VAT on Online Betting Drives Revenue Down 30% in Colombia

The Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) has reported a significant decline in online gross gaming revenue (GGR) in Colombia, claiming that revenue has dropped by 30% since the introduction of a value-added tax (VAT) imposed on the sector. In February, the Colombian government implemented a 19% VAT on online deposits for betting, a decision that Fecoljuegos criticized at the time, cautioning that it was “unsustainable and unfeasible” for the nation’s gambling industry.

Close to two months after the tax’s implementation, Fecoljuegos noted that revenues have already decreased by one third, indicating the rapid and severe impact the tax has had on operators. This decline occurred despite efforts by some operators, such as Stake, which have offered players bonuses equivalent to the 19% VAT to offset the increased costs. However, Fecoljuegos’ chief, Evert Montero, remarked in an interview with Portafolio last week that this strategy is not sustainable in the long term. “This strategy has avoided an immediate loss of customers, but it represents an economic effort that cannot be sustained over time,” Montero explained. He warned that if the tax policy persists, it would severely affect the financial capacity of operators and compromise their formal operations and the resources allocated to health.

Before the VAT was implemented, Fecoljuegos estimated that the average gambler spent between COP150,000 (£26.80/€31.25/$34.17) and COP250,000 on gambling each month. However, the organization reported that some platforms experienced declines of nearly 50% across key metrics, such as deposits and average deposit amounts per player, within the first few days of the VAT’s introduction. Under the tax calculation process, the deposit amount is divided by 1.19, meaning a $100 deposit would leave a player with approximately $84 available for betting. “This reduction immediately affected users’ gaming capacity, generating a significant drop in deposits,” Montero added. He noted that operators were compelled to quickly implement loyalty strategies, highlighting the high risk posed to the industry by a tax burden that significantly alters user behavior.

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Fecoljuegos has raised concerns that the VAT could lead to licensed operators withdrawing from the market and may increase the appeal of illegal gambling. The organization continues to regard this as a credible threat, stating, “The implementation of VAT has made the gaming experience in the formal market more expensive, creating an incentive for players to seek unregulated alternatives, where no taxes or controls are applied.” Furthermore, Fecoljuegos emphasized the potential ramifications of the gambling VAT on Colombia’s healthcare system, which substantially benefits from gambling company taxes, projected to total COP990 billion in 2024. “At Fecoljuegos, we firmly call for any debate on tax matters to be based on technical criteria, with transparency and within a framework of respect for productive sectors that comply with their obligations,” Montero concluded.