Colombia senate vote clears path for online gambling VAT to end

A temporary 19% value-added tax on online gambling in Colombia is expected to expire on December 31, following a 9-4 Senate Fourth Committee vote that blocked legislation to make the levy permanent.

The failed measure, known as the Financing Law, sought to lock in the tax beyond its current term and apply it to games of chance and gambling offered exclusively online. It also proposed increasing the capital gains tax on gambling and lottery winnings to 30% from 20%.

The VAT has been in place since February, when the government introduced the measure to help fund expenses linked to ongoing civil disturbances in the Catatumbo region. With the defeat of the Financing Law, the tax is expected to lapse at the end of the year.

Finance Minister Germán Ávila criticized the congressional vote, describing it as “strictly political, defeatist, and disconnected from the country’s fiscal and social reality.”

Congress has already approved a national budget totaling COP546.9 trillion ($143.9 billion). The failure of the Financing Law leaves the government facing a fiscal gap tied to the rejected revenue provisions.

Industry groups and operators had raised concerns shortly after the VAT took effect. The Colombian Federation of Gambling Entrepreneurs, or Fecoljuegos, said at the time that the tax was “unsustainable and unfeasible,” warning that licensed operators could exit the market, creating space for illegal gambling activity.

In early April, Fecoljuegos reported that the VAT’s introduction led to a 30% decline in online gross gaming revenue. The federation also stated that some companies recorded decreases of close to 50% in metrics, including deposits and average deposit amounts per player.

Several operators attempted to offset the impact on players by offering additional bonuses following the tax’s implementation.

Operators addressed the VAT’s effect on their Colombian operations during earnings calls and public statements. Codere Online said during its post-third-quarter earnings call that Colombia would not be included in its short- to mid-term plans. The comments followed earlier remarks from CEO Aviv Sher after the second quarter, when he said the company would reduce its activity in the market.

Rush Street Interactive took a different position, expressing a more optimistic view. CEO Richard Schwartz said he expected the VAT to be removed.

“Our strong operational performance in Colombia positions us well for meaningful upside when normal tax conditions resume,” Schwartz said during the 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.”