Colombia’s online gaming sector sees sharp revenue decline following new VAT on deposits

Colombia’s online gambling industry is reporting a downturn in revenue less than two months after the introduction of a value-added tax (VAT) on online betting deposits. According to the Colombian Federation of Gambling Entrepreneurs (Fecoljuegos), gross gaming revenue has dropped by 30% since the tax was implemented in February.

The 19% VAT, applied to deposits made by players on licensed platforms, has prompted sharp criticism from the industry’s trade body. Fecoljuegos had previously warned the tax would place unsustainable pressure on operators.

Now, it says the early data confirms their fears, with some platforms experiencing declines of nearly 50% in key indicators like total deposits and average player spending.

Despite efforts by operators such as Stake to absorb the cost by offering bonuses equivalent to the tax amount, the strategy is proving difficult to maintain. “This strategy has avoided an immediate loss of customers, but it represents an economic effort that cannot be sustained over time,” said Fecoljuegos President Evert Montero in an interview with Portafolio.

Under the tax structure, deposits are effectively reduced before a player can place a bet. For example, a $100 deposit is taxed at 19%, leaving users with about $84 to play with. Fecoljuegos said this has directly impacted player behavior.

“This reduction immediately affected users’ gaming capacity, generating a significant drop in deposits,” Montero added. “This forced operators to react quickly with loyalty strategies, but also highlighted the high risk posed to the industry by a tax burden that substantially alters user behaviour.”

Before the tax, average monthly gambling spend was estimated between COP150,000 and COP250,000 per player. The new levy appears to be curbing that figure sharply, which has raised additional concerns about the long-term viability of licensed platforms operating under these constraints.

Fecoljuegos also fears the VAT could have unintended consequences, including an uptick in illegal gambling. In a previous statement, the organization warned that increasing the cost of legal gaming may drive players to unregulated alternatives.

“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," Fecoljuegos warned.

Another issue flagged by Fecoljuegos is the potential impact on Colombia’s healthcare system, which relies heavily on revenue from the legal gambling sector. Gambling taxes are expected to contribute COP990 billion to the health budget in 2024, a figure that could be compromised if the regulated market contracts further.