Colombia Court Kills 19% Gambling Tax, Delivering Major Win for Licensed Operators

For months, Colombia’s regulated online gambling industry fought on two fronts. Licensed operators were not only competing against an expanding black market but were also absorbing the impact of a 19% tax measure that many believed threatened the economics of operating legally.

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Now, after Colombia’s Constitutional Court struck down the controversial Value Added Tax applied under emergency measures, operators have secured what many view as their most significant regulatory victory in years. Yet beneath the relief, another tax dispute is already taking shape.

Following a turbulent period in which licensed businesses withdrew from growth and expansion, they shifted their focus from acquiring new customers to maintaining their current customer base. Increasingly, resources that would generally have been spent on marketing to new players or launching new products were redirected to retention initiatives, promotions or bonuses intended to prevent customers from moving to unlicensed bookmakers.

Figures from the gaming industry in 2025 provide further evidence of this trend. As a result of the additional tax burden that comes with regulated online gambling, revenues for operators in the regulated sector have declined compared to prior years, due primarily to the taxes they already pay for licensing, compliance costs and other sector-specific contributions.

The challenge was not simply the size of the tax itself. Licensed companies were effectively competing against illegal operators that faced none of the same obligations. As costs increased for regulated businesses, the gap between legal and unlicensed platforms widened, creating an environment many market participants viewed as increasingly unsustainable.

Several operators privately reassessed investment plans during the period, while some reportedly began questioning the long-term viability of their Colombian operations if the tax remained in place.

Refund Questions Remain Despite Court Victory

A recent decision from the court may eliminate one major roadblock; another issue regarding payments that were made before the ruling still needs to be resolved. The Colombian Constitutional Court has ordered the Ministry of Finance and tax authorities to figure out the amount of refunds to give back to the taxpayers based on this decision. As of now, we don’t have enough information on how much money will actually be refunded to taxpayers or what methodology was used to calculate the refund amounts, or when those refunds will arrive in taxpayers’ hands. Political issues are causing delays in getting these refunds processed. With many competing issues for national attention and with the election being the primary focus for many people, the implementation of this new law is moving much more slowly than many of those who work in this arena believed it would.

The timing of the ruling is notably important as it affects what is likely to be one of the busiest betting seasons in the industry. International football tournaments usually cause a significant increase in the amount wagered, and there was concern that without the VAT, more customers would be attracted to offshore alternatives because of the higher demand for wagering from international football tournaments, thus providing an incentive to move to the licensed sectors and not through unregulated platforms.

The removal of the tax will help to enhance the competitiveness of licensed operators at a time when the potential for customer acquisition is at its peak. All marketing departments in the industry have created various marketing strategies to prepare for the increase in betting activity associated with the World Cup. However, the industry’s celebration remains cautious.

Shortly after the VAT setback, the Colombian government introduced a new measure through Legislative Decree No. 0240 of 2026. The decree established a 16% National Consumption Tax on online games of chance, creating a fresh layer of uncertainty for operators attempting to forecast future costs.

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The new framework has generated debate over how the tax should be calculated, reported, and collected. Questions surrounding the taxable base and practical implementation have yet to be fully resolved, leaving operators in a familiar position: navigating regulatory ambiguity while waiting for legal clarity.

That clarity may ultimately come from the same institution that overturned the VAT. The Constitutional Court is now reviewing the decree, and its previous ruling signaled skepticism toward the government’s use of emergency powers to create new tax obligations. The court’s reasoning in the VAT case is widely viewed as an important indicator of how judges may approach the newer measure.

Regulatory Evolution Continues Beyond the Tax Debate

A significant structural obstacle exists for Colombia’s regulated market beyond the issue of taxes. Regulatory structures for the Colombian market rank among the most developed in Latin America; however, illegal (unregulated) operators have continued to attract a considerable number of players.

According to many stakeholders in the industry, enforcement resources should be applied not just to licensing compliance for operators, but also to payment methods, website blocking, and other ways to allow illegal operators to remain available to use by Colombian consumers.

Education continues to be an important piece of the overall solution. Many players still lack knowledge about how licensed and unlicensed platforms differ, particularly with regard to consumer protection, payment safety, and regulation.

While tax policy has dominated headlines, other developments suggest the market is still evolving. Recent regulatory changes governing instant prize games have broadened the range of products available to licensed operators, including the introduction of newer game formats such as crash-style offerings. The reforms have been welcomed by many companies as evidence that regulators remain open to innovation despite ongoing fiscal disputes.

Another issue gaining attention is the rise of prediction markets and similar digital products. As regulators worldwide examine how these offerings fit within existing gambling frameworks, Colombia may soon face decisions that could influence regulatory discussions across the wider region.

The country’s position as Latin America’s online gambling pioneer remains largely intact. Yet the recent tax battle exposed how quickly confidence can be shaken when fiscal policy shifts unexpectedly.

For now, operators have won an important fight. Whether that translates into renewed investment and sustained growth may depend less on the VAT ruling itself and more on what comes next from lawmakers, regulators, and the courts.

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Source: igamingexpert.com