Colombia's Constitutional Court delivered a landmark ruling on April 9, striking down President Gustavo Petro's economic emergency decree as unconstitutional and concluding a 13-month push to impose a value-added tax (VAT) on the country's online gambling sector through executive action. The decision forces any future gambling tax to be legislated by Congress, with the presidential election now less than seven weeks away on May 31.
Background: The $3.1 Billion Tax Package Rejected
The court ruled that Decree 1390, signed by Petro's full cabinet in December 2025, exceeded the president's constitutional authority. Lead magistrate Carlos Camargo Assís called the move an “affront to the operation of Congress” stemming from “political conflicts arising due to the refusal of legislative initiatives of the government.” The ruling blocks Petro from collecting approximately $3.1 billion (12 trillion Colombian pesos) through emergency fiscal measures, including a 19% VAT on online gambling gross gaming revenue (GGR), increased VAT on alcoholic beverages (from 5% to 19%), a 50% income tax surcharge on financial institutions, a 19% VAT on luxury items (yachts, high-powered motorcycles), and revised wealth assessments.
The saga began in February 2025, when Petro's administration first introduced a 19% VAT on online gambling deposits as a temporary emergency measure to fund the response to civil disturbances in the Catatumbo region. The Colombian Federation of Gambling Entrepreneurs (Fecoljuegos) reported that the tax caused a 30% drop in online GGR within months, with some platforms seeing declines of nearly 50% in deposits and player activity. Monthly transfers from the gambling sector to Colombia's healthcare system—which by law receives gambling revenue—fell from $9 million (40 billion pesos) to $6.1 million (27 billion pesos).
Cryptocurrency Deposits Explicitly Taxed for the First Time
When Petro sought to make the tax permanent, the Senate's Fourth Economic Committee rejected his financing law by a 9-4 vote in December 2025. Instead of accepting defeat, Petro invoked emergency powers and signed Decree 1390 before Congress recessed. The decree reimposed the 19% VAT, but this time calculated on GGR rather than on deposits—a shift that Fecoljuegos acknowledged as recognizing “the true math of the business,” even as the tax remained unsustainable.
On January 29, 2026, the Constitutional Court provisionally suspended the decree by a 6-2 vote in what legal experts described as an unprecedented move in Colombian constitutional history. Juan Camilo Carrasco, managing partner of Bogotá-based gaming law firm Sora Lawyers, told iGB.com that the court “rarely adopts preventive measures of this type,” suggesting the decree faced serious obstacles. The suspension returned online gambling operators to the standard 15% GGR tax.
Undeterred, the government launched a third attempt in March 2026, issuing Decree 0240 in response to severe flooding in northern Colombia. This time the mechanism was a 16% consumption tax on digital gambling platforms rather than a VAT, with the taxable event defined as deposits made via “cash, money transfers, or cryptocurrencies” from inside or outside Colombian territory. The decree explicitly brought crypto-funded gambling activity within the scope of taxation for the first time under Colombian law.
Market Reaction and Future Outlook
The court's final annulment of the original emergency decree in late March, followed by the April 9 ruling declaring it unconstitutional, has now closed the executive-action pathway. Combined with the earlier budget shortfall from the Senate's rejection of the financing law, the total unfunded gap in Petro's 2026 budget exceeds 16 trillion pesos. The government must now pursue spending cuts of approximately 2.5% of GDP or pass new legislation through Congress.
Colombian equity markets responded positively. The COLCAP index rallied following the ruling, with investors interpreting the court's independence as a signal that Colombia's institutional framework remains functional despite executive overreach. Legal experts consider new gambling tax legislation unlikely before the presidential election, with Petro's prospects uncertain ahead of the May 31 vote. Carrasco of Sora Lawyers assessed that new proposals would likely be deferred “to a normal legislative process at a later date, after the 2026 elections.” Petro's administration has reshuffled the cabinet 15 times since taking office in 2022, contributing to the procedural irregularities that undermined the decree's legitimacy. For Colombia's licensed operators, the ruling provides short-term relief but leaves the long-term tax framework unresolved until a new government takes office in 2027.