Stake Colombia to credit player’s Colombian VAT back
Stake’s venture in Colombia introduces an innovative promotional strategy designed to alleviate the impact of the newly imposed 19% value-added tax (VAT) on player deposits, demonstrating the operator’s commitment to enhancing the gaming experience in the region.
As part of a cashback initiative under an Individual Voluntary Arrangement, Stake will reimburse users the VAT amount deducted from their deposited funds due to legislation enacted in February. This strategic approach aims to mitigate the financial implications of the VAT for players while ensuring compliance with regulatory mandates.
Since entering Colombia’s licensed market in 2023 through the acquisition of Betfair Colombia, Stake has made it a priority to maintain a positive gambling experience for its users amid evolving fiscal policies. The operator is acutely aware of the challenges introduced by the VAT, which imposes a 19% fee on every deposit, a dramatic shift that the company is seeking to counteract through innovative customer-focused measures.
The contentious VAT, which was initially proposed last year, faced delays before being officially reinstated on February 12 through emergency legislation (Decree No 0175), repealing the prior VAT exemption for online gambling. The new tax requirement became effective on February 22.
Diana Otálora, Stake’s General Country Manager for Latin America, emphasized the operator’s resolve to prioritize user experience despite the burdensome tax implications. “We recognize the challenges this tax presents and are dedicated to adjusting our operations to ensure that our customers can continue playing without experiencing any negative effects,” she stated in an official release dated February 25.
Understanding Colombian VAT in the Gambling Landscape
The Colombian gambling association Asojuegos has voiced concerns over the potential ramifications of the VAT, predicting it could render the market “unviable” for operators while inadvertently steering players towards illegal gambling ventures. According to Asojuegos President Juan Carlos Restrepo, the implementation of VAT could drastically diminish the player return rate from 93% to between 71% and 75%, prompting a significant shift toward illicit or international platforms that bypass these financial constraints.
This tax measure is reportedly aimed at addressing the financial burdens associated with ongoing conflicts in the Catatumbo region of Colombia, where escalating violence has led to the displacement of approximately 80,000 individuals, according to the United Nations.
Providing insights into the operational impact of the VAT, local legal expert Juan Camilo Carrasco, a partner at Bogotá law firm Asensi Advogados, highlighted the challenges faced by operators in adapting to these rapid changes. Speaking with iGB, Carrasco remarked, “Operators are under considerable pressure to align with these new tax collection mandates without adequate time to amend and certify their systems, which places them in a precarious position.”
“While tax compliance is vital, the lack of operational capability to collect these taxes legally can result in severe consequences,” he explained. “Operators must be cautious not to implement tax collection without prior regulator approval, as that could constitute a breach of the law.”
As Stake continues to navigate this complex landscape, their proactive cashback initiative emphasizes a progressive approach to regulatory compliance and customer retention amid challenging market conditions. This development serves as a case study for other operators looking to sustain growth while adapting to stringent fiscal policies in the ever-evolving gambling sector.
