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Colombia’s 450% gambling surge sparks tax battle
President Gustavo Petro has once again proposed increasing taxes on the gambling industry in Colombia. The controversy generated by this initiative has not only sparked political and economic debates but also captured the nation’s attention due to the impressive growth of the sector and the fiscal interests involved. According to local media reports, amid this debate, Petro has made it clear that the tax hikes are not his idea but rather an order stemming directly from the 1886 and 1991 Constitutions.
A booming industry: rapid growth in recent years
The gambling industry in Colombia has experienced a significant boom in recent years, particularly in the areas of betting and casinos, both land-based and digital platforms. According to a report by Corficolombiana, the sector has grown by 450% between 2018 and 2024. This surge has positioned the industry among the main drivers of the national economy, surpassing traditional sectors such as mining, energy, and construction.
Gross revenues generated by gambling have increased from 3.1 billion pesos in 2018 (€713,000) to 10.7 billion pesos in 2023 (€2.46 million), reflecting steady and considerable growth. This boom is partly attributed to the regulation of the industry, which has allowed the formalisation of operations and facilitated the entry of large companies into the market. According to the National Tax and Customs Directorate (DIAN), contributions to the healthcare system have also increased. In 2024, Coljuegos (Gambling regulatory entity) contributed nearly double what it did in 2018.
This growth has been crucial for financing social programs aimed at public health, which receives a significant portion of the resources generated by the gambling industry. However, tax evasion remains a persistent issue. Petro has pointed out that “mafias operating outside the law are evading taxes that should be allocated to the country’s health system.” Tax evasion from these illicit activities is estimated to generate a loss of around 2 billion pesos annually (€460,000).
Boom of the gambling industry and fiscal challenges for Colombia
President Petro has explained that his proposal primarily seeks to combat tax evasion and generate greater resources to finance the healthcare system. Through his account on X, Petro emphasised that taxes on gambling were established in the 1886 and 1991 constitutions, and his intention was to enforce these constitutional provisions. “This is not my proposal. It was mandated by the 1886 constitution and is ordered by the 1991 constitution. Gambling, once limited to lotteries and now including a wide range of options, increasingly online, is a national monopoly that generates revenue intended for health,” the president expressed in one of his posts.
Additionally, Petro mentioned that the goal of increasing taxes is not to further burden businesses in general but to find new funding sources for healthcare without affecting small and medium-sized enterprises (SMEs). As such, Petro proposes a tax system that includes both legal gambling activities and those operating outside the law. This approach would allow informal businesses to be legalised, facilitating tax collection and distributing those resources to areas like healthcare.
The president also pointed out that efforts to combat tax evasion are already underway. Authorities such as the DIAN, the Financial Information and Analysis Unit (UIAF), and the National Police are actively working to dismantle the mafias involved in illegal gambling.
What Is UIAF?
The UIAF (Unidad de Información y Análisis Financiero)(Financial Information and Analysis Unit) is a Colombian organisation focused on combating money laundering, terrorist financing, and other financial crimes related to the financial system. Its main role is to receive, analyse, and disclose information about suspicious transactions that may be linked to money laundering or illicit activities.
The UIAF receives suspicious transaction reports from financial institutions and other entities, analyses them, and if signs of illegal activities are found, refers the information to relevant authorities, such as the Attorney General’s office, the National Police, or the Public Prosecutor’s office, for further investigation.
Additionally, the UIAF plays a crucial role in implementing and enforcing international regulations on financial crime prevention, such as the guidelines from the Financial Action Task Force (FATF).
Rejection and consequences of a possible tax increase
Although Petro’s proposal has been supported by some sectors advocating for higher taxes to finance the healthcare system, it has also encountered resistance. Recently, the Colombian Congress rejected a budget proposal that included a tax increase on gambling activities, which sparked a division of opinions. On the one hand, proponents of the tax hike argue that the additional resources would fund key healthcare projects, benefiting thousands of Colombians. On the other hand, some gambling industry business owners believe that a tax increase would be disproportionate, putting the financial stability of smaller businesses and those operating on digital platforms at risk. If the proposal is approved, gambling companies will likely face increased operating costs. They might be forced to adjust service prices or reduce profit margins to adapt to this new tax burden.
Risks and benefits of tax reform
The idea of increasing taxes on gambling is not without risks. If the objectives of reducing tax evasion are not achieved, the sector could face additional difficulties, impacting legal businesses and healthcare resources. On the other hand, if the government is effective in its fight against illegal gambling and improves sector formalization, the benefits could be significant for financing the public healthcare system.
In this context, it would be important for the government to design clear and effective fiscal policies to raise taxes on casinos and promote compliance with tax obligations and the formalization of the gambling sector. The question now is whether Congress and stakeholders can reach a consensus on how to implement this plan to maximise society’s benefits without overly burdening businesses in the sector.
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