The gaming industry in Colombia is a monopoly held by the government at the constitutional level and is regulated under the Colombian Gambling Act, Law 643 of 2001 by Congress. The Gambling Act organises the administration and control of the gaming industry at two levels, national and regional. At the national level, the administration and control of the gaming industry is undertaken by Coljuegos; at the regional level, administration is undertaken by the corresponding regional government and the control by the National Council of Games of Luck and Chance (CNJSA) and by the Health Superintendent.
Having received, from the government, a monopoly over all kind of games, the regulator (regional or national) grants concessions contracts instead of licences and collects exploitation rights (royalties) instead of gaming taxes. These exploitation rights are paid when the games of chance are operated by third parties under a concession contract or by specific authorisation. These resources are used to fund public health services.
The structure of the law has been designed to provide efficient regulation of new games as demand for new products, by consumers and operators, produces them. Coljuegos, as the national authority, has a certain autonomy to develop the industry – through the process of issuing new rules, decrees, agreements and resolutions – when new games are regulated and included in the games portfolios being offered by the operators. This level of autonomy has made Colombia a regional reference on how to regulate online gaming in Latin America, as it creates legal stability for investors and an environment that protects their investment with a regulator that has a pro-operator attitude.
The distinction between games offered at the regional and national level in Colombia is as follows:
The year 2016, was a very active period for the gambling industry as Coljuegos, the National Authority, issued three fundamental regulations to create an environment for the development of online gaming.
Since 2016, all the slots and other gaming machines, known as METs, must be integrated into a system connected to the regulator that allows access to all the information from each machine, for control and reporting purposes. The software and the system must be certified by an authorised laboratory before the regulator.
In 2016, regulation setting the conditions to operate METs in retail locations such as hotels, restaurants and bars (among other venues) came into force, keeping the same certification conditions as the ones operating in casinos.
Since 2016, several drafts have been issued by the regulator which propose to incorporate new types of game within the already regulated online games and expectations of forthcoming regulations updating the industry are high.
Even though Coljuegos has regulatory autonomy, bureaucracy, and resistance from parties that consider these modifications inconvenient for their business, have caused uncertainty on the time to expect these regulations to be in force.
Towards the year 2016, the Colombian regulator issued several laws to regulate internet-operated games as part of the category defined in the Gambling Act as “novelty games” which includes, amongst others, pre-printed lotto, instant lottery, online lotto in any of its modalities, sports or event-based bets and all internet-operated games, or those operated through any other kind of technology not requiring the presence of the bettor.
It was not until the beginning of 2017 that the first online gaming licence was issued, thanks to the tax reform, approved in December 2016, which included these types of games as exempt from the VAT charge.
Since 2016, several drafts to amend the Online Gaming Regulation have been proposed but only a couple of them have gone through. In May 2019, Agreement 2/2019 amended some Articles of the Regulation regarding the return-to-the-player rules and some payment methods. In September 2019, Agreement 4/2019 did amend some articles of the Online Gaming Regulation and incorporate others to authorise virtual betting as part of the gaming-products portfolio to be offered.
Recently, discussion has focused on slot machines (METs) final draft regulation; largely regarding the technical requirements and homologation of the METs and the laboratories certification requirements. Local resistance to this propositions is evident, pointing out that the requirements do not consider the financial and technical capacity of the actual operators to comply and that most of these requirements will affect medium-sized businesses.
Most of the income derived from gambling activity currently comes from land-based business, almost 60% of Coljuegos resources are delivered in this way, meaning that any modification regarding this sector may severely impact the available resources for the authority and the money to be transferred to the health system.
In summary, since online regulation has been set in place, 18 new operators are online, numbers for the gambling authorities are continuously growing. and new developments in the law include new types of games in the portfolio. Notwithstanding this, the impact on the land-based side of the business of the last modification of the exploitation rights (royalties) for casino slots and game machines will cause a decrease in the income of the regulator expected to be around 15%.
Online Gaming falls into the category of novelty games under the national level of regulation. The licensing regime and the conditions to operate are set out in Agreement 4 /2016, which covers all kinds of gambling. The interested party must comply with the legal, technical and financial requirements and list the games that want to offer in their gaming portfolio. Operators are entitled to apply for any of these products:
Includes, bets on real sporting events and bets on real non-sporting events. Bets may be offered as a fixed-odds modality or in the exchange betting format. Fantasy games and e-sports are not specifically defined in the regulation, however, Coljuegos has recently issued a memorandum which clarifies that these types of games fit under the category of real non-sporting events.
