Colombia’s Constitutional Court has temporarily blocked President Gustavo Petro’s ham-fisted attempt to slap a 19% VAT on online gambling, ruling 6-2 that the government’s emergency decree was, to put it bluntly, constitutionally suspect garbage.

The court suspended Legislative Decree 1390—rushed through on December 22, 2025—which would have imposed the tax as part of a declared « economic and social emergency. » Translation: the government needed money fast and decided regulated iGaming operators made for convenient targets.

When Emergency Powers Become a Backdoor Tax Scheme

Magistrate Carlos Camargo’s 86-page opinion didn’t mince words. The decree suffered from both procedural irregularities—including deficiencies in how the administrative act was actually signed—and substantive constitutional defects that would make a first-year law student wince.

But here’s the real kicker: Camargo’s report explicitly warned that emergency powers cannot be weaponized as a mechanism to ram through fiscal reforms that failed to win democratic legislative approval. In other words, you don’t get to bypass Congress just because your tax proposals are unpopular.

This is systems thinking 101. When governments invoke emergency powers to implement unpopular policies that couldn’t survive normal legislative scrutiny, they’re not responding to emergencies—they’re exploiting them. The Colombian government cited eight different justifications for the emergency declaration, and apparently couldn’t adequately substantiate a single one.

The Fundamental Problem: Using Crisis to Avoid Democracy

The court’s decision exposes a pattern we’ve seen across multiple jurisdictions: when traditional tax reform efforts stall, governments increasingly view regulated gambling—online or otherwise—as a convenient ATM. The industry is politically unpopular enough that tax hikes face minimal public opposition, but profitable enough to generate meaningful revenue.

Petro’s administration essentially tried to use emergency powers to accomplish what it couldn’t through normal democratic channels. The Constitutional Court called bullshit, as it should have.

Petro’s Response: Blame Everyone Else

President Petro’s reaction was predictably defensive. On Twitter, he claimed the ruling would « lead to broader economic consequences » and accused the court of « protecting tax advantages for the wealthiest sectors. »

Let’s unpack this deflection. Petro frames blocking an unconstitutional tax decree as somehow protecting the wealthy—never mind that the tax would have hit online gambling operators and, ultimately, Colombian bettors. He warns that « the burden of the resulting crisis would be shifted onto society, » as if the court’s job is to rubber-stamp whatever fiscal band-aids the executive branch dreams up.

This is classic authoritarian rhetoric: constitutional checks and balances become obstacles to progress, judicial oversight becomes protection for elites, and emergency powers become the only « responsible » path forward. It’s the same playbook we’ve seen from populist leaders across the political spectrum.

The Real Crisis: Governance, Not Gambling Taxes

Petro also connected the economic situation to central bank interest rate policy and « speculative pressures in the energy sector. » Notice what’s missing from this analysis? Any acknowledgment that perhaps the government’s own fiscal management might be the root cause.

If Colombia faces genuine economic challenges—and it likely does—the solution isn’t circumventing democratic processes to shake down regulated industries. The solution is comprehensive fiscal reform passed through legitimate legislative channels, with proper debate and constitutional scrutiny.

What This Means for Latin American iGaming

This ruling matters far beyond Colombia’s borders. It establishes judicial precedent that emergency powers have limits, even when governments desperately need revenue. It signals that at least some Latin American courts will push back against executive overreach, even when the target is a politically convenient industry like online gambling.

For operators in Colombia, this is temporary relief—not victory. The court suspended the decree pending a final ruling on constitutionality, with no timeline specified. The underlying fiscal pressures driving Petro’s cash grab haven’t disappeared. They’ll resurface, likely in a new legislative package that’s marginally more constitutional.

The Broader Pattern: Regulated Markets as Government Piggy Banks

Here’s the uncomfortable truth the industry needs to confront: regulated markets increasingly exist to serve government revenue needs first and consumer protection second. When fiscal pressures mount, operators become easy targets for tax hikes, fee increases, and emergency levies.

Colombia’s experience is just the latest example. We’ve seen similar patterns in the Netherlands, where the regulatory regime launched with punitive tax rates that pushed operators toward unprofitability. We’ve seen it in Ontario, where the tax structure was clearly designed to maximize provincial revenue rather than create a sustainable competitive market. And we’re seeing it across multiple US states, where initial tax proposals routinely start at confiscatory levels before getting negotiated down to merely punitive.

The root cause? Governments view gambling regulation primarily as a revenue opportunity, not as consumer protection or market development. Until that fundamental assumption changes—and there’s no evidence it will—operators should expect continued pressure on their margins from increasingly aggressive taxation.

What Happens Next

The Constitutional Court will eventually issue a final ruling on the decree’s constitutionality. Given the substance of Camargo’s preliminary opinion, full validation seems unlikely. But that doesn’t mean the tax is dead—it means Petro’s administration will need to pursue it through legitimate legislative channels.

Expect a modified version of this tax to emerge in Congress, possibly with slightly different rates or mechanisms designed to address the constitutional defects identified by the court. The government’s fiscal needs haven’t changed, and online gambling remains a politically convenient target.

For Colombian operators, the lesson is clear: provisional relief doesn’t equal long-term stability. Tax pressure will continue (at a global scale), whether through emergency decrees, legislative reforms, or regulatory changes. The only question is what form it takes and whether it’s implemented constitutionally.

The Industry’s Uncomfortable Position

Regulated gambling operators find themselves in an impossible position. They need regulatory frameworks to operate legally, but those frameworks increasingly exist to extract maximum revenue while providing minimum value in return. They need political legitimacy, but governments primarily view them as cash cows rather than legitimate businesses.

This is the fundamental contradiction of regulated gambling markets in the 2020s: the same governments that license operators also view them with barely disguised contempt, as necessary evils to be tolerated only insofar as they generate tax revenue. Constitutional protections and rule of law matter only until fiscal pressures mount high enough.

Colombia’s Constitutional Court just reminded everyone that those protections still mean something—at least for now. Whether that remains true as economic pressures intensify across Latin America remains to be seen.