Romania’s 40 Percent Tax on Gambling Withdrawals May Benefit Black Market

Posted on: June 29, 2022, 07:20h. 

Last updated on: June 29, 2022, 07:29h.

Romania plans on implementing a 40% tax on online gambling withdrawals consumers make. The decision, according to an industry trade group, will have dire consequences for the gambling market, as well as the country.

Bran Castle in Romania
Bran Castle in Romania, home of the myth of Dracula. Romania is planning on sucking more life out of online gambling through a 40% withdrawal tax. (Image: Dreamstime)

The imposition of a 40% tax on withdrawals will lead to a reduction in the number of players on licensed sites in Romania. As they search for an alternative, they will likely choose black market operations, predicts the Association of Remote Gambling Organizations (AOJND, for its Romanian acronym).

As a result, the losses will be for all parties. Not only will players and licensed operators be harmed, but so will the government. In addition, the shift to offshore operations will lead to a decrease in revenue in the short- and medium-term, according to the AOJND.

One Step Forward, Two Steps Back

Romania has been rebuilding its gambling industry. But the new change doesn’t appear to be a step forward. In the country, statistics show that approximately 90% of all online gaming activity goes through licensed sites. This was a challenging feat to achieve, but the new tax will have the market heading in the other direction.

Odeta Nestor, the president of the AOJND, said in a statement that online gambling is primarily an entertainment industry, not a source of revenue for players. More than 80% of those who withdraw money after participating in online gambling withdraw amounts up to a maximum of RON1,000 (US$211.80). Most of them were much smaller, on the order of RON200 to RON300 (US$42 to $63).

In essence, Nestor points out, this means that most players don’t pursue the winning at any price, but, instead, value the pleasure of competing. To these people, online gambling is a “source of reducing daily stress.”

Romania already has a successful online gambling industry, according to Nestor. However, the introduction of the tax could throw it into turmoil. This depends on the ability of the authorities to maintain an attractive legislative and fiscal framework.

In response to the proposed tax change, AOJND, as an entity with its finger squarely on the pulse of licensed gambling in Romania, has issued a call to the government. It is ready to lend its expertise, and hopes it can convince the government to hold consultations within the industry to develop an effective plan.

No More Money for the Government

AOJND estimates that such a tax would reduce by more than 50% the taxes gambling operators pay. In addition, it would oblige operators to drastically reduce investments in local software development units and advertising. Just as important, it will force them to cut the amount they spend on sponsorships of Romanian sports organizations.

As I said before, AOJND has the expertise and readiness to be a partner of the government for the adoption of the best solutions in the interest of all parties. The first condition, however, is the existence of a real, sustained and honest dialogue. We are ready to participate in the discussions, and we have the necessary openness to find the best solutions,” said AOJND President Odeta Nestor.

The main purpose of the AOJND is to promote and protect the rights and interests of remote gambling operators licensed in Romania. Its members include Betfair, eFortuna, Netbet, PokerStars, SportingBet, Stanleybet, Unibet, Baumbet, Betano, Circus, Maxbet, Efbet, Public Win, and WinMaster.