Online gambling has gained immense popularity worldwide, and Mexico is no exception. To ensure safety and fun, understanding the complex legal landscape surrounding online gambling in Mexico is a must. This comprehensive guide will delve into the regulations, licensing, and key aspects of online gambling laws in Mexico.
The Legal Framework
Mexico is a federal republic, resulting in differences in gambling regulations from state to state. However, most gambling activities fall under federal law, except for certain taxes and zoning restrictions. While there are differences in regulations across states, they are less significant than those in the United States.
Online gambling in Mexico operates under a specific legal framework governing various aspects. The primary legislation overseeing gambling activities is the Federal Gaming and Raffles Law, also known as the Ley Federal de Juegos y Sorteos. This law was first introduced in 1947 and has been amended multiple times to adapt to the changing gambling landscape. The most significant update came into force in 2004.
Regulatory Authority
The Mexican government’s Ministry of Interior (Secretaría de Gobernación - “SEGOB”) established the Mexican Gaming Board (the Gambling and Raffles Bureau - Dirección General de Juegos y Sorteos or “DGIS”) to regulate and oversee all forms of gambling in the country. DGIS plays a crucial role in issuing licenses, enforcing regulations, and ensuring the industry's compliance with the law.
SEGOB via DGIS regulates:
- Gaming in digital and brick-and-mortar modalities:
- Casino gaming, including slots and table games such as roulette or blackjack
- Poker
- Bingo
- Betting in digital and brick-and-mortar modalities:
- Betting
- Sports betting and horse race betting
- Fantasy betting
- Lotteries (together with the National Lottery for Public Assistance)
- Social and skills gaming with no prize or element of chance
What types of games are legal in Mexico?
The Mexican legal landscape is complex. The table below sheds some light on this matter.
| Type of Gambling | Land-Based Legality | Online Legality |
|---|---|---|
| Bingo | Illegal (except non-profit) | Illegal |
| Poker | Legal with a license | Legal with a license |
| Sports Betting | Legal with a license | Legal with a license |
| Lottery | Legal with a license (monopoly) | Legal with a license (monopoly) |
| Bitcoin Gambling | Not specifically regulated | Not specifically regulated |
Betting on Blood Sports
Mexico has been one of the few countries where betting on blood sports, including cockfighting and bullfighting, has been commonplace. Nevertheless, recent updates have led to bans on these activities in some states.
Licensing and Permits
In Mexico, gambling licensing is overseen by the Gaming and Lottery Office of the Ministry for the Interior (SEGOB). To operate legally in Mexico, online gambling operators must obtain a license from the DGIS.
Only Mexican entities or individuals can obtain licenses, but partnerships with foreign companies are no longer allowed since 2013. Individuals can get short-term licenses to organize betting in fairs and similar activities.
There are several types of licenses available, depending on the specific type of gambling activity:
- Online Casino License: Operators offering games of chance, such as slots, roulette, and card games, must apply for this license.
- Sports Betting License: Bookmakers and sports betting platforms must obtain this license to offer sports wagering services.
- Bingo and Lotteries License: For operators offering bingo or lottery-style games online.
- Betting Exchange License: Required for platforms that facilitate peer-to-peer betting.
The Gaming and Lottery Office exercises discretion and aims to be accommodating due to the outdated legal framework. However, the current government has a negative stance on gambling, resulting in fewer recent licenses issued and stalled projects.
License durations are up to 25 years, with licenses issued before 2013 valid for up to an unprecedented 40 years. Licensing fees range from 1% to 2%, depending on the type of gambling activity.
Mexico has approximately 230 gambling venues, including large resort-based casinos targeting affluent tourists and smaller, localized slot halls.
Online Gambling in Mexico
Online gambling in Mexico has been legal in a limited capacity since 2004, governed by the Regulations of the Federal Games and Draws Law 2004. The Ministry of the Interior oversees licensing and has issued remote gambling licenses to select companies, including online sports betting, poker, and lottery operators.
These entities partner with licensed local companies to legally accept Mexican players. Because foreign online casinos cannot secure a license directly within Mexico, they must establish partnerships with Mexican companies holding remote gambling licenses to legally accept players from Mexico.
Proposed Changes to Laws
While a proposed online gambling law in 2014 aimed to introduce specific regulations, it has been indefinitely postponed. Despite technical challenges and outdated regulations, Mexico's online gambling market is growing.
Offshore Gambling Sites for Mexican Players
While Mexico has a well-regulated domestic online gambling market, many offshore gambling websites also cater to Mexican players. However, these sites operate in a legal gray area.
