Mexico Gambling Regulation

Gambling Legislation imageThe 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

Gaming matters in Mexico are governed under the provisions of the Regulation of the Federal Gaming and Raffles Law. It was introduced in 2004 to complement the country’s outdated gambling legislation, the Federal Gaming and Raffles Law of 1947 (Ley Federal de Juegos y Sorteos), introduced by President Miguel Aleman Valdes.

Article 1
Regulation of the Federal Law of Games and Raffles
The Chamber of Deputies

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Since Mexican legislation is very outdated, it does not contain specific legal provisions related to gambling over the Internet.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

Taxes on Gambling in Mexico

casino licence imageAll 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

casino-regulation-licenceThe 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

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.