It is prohibited to offer pari-mutuel betting on sporting events as this is part of a specific licence in a different category. Horse racing events are also not covered, as this is regulated at the regional level by the National Council (CNJSA) Moreover, the law states that it is forbidden to take bets on real events regarding the results of, for example, casino table games, slots and bingo where the results are defined by a random number generator. The results of national political events are also forbidden to operators. The regulation also sets special attributions and prohibitions on events related specifically to bets on financial markets and cryptocurrencies.
Article 23 of the Agreement includes a definition of bingo as a pari-mutuel game and includes a standard set of rules that should govern the game.
Slots and Casino Games
The online gaming regulation offers a detailed definition of slots, roulette, blackjack and baccarat as part of the gaming portfolio to be offered by an operator. Live casino operation is not permitted, although this development is part of the roadmap of the Coljuegos.
It is not permitted to provide betting on the results of lotteries, nor may bets be made on real events similar in style to lotteries.
Poker is regulated and certain rules regarding tournaments are included in the regulation. The law states the concept of co-organised operations, this is intended to create liquidity among the operators with a licence in Colombia. International liquidity is not allowed.
Social gaming is not specifically mentioned in any of the gaming regulations in force. It should, in any case, be reviewed on a case-by-case basis to verify that the game does not include the essential elements to be categorised as gambling.
Online Gaming Offered On-Premises
The operator who has a contract (licence) with Coljuegos to operate online games – including bets on actual sporting events, bets on actual non-sporting events and virtual games – is allowed to offer a portfolio of real fixed-odds bets and virtual ones through local establishments, only if the venue develops certain activities as described below and only accepts the following combinations:
The operator licensed with a concession contract is the only one responsible before the law and the regulator. This means that unless the local establishment has requested a concession contract before Coljuegos, the retailer which offers real sports events bets/fixed odds bets and virtual events uses an extension of the authorisation of the operator.
The licensed operator should verify the establishment which offers the option to bet on sporting events complies with the combinations listed above and should always include the commercial activity under the International Standard Industrial Classification known as games of chance and betting activities (Code 9200) or anything equivalent to it. The establishment does not have to have a concession contract, it can be an extension of the operator contract. As a franchise, for example.
The regime for land-based gambling is under national regulation. Coljuegos, as the regulator, grants the authorisation through a concession contract to operate any of these games: poker, roulette, slot machines (MET’s), spherometers, bingo, other casino and table games and racing and virtual sports betting (ACVD). Land-based gaming is commonly known as localised gaming which must be operated by legal entities in commercial establishments, where the physical presence of the player is a necessary condition to be able to bet.
For land-based casinos, the minimum number of gaming instances to be authorised is 80 in total per concession contract and the minimum per establishment depends on the number of inhabitants that the municipality has, this obeys the decree in Decree 1905 of 2008 and Decree 1144 of 2010. Quantity of games is regulated according to the size of the municipality/city or region according to the National Department of Statistics.
Under the Gambling Act (Law 643/2001), poker is categorised as a land-based game, and to be offered, must be included as a type of game authorised to operate on the premises of the operator.
Bingo in Colombia is part of localised gaming and, for the authorisation of bingo, a minimum of chairs is established depending on the number of inhabitants of the municipality in which the game is intended to operate.
Electronic slot machines, known by their acronym METs, are defined by having an entry for coins or bills, which allows the player to participate and get their prizes. According to Colombian law, slot machines can only be operated in casinos and at commercial premises that comply with the relevant regulation.
The regulation of METs (maquinas electrónicas tragamonedas), permits the operation of slots in both casinos and other establishments, opening the scope of operation. The regulation to interconnect the METs requires that all slots are connected to the reporting system to the regulator. The operation, per game site, of a maximum of two machines (municipality of 25,000 to 50,000 inhabitants) and a maximum of three machines (50,000 or more inhabitants) is allowed.
The gaming products generally permitted, among others, are roulette, blackjack, craps and baccarat. The law includes the category of others to give broad gaming offers.
