Illegal gambling activity has been and remains a phenomenon that undoubtedly requires state intervention to prevent, stop, and sanction it. In this regard, Romanian legislation provides a series of sanctions and restrictions for entities involved in the illicit operation of gambling.

For example, to prevent and sanction the operation of online gambling without an operating license/exploitation authorization, the Romanian legislator has implemented a blacklisting mechanism, which I will address below.

1. The blacklist – concept

The system based on the blacklist can be summarized as follows:

– Entities that have carried out online gambling on Romanian territory without holding the relevant licenses and, consequently, without paying the relevant taxes due in accordance with gambling legislation, cannot obtain a gambling license/authorization. For this purpose, Art. 15 para. (4) of Government Ordinance no. 77/2009 (in its form until 18.07.2022) provided that the sites of such entities would be included on the blacklist of gambling sites that have operated on Romanian territory without a license until the situation is clarified and will be removed from the blacklist only by the decision of the ONJN Supervisory Committee.

– According to the Methodological Norms for the application of Government Ordinance no. 77/2009, the blacklist is a document drawn up by the ONJN, which includes internet domains, as well as natural or legal persons who have carried out or are carrying out in Romania related activities in the field of gambling without a license.

– The scope of the blacklist has been significantly expanded starting from 18.07.2022, and now includes: (i) websites, applications, platforms, trademarks, brands, and logos of entities that operate or have operated remote gambling without an appropriate license/authorization and without paying the relevant fees; and (ii) websites, applications, platforms, trademarks, commercial brands, and logos of entities that promote unauthorized gambling activities in Romania.

– The procedure for registering and removing websites, applications, platforms, trademarks, and brands from the blacklist should be detailed by order of the ONJN president. So far, only the process of including websites on the blacklist has been regulated by Order no. 147/2015 of the ONJN President. On the other hand, the ONJN has not yet regulated the mechanism for removing websites from the blacklist (although more than 8 years have passed since the entry into force of this sanction system) and the mechanism for introducing and/or removing applications, platforms, commercial brands, and trademarks, as provided in the updated version of Art. 15 para. (4) of Government Ordinance no. 77/2009.

2. The license applicants’ dilemma who wish to use assets identical/similar to those used by sanctioned operators

The Romanian state’s interest in preventing operators who have illicitly provided gambling services to Romanian players from obtaining licenses/authorizations for gambling is understandable, of course. However, the ambiguous nature of primary legislation and the absence of secondary legislation designed to properly detail and articulate the scope and limits of the sanctioning regime based on the blacklist generates the risk of inconsistent and discriminatory interpretations and applications.

I will not analyse all the issues generated by the regulation of the sanctioning mechanism based on the blacklist, but I will focus on a particular aspect that affects applicants who would like to exploit assets identical/similar to those used by a sanctioned operator included on the blacklist.

Taking the example of sites on the blacklist, in the absence of a delisting procedure, until now, in practice, no licenses/authorizations have been granted for the organization/operation of remote gambling accessed through internet domains included on the blacklist, even if the applicants had not been involved in the illegal gambling activity on the territory of Romania.

Since there is no delisting procedure yet, entities not involved in the illicit gambling activity that intend to exploit one or more domains included on the blacklist are indefinitely prevented from entering the online gambling market, to the extent that they would like to use such internet domains. Their only option to obtain a gambling license/authorization remains to use a different domain than those included on the blacklist.

With the expansion of the scope of the sanctioning system based on the blacklist, things seem to get even more complicated for the applicants.

It is known that in order to operate online gambling platforms, operators must make significant investments in technology (i.e. domains, websites, platforms) and distinctive signs for promoting their business (i.e. trademarks, logos). If ONJN’s approach so far regarding internet domains were to be extended to other categories of assets that can be included on ONJN’s blacklist (trademarks/brands/platforms/applications), the consequences for applicants who would acquire the rights to the technologies/distinctive signs from the operators included on the blacklist could be quite unpleasant.

Of course, these operators have certain legal/commercial means to protect themselves from any damages stemming from the hindrances in exploiting the acquired assets (e.g. preliminary due diligence of the asset acquisition regarding how they have been exploited in Romania, including contractual liability clauses in the SPAs/license agreements, obtaining financial guarantees from the technology supplier/intellectual property rights holder regarding the distinctive signs to be used, etc.).

