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Last Tuesday, the Senate’s Fourth Committee defeated the financing bill by a 9-4 vote, effectively blocking legislation that included a 19% VAT on online games of chance and gambling, as well as an increase in the capital gains rate on gambling and lotteries from 20% to 30%.
The decision represents a major development for Colombia’s gambling sector, which has operated under the temporary 19% VAT on player deposits since the government introduced it in February to fund expenses related to ongoing civil disturbances in the Catatumbo region. With the Financing Law’s defeat, the VAT measure is expected to expire on December 31, 2025.
Government Faces Fiscal Challenge
The vote delivered a significant setback to the Colombian government. Finance Minister Germán Ávila characterized the decision as “strictly political, defeatist, and disconnected from the country’s fiscal and social reality.”
Congress had already approved a budget of COP 546.9 trillion ($143.9 billion), leaving the government to address a substantial fiscal gap following the Financing Law’s failure.
Industry Warned of VAT’s Impact on Legal Market
When the VAT was first implemented, the Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) warned the tax was “unsustainable and unfeasible” for the sector. The organization predicted licensed companies would exit the market, creating opportunities for illegal operators.
In early April, Fecoljuegos reported that the VAT’s introduction had caused a 30% drop in online gross gaming revenue. Some operators, including Stake, attempted to offset the impact on players by offering increased bonuses.
Fecoljuegos claimed certain companies experienced declines approaching 50% in key performance indicators including deposits and average deposit amounts per player.
The federation also highlighted the VAT’s effect on Colombia’s healthcare system, which received COP 990 billion in gambling taxes throughout 2024.
Operators Reassess Colombia Strategy
Gaming operators have been outspoken about the VAT’s impact on their Colombian operations.
Codere Online indicated during its post-Q3 earnings call that Colombia would not be part of the company’s short- to mid-term strategy. The announcement followed CEO Aviv Sher’s Q2 statement that the company would reduce its market presence.
Rush Street Interactive took a more optimistic view. CEO Richard Schwartz expressed confidence the tax would be eliminated, stating during the company’s post-Q3 earnings call: “Our strong operational performance in Colombia positions us well for meaningful upside when normal tax conditions resume. As for the president’s proposed 2026 tax reform, we continue to believe that Congress will not approve the proposed online gaming tax.”
Source: iGaming Business
