisure for Tourism) and that’s how I ended up as a technician at the service for gambling and fun games. The revolution followed… immediately after the revolution the Novomatic company from Austria entered Romania and I became the chief technician for Romania. In 1991 I established and coordinated the Novomatic branch in Turkey and Turkish Cyprus.
In 1992 I decided to start my own business, that’s how Smart Games appeared, I continued the collaboration with Novomatic both in Romania and Turkey, Croatia, South Africa or the Czech Republic. I can’t say that I ended the relationship with Novomatic but in 1996 together with 2 other ex-Novomatics (Viktor Mayer and Michael Order) I founded Safe Games Ltd, a company in Las Vegas where we developed a monitoring and control system for gaming tables from the casino using RFID and CCD image recognition technology. The system read the value of the chips on the game table, detected their position, the client and the cards of each player and the dealer, after which it verified in real time the correctness of the game, the payments and transmitted the results to the existing casino management system. Over time I have integrated this system in casinos in Las Vegas, Australia, Malaysia, Argentina and Europe, which helped me understand the complexity of this industry both from a technical, operational, management and jurisdictions point of view.
Since 2002, back in Romania, I have continued to exploit games of chance but also to produce equipment and accessories for this industry.
I thought it was appropriate to share the experience gained over time and so I started working with various organizers in the country to help them develop and optimize their business.

➤ What does it mean to be a consultant in this industry?
Consultant is not the right name for the services offered by Smart Games, we offer software and IT maintenance for the optimization of the activity of organizing games of chance, graphics and design for gaming rooms, jackpot systems and advertising campaigns, advertising production and representation services for organizers both in the relationship with ONJN and with manufacturers/ distributors of gaming equipment, service providers in the field such as monitoring, online platforms, evaluation bodies, advertising or consultants specialized in different fields (financial, legal, GDPR, AML, management, etc.)
To answer your question, a consultant must first of all be up to date with how the industry works, with the technology behind it, with the news that appears in the field but also with the legislative, financial-accounting, marketing or advertising side.
The consultant does not know everything, that is why he must have or collaborate with specialists and people capable of understanding the field of gambling applied in his specialization, whether we are talking about taxation, accounting, legislation, marketing, advertising, especially since lately all kinds of legislative changes or related regulations are constantly appearing.

➤ How has the industry evolved over the years?
Although the gambling industry was considered conservative, in recent years it has changed enormously. It is true that the casino segment has kept somewhat the same style, but technology has massively influenced the slot-machine segment, sports betting and especially online.
Think about what a slot machine looked like in the 1990s-2000s and what it looks like now. At that time SAS was in its infancy and was mainly used in big casinos overseas, monitoring systems had just appeared, online was just a dream and slot machines were either with electromechanical discs or step by step motors or had CRT monitors and there were maximum video poker or pokies machines (the Aristocrat ancestor of today’s multi-liners), wide area jackpot systems were the maximum of technology and bets were still made with cards on which you checked the combination.
Now we have gaming devices that compete with highperformance computers, video images worthy of Hollywood, surround sound, 3d animation, large screens with HD or Ultra HD resolutions, touch screens, highperformance player tracking and awarding systems.
In live casinos (traditional) we have chips with smartchips, video cameras with high-performance image recognition software, player analysis software, anti-fraud systems, artificial intelligence systems that analyze the behavior and performance level of players and dealers such as and high-performance management software of the entire complex where gambling is carried out.
Online, everything is new, it doesn’t have time to get old, because it’s easiest to implement new technologies here, and if you don’t keep up with the technology, you risk that the software will no longer be compatible with the hardware. The online segment has the greatest dynamics of change and due to the generational change will have the largest share in the industry.
Also in recent years we have witnessed the disappearance of some types of games or activities, either because the players have disappeared or because new types of games that are much more attractive have appeared. I am referring to bingo, classic poker, video poker machines or automatic Texas Hold’em tables and soon the Romanian Lottery which has not been able to step into the 21st century, implement online tickets or modernize its locations what remained like 20 years ago.

