After the Colombian Government proposed to apply a Value Added Tax (VAT) of 19% to online gambling, within the framework of a new tax reform to finance the Budget 2025, the gaming sector guild has expressed its concern and rejection to the measure.
The reform proposal, which was presented by the Executive in Congress on Tuesday, September 10, seeks to collect COP 12 billion (about $2,797 million), while the new tax that would be applied to the online sector would contribute with a collection of COP 2 billion ($478.2 million).
In an exclusive interview with Yogonet, Juan Carlos Restrepo Escobar, President of the Colombian Association of Gaming Operators (Asojuegos), explained why they consider that the proposal is unfeasible for the sector and how this increase would generate a massive flight of players towards illegal platforms, which in turn has an impact on the financing of health.
In addition, he referred to the panorama of gambling in the country and the advanced regulation of the online modality and highlighted the guild’s constant fight against illegal gambling. Finally, he detailed some of the plans to continue promoting the growth of the sector.
How does Asojuegos analyze the proposal to levy a 19% VAT on online gambling platforms in Colombia?
From Asojuegos, we consider that taxing online gaming and betting platforms in Colombia with a 19% VAT is unfeasible and detrimental to the industry. First of all, the current structure of these games was established in the National Development Plan through Law 1753 of 2015, which already contemplates a differentiated tariff of operating rights, adjusted to the realities of the market and the high percentages of return of prizes that range between 93% and 96%.
Cifras del día:
1️⃣ Se radicó el Proyecto de #LeyDeFinanciamiento, una iniciativa que impulsa la #ReactivaciónEconómica 🇨🇴 y busca aumentar recursos para la inversión en el #PGN2025.
2️⃣ #MinHacienda subastó $450.000 millones en Títulos de Corto Plazo. pic.twitter.com/5oNZcOhxT0
— MinHacienda (@MinHacienda) September 11, 2024
Imposing an additional VAT would significantly compromise this balance, affecting the competitiveness of legal operators vis-à-vis international platforms and the illegal market, which offer much more attractive margins to players.
How would this increase affect operators and players?
The impact of this measure would be direct and devastating for both operators and players. For operators, the inclusion of a VAT would raise costs and reduce their ability to offer a competitive return on prizes, which could lead to a drop from 71% to 75% in guaranteed return value.
This would also generate a massive flight of players to illegal platforms, which offer return margins of over 90%, and which are not subject to this type of tax burden. As a consequence, legal platforms would see a drastic decrease in their bets and, therefore, in the operating rights they contribute to the State, also affecting the financing of the health sector.
What is Asojuegos’ message to the National Government regarding this issue?
Asojuegos calls on the National Government to abstain from implementing the VAT on online gambling. This measure would generate an imbalance in the economic equation of the contracts signed with Coljuegos, affecting the stability of the operators and weakening one of the sectors that contributes the most to the financing of the health system.
In 2023, online games transferred more than COP 317,977 million to the health sector, which is equivalent to more than $74 million, and only in the first semester of 2024, they have already contributed more than COP 181,628 million ($42,379). These figures show the growth and importance of online games for the country’s economy, and it is imperative to protect this source of income.
How does Asojuegos see the development of online games in the country as well as compared to other industries in Latin America?
Colombia has been a pioneer in the regulation of online games in Latin America, and its gaming industry has shown a sustained and significant growth. The advances in the regulation have allowed the consolidation of a competitive and legal framework that has attracted both players and international operators.
Juan Carlos Restrepo, with Alejandro Éder (Mayor of Cali) and Marco Emilio Hincapié (Coljuegos)
At a regional level, Colombia has positioned itself as a reference in the implementation of clear regulations that favor the formalization of the market, in contrast with other countries in the region where online gaming still faces regulatory gaps or restrictions. However, imposing a VAT would seriously affect this leadership and the sustainability of the sector.
On September 10, Asojuegos held the Due Diligence webinar, what was the objective of this event?
This webinar is part of a cycle of trainings that we have implemented within the framework of LAFT AMERICA 2024, which will be held on September 17 and 18 at the Marriott Hotel in Bogota and which brings together experts and different sectors of the national and Latin American economy and seeks to train and learn from best practices in the ongoing fight against Money Laundering and Terrorist Financing.
In particular, this Masterclass on ‘Due Diligence’ trained and sensitized companies, managers, risk managers, and Compliance Officers on the importance of complying with legal and financial regulations, particularly regarding the prevention of money laundering and how to involve all levels of the organization.
What progress was Asojuegos able to show at GAT Showcase Bogota?
At GAT Bogota, Asojuegos was able to evidence an important advance in the adoption of new technologies and solutions for the gaming industry. We saw a growing interest in the digitalization of operations and in the implementation of platforms that allow for a more agile, secure, and responsible gaming experience.
GAT Bogotá 2024
Furthermore, the participation of international operators showed that Colombia continues to be an attractive investment market. Key issues related to the regulation and expansion of online gaming were also discussed.
Given the illegal gambling panorama that shows an increase in Latin America, how does Asojuegos work to face this problem?
Asojuegos is committed in the fight against illegal gaming through several strategies. We work hand in hand with the authorities to strengthen supervision and control mechanisms, we promote awareness campaigns aimed at players about the risks of betting on unregulated platforms, and we promote the reporting of illegal operations.
At the guild level, we insist on the need for the banking sector to reject transactions related to these platforms, and we request that the National Government continue to cooperate to combat illegal gambling operating from unregulated platforms.
What are the short and long-term projects of the Association for the growth of the guild in Colombia?
In the short term, Asojuegos seeks to continue consolidating the regulation of online gaming and to maintain a constant dialogue with the National Government to guarantee competitive conditions for legal operators.
We also continue to promote the adoption of new technologies and best practices in regulatory compliance.
In the long term, our objective is to expand the types of games of chance permitted, strengthen the fight against illegal gambling, and continue to promote the sustainable development of the sector, ensuring that it remains an important source of resources for the country and a reference in Latin America.
