How to start an online casino in Colombia in 2023: gambling industry overview
Colombia is leading the way among Latin America’s emerging iGaming markets. With the only comprehensive regulatory framework in the region and a gambling industry that’s expanding year-on-year, online operators have no time to lose staking out their position in this thriving market.
All eyes are on Latin America in 2023. All across Central and South America, new iGaming markets are emerging while those already established are growing and improving their regulations. Chief among them is Colombia. Here you’ll find out why so many investors and entrepreneurs are drawn to the Latin iGaming hotspot.
A turbulent past and a bright future
Colombia, a picturesque country located in the northern part of the continent, is a place of contrasts.
The 20th century was a turbulent time in the history of Colombia. The country was plagued with civil conflicts between political factions, rebel groups, and militias, with constant and devastating violence. As a result, up until the millennium, more than 60% of the population was living below the poverty line.
But despite its violent and poverty-stricken past, Colombia now has plenty to be proud of. Over time, the violence has given way to increasing stability, and the country has grown to become the third strongest economy of South America, with a GDP of $741 million. The number of people living below the poverty line has dropped to 35.7%.
Gambling market overview
Colombia is a regional forerunner when it comes to iGaming.
As the first and only country in Latin America to introduce a comprehensive regulatory framework for online gambling, the country has set a standard for its neighbors to learn from and follow. And with those transparent regulations in place, the industry is projected to grow from its current GGR of $312 million (the second-highest in the region) to $806 million by 2026.
Land-based gambling regulations
Private gambling companies in Colombia are allowed to offer almost all types of gambling activities, with the only exceptions of card rooms, which are prohibited, and lotteries, which are operated exclusively by state-owned companies. The industry is regulated by Coljuegos, the national gambling authority, and Law 643/2001, the cornerstone piece of legislation. Several additional resolutions establish the requirements for casinos and slot halls and rules of concession granting.
The law grants the state a monopoly over the industry, yet allows private gambling entities to operate through concessions granted by the state (in other words, a typical license). Operators who are granted a concession have to pay the “operation right,” or royalties, which amount to 12% of their GGR. Concession contracts are valid from three to five years.
iGaming regulations in Colombia
Online gambling regulation is conducted on a similar basis as for the land-based sector. The responsible regulatory body is Coljuegos, and the primary governing legislation is the law of 2001, which legalizes online gaming and defines it as “novelty games.” The first comprehensive set of regulations, however, appeared much later in 2016, with the first license officially issued in 2017.
This decree was later amended, and all regulations consolidated, by Acuerdo 8/2020. The result is a detailed and transparent body of rules that mentions all types of games (including innovative ones like fantasy sports) and clearly regulates the licensing regime and requirements, operation conditions, and technical standards, as well as advertising and anti-money laundering requirements.
Types of gaming licenses in Colombia
The great news is that Coljuegos offers one single type of B2C license that covers all kinds of games (card games, live games, online slots, sports betting, etc.), so online operators will not have to navigate through a labyrinth of different types of licenses. The license is valid from three to five years.
Online gambling license costs
Online gambling licensees in Colombia have to pay a yearly license fee of 811 times the Colombian minimum wage, which makes up approximately $196,830 based on the monthly minimum wage of COP1.16 million (as of March 2023).
Online casino operators must also pay a 15% gaming tax if they ensure an RTP of 83% of total stakes. Otherwise, the gaming tax is 17%.
Lastly, concession holders are required to pay an administrative fee equal to 1% of NGR plus the yearly license fee.
Colombian gaming license requirements
Online casino operators have to fulfill the following criteria to obtain a gambling license in Colombia:
- Online gambling operators must incorporate a subsidiary in Colombia. It can be either a Colombian company or a branch of a foreign-owned company.
- Operators are required to demonstrate their working capital, net worth, and net debt. They must provide a bank guarantee to cover compliance costs, salaries, social benefits, prize payments, and reimbursements of players funds.
- Companies must ensure compliance with anti-money laundering and responsible gaming requirements and have an appointed compliance officer.
- Online operators are not obliged to base their gaming servers in Colombia. However, they must establish “data safes” in the country that will store information about players and transactions. Colombian authorities must be given access to the required data if necessary.
- All gambling equipment must be testedand certified by an authorized testing laboratory.
Responsible gaming in Colombia
The online gambling regulatory framework in Colombia is still young and developing – new regulations are regularly introduced. For instance, the issue of responsible gambling has only been approached and regulated by Coljuegos as late as in 2022.
