Colombian Trade Body Raises Alarm over Increased Gambling Taxes

Colombia’s gambling sector faces increasing challenges after the government effectively imposed a 19% value-added tax (VAT) on online betting, stirring concern among regulators and industry stakeholders. The Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) warned that the sudden tax increase could drive operators out of the market, destabilize state revenue streams, and fuel a boom in illegal gambling.

Higher Taxes Could Push Companies out of the Market

The Colombian Ministry of Finance and Public Credit’s recent decision to eliminate the VAT exemption for online gambling has faced severe criticism from industry stakeholders. Fecoljuegos president Evert Montero noted that the government’s decision doesn’t consider the industry’s complex operational and technological structure and could endanger the sector’s viability.

Montero was highly critical of this new tax regime, lambasting the government for implementing drastic measures without consulting the affected parties or considering the technical challenges involved in such rapid reforms. He noted that the increased operational costs could have substantial long-term implications as many licensed operators could face difficulties adapting to the changes.

Without a transition period, operators will face serious difficulties complying with the new requirements, which could lead to the partial or total suspension of activities, with serious economic and social consequences.

Evert Montero, Fecoljuegos president

Online gaming has been a primary driver of gambling revenue expansion for Colombia. According to Coljuegos, Colombia’s gambling regulator, revenue from national and territorial games of chance reached $1.5 billion in 2024, with online betting growing 31.9% year-on-year. In contrast, physical gambling and traditional lottery-style games recorded more limited growth.

The Changes Could Become Counterproductive

Fecoljuegos has identified several critical risks associated with Colombia’s updated VAT policy, urging the government to reconsider these measures and avoid destabilizing the regulated sector. The organization warns the new VAT will push the overall tax load on the gambling sector to 70.5%, leaving firms with less than 29.5% of revenue to cover operating costs.

According to Fecoljuegos, the government gave companies only five days to adapt systems for VAT collection, invoicing, and tax reporting, an unrealistic assumption that risks significant business disruptions. Furthermore, the short timeframe means operators will struggle to feasibly receive technical certification for these tax-related system changes, risking unintentional non-compliance.

Unlicensed gambling represents another substantial concern as stakeholders fear the increased tax burden may push players to unlicensed websites, reducing tax revenue and exposing users to unregulated and potentially unsafe gambling platforms. While Coljuegos has blocked 10,000 illegal gambling websites and social media accounts, this change could jeopardize the regulator’s efforts.