Colombia’s Top Court Freezes Online Gambling Tax Hike

The Constitutional Court of Colombia has stepped in to block a tax increase on online gambling, delivering a significant blow to President Gustavo Petro’s financial plans. The decision, reached by a 6-2 majority, provisionally suspends Legislative Decree 1390 of 2025, which envisioned a 19% value-added tax on online betting and gambling services.

Rising Economic Pressures Led to Drastic Measures

The proposed levy was introduced during Colombia’s declared state of economic and social emergency. This mechanism empowers the executive branch to enact temporary measures when national stability is under threat. Petro’s administration had projected the decree would help raise roughly 11 trillion Colombian pesos ($3 billion), largely by taxing sectors viewed as undertaxed or rapidly expanding, such as online gambling.

Magistrate Carlos Camargo, the person behind the report that motivated the court’s decision, warned of serious flaws in the emergency decree and pushed for its immediate suspension. His 86-page opinion highlighted irregularities in the signing of the decree and a lack of detailed justification for the government’s decision to invoke emergency powers. The court agreed with these warnings and paused the decree until a final ruling on its constitutionality.

Legislative Decree 1390 of 2025 will NOT TAKE EFFECT until this Court issues a final decision regarding the constitutionality of the mentioned decree.

Constitutional Court of Colombia ruling

While the administration presented the tax as essential to address fiscal challenges, the court was adamant that constitutional safeguards still apply. Camargo noted that allowing the tax hike to proceed without a full constitutional review could undermine the nation’s foundational principles and lead to irreversible consequences. 

Gambling Remains a Vital Revenue Source for Colombia

The decision offers a short-term reprieve for Colombia’s gambling industry. Operators had warned that a sudden VAT hike would place an additional burden on consumers, pushing players toward unregulated offshore platforms and undermining recent efforts to channel bettors toward licensed offerings. While the court’s action buys time, the threat of a tax hike remains.

Colombia has increasingly turned to gambling as an additional revenue stream to cover its budgetary needs. Authorities are increasingly leaning on the sector to fund public priorities, particularly healthcare. Coljuegos, the national gambling regulator, has introduced new products such as blockchain Keno, which can generate hundreds of billions of pesos in contributions over the next five years.

Authorities have also intensified their enforcement against unlicensed operators. Coljuegos recently ordered internet service providers to block users from accessing the prediction market platform Polymarket, arguing that the company offered illegal political betting and cryptocurrency gambling. The regulator has remained adamant that gambling is welcome as a source of public funds, but only under strict regulatory control.