Colombia’s Constitutional Court has closed off President Gustavo Petro’s attempt to use emergency executive powers to impose new taxes on the online gambling sector, a decision with broader implications for fiscal policy, digital payments, and the treatment of crypto-funded gambling activity under Colombian law.
In its April 9 ruling, the court found that Petro’s emergency economic decree was unconstitutional, effectively ending a 13-month campaign to tax the country’s online gambling industry through presidential decrees rather than ordinary legislation. The decision means any future effort to impose a gambling VAT or similar levy must now go through Congress.
A Constitutional Limit on Executive Tax Power
The ruling centered on Decree 1390, signed by Petro’s full cabinet in December. The government had used the measure to revive a tax package after its financing law was rejected in the Senate. According to the court, however, the decree exceeded the constitutional limits of presidential emergency powers.
Magistrate Carlos Camargo Assís, who authored the lead opinion, described the decree as an affront to Congress, arguing that it emerged from political conflict after the government failed to win legislative approval for its agenda. The judgment is important not just for gambling operators, but for Colombia’s broader institutional balance: it reinforces that major tax changes cannot simply be pushed through executive channels when lawmakers say no.
The blocked package would have helped the government collect roughly $3.1 billion, or 12 trillion Colombian pesos, through emergency fiscal measures. Those measures included a 19% VAT on online gambling gross gaming revenue, a VAT increase on alcoholic beverages from 5% to 19%, a 50% income tax surcharge on financial institutions, new VAT on luxury goods such as yachts and high-powered motorcycles, and revised wealth tax assessments.
How the Gambling Tax Fight Escalated
The conflict began in February 2025, when Petro’s administration introduced a temporary 19% VAT on online gambling deposits. The government presented the measure as an emergency response intended to help fund the state’s reaction to unrest in the Catatumbo region.
Industry groups said the impact was immediate. Fecoljuegos, the Colombian Federation of Gambling Entrepreneurs, reported that online gross gaming revenue fell by 30% within months of the tax being introduced. Some platforms reportedly saw declines approaching 50% in deposits and player activity. Because Colombian law channels gambling-sector transfers into the healthcare system, the industry downturn also reduced public receipts: monthly transfers reportedly fell from about $9 million to $6.1 million, or from 40 billion pesos to 27 billion pesos.
After the government tried to make the measure permanent, the Senate’s Fourth Economic Committee rejected the financing bill by a 9-4 vote in December. Instead of shelving the proposal, Petro’s administration turned to executive powers and issued Decree 1390 before Congress entered recess.
That decree reimposed the 19% VAT, but changed the tax base from deposits to gross gaming revenue. Fecoljuegos acknowledged that taxing GGR better reflected the business model of operators, but still argued that the burden remained unsustainable.
Court Intervention and Return to the Standard Regime
The Constitutional Court had already signaled skepticism before the final ruling. On January 29, it provisionally suspended the decree in a 6-2 vote, a step that legal observers described as highly unusual in Colombian constitutional practice. According to gaming lawyer Juan Camilo Carrasco of Bogotá-based Sora Lawyers, the court rarely adopts preventive measures of that kind, suggesting the decree faced serious legal weaknesses from the outset.
That suspension returned licensed online gambling operators to the standard 15% GGR tax regime. The court’s later annulment of the original emergency decree, followed by the April 9 constitutional ruling, has now shut the executive route more definitively.
Crypto Deposits Became a New Flashpoint
One of the most notable developments for digital asset markets came with the government’s third attempt to tax gambling activity. In March 2026, citing severe flooding in northern Colombia, the administration issued Decree 0240. Rather than a VAT, the new mechanism imposed a 16% consumption tax on digital gambling platforms.
What made Decree 0240 stand out was its treatment of funding methods. It defined the taxable event as deposits made through cash, money transfers, or cryptocurrencies, whether the funds originated inside or outside Colombian territory. This was the first time Colombian law explicitly brought crypto-funded gambling activity within the scope of taxation.
That point matters well beyond gambling. It shows that Colombian policymakers are increasingly willing to identify crypto as a taxable payment rail in digital consumer activity. Even though the immediate legal battle was about constitutional procedure and emergency powers, the inclusion of cryptocurrencies creates a policy marker that may resurface in future legislation. If a revised gambling tax bill eventually reaches Congress, crypto-linked deposits are likely to remain part of the debate.
Budget Pressure and Political Timing
The court’s decision also deepens the government’s fiscal challenge. With the emergency tax package blocked and the earlier financing law already rejected, the unfunded gap in Petro’s 2026 budget now exceeds 16 trillion pesos. According to the report, the administration will need either spending cuts worth roughly 2.5% of GDP or fresh legislation approved through Congress.
The timing is politically sensitive. Colombia’s presidential election is less than seven weeks away, and legal experts see little chance of comprehensive gambling tax legislation being passed before the vote. Carrasco assessed that any new proposal would more likely return through a normal legislative process after the 2026 election cycle.
Petro’s administration has reshuffled the cabinet 15 times since taking office in 2022, a factor that critics say contributed to the procedural instability surrounding the decree strategy. For licensed operators, the court ruling offers immediate relief from emergency taxation. For the government, it leaves an unresolved fiscal gap. And for the crypto sector, it provides a clear signal that digital asset use in gambling and other online transactions is increasingly visible to lawmakers.
Markets Welcome the Institutional Signal
Financial markets responded positively to the ruling. Colombia’s COLCAP index rose after the decision, with investors interpreting the judgment as evidence that the country’s institutional checks and balances remain intact even amid executive overreach. In that sense, the case became more than a tax dispute: it turned into a test of whether Colombia’s constitutional system could restrain emergency policymaking when major economic measures bypass ordinary democratic channels.
For now, the online gambling sector gets short-term certainty, but not a final answer on taxation. The court has blocked the presidential shortcut. It has not settled the long-term policy question. That issue now returns to where the court says it belongs: Congress.