The law states that “casino” is defined as an establishment dedicated exclusively to the operation of localised games that require the presence of the person to be played.
Virtual Sports/Racing Betting
These are regulated as part of the land-based portfolio with a specific set of rules governing the legal, technical and financial conditions for this game to be offered. Such conditions are stated with detail in Agreement 14 of 2013.
Lotteries and Permanent Betting
Lotteries and permanent betting with the popular name of "chance" are games regulated at the regional level, which means that the authority for supervising the operation is the National Council of Game of Chance (CNJSA). Lotteries are a type of game carried out on a periodical basis by an authorised legal entity, which issues and puts into circulation indivisible or fractional notes of fixed prices singled out with a numerical combination and other characters on display and thus are bound to award a prize in money, previously fixed in the corresponding plan, to the holder of the lottery ticket or fraction – the combination or pre-established approximations of which do coincide in their order with the one obtained at random in a public drawing carried out by the operating entity.
The administration of these games is at the regional level. Games are organised by departments, directly or through an association or third parties; Bogotá, as capital district; the Colombian Red Cross, which has legal competence for the exploitation of a lottery which is traditionally operated to raise funds; and those municipalities which were exploiting lotteries before the regulation came into effect.
Permanent betting, known as “chance”, is a game where the player states on an official form, either manually or systematically, the value of his or her bet and chooses a number of no more than four digits so that, if that number matches the result of the top prize of the lottery, or a game authorised for that purpose, according to the predetermined rules, the bettor wins a prize in money, in accordance with a predefined prize plan and as authorised by the national government by regulatory decree. The competence of administration also lies with the regional government.
Horse Racing Events
This is part of the regional level games under the control of the National Council (CNJSA) and was regulated in detail under Agreement 179 of 2015. The regional government, directly from the department/district or the entity in charge of managing the monopoly in whose jurisdiction the game will operate, has the competence for the administration of such games.
The monopolistic regime in Colombia is set at the constitutional level in Article 336 of the Colombian National Constitution. The National Congress has issued the General Gambling Act (Law 643/2001). The regulatory framework for games of chance is referred to in the following instruments, depending on the regulatory subject matter or its relation thereto:
The specific legal texts that are in place applicable to the online gambling activity in Colombia are the following:
The Law 643/2001 defines games of luck and chance as games in which, in accordance with specific rules given by the law and regulation, a person acting as a player makes a bet, or pays for the right to participate, to a legal person acting as an operator, who offers a prize in exchange, in money or in kind, that the player will receive if he or she hits the final results of the game, not being predictable with certainty.
Law 643 of 2001 and Resolution 2695 of 2015 issued by Coljuegos, establish that games that operate with equipment or elements of games, in commercial establishments, which players attend as a necessary condition to bet, such as bingo, video games, spherodromes, slot machines, and those operating in casinos and the like, are classified as “localised” and are therefore land-based.
Online gambling is part of the category of novelty games which are described in Article 38 in Law 643 of 2001, as modified by Article 93 in Law 1753 of 2015. This lays down the following:
"Article 38. Novelty games. They are any type of luck and chance game different from traditional or ticket-based lotteries, permanent betting and any other games referred to in this law. The novelty games category includes, amongst others, pre-printed lotto, instant lottery, online lotto in any of its forms, sports or event-based bets and all internet-operated games, or those operated through any other kind of information technology not requiring the presence of the bettor. The above only applies to games managed and/or run by Coljuegos.
It shall be understood that the game is operated over the internet when bets are placed and prizes are paid solely through such channel, after the player has registered on the authorised website or portal and the mechanics of which are supported by a virtual random number generator or by the occurrence of events, the results of which are not controlled. Consideration, as internet-operated games, is not given to those games where physical draws are held, such as chance and lotteries, amongst others, where the internet is a means for commercialisation. Coljuegos shall regulate the games under its remit which are operated and marketed over the internet"
This means that online gaming is defined as internet operated games that use only this channel and other interactive channels, such as websites, apps or downloadable platform through which the player can access the games offered by the operator.
The key offences that can be committed include:
Coljuegos carries out the activities aimed at providing the necessary support to the investigating authorities in the collection of probative material and its assurance for the effective development of the investigation and will act in co-ordination with the authorities in the cases considered pertinent.