➤ What do you think about the new tax regulations? What will be on the short, medium and long term effects?
As usual when it has problems, the Government increases taxes… you just don’t want them to get down to business to study the field in which they are changing the legislation, to consult the entities directly involved to make a budget projection not only of what they will collect but also of the sustainability of the changes for the charged target… it’s too much work and he doesn’t want to tire his employees either.
Unfortunately, one of us comes out on the job and says that gambling is taxed with 1%, he doesn’t know if it is, so he didn’t check the situation, he believed the „specialist” next to him, and look like that, everyone’s eyes and mouth on the gambling bastards who don’t give anything to the State. I don’t blame the „specialist”… maybe he told her that gambling contributes 1% of GDP to taxes, but the man is not able to understand, he doesn’t read the law that he and his colleagues voted for and advance with 40% taxes.
For all this we are to blame, we chose them and we let them be incompetent – in all areas!
Now, nothing to say, money is needed in the budget and where to get money quickly?… from cash cows gambling, cigarettes, drinks and in general from whoever pays taxes regardless of whether they are natural or legal persons.
Regarding our industry, let’s see what changes we have and try to discover the Government’s strategy for the future and the effects of implementing this strategy.
Lottery – increase for licensing fee by 17% and authorization by 11%;
Fixed odds betting – 300% license fee increase and 2% authorization;
Casinos – increase for licensing fee by 21% and authorization by 8%;
Poker Club – 17% license fee increase and 7% authorization fee;
Slot machine – increase for licensing fee by 275% and authorization by 28%;
Bingo – increase for licensing fee by 15% and authorization by 2%;
Online games – increase for licensing fee by 160% and authorization by 7%;
VLT – increase for licensing fee by 20% and authorization by 0%;
The conclusion is relatively simple – if we were to respect the motivation of the Government Ordinance, then the organizers of bets and slot machines must be reduced by 30% and for online (the new cash cow) the tax increase should feed the State Budget.
The organizers, who have long been divided into two camps with different visions and interests, failed to reach a common denominator in the negotiations with the Government. We hoped that after the pandemic they learned something, but unfortunately everyone made their own proposals and we found ourselves with higher taxes than the ONJN requested.
Now the big operators are relatively happy with the new regulations and the timing of their arrival, but let’s not kid ourselves!… they are not happy, but they are satisfied that some of the COMPETITION may be gone.
The small and less visible organizers in the government area are upset, they do not understand how it is possible to increase some taxes so drastically at such an inopportune time, after two years of pandemic in which this area has been cruelly affected, less than one year until the implementation of Order 404 and in the midst of an energy, food, humanitarian crisis and what other crisis is coming.
Short-term effects – direct budget revenues (authorization fee and vice) probably slightly increased, the bankruptcy of some organizers but also companies from small towns that had association contracts with organizers of sports betting or slot machines and that without the income from the „slots” they will no longer face the expenses, the loss of jobs for several thousand employees, the increase in the number of black machines. Online players will adapt immediately, there will be no more account withdrawals of more than 10,000 lei, so maximum tax on gambling winnings of 3%. The same with fixed-quota bets – stakes that ensure winnings up to the threshold of 10,000 lei, it is better to make 10 tickets with the same quota, but for winnings of 100,000 lei you still pay 3% tax.
Medium-term effects – a resettlement of the market with moves to merge small firms into gaming holding companies (so not a spectacular increase in budget revenue from the license fee), the disappearance or reduction of fewer machines performances that do not allow covering the expenses of the operators, again lost jobs for several thousand employees, the continuous increase of black machines and corruption, nor a significant increase in the casino segment.
Long-term effects – the pseudo-monopolization of the gambling activity by a few large companies that will transfer their profits to various tax havens, thus without indirect revenues to the budget.

