Colombia Blocks 325 Unlicensed Online Gambling Domains When Operators Refuse to Pay Up

Posted on: March 16, 2017, 03:00h. 

Last updated on: March 16, 2017, 01:52h.

Colombia has a reputation for extreme violence and massive illegal drug trade, and neither problem seems anywhere close to being curtailed. But when it comes to online gambling, the South American country is taking a hardline approach and cracking down on illegal internet casino platforms.

Colombia internet gambling operator crackdown
While hardly the South American country’s biggest issue when it comes to policing, Colombia wants online gaming operators to pay up or get out, and is banning hundreds of sites, including many well-known names, that have refused to pay the piper. (Image: Insight Crime)

Last week, Coljuegos, the South American country’s gambling regulator, announced the formation of an online gambling blacklist that comprises 325 websites that are now banned by the federal government.

The catalog of domains features some of the most famous interactive gambling companies, including William Hill, PokerStars, Betfair, Paddy Power, and Ladbrokes, to name just a few.

The blockage is in response to the country legalizing online gambling last October, albeit at a cost to operators that most seem unwilling to pay. A high six-figure licensing fee and a nearly 20 percent tax on revenues, has left the majority of operators opting to continue offering their products to Colombians, but from offshore headquarters.

Colombia has land-based casinos spread throughout the country, with the heaviest concentration in the capital city of Bogota.

Flawed Bill

Colombia was at the forefront of taking steps to finally regulate online gambling, as it became one of the first Latin American countries to approve legislation for the digital industry. But in hindsight, the law it endorsed was severely unsound.

The first and most critical issue was the country’s decision to impose a licensing fee for online gaming operators that exceeded $160,000. Considering the average annual wage for a Colombian is under $14,000 according to the World Bank, and presumably don’t have massive bankrolls to spare gambling, few operators were excited to put up so much at the outset with no guarantee of ROI.

On top of the high permit fee, Colombia also instituted a 16 percent value-added tax (VAT) on player deposits. Two months after the law was passed, the government rid the VAT tariff in response to concerns presented from gambling operators. But despite the deposit elimination, gaming revenue is still taxed at 15 percent, and gaming sites are refusing to buy into the legalized game.

“All of those things add cost to entering a market that we don’t know whether is going to be viable,” Remote Gambling Association (RGA) CEO Clive Hawkswood told Gambling Compliance last fall. The RGA is a London-based trade association that represents the interests of European internet gambling entities.

Bigger Fish to Fry

To operate and market to its citizens, Bogota wants to first receive a six-figure check from each site purveyor. But based on Colombia’s track record, it seems dubious at best whether or not it will be any more effective at policing online gaming sites than it is at curtailing other illegal enterprises.

The US Department of State names Colombia as a “major illicit drug producing and/or drug-transit country.” Colombia is also identified as being a major source of cultivating essential chemicals that are used in the production of illegal narcotics, and is also a country whose financial institutions engage in money laundering.

And of course, with drugs comes crime.

“Despite significant decreases in overall crime in Colombia, continued vigilance is warranted due to an increase in recent months of violent crime, including crime resulting in the deaths of American citizens,” the State Department’s Bureau of Consular Affairs says in its warning of travel to the South American country.