The General consequences of non-compliance with obligations are set out below.
Breach of Contract
It is punishable with:
Operating Games While Being Disqualified
This is punishable with:
At the national level, there is no pending regulation to be approved. Nonetheless, Coljuegos is always aiming to develop new games and amend the actual rules of operational games.
Considering the division established by the law, there are two levels of administration and control, therefore two gambling regulators: Coljuegos and the National Council of Games of Chance (CNJSA).
At the national level Coljuegos regulates and controls:
The CNJSA is in charge of games offered at local territories, such as:
At the regional level, the administration is under regional government responsibility, but the control is under CNJSA and the Health Superintendent.
Coljuegos has wide powers to issue regulations for new games that form part of the rental monopoly on luck and chance, which are not attributed by a legal provision to another entity, the power to approve such regulations falls upon the Board of Directors of Coljuegos, and the president of the entity.
Its primary functions are the operation, exploitation, administration and issuance of regulations of the games that are part of the rent monopoly on games of luck and chance that by a legal provision are not attributed to another entity.
The National Council (CNJSA) has the duty to approve and issue the regulations and their modifications of the different types of games of luck and chance, whose exploitation corresponds to the territorial entities.
Coljuegos, as the national authority, has to research and regulate the gaming portfolio, accordingly with the new technologies available. This proactiveness, requires the investment of important resources so that the regulator will be scientifically and technologically well informed. Sometimes those resources are not available.
Notwithstanding this, the authority is continuously making efforts to be up to date with the industry and fosters an open, fair, and predictable regulatory framework through the rationalisation of the regulatory process and though favouring contact between regulators and the industry.
There is only one type of licence in Colombia, as the authorisation is granted through a concession contract. However, some games are awarded to operators after a public tender process that gives sole permission to operate such a game.
In general terms, for most of the games, there is no limit on the number of concession contracts or authorisations available. For baloto, Super-Astro and pari-mutual betting there is only one licence available for each type of game. For online gaming and land-based operations there is no limitation of licences.
The Gambling Act states that the minimum duration of concession contracts operated by third parties is three years with a maximum of five years. The concession contracts are subject to two essential rules: (i) the period may not be less than three years nor more than five, and (ii) selection of dealers and other issues related to public tender shall be governed by Law 80 of 1993.
In the case of horse racing events, following the specific rules, the concession will be for ten years.
All legal persons willing to request a concession contract must provide an affidavit to the effect that the individuals and legal persons interested in executing a contract for the exploitation of games of chance are not among those affected by any of the disqualifications and incompatibilities established by Colombian contract and public law.
The authorisation must be accredited before Coljuegos and comply with the following requirements:
Once the administrative act of granting the authorisation is signed, the concession contract will be signed, which will be governed by the provisions of Law 643 of 2001, Law 80/1993 and Law 1150/2007 and its decrees.
Within the first ten business days of each month, the authorised operators must pay the exploitation rights, administrative expenses and late fees that may arise, in the banks and/or financial entities authorised by Coljuegos.
The operator must provide to Coljuegos, through an insurance company, or a bank legally established in Colombia, a guarantee that covers the following risks:
The online gaming regulation does not specify a limited number of licences, nor a specific period whether the licences are available.
The concessions will be granted by Coljuegos to the operators for periods lasting between three and five years, only one licence by entity.
A local presence through a local company incorporated in Colombia is required (The operator can only be either a Colombian commercial company or a foreign company branch incorporated in Colombia).
Players’ funds must be managed from a bank account in a Colombian financial entity authorised by the Superintendent of Finance.
Applicants will have to accredit compliance with certain financial indicators that are defined by the Resolution setting up the conditions and guarantees for applicants. New incorporated companies require at least USD450,000 of equity.
The regulation includes all kinds of gambling. The exclusions are pari-mutual betting, horse racing, lotto, numeric games and live casino operations.
Domain names to operate in Colombia will need to be .co (.com sites are not allowed).
When it comes to the location of the technical components, only the vault and the capturer must be located in Colombia and there are no further requirements on location for other components. Therefore, the main servers can be located anywhere in the world.
The operator must certify all the technical gaming system components before a laboratory approved in Colombia by Coljuegos.
Jackpots and bonuses are welcome.
