Drastic Regulatory Failings Could Have Cost Romania €900M in Lost Taxes

The Romanian Court of Accounts (CCR) has uncovered widespread regulatory failures and tax collection negligence by the country’s gambling regulator, the Romania National Office for Gambling (ONJN).

According to the CCR, between 2019 and 2023, the ONJN failed to properly monitor gambling operators, leading to potential tax revenue losses of as much as €900 million.

Could Better Oversight Have Saved Romania Millions?

The CCR audit revealed that ONJN did not enforce proper licensing audits or verify operator-reported financial data. Instead, operators were allowed to declare their own revenue figures, which the regulator took as truthful, leading to potential lower revenue reporting and, as such, tax receipts.

Another key issue identified in the report was ONJN’s failure to verify the Return-to-Player (RTP) rates declared by operators. Many online gambling operators that received full Romanian licenses are registered in Malta, where RTP requirements were adjusted from 92 percent to 85 percent in 2021.

According to the audit, the ONJN’s failure to enforce correct taxation procedures resulted in:

• Up to RON 1.8 billion (€365 million) in undeclared fees in 2023.
• RON 1.2 billion (€243 million) in undeclared fees in 2022.
• Significant tax revenue gaps between 2019 and 2021.

Crypto casinos remain unlegalized in Romania, and the lack of proper oversight offered by the state’s gambling regulator could have encouraged more operators to operate in a regulatory gray area as they know enforcement of sanctions is unlikely.

The ONJN was found to have potentially breached Romanian law, in never implementing a secure monitoring terminal that would have allowed real-time access to operator servers and financial records.

Furthermore, the absence of proper IT controls meant that ONJN had no mechanism to cross-check operator revenue reports with actual transactions – creating a large fraud and tax evasion risk.

The CCR report also found that the regulator had failed to monitor how licensing fees were allocated, creating stark financial inconsistencies throughout the period examined.

Currently, the Romanian Court of Accounts has not notified the criminal prosecution authorities. However, if it decides to do so, regulator officials could face charges of negligence in public office and failure to enforce gambling laws.

Romanian industry experts believe that the turmoil at the top of the state regulator is at least partly to blame for the negligence. Since 2018, ONJN has had five different Presidents, contributing to a lack of public trust in regulation.