Impact of Colombia’s New Gaming Tax

Impact of Colombia’s New Gaming Tax

Colombia has been a leader in Latin America regarding online gaming regulation since 2016, establishing a robust legal framework that has fostered sector growth. However, a newly announced tax by the Colombian government has raised concerns within the industry. The removal of the VAT exemption (19%) on online betting and gaming has alarmed operators and industry associations.

The Tax: A Temporary Measure with Potential Long-term Effects

The Ministry of Finance has stated that the removal of the VAT exemption will initially last for 90 days as part of an economic and social emergency decree. During this period, the government aims to collect between 600 and 1,000 million Colombian pesos to address urgent needs in conflict-affected areas. However, operators and industry experts warn that this measure could be extended or made permanent, fundamentally altering the cost structure of the sector.

Operators’ Reaction: Concern and Warnings

Leading companies in Colombia’s market, such as Rushbet, BetPlay, and Wplay, have voiced their opposition to this new tax burden. They argue that the sector already significantly contributes to the economy by creating jobs and providing healthcare funding through specific betting taxes. According to these operators, implementing VAT would:

• Reduce competitiveness of legal betting houses, making offerings more expensive for players.

• Encourage illegal markets, as unregulated platforms would continue operating without tax obligations, attracting more users.

• Deter investment in innovation and development within the sector.

Impact on Players and the Market

For users, applying VAT could mean fewer promotions, higher betting costs, and a less appealing gaming experience on legal platforms. In a highly competitive market, this may lead players to migrate to unregulated operators, resulting in decreased oversight on responsible gaming practices and user data security. While the government seeks quick revenue sources, there is uncertainty about whether long-term collections will decline due to player migration to unregulated sites.

A Potential Trend in Latin America?

Colombia’s move could set a precedent for other countries in the region. Governments in Mexico, Brazil, and Argentina are considering increasing taxes on online gambling as part of their revenue strategies. If Colombia maintains its VAT removal over time, other nations may adopt similar measures, reshaping the iGaming landscape across Latin America.

The coming weeks will be crucial for assessing the real impact of this tax. The industry is likely to negotiate with the government to prevent extending the measure beyond its initial 90 days. Meanwhile, operators, associations, and players must adapt to a new environment where tax burdens could significantly alter how iGaming operates in Colombia.

The new online gambling tax poses a significant challenge for the sector. While its goal is to address social crises and raise funds for the country, its consequences may inadvertently promote illegal gambling and diminish regulated operators’ competitiveness. Whether this is a fair measure or an unnecessary obstacle for an industry already contributing through taxes and employment will depend on how this situation evolves in the coming months.

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