Return to the Player (RTP) is set at 83% for slots and real events must comply with the theoretical return to the player formula.
Guarantees requested from operators:
Land-based: The response to the authorisation request must be issued within a term not exceeding thirty days following the filing of the petition.
Online: Once applied, the regulator has a deadline of two months for making a resolution or requiring additional information or clarifications, once submitted the response will have an additional one month to resolve.
There are no application fees, nonetheless, most companies must comply with certain financial requirements regarding equity and debt factors.
As stated above, exploitation rights apply to both national and regional games.
There are two types of exploitation right:
For their operation, premises will require prior approval from the mayor of the city or municipality in which they wish to operate, according to the conditions stated in the territorial planning decree, with regard to land use, location and minimum distance from educational institutions. Changes in the location of the operating room must also have prior approval and meet the conditions established by the gaming regulations.
In the case of local games and lotteries, a favourable report from the local or provincial authority is required. Each municipality may have its own regulations concerning the necessary distance from schools, hospitals, public libraries, etc.
Three recent changes are impacting the land-based gambling sector.
Tax Rate for Slot Implementation
The National Plan of Development Law, which sets the roadmap for the next four years of development, includes a small but high-impact reform to the Gambling Act Law 643/2001, stating that all interconnected METs that comply with certain technical requirements (to do with connectivity and reliability) will pay 12% of GGR (gross gaming revenue) calculated over the all gaming elements of the operator, instead of the old formula that required paying the highest value between 12% and the fixed rate of GGR. This amendment has created controversy between operators and the regulator as the authority needs to set the conditions for this law to be applied.
On 22 November 2019, the government issued Decree 2106 of 2019 to simplify procedures; Article 56 stated that actual operators shall declare and pay gaming duties as stated in Article 59 of the National Plan of Development Law, that is, 12%, although if one of the elements does not comply with the technical requirements, the operator must declare and pay the fixed fee stated in Article 34 of the Gambling Act Law 643/2001.
Before printing this book the government issued a draft decree, giving six months, where Coljuegos will establish the conditions of reliability of the MET, which will be verified two years after its issue; the operators that meet the conditions, according to the timescales, stages and deadlines defined in the document to reach international standards, will pay 12% of GGR, otherwise they will pay the fixed rate. This decree is open for public comments, although is expected to be approved before the end of 2019.
Technical Requirements for Electronic Machines (METs)
Changes to the technical conditions required of gaming machines, and the homologation processes involved, were discussed in a draft document which was open to public consultation. The industry is expecting a final version soon.
Coljuegos has recently performed a national inventory of slot machines, but the final results of this study are not public yet.
The licensing regime for online gaming, Agreement 4 of 2016 and its regulatory documents, sets the conditions to offer internet-operated games under the category of novelty games.
The operation of new games through third parties must be carried out by legal persons; who have concession contracts with Coljuegos; under the terms defined by the specific legal framework for games of chance, the General Statute for Public Tenders in Public Government and the regulatory norms for such statutes or any provision modifying or replacing them. The regulation states that any company willing to commercialise and offer a gaming portfolio must sign the relevant concession contract once the legal, financial and technical requirements have been fulfilled before Coljuegos.
The Colombian regulations do not state any requirements for B2B business.
Affiliates are not regulated, nor mentioned in the gaming regulation. Notwithstanding this, the operator holding a concession contract must guarantee that the terms and conditions – and compliance with the law – are respected with the registered players. B2C providers are liable for any compliance issues with their players.
White-label provision is not regulated and the regulator has not provided an official position regarding white labels yet. Gaming services should be only performed by a concession holder. Nonetheless, if the white-label firm only performs marketing activity and both registration and operations fall on the side of the operator that holds the concession, this should be permitted
Since 2016, when the online gaming regulation was issued, several drafts amending such regulation have been proposed, these have included:
Colombia has a blacklisting regime where the police identify illegal websites offering online betting and report them to the Ministry of Technology and Communications which order the relevant ISP blocking. Coljuegos, once the regulation was published, announced that it was introducing ISP blocking to all operators that had not requested an authorisation to operate in Colombia.
The regulator and the industry have the challenge of preventing compulsive gambling among consumers. These concerns have brought together the whole industry. A united effort with the regulator promotes the responsible gaming programme known as "Juega Bien”, where, under every gambling website, the player may find information regarding compulsive gambling.
