SANCTIONS FOR NON-PAYMENT OF THE CLASS II LICENSE 4g3s6

by Dumitru Loredana-Marlen, Senior Associate Attorney, Luca Mihai Catalin Law Office 6d6w4u

As is well known, the activity in the field of gambling is carried out by several players. In all cases, the sine qua non condition, so that an economic operator may carry out activities in the field of gambling, is represented by the need to obtain a license associated to the type of activity that specific economic operator wishes to carry out. The gambling legislation approaches licenses that can be granted in the field of gambling in a distinct manner, as follows:

• For economic operators that want an actually implication in the organization of gambling activities, the law stipulates the need of obtaining a gambling organization license adequate for the type of activity wished to be carried out (ex.: remote gambling, traditional gambling)
• For economic operators that want an adjacent implication in the field of gambling by rendering services associated to the actual organization of gambling activities, the law stipulates the need of obtaining a class II license adequate for the type of activity wished to be carried out (ex.: payment processing, production and/or distribution of specialized software, d partners, certifiers etc.)

As the organization and development of gambling activities on Romania’s territory represent state monopoly, licenses in the field are issued by the National Office for Gambling.

Furthermore, the licenses are granted solely after the payment of the tax associated to the type of license requested, this becoming income to the State Budget.

Paying the license tax represents an essential requirement not only for obtaining the license, but also for maintaining the license’s validity, and, in case of non-payment or delay in payment, there are sanctions that arise depending on the type of license for which payment is performed. The present article analyzes the sanctions which may arise as a result of non-payment/delayed payment of the tax associated to the class II license, according to legislation in force in the field of gambling.

CLASS II LICENSE

According to item 1, sub-item I, letter J under the Annex of Government Emergency Ordinance no. 77/2009, the class II License is granted to legal entities involved in the field of traditional or remote gambling as follows:

(i) operators that offer management and hosting facilities on the gambling platform;

(ii) economic operators that carry out the distribution activities, program/device offerings for carrying out or managing the gambling activity, repair and maintenance services providers for gambling means, import, export, intra-community procurement, intra-community delivery, or other activities with game components or means;

(iii) payment processors;

(iv) companies that produce and/or distribute specialized software in the field of gambling;

(v) s;

(vi) certifiers;

(vii) auditors;

(viii) conformity assessment bodies.

Concurrently, according to art. 148 of the Methodological Norms for the implementation of GEO 77/2009:

(1) The class II License is granted, upon request, to economic operators that meet the requirements for carrying out each activity.

(2) The class II License is valid for 10 years as of its granting, with the condition of paying the associated taxes as follows:

1. a) for the first year, until the 25^th of the month following the one in which the documentation submitted by the economic operator was approved;
2. b) for the following year, with at least 10 days before reaching the one year period.

The sanctions for the non-payment/for exceeding the due date for paying the license tax by more than 30 days are provided under art. 17, para. (2), letter a) of GEO 77/2009 regarding gambling, according to which The Commission may impose, depending on the determined consequences, the measure of revoking THE GAMBLING ORGANIZATION LICENSE for: a) non-fulfillment of payment obligations towards the general consolidated budget (including the license fee) or their payment, according to the legal provisions in force, with a delay of more than 30 days from the date on which the respective obligations are due under the law.

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The results of analyzing these provisions are as follows:

• THE DOCUMENT WHICH CAN BE THE OBJECT OF REVOCATION – The revocation measure may be imposed only with regards to a license granted for the organization of gambling activities, and not with regards to licenses issued for activities associated to gambling (like class II licenses) aspect which can be concluded from the expression “the measure of revoking the gambling organization license”;
• THE CONDITION OF THE JUSTIFIED/REQUIRED REVOCATION – The measure of revoking the license for organizing gambling activities represents a last resort solution, it being imposed by the authority solely as a result of the analysis of effects/consequences determined by the non-payment/non-payment of taxes within the legal term aspect which can be concluded from the expression “depending on the determined consequences”;

The following arguments also the interpretation according to which the sanction of revoking the license does not apply with respect to class II licenses:

• According to the complete interpretation of provisions under art. 17, para (2), followed by the analysis of all cases/situations (listed within the article) which may determine the revocation, there is no doubt that the class II licenses issued for activities associated to gambling do not fall under the incidence of those provisions, as most situations for which the authority may dispose the revocation of the license are in the scope of stricto sensu organization of gambling activities (: b) the organizer no longer has organizing gambling activities as its primary object of activity; g) organizing fraudulent gambling, h) non-constitution of guarantee in the amount, form, and upon the date provided within the present emergency ordinance; h¹) ascertainment of certain irregularities with regards to underlining granted winnings), which means that the provisions under art. 17, para. (2) are of strict interpretation and application, and the measure of revocation cannot be extended without substantiation to other persons or situations which are not provided for within its content.
• From the systematic interpretation of provisions under art. 17 of GEO 77/2009, it results that there is a clear distinction between the license for organizing gambling activities and the class II license for activities associated to gambling.

As such, this distinction is clearly seen from the content of provisions under art. 17, para. (9¹), according to which the O.N.J.N. Supervisory Committee can suspend the activity of gambling organizers or of economic operators holding a class II license, upon the substantiated proposal of the O.N.J.N. specialized directorates, until the situation that generated the suspension ceases, thus leading to a clear differentiation between the types of licenses and, in consequence, between the types of measures that can be applied with regards to each of them.

The conclusion that can be drawn from the analysis of these provisions is that, in the case of non-payment/delayed payment of the license tax with regards to the license for organizing gambling activities, both revocation and suspension measures may be imposed, while for the class II license, the measure which can be applied is that of suspending the activity until the situation which led to its suspension ceases.

Even in the situation in which art. 17, para. (2), letter a) would be interpreted in the sense of applying the revocation measure even with regards to licenses issued for activities associated to gambling (therefore, including class II licenses), the measure would not be a justified one as long as the non-fulfillment/delayed fulfillment of the obligation to pay the license tax did not produce consequences (according to art. 17 paragraph 2 letter a)) nor any infringement of any protected value that may justify it, the authority being required, by law, to apply a lighter sanction (eg suspension of the license), as the measure of revocation does not meet, according to the normative text governing it, the condition of the justified / necessary character of its disposition.

If, for example, prior to the issuance or communication of the license revocation decision as a result of the non-fulfillment of the license payment obligation, the license tax is paid, the revocation measure cannot be imposed or, if it has already been imposed, it must be removed, as, having fulfilled the payment obligation (even delayed), no legal consequences were provoked, the revocation decision not having effect, as long as it was not communicated to the recipient.

With regards to the date as of which the license revocation decision produces effects, in accordance with art. 12 of Annex 2 to GD 298/2013, the Decision (whichever it may be – cancellation, revocation, suspension) produces effects as of the moment it is communicated to the legal entity or its representative, or, upon a subsequent date specified in the communicated decision, in accordance with the law. Thus, it results that the revocation does not produce retroactive effects, but solely future ones.

In conclusion, there is no doubt whatsoever that there are similarities between organizing gambling activities and the activities associated to gambling, as there is no doubt that they are also different, holding different roles in the field of gambling. Even if the current tendency is to incorporate sanctions for the non-payment of the license tax without differentiating between the license for organizing gambling activities and the class II license, in our opinion, there are differences between manners of sanctioning, and they solely represent a natural consequence of differences already existent between these two license categories.