Online GGR in Colombia fallen 30% since VAT introduction, says industry body
In February, the Colombia government implemented a 19% VAT on online deposits for betting, a move gaming trade body Fecoljuegos criticised at the time, warning it was “unsustainable and unfeasible” for the nation’s gambling industry.
Close to two months have passed since the tax’s introduction and Fecoljuegos reported revenues have already dropped a third, indicating the severe impact the tax has quickly had on operators.
This is despite operators like Stake giving players back the 19% VAT in bonuses, in an attempt to counteract the increased costs for them.
However, Fecoljuegos chief Evert Montero said in an interview with Portafolio last week this strategy isn’t sustainable in the long term.
“This strategy has avoided an immediate loss of customers, but it represents an economic effort that cannot be sustained over time,” Montero explained.
“If the tax policy continues, the financial capacity of operators will be severely affected, compromising formal operations and resources allocated to health.”
VAT leading to changes in Colombia gambling behaviour
Prior to the tax coming in, Fecoljuegos estimated the average gambler spent between COP150,000 (£26.80/€31.25/$34.17) and COP250,000 on gambling a month.
However, the body claimed some platforms had experienced declines of almost 50% across key metrics, such as deposits and average deposit amounts per player, in the first few days of the gambling VAT’s introduction.
Under the calculation process for the tax, the deposit amount is divided by 1.19, meaning a $100 deposit would leave the player with approximately $84 left to bet with.
“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.”
Fears over illegal gambling rises
When the tax was introduced, Fecoljuegos issued a press release that shared concerns over the VAT leading to licensed operators pulling out of the market, while also raising the attractiveness of illegal companies.
The body still views this as a real threat, stating: “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.”
Additionally, Fecoljuegos highlighted the potential impact of the gambling VAT on Colombia’s healthcare system, which benefits hugely from taxes on gambling companies, to the tune of COP990 billion in 2024.
“At Fecoljuegos, we firmly call for any debate on tax matters to be based on technical criteria, with transparency and within a framework of respect for productive sectors that comply with their obligations,” Montero said.