Mexico Gambling Regulation

The Federal Republic of Mexico, officially known as the United Mexican States, is a country with a population of 129 million people and a gross domestic product of US$2.6 trillion as of 2019. Gambling is permitted in Mexico, although the local government imposes restrictions on these activities to protect citizens.

The sector is mostly aimed at foreign visitors, who can choose from nearly 300 brick-and-mortar gambling venues, the majority of which are housed in luxurious resorts that attract hordes of wealthy tourists. The local government has no plans to increase the number of gambling locations for the time being.

One unique aspect of Mexico is that it is among the few jurisdictions that still allow wagering on blood sports such as bullfighting, cockfighting, and dog fighting. Terrestrial gambling is permitted in the country under the supervision of the General Bureau of Gaming and Raffles, which is part of the Mexican Ministry of Internal Affairs.

As for online gambling, the country lacks a definitive legal framework to regulate such activities. There were talks of introducing new online gambling legislation, but these were abandoned several years ago. Despite this, virtual betting is flourishing in Mexico. The sector generated yearly revenue of around $2 billion as of December 2019. Most of these wagers, or around 80%, were placed via gambling sites without local authorization.

Laws That Govern Landbased Gambling in Mexico

Gaming in Mexico is governed by the provisions of the Regulation of the Federal Gaming and Raffles Law. Introduced in 2004, it complements the country’s outdated gambling legislation, the Federal Gaming and Raffles Law of 1947 (Ley Federal de Juegos y Sorteos), enacted by President Miguel Aleman Valdes.

Article 1

Regulation of the Federal Law of Games and Raffles

The Chamber of Deputies

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Article 1

The 1947 legislation is brief and comprises only 17 articles, beginning with Article 1, which declares that gambling games are prohibited throughout Mexico’s national territory, although the Minister of the Interior may establish rules and authorize betting games in advance. The text’s vague wording created a legal gap that Mexican authorities have been trying to close for years.

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Regulation of the Federal Law of Games and Raffles

The gap was finally addressed by President Vicente Fox Quesada in September 2004 when the Regulation of the Federal Law of Games and Raffles was published in the Federal Official Gazette. The regulation was amended in 2013 to align more closely with the contemporary industry and the technological advances it had witnessed.

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The Chamber of Deputies

A new piece of legislation was submitted a year later with the goal of introducing regulations that would ensure gambling in the country is conducted safely and responsibly. The Chamber of Deputies (Cámara de Diputados) voted in favor of it, and the bill was subsequently sent to the higher Chamber of Senators of the Honorable Congress of the Union.

The Senate was expected to examine and approve the bill, but as of this writing it has not done so. There are no indications that the legislation will be ratified during the current administration, which remains in charge until 2024.

Despite the complicated wording of the legislation, certain forms of gambling are permitted in the country, provided that operators obtain licenses from the General Bureau of Gaming and Raffles. Allowed forms of gambling include wagering on greyhound and horse races, jai alai, card games, bingo, and lotteries.

Online Gambling in Mexico

Since Mexican legislation is very outdated, it does not contain specific legal provisions related to gambling over the Internet. The legislation is also silent about nationals of the country making online bets.

The draft gaming bill submitted in 2014, however, provides a legal definition of online gambling, describing it as gaming activities conducted via electronic devices that have access to the Internet without direct physical contact between the gambling operator and the participants.

The current regulations are focused mainly on the control of terrestrial gambling establishments, i.e., brick-and-mortar casinos and bookmaking shops. Online betting is addressed briefly by several provisions of the Regulation of the Federal Law of Games and Raffles, more specifically Articles 85 through 87 and Article 107.

Article 85 states that establishments can offer wagers electronically as long as they comply with certain conditions. The transactions should be carried out via an internal control system containing information about the bettors’ accounts, identity, and the time and date of their wagers.

The system must receive the approval of the local authorities. Article 87 further elaborates on the conditions that online gambling operators must meet. At present, the General Bureau of Gaming and Raffles has granted several authorizations for the provision of remote wagering.

Application Process and License Conditions in Mexico

Setting up a gambling business is possible in Mexico, provided that the operator obtains authorization from the General Bureau of Gaming and Raffles. One peculiarity of local law is that only entities based in the country may run betting operations.

Application Process

License Conditions

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Application Process

They can, however, partner with non-licensed entities based outside Mexico’s jurisdiction as long as they comply with the applicable Mexican laws. Local legislation lacks specific provisions regarding online gaming offered by entities that are not connected to establishments operating authorized remote betting centers.

License applications must be submitted to the General Bureau of Games and Raffles. Applicants have to provide documents detailing their nationality, address, and the names of all members of their board of directors, along with financial statements.

Applications are assessed within a period of up to three months. Approved applicants are published on the official website of the General Bureau. Licensees may offer only authorized gambling games and must prohibit betting on credit on their premises.

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License Conditions

In the case of land-based casinos, venues must be located at least 200 meters from schools and churches. The admission of minors, inebriated, or otherwise intoxicated individuals is strictly prohibited. Article 10 of the Regulation of the Federal Law of Games and Raffles stipulates that all wagers must be placed solely in Mexico’s national currency, the MXN.

Permits for greyhound and horse race wagering, as well as for establishing remote gambling centers, can remain valid for 1 to 25 years, while those for organizing raffles expire after a maximum of one year.

Licenses are revoked in the event of insolvency or liquidation of the business. Naturally, revocation also occurs whenever a licensee violates the Regulation of the Federal Law on Games and Raffles.