Mexican players are permitted to engage with licensed foreign online gambling platforms but are advised against unlicensed outlets, as they are illegal and taxable.
Mexican authorities have taken steps to block access to offshore gambling platforms, but the effectiveness of these measures can vary. Enforcement against unlicensed platforms is inconsistent, making them accessible but risky for players.
Are Cryptocurrencies Legal in Mexico
Cryptocurrencies are officially recognized as legal tender within The United Mexican States, regulated by the 2018 Financial Technology Institutions Law. It's noteworthy that cryptocurrencies, including Bitcoin, were permissible even before the enactment of this law in 2018.
However, Mexican gambling legislation does not explicitly address using Bitcoin or any other alternative digital currencies. While there is no direct mention of cryptocurrencies in gambling laws, there are subtle indications of the government's perspective on wagering with crypto coins. In 2015, Mexico's Secretariat of Finance and Public Credit issued a cautionary statement concerning using Bitcoin. This advisory did not make crypto transactions illegal at the time but reflected the government's cautious stance towards virtual currencies. Consequently, state-owned gambling entities have refrained from accepting cryptocurrencies, and this policy remains unchanged.
While the government does not prohibit gambling transactions involving Bitcoin, it does not actively encourage or endorse them. In fact, the Mexican authorities still maintain a somewhat unfriendly disposition towards Bitcoin. As a result, no brick-and-mortar casinos, betting shops, lottery retailers, or any other gambling establishments within the country currently accept any form of virtual currency.
However, some licensed online casinos in Mexico, operating in collaboration with Mexican-registered companies but owned by entities outside of Mexico, have accepted various digital currencies like Bitcoin, Litecoin, Ethereum, Ripple, and others. These online platforms facilitate cryptocurrency transactions through different payment processors.
Are casino table games and live dealer games illegal?
Most casinos offer online casino table games and live dealer games. Under current Mexican online casino gambling laws, these games are considered illegal. The legality of this situation is a bit intricate, but it can be simplified as follows:
First, most online casinos utilize additional gambling licenses from various recognized jurisdictions (e.g., Malta, Gibraltar, Costa Rica) to operate these additional games.
They route player activity to servers located in the respective licensed country. The process happens seamlessly in the background- According to the laws of that country, as long as the activity occurs in their data centers, it's not considered to be taking place in Mexico. This is often referred to as a point of consumption approach, making it legal from their perspective.
They direct this activity through their Mexican subsidiary and account for the generated revenue from table games and live dealer wagering as if it were from slot machine gambling. They dutifully pay taxes to the Mexican government through their Mexican subsidiary. They do this punctually annually, fostering a positive relationship with the government and tax authorities.
Taxes
Online gambling operators in Mexico are subject to taxation. The tax rate varies depending on the type of gambling activity, with rates typically ranging from 20% to 30% of gross gaming revenue. Operators must also pay value-added tax (VAT) on their services.
Taxation on Winnings
The bad news for players is that federal and state governments also tax the winnings. The federal rate is fixed at 1%. The state rates vary between 4 and 6% of the winnings.
Tourist Online Gambling
Tourists, expatriates, non-citizens, and illegal migrants can freely engage in online gambling activities, as the discussed laws apply solely to Mexican citizens. Unlicensed online gambling platforms are technically unlawful, yet enforcement is lenient.
Player Protection
Mexico has implemented measures to protect players and promote responsible gambling. Online casinos and betting sites must provide tools for self-exclusion, deposit limits, and access to information about responsible gambling organizations.
Advertising and Marketing
The Federal Gaming and Raffles Law also regulates the advertising and marketing of gambling services. Operators must adhere to strict guidelines to ensure their promotions do not target minors or encourage excessive gambling.
Future Prospects
The online gambling industry in Mexico continues to grow, and lawmakers are considering potential updates to the regulatory framework .In 2014, Mexico considered a new online gambling law but faced delays and indefinite postponements. These changes may include measures to increase player protection and strengthen the oversight of the industry. For example, the legal age is expected to be increased to 21 years. Despite technical issues and outdated regulations, the online gambling market in Mexico continues to expand.
Conclusion
Online gambling in Mexico is governed by a comprehensive legal framework that aims to ensure fair play, protect players, and generate revenue for the government. Operators seeking to enter the Mexican market must navigate a complex licensing process and adhere to strict regulations. While offshore gambling sites remain accessible, the Mexican government is actively working to regulate and control the online gambling industry within its borders. Both operators and players must stay informed about the evolving landscape of online gambling laws in Mexico to operate and participate legally and responsibly.
