Colombian economy has been ranked as the fourth-largest in Latin America, however it grew 1.8% last year, the lowest in eight years. As a consequence of the continuing impact of the 2014-15 drop in global oil prices which dramatically reduced exports.
While it keeps recovering, the government’s need to fill a hole in public finances, meaning that the tax burden on land-based casino operators is unlikely to diminish in the near future, a lot less regarding that it goes to fund Colombia’s healthcare system.
The Santos administration estimates that peace with the FARC could triple foreign direct investment, reinvigorate the oil industry, and boost GDP growth to as high as 5.9 percent annually. This without mention the road program “4G” that hast an investment cost of $70bn COP.
“If we look at the figures, the land-based sector is facing elevated costs – taken together licensing fees, taxes, and operating expenses occupy around 85 to 90 percent of operators’ revenues, depending on how a business is structured,” explained Evert Montero Cárdenas, president of Colombian trade body, Fecoljuegos.
“That is to say that operators only have a maximum of 10 percent left over to reinvest in their businesses.”
“The problem is that, at present, there is a desire on the part of the authorities to recoup as much tax revenue as possible in order to show the viability of the industry as a revenue-generator, however this focus on figures could put the long-term sustainability of the sector at risk, What the government can do to help the industry is revisit these issues, taking another look at the current rate of tax and how it is levied.” Montero Cárdenas affirmed.
“We need to mature the market, however even if it’s possible to persuade the illegal operators to regularize their status, if that happens we could find that the marketplace becomes very crowded,” continued Montero Cárdenas.
Another issue is the living cost, Colombia has one of the highest costs of living in Latin America, however over half of the population live on the minimum wage of $273 USD a month or less, and this situation has worsened since the VAT rate was raised to 19%nlast year.
However, there is the potential for an interesting synergy between the entertainment and the tourism sectors, according to figures from the country’s Ministry of Commerce, Industry and Tourism (MinCIT) show that the country’s tourism revenues reached nearly $5.7bn in 2016.
But the government’s goal is to reach $6bn in tourism revenues this year. For the gaming industry, the growth in tourism could represent an opportunity. While the integrated resort concept has yet to be realized in Latin America, looking to the future, Montero Cárdenas contends that this model could work in Colombia.