However, there are no specific guidelines in the law about the general requirements of a responsible gaming programme. In the case of online gaming, operators shall provide a document with regard to their responsible gaming programme, with the minimum measures to be implemented including at least the following:
Advertising must warn about the risk of gaming addiction and include a message about responsible gaming and about the fact that the gaming activity is restricted to persons of legal age in Colombia. According to the Guidelines, please see the compulsory message below: “gambling is entertainment, play with moderation”, “playing without control causes addiction” and “minors are prohibited from playing”.
Online gaming operators must provide an auto-exclusion system for the players and, during the registration process for a player, must request that they define and determine daily, weekly, and monthly limits to the acquisition of credits or deposits to their gaming accounts.
If the player decides to modify these limits, the operator must attend to the request under the following deadlines:
Colombia is part of the South America International Financial Action Group (GAFISUD), an intergovernmental body reporting to GAFI (the Financial Action Task Force). In this respect, Colombia follows the guidelines issued by GAFI for the prevention of money laundering and terrorism financing (PBC/FT) and, therefore, the obligations of operators do not differ from those required in other countries.
The AML legal framework is set on the following regulations:
The Colombian regulation states all operators must fulfil the legal requirements to apply for a concession contract, among other the following are the main obligations:
In Colombia, there is no supervisory agency for advertising. The marketing and advertising associations have created a code of self-regulation. The Superintendent of Commerce is the entity that supervises consumers' rights, this entity will receive all the complaints against advertising.
Law 1480 of 2011, states the following in Article 5: "12. Advertising: Any form and content of communication whose purpose is to influence consumption decisions (…)”
In Colombia all commercial entities should comply with the consumers' statute, Law 1480 of 2011, which mandates the following:
Colombian Gambling Regulation sets forth the following limits on marketing and advertising:
Also, the Gambling Regulation establishes a general provision with general criteria that operators must comply with at the time of marketing activities. For instance, advertisements must warn about the risk of gaming addiction and include a message about responsible gaming and about the fact that gaming activity is restricted to persons of legal age in Colombia.
Also, other general marketing and advertising regulations in Colombia, further than the prohibition involving minors and false expectations, state that marketing activities cannot induce any religion and cannot go against good customs/manners.
Law 1480/2011 states that the Superintendent of Industry and Commerce may impose sanctions for different type of violations of the consumer's code, including:
There are no specific conditions for the acquisition of a company that has signed a concession contract, however as these type of contracts are ruled under the public law, intuitu personae, the specific qualities of the private party that was accredited in the selection stage must be considered. If the acquisition of the company results in a change of legal entity that will cause a transfer of the contract to a third party, this must be previously approved by Coljuegos.
Furthermore, with regard to the relevant due diligence obligations, information corresponding to natural persons as beneficiaries with 5% of more, should be disclosed.
All changes of control, regarding modification in the corporate equity, capital increases, and shareholder changes beyond 20%, must be reported to the regulator every six months/semester. Although is not a requirement to request prior authorisation for this change of control, it is prudent to report the information to guarantee there will not be any compliance complications.
There are no distinctions made for passive investors.
As explained previously, the relevant authority grants the permits necessary to operate in the betting industry through a concession contract, which means that public contract law is applicable in all matters regarding the enforcement of obligations, meaning that the regulatory bodies may use financial guarantees as standby letters of credit and insurance bonds as compliance guarantees to execute compliance situations after an administrative procedure that did not satisfy the regulatory expectations regarding compliance.
One of the particularities of the Colombian authority (Coljuegos) is that it controls its jurisdiction, meaning that the regulator is judge and party at the same time. Coljuegos must promote the growth of the gaming industry growth and, at the same time, control and execute all the compliance situations of the licensed operators.
Administrative, penal and financial procedures are started against illegal operators or non-compliant operators.
Administrative procedures usually start for breach of the contract regarding reporting or technical compliance. As the regulator has, by law, the powers and jurisdiction to be judge and party, it is very common to start the sanctioning process against non-compliant operators as a persuasive measure.
Standby letters of credit are one of the most common guarantees that operators must provide when requesting a licence which offers liquidity to the authority as they can easily enforce the penalty against such a guarantee.