➤ Why do you think the Government made these new tax changes? And I’m not just talking about gambling.
For more money and that’s all, otherwise I don’t think the Government or the political class has a vision for the future.
I’m not saying that all the changes are absurd, but you can’t screw up like that!, you know we’re recovering after two years when the economy was on the rocks.
You, the government and the parliament, gave discretionary help to whoever you thought would help you vote, you threw away our taxpayers’ money on enough vaccines for half of Europe, it’s true you borrowed to pay technical unemployment and also special pensions , high salaries in the state, holiday vouchers and contracts of the crooks next to you, you received money from the EU to generate economic growth but you were unable to do anything and now when another major crisis is predicted all on our money are you rushing?
What if instead of overcharging us you used people capable of doing projects?
Fire those incompetents to whom we also pay high salaries, switch to digitization because we have the best net in the world and not thanks to you, shrink the budget apparatus because that’s why we can’t find labor – because everyone wants to a state where the pay is good and not much is done, stop ticking the state companies… make them profitable, stop spending our money on super allowances and bonuses, if you keep taking money from us for health, do something with the medical system, with the money we give you for unemployment pay the pensions of those who contributed to them don’t take from the pension fund (our money) to pay special pensions, teach our children in modern schools with real teachers, make us good roads that we die on our heads on the congested roads.
Show us that you do all this and see what taxes you collect in the budget because we, these taxpayers, entrepreneurs, will develop this country and we will be happy to give higher taxes.

➤ What plans do you have in general, and for the industry activity in particular?
This is where you put me in trouble, I can’t make plans anymore because I’m not sure that in 3 months another smart guy won’t come and change everything.
I can only tell you what I want. In general, apart from health, I wish everything I wrote above.
Especially for the industry primarily predictability, a legislative framework that will remain so at least for the duration of the validity of a license.
I don’t want to be charged a file review fee to an entity that I pay anyway with my money and let’s be serious, the documents in the file have been reviewed for a fee by other entities that released them, that only that’s why we pay to the certification bodies the correctness of the game programs and equipment, to the Trade Registry Office the authenticity of the rental/association contracts for the work points and the ascertaining certificates, to the ANAF the tax certification certificate, to the gaming equipment distributors the game regulations, etc.
Maybe it’s not about money, it’s not a big amount, but at least find other reasons for this fee!, otherwise we’ll find ourselves paying an analysis fee for submitting the Single Declaration.
I want a strong association to defend our rights, I want us to succeed in changing the stamp of blameworthy activity from the public opinion and the governors, I want to be able to open an account at any bank for the company with CAEN code 9200, I want ONJN to continue to participate in seminars, exhibitions, congresses, round tables where we can work together to find the best methods to make this activity as transparent, efficient and responsible as possible.

➤ Do you think spectacular things can still happen in the industry in our country?
Spectacular things will surely happen. Let’s think that there are still enough companies that are not present on our market, despite the war in Ukraine, life will go forward and so will globalization.
As long as the governments that will follow will not tighten the tap harder and the Romanian market will still be profitable, a lot more will happen, it remains to be seen how spectacular.

➤ You are a partner with us in two projects – Club Casino and Central European Gambling Summit. What made you become a partner?
We made the Club Casino format together and it aims to reveal the man behind the brand, it’s a free discussion in which the guest tells us about him, about the business he’s involved in, we sneak news and gossip from the industry and comment on them. It’s not an interview because we don’t have a set of questions prepared; we just go where the discussion takes us. I think that’s the only way you can get an idea of a man with whom you have a business relationship but whom you’ve never met or only met at the office or at an event. At Club Casino there is laughter and in general there is a relaxed atmosphere, without inhibitions, banalities are also said, but in general I hope that the listener stays with something at the end.
Central European Gambling Summit for me is the natural continuation of Club Casino. We met at Club Casino, I got an idea of what kind of person you are now we meet at CEGS and we have a starting point.
Both projects aim to bring closer the entities active in the industry, to discuss the problems that others have encountered or the solutions to the problems, to promote new technologies or equipment, to explain some marketing concepts, the application methodology of laws and regulations in the field.
And because we liked the atmosphere at Club Casino, we thought that a more non-conformist exhibition without stands, where the exhibitors are scattered around the hall where you also find manufacturers, distributors, technical certifiers, service companies, monitoring, law firms , software producers, AML or GDPR consultants, ONJN representatives and of course organizers.
… there was no way I could not become a partner in such a thing!

➤ What do you want to convey to our readers?
I can only wish you strength and patience to get through these complicated times!

Articolul precedentROMBET, Gold Partner at Exact Time in Gambling seminar