Beyond these protection mechanisms, however, remains the question of whether such an approach by public authorities would be legally correct. Is it fair to establish/maintain such obstacles for online gambling license/authorization applicants?

3. What arguments do honest applicants who want to enter the Romanian market with identical/similar assets to those included on the blacklist have?

First and foremost, it should be noted that the responsibility for the illicit operation of gambling games is a personal one. Each individual/entity is responsible only for their own actions. This is a general principle applicable to the criminal sanctioning regime, as well as the administrative sanctioning regime. As such, the applicant, a third party regarding the actions of the operator included on the blacklist, should not be sanctioned (with a possible refusal to issue a gambling license/authorization) for the actions of the operator guilty of illicit activity.

In addition, the blacklist-based sanctions system should take into account the legal regime applicable to the assets used for operating online gambling games, as well as the possible situations in which a third-party entity may wish to operate those assets. Below are some examples of such situations:

1) both the platform and the applications are essentially computer assets (i.e. a suite of hardware and/or software assets) that can be assigned or licensed offered to both the operator on the blacklist and the applicant by a third party;

2) commercial trademarks, brands, and logos are intangible assets that can be owned by one entity but used by another entity (for example, under a license) or can be transferred from one entity to another. In such cases, an applicant could be (i) a new owner of the trademark/brand/logo used previously by an unlicensed operator on the blacklist, or (ii) a licensee of such commercial trademarks/logos/brands like the operator on the blacklist.

3) domain names can also be assigned and initially used by one entity, and that entity may transfer the right to use the domain to a third party entity that may operate their own sites using that particular internet domain;

4) last but not least, the right to use a domain name is not perpetual but subject to a periodic renewal right. In the event that the renewal procedure is not followed, the holder may lose the right to the domain name, which may subsequently be allocated to another entity (e.g. the third-party applicant for a gambling license/authorization in Romania).

The foregoing examples show that an applicant who uses identical/similar assets to those of the operator on the blacklist (domain name, platform, applications, trademarks) may objectively have no connection with the illicit activity carried out by the operator on the blacklist.

Therefore, the mere inclusion on the blacklist of websites/ platforms/ trademarks/ brands/ logos/ applications, without any specific sanctions targeting those assets by law enforcement bodies/courts, should not prevent a third party (unrelated to the activities of sanctioned operators) from obtaining an online gambling license/authorization, even if they wish to use the same domain names/ platforms/ trademarks/ brands/ logos/ applications as those used by operators included on the blacklist. Otherwise, it could be argued that several fundamental principles/rights, such as the principle of proportionality and non-discrimination or the right to property and the freedom to carry out economic activity, are being violated.

Therefore, any such situations should be properly addressed by the regulatory authority in the order that will regulate the process of registering and removing websites/ platforms/ brands/ trademarks/ logos/ applications from the blacklist.

ONJN attempted to issue a draft order regarding the procedure for registering on the blacklist and removing from the blacklist (the draft order was published for public consultation on 08.12.2022), a process that has not yet been finalized. Given the hastily introduced changes in the summer of 2022, the regulatory authority seems to still have difficulties in identifying some appropriate, coherent and proportional rules of application for the blacklist-based sanction system.

It remains to be seen what ONJN’s response will be to these challenges.

4. Conclusions

Critical voices will argue that the gambling industry is a dangerous activity for society and that any measure to suppress access to this industry would be welcome. Like it or not, gambling is part of the economic, social, and legal landscape in Romania, and the rules under which the gambling industry plays, including the sanctioning regime, must be regulated and applied while respecting a series of constitutional principles.

Imposing broad and non-discriminatory restrictions on entities wishing to enter the Romanian market will not stop the phenomenon of illicit online gambling, but will make the Romanian market less attractive and competitive (with indirect negative impact also for Romanian players). Last but not least, a utilitarian argument must be mentioned here. Gambling operators contribute significant sums to the state budget (given the high level of taxes on gambling revenues, as well as those for obtaining and maintaining online gambling licenses/authorizations), and through an aggressive approach towards honest operators, the Romanian state will miss the opportunity to collect these additional revenues for the state budget.

Sergiu Crețu, Managing Associate ȚUCA ZBÂRCEA & ASOCIAȚII

* The ideas and opinions expressed in this article are solely those of the author and do not necessarily reflect the views or policies of the organization in which they work.