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 have a choice 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 thing about Mexico is that it is among the few jurisdictions that still allow wagering on blood sports such as bullfighting, cockfighting, and dog fights. 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 they 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 posted via gambling sites without local authorization.
Laws That Govern Landbased Gambling in Mexico
Article 1
Regulation of the Federal Law of Games and Raffles
The Chamber of Deputies
Article 1
The 1947 legislation is short and contains only 17 articles, starting with Article 1 which states that gambling games are disallowed throughout the national territory of Mexico although the Minister of the Interior might establish rules and authorize betting games in advance. The wording of the text was confusing and created a legal gap Mexican authorities have been trying to fill for years.
Regulation of the Federal Law of Games and Raffles
The gap was finally addressed by President Vicente Fox Quesada in September 2004 with the publication of the Regulation of the Federal Law of Games and Raffles in the Federal Official Gazette. This was amended in 2013 to make it more harmonious with the present industry and the progress in technologies it has seen.
The Chamber of Deputies
Another legislation was submitted a year later that aimed to introduce new regulations so that gambling in the country can be conducted securely and responsibly. The Chamber of Deputies (Cámara de Diputados) voted in its favor so the legislation was subsequently sent to the higher Chamber of Senators of the Honorable Congress of the Union.
The Senate was supposed to examine and approve the new bill but this has not happened at the moment of writing. There are no signs the legislation will be ratified during the current administration, which will remain in charge until 2024.
Despite the complicated wording of the legislation, certain forms of gambling are permitted in the country provided that those who run the operations have obtained licenses from the General Bureau of Gaming and Raffles. Some of the allowed forms of gambling include wagering on greyhound and equestrian 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 as to nationals of the country making online bets.
The draft gaming bill submitted back 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 tackled briefly by several provisions of the Regulation of the Federal Law of Games and Raffles. More specifically, Articles 85 through 87 as well as in Article 107.
Article 85 says 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 should have received the approval of the local authorities. Article 87 further elaborates on the conditions those who pursue online gambling operations must meet. At the present moment, 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 laws is that only entities based in the country can run betting operations.
Application Process
License Conditions
Application Process
They can, however, work in partnership with non-licensed entities based outside Mexico’s jurisdiction as long as they comply with the applicable Mexican laws. The local legislation and regulations lack specific provisions regarding online gaming offered by entities that are unrelated to establishments that run authorized remote betting centers.
As for license applications, they must be submitted to the General Bureau of Games and Raffles. The applicants must provide documents that contain information about 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. The approved applicants are published on the official website of the General Bureau. Licensees can offer only authorized gambling games and disallow betting on credit on their premises.
License Conditions
In the case of landbased casinos, they should be located at least 200 meters away from schools and churches. The admission of minors, inebriated, and intoxicated individuals is strictly prohibited. Article 10 of the Regulation of the Federal Law of Games and Raffles stipulates that all wagers should be made solely in Mexico’s national currency, the MXN.
Permits for the provision of greyhound and horse race wagering, and setting up remote gambling centers can remain valid for 1 to 25 years while those for the organization of raffles expire after a maximum of one year.
Licenses are revoked in the event of insolvency and liquidation of the business. Of course, qrevocation also occurs whenever a given licensee has violated 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.
Said levies technically already applied through the past legislation. However, the wording of the law was such that it 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, the operators will have to pay 10% taxes on profits generated through casino games and slot machines. The collected levies will be used by the state government for good causes, including the funding of 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 of the country, gamblers must also pay value-added taxes (VAT).
Responsible Gambling Policies in Mexico
The General Bureau of Gaming and Raffles expects licensed operators to comply with several social responsibility policies that aim to prevent problem gambling and illicit activities like money laundering. Gaming businesses should also comply with certain advertising policies which are outlined in Article 9 of the Regulation of the Federal Law on Games and Raffles.
To begin with, the operator must obtain the permission of the General Bureau of Gaming and Raffles before they can advertise their services. All marketing materials should be presented in a clear and precise manner so that players are not deceived or confused in any way. The number of the corresponding permission should be included.
Another condition stipulated in Article 9 of the regulation legislation is that the advertisements should contain messages warning that gambling participation is prohibited for underage persons. The ads should also invite players to gamble responsibly and for entertainment purposes only.
A particular emphasis is placed on the protection of minors from gambling-related harm. Article 142 of the regulation law dictates that no gambling-related prizes should be given to minors. They should be granted only to their parents or legal guardians after identity verification. It makes sense that minors cannot participate in wagering in the first place. They can enter gambling facilities only when accompanied by their parents or guardians.
Gamblers should be in adequate enough condition to be allowed to participate in betting activities. Thus, if someone is drunk or under the influence of some psychoactive substance, they should be denied gambling participation under the provisions of the regulation law.
Visitors are also disallowed from carrying weapons on landbased gambling premises. Gambling debts are not enforceable in the jurisdiction of Mexico, largely because Article 11 of the Regulations prohibit authorized gaming operators from indirectly or directly extending credit to their patrons.
Staff members should be specifically trained to conduct gambling operations in a professional manner and identify visitors who might have a gambling problem. The General Bureau of Games and Raffles works closely with several entities that deal with 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
Regulation of Gambling-Related Payments
According to Mexican legislation, gambling belongs to the category of the so-called “actividades vulnerables” or vulnerable activities. It follows that licensed gambling providers are expected to operate in compliance with several other laws besides the Regulation of the Federal Law on Games and Raffles.
They should strive to prevent money-laundering, among other illegal practices, under the provisions of thea Federal Law on the Prevention and Identification of Transactions with Funds from Illegal Sources. This piece of legislation requires authorized gambling operators to verify the identity of each customer.
The same law also stipulates that the operators should notify authorities about gambling activities that exceed the amount of $2,500. All wagering on games and raffles must be conducted in the local currency MXN. Hence, local online gamblers cannot use cryptocurrencies like Bitcoin to fund their betting. Money-laundering is also punishable under the Federal Criminal Code.
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 inspect for the correct conduct of all gambling-related services provided within Mexico, including racetrack betting, frontons, raffles, casino gaming, and wagering on blood sports like cockfighting.
Another fundamental mandate of the regulator is to ensure the integrity and transparency of raffles and other gambling activities in the country. In the interest of transparency, the regulatory entity’s website contains a list of the authorized permits that have been granted to license holders.
There is also a dedicated User Service Center where businesses and individuals who seek to obtain gambling permits may find detailed information about the regulatory procedures and requirements. A full list of locally authorized operators is available at 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 intentions to amend the musty Federal Law on Gaming and Raffles from 1947 and introduce a new legal framework aligned with the 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 very day. Furthermore, the current President Andrés Manuel López Obrador announced in 2020 no more casino permits will be issued for the time being. This decision came as a result of doubts associated with 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 have been wrongfully issued, and revoke them if they are. This unfavorable climate is likely to hinder the growth of the local gambling industry but only time will tell.