The new set of regulations is intended to combat problem gambling by requiring online operators, among other things, to detect risky behavior and display warning messages, and to enable players to self-exclude themselves from gambling and limit their deposits.
If it seems hard to find your way through all the existing and upcoming regulations, it is always better to reach out for legal consultancy than risk your business penalties. Our legal team is ready to help you stay compliant with all legal requirements.
Risks of unauthorized online casino operation
With online gambling regulations now fully functional, Colombian authorities are taking a hard line when it comes to unlicensed operators.
The primary iGaming law of 2001 enables both Coljuegos and the police to monitor the internet and block unlicensed or offshore sites. It has been reported that during the first half of 2022, Coljuegos blocked 1,577 websites that operated without a license. Illegal operators of online casinos also risk up to five years of imprisonment.
Choice of software for online casinos
While emerging markets like Colombia present a lucrative opportunity to expand the reach of a casino or sportsbook brand, simply duplicating a platform, translating all text to Spanish, and registering a Colombian domain name isn’t much better than just throwing your investment into the trash.
Localization involves much more than simply translating the text in your marketing material. Players in different cultures have their own UX expectations, and respond to different marketing activities. The Latin American gambling market is a world of its own, and new operators must take the preferences of local audiences into account when entering a new market.
With the right platform software — like our turnkey solution — you can quickly and easily adjust your frontend in line with players’ expectations.
Payment methods for online casinos
Colombian players have their own expectations in terms of payment methods. Online casino operators might get by with credit cards like Visa or Mastercard in Europe, but this will not be enough in LatAm. Research shows that while 45% of the population has a bank account, even less – merely 28% – have a credit card. Taking this into account, here are some popular payment methods to integrate in Colombia:
- Online vouchers prepaid with cash at authorized stores (Efecty, Carulla, Surtimax) or via bank transfer (AstroPay).
- PSE – an interface for transferring funds directly from a bank account without a credit card.
- Local digital wallets (e.g., Nequi).
As for sportsbooks, the local audience is used to placing bets and withdrawing winnings through a flesh-and-blood agent. This aspect of the local market could prove to be a sticking point for operators who are used to online-only operation; convincing players that online payments are just as safe and secure as those made in retail betting shops.
Popular sports for betting
As in the rest of Latin America, sports betting is a much more popular and profitable vertical than casino games. Colombians are among LatAm’s biggest bettors: research conducted by data and insight company TGM showed that 39% of respondents bet on sports at least once a week and 40% bet at least once a month. Overall, 55% of the population places bets on sports.
When it comes to the choice of sports, football is an obvious favorite. Colombia’s national football team is ranked 17th in the FIFA World Rankings, though if there were rankings for enthusiasm, Colombians would undoubtedly be in the top ten. The national team also participates in a number of regional events such as Copa Libertadores, Copa América, Categoría Primera A, the local football league, and Copa Colombia.
This national passion for football makes opening a sportsbook in Colombia a fantastic business idea. Teaming up with Slotegrator will bring you the best results in this enterprise – our online sportsbook solution has all features needed to build a successful betting platform.
Colombian players’ game preferences
While sports betting reigns supreme in Colombia, there’s still plenty of enthusiasm for casino games.
Data collected by Coljuegos indicates that the second most popular vertical in Colombia after sports betting is live casino games, which account for a larger share of GGR generated in Colombia than RNG table games. Online slots are also loved throughout the country.
Selecting the right content is the first step in building a gambling platform, but casino operators also need to make sure that they integrate a diverse portfolio of high-quality games to make the best possible user experience. Cooperating with a game aggregator like Slotegrator can spare you the headaches of signing contract after contract with a long list of game developers: thanks to our APIgrator solution, you can integrate thousands of high-quality games in just one integration session.
How can Slotegrator help?
Despite the high levels of competition inherent in growing markets, Colombia still has a lot to offer gambling investors. With one of the largest iGaming markets of the continent, a sports-oriented culture, and transparent, pro-operator regulatory framework, this country is a great destination for an online casino of any size.
However, launching a gambling platform is easier said than done. Future online operators have to go through a labyrinth of challenges ranging from bureaucratic tasks like navigating local regulations to technical issues related to platform development.
One-stop software suppliers like Slotegrator are here to lend you a helping hand. We offer turnkey gaming platform development and White Label solutions to speed up the process of launching an online casino. Cooperating with us can help save time and money, eliminate potential mistakes, and stake your position in the iGaming industry of Colombia.
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