Additionally, insurance bonds cover the contractual obligations and penalty clauses included in the concession contract for breaching that contract. As it is evidently difficult for operators to obtain insurance products for taking part in the gambling industry, this is a relationship that a licensed operator wants to take care of and preserve.
There have been no recent trends impacting the Colombian social gaming market.
Recently Coljuegos issued a statement to the effect that eSports may be offered as part of the non-sports real events product, available under the online licence.
Recently Coljuegos issued a statement to the effect that fantasy sports may be offered as part of the non-sports real events product, available under the online licence.
There have been no recent trends impacting the Colombian skill gaming market.
There have been no recent trends in blockchain technology in Colombia.
There are no specific trends, in relation to reform, to highlight in Colombia, nonetheless the Ministry of Technology and Communications is always aiming to update the local regulation regarding market developments such as blockchain.
The Gambling Act and the regulatory decrees have stated two types of fees for the gambling industry: exploitation rights (royalties) and administrative fees.
Additionally, the majority of gambling activities, both national and regional, are charged with VAT. Except internet-operated games and regional lotteries.
Exploitation rights are levied on all national and regional games. However, please note that technically speaking this is not a tax but merely a public charge, since the amounts collected from them do not go to the Tax Administration but to the health and pension system.
The administrative fee is a charge for administrative expenses calculated by specific rules for each game, usually over 1% of the actual fixed and variable exploitation rights paid yearly and monthly to Coljuegos or the regional authority.
The law prohibits any fees, stamp duties, or taxes of a municipal, district or departmental nature, other than those that must be paid to the national government. It is important to bear in mind that the level of enforcement and surveillance of the Colombian Tax Administration on the gambling operators is the same as for companies of any other business sector.
Royalties (Exploitation Rights)
As stated above, to understand the taxation system one must consider the legal minimum monthly wage, a national index which is changed on 1 January by a government decree. The 2019 legal minimum wages are:
At the national level:
At the regional level:
As stated above, VAT applies to both national and regional games except for internet-operated games and regional lotteries. As an example we have included below a description of the application of this tax in relation to slots, casino games (roulette, poker, blackjack, etc) and bingo, all of them, of course, understood as land based.
In order to better understand the operation of VAT over these games, it is material to firstly note the following variables for the calculation of this tax:
UVT is an index tributary value updated every year by the government in accordance with inflation.
Please note that the tax base for VAT, in relation to these games, is not the turnover, the GGR nor any other figure related to sales or incomes, but a fixed amount calculated as “x” times (depending on the game) the Colombian Tributary Unit Value (UVT) multiplied by the VAT general rate for these games. Therefore, there is no real consideration of sales per game, terminal, table, etc, as the presumptive sales of the relevant UVT are the basis for the rate of 19% to be paid monthly via electronic declaration.
It is also important to note that VAT cannot be part of the value of the stake to be made by the player. In other words, if a player makes a stake of COP100, the value of his or her stake should be precisely that and not COP100 minus 19% VAT (COP81).
Please find below examples explaining how VAT is calculated for the different land-based games subject to VAT.
VAT for land-based slots
In the case of slots terminals, the taxable monthly base, per terminal, is 20 Colombian Tributary Unit Values (UVT). In other words: 20 x UVT (COP34,270) = COP685,400.
Hence, the taxable monthly base of COP685,400 at the VAT general rate of 19% equals COP130,226, which is, therefore, the tax cost per terminal and per month.
VAT for casino games (table games)
In the case of casino games, the taxable monthly base, per table, is 290 UVT. In other words: 290 x UVT (COP34,270) = COP9.9383 million.
Hence, the taxable monthly base of COP9.9383 million at the VAT general rate of 19% equals COP1.888277 million which is, therefore, the tax cost per table and per month.
VAT for bingo
In the case of bingo, the taxable monthly base, per chair, is 3 UVT. In other words: 3 x UVT (COP34,270) = COP102,810.
Hence, the taxable monthly base of COP99,468 at the VAT general rate of 19% equals COP19,534 which is, therefore, the tax cost per chair and per month.
Tax on Winnings
The Tax code states a 20% tax over the winnings. The operator will have to withhold this amount at the time of withdrawal of funds or prize payment. It applies over withdrawals over approximately USD400.