Colombia Implements Temporary Online Gambling Tax

The Colombian government has enacted a temporary 19% VAT on online gambling, aiming to generate additional tax revenue.

The tax targets sports betting, online casinos, and digital gaming platforms, which have seen rapid growth in Colombia.

While the move could raise 519 billion pesos (US$123 million), industry leaders warn of potential economic and regulatory downsides.

Explore how this tax impacts Colombia’s gaming sector and whether it could drive players toward illegal betting platforms.

Colombia Introduces 19% Online Gambling Tax to Tackle Security Crisis

3 Key Points:

1. New Tax Implementation: The Colombian government has introduced a temporary 19% VAT on online gambling to raise revenue.
2. Potential Market Disruption: Licensed operators may pass on costs to players, increasing the risk of illegal gambling activity.
3. Security and Economic Justifications: The tax aims to fund humanitarian aid amid escalating violence in regions like Catatumbo.

After months of debate, the Colombian government has officially enacted a 19% VAT on online gambling, marking a significant shift in the country’s iGaming tax structure. The administration of President Gustavo Petro introduced this and two other taxes—on oil exports and stamp duty—to generate over 1 trillion pesos (US$237.8 million) in additional revenue.

The tax will primarily impact online sportsbooks, football betting, and casino platforms, which have seen unprecedented growth in Colombia’s expanding gambling market. According to the National Administrative Department of Statistics (DANE), Colombia’s entertainment industry GDP grew 133% over the last decade, with gambling contributing 53% of that expansion.

Deputy Finance Minister Juanita Villaveces emphasized that the revenue is urgently needed to support government security measures. However, the decision has sparked concerns among industry leaders, who fear it may have unintended economic consequences.

Concerns Over Market Disruption and Illegal Betting Growth

Despite the government’s intent, industry experts argue that higher taxes could push players toward unlicensed operators. Many offshore betting sites do not adhere to Colombian regulations, meaning gamblers might attempt to bypass taxation by using illegal platforms.

Another concern is that licensed operators could transfer the tax burden to consumers, increasing costs for sports bettors and online casino players. This could lead to reduced engagement and, ultimately, a decline in legal market revenue.

Additionally, representatives from the Colombian gaming sector warn that increased taxation could slow investment and innovation in the industry. While the Petro administration insists that the tax is temporary, some experts fear it could become a long-term policy, further straining the regulated market.

Security and Humanitarian Justifications for the Tax

The Colombian government argues that these tax measures are necessary to address the country’s escalating security crisis, particularly in Catatumbo, a region plagued by armed conflict and mass displacement.

Recent clashes between the National Liberation Army (ELN) and the EMBF, a rival group, have resulted in dozens of deaths. Reports indicate that peace signatories, social leaders, and human rights defenders have been among the casualties. The United Nations has acknowledged the severe humanitarian crisis, with at least 20,000 people displaced and thousands in urgent need of aid.

The Petro administration argues that revenue from the gambling tax and oil export tax will be used to fund humanitarian programs and security initiatives in these conflict-ridden regions.

Balancing Taxation and Market Stability

Colombia’s 19% VAT on online gambling represents a double-edged sword. While it aims to generate funds for urgent security needs, it risks pushing players toward illegal operators and weakening the country’s legal gaming sector.

The coming months will be critical in determining the long-term effects of this tax policy. If it reduces legal gambling activity or fails to meet revenue targets, the government may face pressure to reconsider its approach. Meanwhile, industry stakeholders continue to advocate for a more balanced regulatory framework that supports both economic growth and social responsibility.