iGaming in Mexico: A Legal Overview
Mexico is home to one of Latin America's most established gambling industries, supported by a longstanding legal and regulatory framework. In recent years, the country's gambling regulations have undergone several reforms impacting both land-based and online iGaming operations.
In this article, we will explore the legalities of online gambling in Mexico and share more information about the recent reforms to the regulatory structure, licensing requirements, advertising rules, and tax implications.
A quick summary of existing legislation
Gambling in Mexico – including online gaming – is regulated by the Federal Gaming and Raffles Law (commonly referred to as the 2004 Regulation) and can be complex to navigate as an operator. Changes made in 2023 mean new licenses for online casino games are unlikely to be issued, but existing license holders can continue to operate. Online sports betting isn’t affected by these new restrictions, and domestic and overseas operations can continue to apply for new licenses as normal. Regulations are applied in a tier structure and are applicable to a wide range of business models.
A Brief History of Gambling Regulations in Mexico
Mexico's gambling regulations date back to the 1947 Federal Gaming and Raffles Law, which laid the foundation for gambling in this vast country. In the almost 80 year since, the industry has undergone huge changes, and the legislation has changed with it. Over the years, the law has been amended several times to adapt to emerging forms of gambling, particularly online activities.
The most significant update came with the 2004 Regulation of the Federal Gaming and Raffles Law (commonly referred to as the 2004 Regulation). This was introduced to modernize the law and include online gaming, lotteries, and sports betting within its scope.
With an estimated contribution of around $2 billion per annum, Mexico’s gambling market is far from marginal. It’s also expected to grow significantly in the near future. Despite this potentially lucrative development, the Mexican government remains somewhat conservative when it comes to expanding the nation’s gambling sector. The latest reforms, introduced by a presidential decree in 2023, have imposed tighter restrictions on certain forms of online gaming, particularly online casino games.
These changes, while limiting, still leave more than enough room for iGaming operations to flourish under clear legal parameters.
The Legal Status of iGaming in Mexico
Mexico allows a variety of gambling operations, both online and offline. Players can legally participate in:
Casinos (both physical and virtual)
Sports betting
Lottery and raffle games
Bingo (raffle number games)
Despite this, recent reforms have added new restrictions to online gambling, particularly regarding online casino games. In November 2023, Mexico's then-President signed a decree amending Article 91 of the 2004 Regulation, stating that lawful drawings cannot encompass “betting games played with cards or the equivalent in all its forms, dice, roulette wheels or slot machines”.
The reform also repealed Article 137 Bis of the 2004 Regulation, which had previously been interpreted to allow online casino gaming. As a result, new or renewed licenses are unlikely to permit the operation of online casino games under this revised regulatory structure. However, operators holding existing licenses can continue offering these games until their license expires.
Gambling in Mexico
As mentioned above, the Federal Gaming and Raffles Law remains at the core of Mexico's gambling framework. With all its amendments and updates, it provides the overall legal basis for all gaming activities. The 2004 Regulation defines how this law applies to specific types of gambling, including online and land-based operations. The November 2023 Decree marks the most recent change to this regulatory framework, particularly concerning the future of online casino gaming.
The key regulatory body responsible for overseeing the gaming industry in Mexico is the Dirección General de Juegos y Sorteos - the General Directorate of Games and Raffles, which is part of the Secretariat of the Interior, known locally as SEGOB. Its task is to ensure that gambling operators comply with the legal requirements, including licensing, anti-money laundering measures, and data protection laws.
Although recent reforms have limited the scope of online casinos, online sports betting remains a fully legal and regulated industry. Both local and international operators can apply for licenses, enabling them to offer sports wagering services across a wide variety of sports.
The local licensing process is overseen by SEGOB, which ensures that operators meet strict criteria regarding player protection, anti-money laundering compliance, and responsible gambling promotion.
Licensing Structure: Operators, Master Licenses, and White Labels
The licensing process for online gambling in Mexico is tiered, with different levels of responsibility assigned to various entities:
SEGOB: Oversees the issuance and regulation of all gambling activities through the General Directorate of Games and Raffles.
Master License Holders: These are primary licenses granted by SEGOB. Obtaining a master license is complex and costly but allows the holder to issue sublicences to third-party operators.
Operators: These are independent companies that operate under a sublicense granted by a master license holder. Operators bear the primary responsibility for ensuring compliance with the law, and they manage the day-to-day operations of gambling services.
White Label Brands: A more affordable licensing option, white label operators are allowed to run their iGaming platforms under the umbrella of an operator's license. However, this method presents risks, as any non-compliance by the license holder could result in the suspension of all associated brands.
This licensing hierarchy allows flexibility within the industry, enabling various business models, from fully independent operators to white-label solutions. However, potential entrants into the market should be aware of the risks associated with each licensing path, especially as the regulatory environment tightens following the 2023 reforms.
Advertising Rules for Operators
Advertising is permitted for licensed operators in Mexico, but it is subject to stringent conditions under Article 9 of the 2004 Regulation. These conditions include:
Gambling activities cannot be explicitly promoted.
Advertising must be clear and precise, avoiding language or imagery that encourages gambling or misleads consumers.
All advertising must include information about the operator's gambling license and clearly state that gambling services are not available to minors.
Responsible gambling messages must be present in all adverts. They should emphasize that gambling is a form of entertainment, rather than a way to make money.
The goal of these guidelines is to promote gambling responsibly, while protecting vulnerable segments of the populations (such as young children) from exposure to gambling advertss.
Taxation on Gambling Operations and Player Winnings
It's important for both operators and players to understand the local taxation rules to ensure full compliance. In Mexico, gambling operators are taxed at a rate of 30% on their gross gaming revenue (i.e., total turnover minus any prizes paid out to players). This applies to both online and land-based operations, as there is no distinction made between the two in the country's tax laws.
Player winnings are also subject to taxation, although the rate is considerably lower. Federally, players must pay a 1% tax on their winnings, with some states imposing additional taxes that vary by region.
Data Protection and Anti-Money Laundering Measures
Mexico’s gambling industry is also subject to comprehensive data protection laws and anti-money laundering (AML) measures. The Federal Law for the Protection of Personal Data Held by Private Persons (2010) and its corresponding Regulations (2011) govern how operators must handle player data. These laws align with international standards, ensuring that players’ personal information is collected and stored securely.
In terms of AML compliance, gambling operators must adhere to the Law for the Prevention and Identification of Operations with Resources of Illegal Origin. This law requires operators to implement robust systems for detecting and reporting suspicious financial activity, with the aim of ensuring the integrity of the gambling industry and preventing the use of gaming platforms for illicit activities.
Despite its changes, Mexico remains a lucrative market for iGaming operations, with legal provisions in place to support sports betting and other forms of gambling. While the legislation may seem restrictive in some areas, opportunities still abound for those willing to navigate the complexities of Mexico's gaming regulations.
