Finance Minister Germán Ávila confirmed that the government is redrafting its tax proposal on games of chance following the court’s provisional suspension of the emergency economic decree that introduced the levy. The decree had applied a 19% VAT to online gambling operators based on gross gaming revenue.

Court blocks executive route

The VAT was initially imposed in February 2025 under executive authority, framed as a measure to generate urgent funding for humanitarian and security needs in the Catatumbo region. In September, Petro signalled his intention to make the tax permanent for both domestic and international operators, projecting billions in additional revenue for the national budget.

However, Colombia’s Constitutional Court intervened after challenges from Congress, questioning whether the president could rely on emergency powers to enact budgetary measures of this scale. The court’s suspension does not eliminate the tax outright but halts its executive basis pending a deeper constitutional review.

The ruling forces the government to consider alternative legislative pathways, potentially reintroducing the VAT through Congress or restructuring the taxation model.

Election-year fiscal stakes

The political context heightens the significance of the dispute. Colombia is set to hold presidential elections on 31 May 2026, placing Petro’s fiscal agenda under increased scrutiny. His administration has prioritised expanded public spending on healthcare, welfare and social programmes, relying heavily on new taxation measures to fund these commitments.

In addition to gambling VAT, the government has implemented digital service levies, corporate tax floors and increased capital gains rates. Online gambling, as a fast-growing and highly visible industry, has become a focal point within this broader redistribution strategy.

For Petro, maintaining the VAT is both a financial necessity and a symbolic reinforcement of his policy platform.

Industry pushback intensifies

Colombia’s gambling sector has strongly criticised the tax, arguing it has placed unsustainable pressure on operators. Industry representatives report that companies have absorbed part of the VAT burden through promotional incentives rather than fully passing costs to players.

Sector data suggests the industry experienced its first contraction in 2025 since regulation was introduced in 2016. Monthly transfers to Colombia’s healthcare system, partly funded by gambling revenues, have reportedly declined during the VAT period.

Operators warn that continued fiscal pressure could reduce competitiveness and increase exposure to unregulated market activity.

Regulatory uncertainty persists

The suspension leaves licensed operators operating in a climate of uncertainty. While the VAT remains politically supported by the administration, its long-term legal footing remains unresolved.

Whether the government succeeds in reinstating the tax through ordinary legislative channels will likely depend on shifting political alliances and the outcome of electoral positioning ahead of 2026.

For now, Colombia’s gambling market remains caught between fiscal reform ambitions and constitutional limits, as policymakers weigh revenue priorities against regulatory stability.
Sources: SBC News