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Gambling Regulatory: Slot ban in small towns: A legal measure?

June 2024

By Ana-Maria Baciu and Andrei Cosma

The above title summarizes the recent legislative change affecting the land-based gambling industry through the adoption of Law 107/2024. This law, among other amendments, also introduces a new authorization condition for slot machines, namely that the proposed premise must be located in a locality “with a population greater than 15,000 inhabitants”.

It is not the purpose of this article to analyze the appropriateness or standards of transparency that should characterize any law. However, we will explore a series of issues together with the legal arguments that support or criticize this new measure, considering that the implementation of the new legal framework generates numerous difficulties in practice.

“We only ban slots” – Differential/discriminatory treatment?

Law 107/2024 introduces a restriction exclusively for slot machines. Other types of land-based gambling, such as betting or lotto agencies, can continue to operate in localities with less than 15,000 inhabitants.

Inherently, a licensed slot machine operator could invoke a discriminatory treatment by comparison, for example, with bookmakers who may continue to operate in small towns while slots are prohibited in the same towns. In other words, both operators are required to pay license and authorization fees and should benefit from the applicability of art. 15 para. (8) of GEO 77/2009 which (still) provides expressly and without differentiation that the license and authorization grant the right to operate “on the entire territory of Romania”.

The prohibition of discrimination is a constitutional principle that can become the basis on which arguments of unconstitutionality could be built against Law 107/2024. Also, predictability of the law is a fundamental principle, but such standards (which remain, unfortunately, only theoretical) did not stop the adoption of a law in a “fast forward” manner (the wording does not belong to us, it is taken from the public statements of the politicians involved, in the context of adoption).

On the opposite end, supporters of the law could argue that a restriction is justified only for slots by comparison to other categories of gambling because slots can generate a higher degree of addiction and thus the measure is justified for reasons of safety and public health. The strength of this argument obviously depends on the existence of solid studies that prove the increased addiction issues created in Romania by slots by comparison to other types of gambling, studies that have not been presented, and of which we are not aware of existing.

“We create the ban only in small towns” – Redefining the legal logic of issuing an authorization?

Strictly speaking, Law 107/2024 only introduces a new authorization condition, namely that the space proposed for operation, if it includes slots, should not be located in a locality with a population of less than 15,000 inhabitants.

This new requirement raises an interesting issue from a technical perspective, namely: is the authorization for slot machines inextricably linked to a specific premise declared at the time of authorisation? Our answer? Not really.

The gambling legislation states that the authorization for slots is granted for each equipment and not for a specific location. It is true that both GD 111/2016 and GEO 77/2009 provide that the authorization file must contain certain documents about the space proposed for operation. However, the legislation also allows the movement of an authorized slot from one location to another, and this situation is extremely common in practice (for example, in the meeting of the ONJN Supervisory Committee of 13.05.2024, 106 such requests were submitted for approval).

That being the case, Law 107/2024 suffers from the perspective of the regulatory technique because in reality the legislator’s intention seems to be to prohibit the operation in small localities, and not to condition the granting of the authorization to a specific location. What will happen if, at the initial time of authorization, the operator submits proof that the respective locality meets the minimum number of inhabitants, but the population inherently fluctuates during the authorization year? Should this fluctuation be monitored? And if so, by whom? By the ONJN, the town hall or the local police or even by the operator?

“We ban now” – Retroactivity?

We kept the issue of retroactivity at the end because it was probably the most debated from a legal perspective recently. Of course, there can be conflicting interpretations in this case as well.

On one hand, authorizations for slots are granted for a period of one year (and for each machine separately), so this may support the interpretation that an authorization issued before the entry into force of Law 107/2024 is inherently subject to the legal regime that existed before this law which did not provide for the requirement related to localities with more than 15,000 inhabitants. In this logic, an operator who obtained an authorization valid from 01.04.2024 could claim that it can operate the device in towns with less than 15,000 inhabitants until 31.03.2025 when the authorization will expire. This interpretation seems to have been initially adopted by ONJN through the initial statement published on the institution’s website on 26.04.2024 and which evokes the principle according to which Law 107/2024 cannot retroactively apply to a legal relationship born before its entry into force.

On the other hand, the constitutional principle regarding the non-retroactivity of the law, although it depicts an apparently simple rule, presents numerous nuances that are the subject of extensive jurisprudence of the Constitutional Court. Without intending to turn this article into a technical and dry material, one of these nuances concerns the future effects of legal situations. In short, this concept implies that a law is not retroactive if it only changes for the future certain circumstances of a right born before its entry into force. In the present case, supporters of the immediate application of the provisions of Law 107/2024 could argue that we fall into such a hypothesis because the law does not invalidate the authorizations issued under the old law, but only modifies, for the future, the manner in which such authorization can be operated. This interpretation is also reflected in the update ONJN press release issued on 29.04.2024, in which it is basically claimed that the authorizations issued before the law remain valid, but the operators must “immediately” move the slots to localities with over 15,000 inhabitants.

Instead of conclusion

The gambling industry has seen so many sudden legislative changes that it became naive to claim predictability and transparency. But, when the political will is to modify a law in a non-transparent and “fast forward” manner, the law becomes inherently more flawed and full of vices that can be exploited through legal approaches.

This article was first published by Casino Inside magazine. The version in Romanian is available HERE.

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