The Colombia Congress has voted against the Financing Law, which would have made permanent a 19% value-added tax (VAT) on gambling.
Last Tuesday, the Senate’s Fourth Committee defeated the financing bill by a 9-4 vote.
The Financing Law had included a 19% VAT on games of chance and gambling operated exclusively online, as well a rise in the capital gains rate on gambling and lotteries from 20% to 30%.
It’s a huge boost for the gambling sector in Colombia, which has faced the 19% VAT on player deposits since February this year after the government brought it in to cover the expenses of ongoing civil disturbances in the Catatumbo region.
With the defeat of the Financing Law, it’s expected the VAT will come to an end when the measure expires on 31 December.
The vote is a big blow to the Colombia government, with Finance Minister Germán Ávila describing the move as “strictly political, defeatist and disconnected from the country’s fiscal and social reality”.
The Congress had already approved a budget of COP546.9 trillion ($143.9 billion), meaning the Colombian government now faces a huge fiscal gap due to the defeat of its Financial Law.
A win in the fight against illegal gambling in Colombia
At the time of the VAT’s implementation, the Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) warned the tax was “unsustainable and unfeasible” for the sector, as it risked licensed companies withdrawing from the market and black market operators filling that vacuum.
In early April, Fecoljuegos said the VAT’s introduction had resulted in a 30% drop in online GGR.
Operators, including Stake, attempted to mitigate the impact on players by granting additional bonuses.
Fecoljuegos claimed some companies had faced declines of close to 50% across crucial metrics such as deposits and average deposit amounts per player.
The federation also raised the issue of the impact of the VAT on the Colombian healthcare system, which benefitted from COP990 billion in taxes on gambling across 2024.
A change in strategy for operators in Colombia?
Operators have been vocal on the VAT’s impact to their Colombian businesses.
Codere Online said in its post-Q3 earnings call that Colombia would not feature in the company’s short- to mid-term strategy.
This followed its CEO, Aviv Sher, stating post-Q2 that the company would pull back from the market.
Rush Street Interactive, however, was more positive about the VAT, with CEO Richard Schwartz stating he expected the tax to be scrapped.
“Our strong operational performance in Colombia positions us well for meaningful upside when normal tax conditions resume,” Schwartz said on his company’s post-Q3 earnings call.
“As for the president’s proposed 2026 tax reform, we continue to believe that Congress will not approve the proposed online gaming tax.”
After nearly a year of facing a permanent 19% VAT level, operators in Colombia are now likely days away from the measure being lifted.