Mexico Casino Trade Group Calls for Government Control On Gambling Taxes

Posted on: May 24, 2022, 09:02h. 

Last updated on: May 15, 2023, 02:43h.

Casinos are an important part of the Mexican economy. However, operators aren’t happy with the myriad tax systems in place, and want to see change.

Soccer fans unfurl the Mexican flag at a soccer game. Gambling continues to be a huge part of the economy, but casino operators are pushing for changes to tax laws. (Image: Sporting News)

Before the pandemic, the casino industry contributed some MXN7.5 billion (US$377.03 million) in federal, state, and municipal taxes and duties. The convoluted tax system creates administrative nightmares for operators.

A group that represents casinos and the gaming industry in Mexico asked the federal administration to consider changes to the country’s tax law. These would lead operators in the sector to make a single payment nationwide instead of facing fragmented charges at various levels.

Time to Tackle Taxes

The Association of Permit Holders, Operators and Providers of the Entertainment and Gambling Industry in Mexico (AIEJA, for its Spanish acronym) is behind the initiative. It asserts that the logic of a single charge to the industry lies in better control of income and a better distribution to the federal, state and municipal coffers.

This economic sector is the one that pays the most taxes in proportional terms, because before the pandemic, the 384 rooms in operation contributed just over MXN5 billion per year (just over US$250 million) to the coffers of the Federation, and another MXN2.5 billion (US$125 million) to states and municipalities,” said AIEJA President Miguel Angel Ochoa.

He also explained that such high taxes indirectly encourage clandestine and illegal gambling. They can also inhibit investment, since the investors who are thinking about this sector may find the annual returns unattractive.

This isn’t the first time a call for a rejig of tax requirements has made its way to the government. For years, representatives of trade associations that make up 90% of the licensees in Mexico have demanded reforms.

The groups have lobbied for a single, fair, and proportional federal collection on the real profits of the companies. Subsequently, the federal government could redistribute the collected funds to the states that have casinos in their territories.

However, just like the previous times, the request will likely fall on deaf ears. The government isn’t likely to be too eager to introduce sweeping tax reforms.

This is especially true given the current state of casino operations in Mexico. Across the country, there are concerns that some casino operators may not have been as forthcoming with their true revenue figures as they should have been. As a result, tax authorities are beginning to scrutinize their books.

Online Gambling and Betting on the Rise

Mexico, with more than 130 million inhabitants and a significant immigrant population in the US, is currently the largest Spanish-speaking country in the world. It is also the second-largest gambling market in Latin America.

Mexico is witnessing an increase in its gambling activity, especially sports betting. Recent reports show that 60% of all gambling activity occurs in the segment. The other 40% targets more traditional games, such as slots, blackjack, poker, and the various lotteries.

Sports betting in Mexico represents a market of about MXN5.96 billion (US$300 million) in annual gross profits in tax revenue for the country. The Primera División (Premier Division) is the most popular soccer league in Mexico, followed by the Spanish, English, and German leagues.

Baseball leagues in both Mexico and the US also see considerable participation. American football ranks third in the preferences of Mexicans.

The most popular games are slots with themes that include Mexican traditions. Inca, Day of the Dead, the Piñata and games with similar themes are always popular.

Blackjack is also a favorite, and is usually at the center of online casino platforms. There is also significant traffic in live casino games, with blackjack appearing again alongside roulette.