Colombia’s Constitutional Court has ruled President Gustavo Petro’s economic emergency decree unconstitutional, cutting off his government’s attempt to tax online gambling through executive action. The April 9 decision means any future gambling tax must go through Congress, with the presidential election less than seven weeks away and little room for a quick legislative reset.
A court ruling erased a $3.1 billion emergency tax plan
The decision targeted Decree 1390, signed by Petro and his full cabinet in December. Magistrate Carlos Camargo Assís, who wrote the lead opinion, said the measure exceeded presidential authority and amounted to an affront to the operation of Congress, tied to political conflict after government legislative proposals were rejected. The blocked package had been expected to raise about $3.1 billion, or 12 trillion Colombian pesos.
The decree went well beyond online gambling. It also included an increase in VAT on alcoholic beverages from 5% to 19%, a 50% income tax surcharge on financial institutions, 19% VAT on luxury goods such as yachts and high-powered motorcycles, and revised wealth assessments.
The gambling tax fight stretched across 13 months
The dispute began in February of last year, when Petro’s administration introduced a temporary 19% VAT on online gambling deposits to fund the response to civil disturbances in the Catatumbo region. The Colombian Federation of Gambling Entrepreneurs, Fecoljuegos, said the tax led to a 30% drop in online gross gaming revenue within months. Some platforms saw declines nearing 50% in deposits and player activity.
The effect reached public transfers as well. Under Colombian law, gambling revenue supports the healthcare system. Fecoljuegos said monthly transfers from the sector fell from $9 million (40 billion pesos) to $6.1 million (27 billion pesos).
Petro later tried to make the tax permanent, but the Senate’s Fourth Economic Committee rejected the financing bill in December by a 9-4 vote. He then used emergency powers before Congress entered recess and reimposed the 19% rate through Decree 1390, this time based on GGR rather than deposits. Fecoljuegos said that switch reflected the actual economics of the business, while still arguing the tax was unsustainable.
Crypto was explicitly named in the March decree
On January 29, the Constitutional Court provisionally suspended the decree in a 6-2 vote. Legal specialists described that step as highly unusual in Colombian constitutional practice. Once the suspension took effect, online gambling operators returned to the standard 15% GGR tax.
The government made a third attempt in March, citing severe flooding in northern Colombia. Decree 0240 replaced the VAT approach with a 16% consumption tax on digital gambling platforms. It defined the taxable event as deposits made through “cash, money transfers, or cryptocurrencies,” whether originating inside or outside Colombian territory. According to the source material, this was the first time Colombian law explicitly brought crypto-funded gambling deposits into the scope of taxation.
Relief for operators now, no settled framework yet
With the original emergency decree annulled at the end of March and then declared unconstitutional on April 9, the executive route is closed. Combined with the earlier failure of the financing bill, the unfunded gap in Petro’s 2026 budget now exceeds 16 trillion pesos. The report said the government must either pursue spending cuts worth about 2.5% of GDP or pass new legislation through Congress.
Markets reacted positively. Colombia’s COLCAP index rose after the ruling, as investors read the court’s independence as a sign that institutional checks remained in place. Legal observers do not expect new gambling tax legislation before the presidential vote. Since taking office in 2022, Petro’s administration has reshuffled the cabinet 15 times, a factor the report linked to the procedural weaknesses behind the decree. Licensed operators have near-term relief, but the long-term tax structure remains unresolved.