Tax rates for the sports betting industry and online casinos are an issue in Latin America, as there are many outdated or contradictory laws depending on the jurisdiction and the interpretation of the authorities. In the case of taxes for winnings in bookmakers, some countries establish limits by which the earnings must be declared, others leave everything to the discretion of the citizens, and many have gray areas that vary according to the case.
It happens to many bettors that once they win an online bet, they do not know how much of the amount won will go to taxes or when they must pay the respective percentage. In order not to have doubts about it, we have taken on the task of investigating the laws and regulations of different countries to learn a little more about how the winnings of bookmakers in Latin America are taxed.
Not all countries are the same, and comparisons can even be made between the rules and obligations of different provinces within the same country. In addition, some laws are stricter than others, and a few of them are somewhat more permissive so that bettors do not have as many tax obligations when making a profit.
Internationally, the percentage of countries with laws on gambling and taxes on profits in sports betting or online casinos barely exceeds 50%. This same reality exists in Latin America, where there are few countries with clear, current, and active regulations for taxes on victories in betting sites. It is quite common for regulations to focus on casino and bookmaker operators rather than users. Here is a review of the situation in some countries with a strong online gambling market:
Argentine laws on casinos, online games, and sports betting focus more on the activities of companies. For individuals, each person is supposed to declare the winnings obtained in a bookmaker to the tax agency, but this is at the discretion of each person. To complicate matters a bit more, there are no federal regulations on this, but each province has its regulations to deal with the extraordinary income of each individual.
The tax agency has a 2% tax for online gambling, but the only way to collect it is when the user uses debit or credit cards as a payment method. As operators offer other options for deposits and withdrawals of funds, this surcharge can be avoided in most cases. It is also not too strict a law, so any tax burden will fall on the provincial laws, which leaves a lot of freedom for bettors.
The legal framework for sports betting in Colombia is much newer and more transparent in terms of people's rights and obligations. Every user must declare the winnings obtained in a betting house, as long as these incomes are greater than 1,644,960 Colombian pesos (about 430 US dollars). The balance is annual, and the declared amount must be entered in the "occasional earnings" item.
For this purpose, you must add up all the winnings of all the bookmakers used during the fiscal year. If you do not report this income in a timely manner, the tax agency (DIAN) could carry out an investigation and find irregularities that could lead to legal consequences. The payment of taxes for sports betting profits depends on your complete return, also considering other income and assets.
With a long tradition of sports betting and casinos, the industry is regulated by the Secretaria de Gobernacion (SEGOB) but does not have a specific legal framework for taxes on victories in sportsbooks. In this sense, the income tax law applies. This means that for all the winnings obtained in bookmakers, you must pay a 21% tax.
Taxes are mandatory only in case of winnings, and for this, all deposit amounts, sports betting bonuses, money wagered, and victories obtained must be considered. After doing the respective subtractions, you will know the amount of winnings. Taxes on this income are part of the annual tax return and must be paid even when you have not made a withdrawal from your gambling site account.
In Argentina, contrary to the tax laws for individuals, companies that provide a service related to gambling are subject to a much more demanding framework. The tax on income derived from the exploitation of games of chance is federal in scope and sets a percentage above 40% as a contribution. The Government constantly analyzes updates to the laws on gambling and the percentages, including the distribution of the money collected from these tax revenues.
All online casinos and sports betting sites must pay 12% of gross income as tax in Colombia. Much of the money obtained from this concept is destined for the health sector, which is why the gambling industry contributes millions of dollars to the government system each year. On-site slot machines and bingo games have been out of this tax liability for some time, but all electronic games and online gambling remain large contributors. Having the numbers in order is one of the requirements for operators to have a Coljuegos license.
In other countries, there are no specific laws, and bookmakers are treated like casinos. Tax percentages vary and are subject to both national and provincial regulations, depending on the case.
In places where casino games and sports betting are not allowed as locally incorporated companies, operators offer services with international licenses and are based in other countries, so this is a gray area in which governments cannot do a lot about it. For this reason, in recent years, Colombia has taken a step forward in terms of industry regulation, and other countries will surely follow suit in the near future.