Taxes on Gambling in Mexico

All casino licensees in Mexico are required under local laws to pay compulsory taxes. The state of Jalisco recently updated its laws on gambling levies with the approval of a new measure in the Jalisco State Revenue Law. The measure was suggested by the state governor, Enrique Alfaro, and subsequently gained the approval of the Treasury Commission of the Congress of Jalisco as part of the 2021 State Revenue Law.

These levies technically already applied under the previous legislation. However, the wording of the law enabled some operators to exploit legal loopholes and avoid paying the taxes. Lawmakers insisted on separate legislation to enforce tax compliance on behalf of all gambling businesses.

Under the new measure, operators must pay a 10% tax on profits generated through casino games and slot machines. The collected levies will be used by the state government for good causes, including funding for hospitals and the Jalisco Cancer Institute. Around 25% of the funds will go toward various gambling addiction initiatives.

The Bureau of Games and Raffles generally imposes fees on its licensees that range between 1% and 2% of their revenue, depending on their licenses. In some states, gamblers must also pay value-added tax (VAT).

Responsible Gambling Policies in Mexico

The General Bureau of Gaming and Raffles requires licensed operators to follow several social responsibility policies designed to prevent problem gambling and illicit activities such as money laundering. Gaming businesses must also adhere to specific advertising rules outlined in Article 9 of the Regulation of the Federal Law on Games and Raffles.

First, the operator must obtain permission from the General Bureau of Gaming and Raffles before advertising its services. All marketing materials have to be presented in a clear and precise manner so that players are not deceived or confused. The corresponding permission number must be included.

Article 9 further provides that advertisements should contain messages warning that gambling participation is prohibited for underage persons. Ads must also encourage players to gamble responsibly and for entertainment purposes only.

Protecting minors from gambling-related harm is a key priority. Article 142 of the regulation states that gambling-related prizes must not be awarded to minors. Prizes may be given only to parents or legal guardians after identity verification. Minors cannot participate in wagering, and they may enter gambling facilities only when accompanied by a parent or guardian.

Gamblers must be in an adequate condition to participate in betting activities. Therefore, if someone is drunk or under the influence of any psychoactive substance, they must be denied access to gambling under the provisions of the regulation.

Visitors are also prohibited from carrying weapons on land-based gambling premises. Gambling debts are unenforceable in Mexico largely because Article 11 of the Regulations prohibits authorized gaming operators from directly or indirectly extending credit to patrons.

Staff members must be specifically trained to conduct gambling operations professionally and to identify visitors who might have a gambling problem. The General Bureau of Games and Raffles works closely with several entities that address gambling addiction, namely the National Commission against Addictions (CONADIC) and the Prevention and Control of Addictions Center, which is part of the Mexican Ministry of Health.

Regulation of Gambling-Related Payments

The Gambling Regulator of Mexico

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Regulation of Gambling-Related Payments

According to Mexican legislation, gambling falls under the category of so-called “actividades vulnerables,” or vulnerable activities. Consequently, licensed gambling providers are expected to comply with several other laws in addition to the Regulation of the Federal Law on Games and Raffles.

They must strive to prevent money laundering, among other illegal practices, under the provisions of the Federal Law on the Prevention and Identification of Transactions with Funds from Illegal Sources. This legislation requires authorized gambling operators to verify the identity of each customer.

The same law also stipulates that operators must notify authorities about gambling activities that exceed $2,500. All wagering on games and raffles must be conducted in the local currency, MXN. Accordingly, local online gamblers cannot use cryptocurrencies such as Bitcoin to fund their betting. Money laundering is also punishable under the Federal Criminal Code.

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The Gambling Regulator of Mexico

Remote gambling is not expressly regulated in the country, but the terrestrial sector of the industry is subject to the regulatory framework of the General Bureau of Gaming and Raffles (Dirección General de Juegos y Sorteos). This entity operates under Mexico’s Ministry of Internal Affairs (Secretaría de Gobernación, or SEGOB).

One of the responsibilities of the General Bureau is to ensure the correct conduct of all gambling-related services provided within Mexico, including racetrack betting, frontons, raffles, casino gaming, and wagering on blood sports such as cockfighting.

Another fundamental mandate of the regulator is to safeguard the integrity and transparency of raffles and other gambling activities in the country. In the interest of transparency, the regulator’s website contains a list of the permits it has granted to license holders.

There is also a dedicated User Service Center where businesses and individuals seeking gambling permits may find detailed information about the regulatory procedures and requirements. A full list of locally authorized operators is available on the General Bureau’s official website.

Closing Thoughts

Mexico has an outdated legal framework where gambling is concerned. Back in 2014, the Mexican authorities announced their intention to amend the antiquated Federal Law on Gaming and Raffles from 1947 and introduce a new legal framework aligned with recent technological developments. One of the proposals was to launch a new autonomous regulatory entity and properly regulate remote gambling.

Unfortunately, lawmakers appear to have abandoned the idea, since the draft bill in question remains unapproved to this day. Furthermore, the current president, Andrés Manuel López Obrador, announced in 2020 that no more casino permits would be issued for the time being. This decision came as a result of doubts surrounding the adequacy and legality of some licenses granted under the previous administration of President Vicente Fox Quesada.

President Obrador instructed the Secretary of the Interior, Olga Sánchez Cordero, to review these permits, determine whether they had been wrongfully issued, and revoke them if they were. This unfavorable climate is likely to hinder the growth of the local gambling industry, but only time will tell.