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A recent audit has revealed that the failures of the Romanian gambling regulator might be responsible for almost $1 billion in tax negligence.
In a report released last Friday (Feb 21), Romania’s Court of Auditors criticized the National Office for Gambling (ONJN) for failing to fulfill its statutory responsibility to monitor and regulate online gaming operations since its establishment in 2013. The court also announced that it’s planning to notify the country’s prosecution bodies about these failures.
The report highlights that the main issue stems from the ONJN’s failure to utilize its legal right to gain remote access to the systems of all licensed online operators. This oversight has led to potential discrepancies in the collection of authorization fees, mainly due to differences between taxation and return to player (RTP) levels.
Operators used this loophole to adjust payout percentages and increase profits while underreporting earnings to the regulator. Malta notably reduced its RTP requirement from 92% to 85% in 2021.
The report criticized the ONJN for not looking into the effects of lower RTP requirements in Malta, where many licensed Romanian operators are based. This significantly affected state budget revenues, resulting in over 78 million lei ($16.4 million) in unpaid tax differences between 2022 and 2023 alone.
However, the Court of Auditors is claiming that the potential difference in undeclared authorization fees between 2019 and 2023 could be up to 4.8bn lei ($1 billion).
“Since its establishment until now, the National Office for Gambling (ONJN) has never monitored or controlled the activity of remote (online) gambling organizers and has not fulfilled its legal duties such as analyzing the data stored by the game organizers or verifying the accuracy of their periodic reports,” the report stated.
“During the mission, external public auditors found numerous irregularities in the office’s activity. An important consequence of these irregularities is the failure to generate state budget revenues at a level corresponding to the collection potential from this area of economic activity.”
ONJN Asked to Update Procedures
The report also listed several other failures by the country’s gambling regulator. It accused the office of operating without an approved control plan in 2023 and not conducting any control actions on online operators regarding tax verification and ensuring the proper financial guarantees were available.
The ONJN’s Responsible Gambling Promotion Service was also criticized for collecting annual revenue but not implementing programmes to educate and prevent problem gambling or protect minors and other vulnerable groups.
The Court of Accounts has sent the regulator a series of recommendations, including conducting immediate control missions focusing on owed taxes, reviewing operational procedures for supervision and control, and implementing proper access to remote operators’ servers.
Romania licensed online gambling in 20009, but the market didn’t fully launch until 2013, when the National Office for Gambling (ONJN) was established. The regulator has since been in charge of regulating the sector, including issuing licenses and monitoring compliances.
Source: iGamingBusiness
