In response to devastating floods affecting eight provinces, the Colombian government has revived a tax on online gambling deposits through emergency decrees issued last Thursday. The tax is set at a rate of 16% and is specifically targeted at online operators providing services within Colombia, whether they are based domestically or abroad. This levy will be applied to cash deposits made by players into online gambling platforms.

The decrees, signed by President Petro, also aim to raise an additional COP8.6 trillion ($2.3 billion) to support the country’s 2026 budget. However, Petro, whose four-year term concludes this year ahead of May’s elections, faced setbacks earlier in 2025 when his original budget proposal was rejected. A revised version was eventually approved but was COP10 trillion lower than initially planned. The government has now acknowledged that this reduced allocation is “insufficient for the annual provision for disaster and public calamity relief.”

Consequently, gambling operators will once again face a new tax in addition to Colombia’s standard 15% gambling levy. Colombia’s licensed gambling industry experienced significant tax pressures in 2025. In February of that year, the government introduced an emergency 19% value-added tax (VAT) on deposits, responding to civil unrest in the Catatumbo region and claiming the funds were necessary for crisis management.

By April, the Colombian Federation of Gambling Entrepreneurs reported a 30% decline in online gross gaming revenue (GGR) since the VAT’s implementation. This downturn had a notable impact on the sector, which contributed COP990 billion in taxes to the health sector in 2024.

Efforts to make the VAT permanent failed when the Colombian Senate’s Fourth Committee rejected the Financing Law that included it in December. Although the VAT was later shifted from a deposit-based to a GGR-based model, this emergency decree was suspended in January by the Colombian Constitutional Court over concerns of unconstitutionality.

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It remains uncertain what level of scrutiny this new attempt to impose a gambling tax will face. However, the government asserts it has the authority to implement it as a response to a different emergency.

“The adoption of tax measures in a previous emergency does not prevent the national government from using them again in a subsequent exceptional situation to address a different crisis,” the decree stated. Colombia Tax Gambling

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Effective since February 21, 2025, and set to expire on December 31, the Colombia online gambling VAT targets every deposit made to licensed online gambling and sports betting platforms, including those using cryptocurrencies. Paired with a 1% tax on coal and gas sales and a 1% stamp duty on securities deals, the VAT supports a COL$523 trillion welfare-focused budget. The Finance Ministry is already considering making this “temporary” tax permanent, signaling long-term fiscal plans.

The Attorney General’s Office staunchly defends the VAT, arguing its legality and necessity. “The measures in Decree 175 are proportional and non-discriminatory,” said Gregorio Eljach, President of the Attorney General’s Office. “They’re critical for funding public order and humanitarian efforts.” Eljach has urged the Constitutional Court to uphold the tax, emphasizing its role in stabilizing violence-plagued regions.

The gambling industry, however, is sounding the alarm. Fecoljuegos, Colombia’s national trade group, reports a 30% drop in online gambling gross gaming revenue (GGR) within the first month of the Colombia online gambling VAT. Players are flocking to unregulated offshore platforms to avoid the tax. “The Colombia online gambling VAT is pushing players to unlicensed sites,” said Evert Montero Cárdenas, President of Fecoljuegos. “Operators are struggling to absorb costs despite offering bonuses.”

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The tax’s structure—levied on deposits rather than net revenues—is particularly damaging. Kambi, a leading Stockholm-listed sportsbook provider, noted a “significant squeeze” in Colombia. “The 19% Colombia online gambling VAT directly suppresses betting volumes,” Kambi stated, highlighting its negative impact on performance despite the company’s strong market position.

Trade groups like Asojuegos warn that the tax is eroding South America’s robust regulated market. The tax incentivizes lower return-to-player (RTP) rates, potentially pushing licensed operators below the 78% compliance threshold and into legal trouble. The shift to unregulated platforms further undermines the market’s integrity, threatening one of Colombia’s thriving digital sectors.

With opposition mounting, even within Petro’s coalition, the VAT faces an uncertain future. The government must balance its fiscal needs with the risk of crippling a key industry. Without a rethink, the tax could drive more players to the black market, undermining Colombia’s regulated gambling framework.

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