Columbia Regulates Online Gaming

The new EGaming Act was recently approved by the Colombian Government after several drafts have been put forward for discussion by the Colombian regulating agency Coljuegos. The new act is supposed to regulate the activity of online gaming operators in terms of licensing, taxation and technical requirements. According to the new law the operators will be able to provide a wide range of gambling content including online casino games, online poker, sports betting, fantasy sports and promotional games.

Internet gaming in Colombia was not properly regulated in the past, that is, the law did not explicitly cover this field of gambling activity. Some rules regarding online gambling were included in the Government National plan but the government realized that online gambling was a reality and that by not defining it within the confines of the state, a huge market was left unexploited. Therefore, in the last few years the agency which regulates gambling activity in Colombia, Coljuegos started drafting bill proposals for legalization of online gambling.

This finally resulted in putting forth the new EGaming Act according to which the Online Gaming Operators are obliged to open a bank account in Colombia and also own a Columbian domain. The tax levy imposed on Operators’ net income is 15% which was reduced from 17% as it was previously implied in the National Plan. Furthermore the fee for the acquired license will be a fixed amount calculated as 811 minimum wages as determined by the state which amounts to around $160,000.

The license will be pretty flexible in terms of the games allowed, as Operators can offer anything from online casino games such as baccarat, roulette, poker, etc. to sports betting and promotional games. Promotional games are one interesting aspect of the online gaming as their purpose is to advertise the products and services while at the same time promoting gambling and attracting new players. Practically, these games provide the players with the opportunity to gamble for free if they purchase a certain product or a service.

The new Act definitely represents a breakthrough for Colombian Online Gambling market; however, certain challenges are already in sight. First of all, according to the Colombian law “a game operates through the Internet when both the bet and the prize are paid exclusively through the internet.” This implies that the players should own a bank account, which, you may think, should not be a problem but the situation is slightly different with the Colombians.

In Colombia there is a majority of people who do not possess a bank account or internet access. Gamblers are skeptical about online payments and prefer to process their payments in cash. Now the logical course of action would be building trust of the gamblers and working hard on promotion of the online gambling, which takes a lot of time and effort. Mentality change takes much more than bringing a law.

Another major concern for Colombians is that the local entrepreneurs possibly will not be able to contend with the foreign operators due to the high licensing fees.

The theory and reality of the new online gambling law encounter some contradictions, which is another issue for Coljuegos and the government to deal with. A step forward has been made but obviously there are many other things to consider and amend in the future.