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What’s New in Mexico’s Gambling Tax Proposal?
Gambling has always been a source of extra tax revenue for governments, and many countries are now pushing for higher rates. From casinos to sportsbooks and even video games, taxes on gaming are going up worldwide. Mexico is the latest country to propose a major tax increase, and the plan has already started debates across the industry. If approved, Mexico would become one of the highest-taxed gambling markets in the world.
Mexico’s Current Gambling Tax System
In Mexico, gambling is taxed under the Special Tax on Production and Services (IEPS). At present, casinos and online operators must pay 30% of their gross gaming revenue under IEPS.
But that’s not all. On top of this, companies also pay:
- 30% corporate income tax on net income
- Local and municipal taxes, which can reach as high as 10% in some states
- Regulatory fees charged by SEGOB, the Ministry of Interior
This already makes Mexico one of the toughest places in Latin America for gambling businesses.
What the New Proposal Suggests
The country’s Finance Minister, Édgar Amador, has proposed to increase the IEPS on gambling from 30% to 50% of gross gaming revenue.
The plan also introduces a brand-new tax: an 8% levy on video games that have violent or adult themes, or those offering in-game purchases. This would apply to:
- Physical discs for consoles and PCs
- Digital downloads from platforms like PlayStation, Xbox, and Steam
- Mobile in-app purchases and subscriptions
Why Video Games Are Included
The idea behind the video game tax is to bring them under the same category as “socially risky” products, similar to gambling, alcohol, and sugary drinks. According to the government, this move would:
- Generate more revenue to reduce the budget deficit (currently at 4.1% of GDP)
- Control the spread of violent and adult content among younger players
Critics, however, argue that the tax could harm creative freedom in the gaming industry and unfairly raise costs for younger audiences who rely heavily on digital purchases.
How This Affects Operators
Operators are already dealing with multiple tax layers. If IEPS rises to 50%, along with income tax, local levies, and regulatory fees, profit margins will shrink even further.
- Large international operators might still survive by absorbing costs.
- Small and mid-sized businesses could struggle and even shut down.
- Market concentration may increase, giving more power to a handful of global companies.
Players are also expected to feel the pinch. Higher taxes could mean:
- Fewer bonuses and promotional offers
- Higher betting margins and fees
- Less competitive odds compared to offshore platforms
Industry Concerns
Trade associations and operators are preparing to fight the proposal. Their main worries include:
- A possible shift of players to unregulated sites, where safety and fairness can’t be guaranteed
- Job losses and closures of smaller gambling businesses
- A drop in competitiveness compared to foreign platforms operating outside Mexico
What Other Countries Teach Us
Mexico is not the first to raise gambling taxes, and past cases give a clear warning:
- In Illinois (USA), higher gambling taxes led to extra surcharges on players, damaging customer trust.
- In the Netherlands, tax hikes reduced legal gambling revenue and pushed many players to illegal operators.
- In the UK, tax changes faced backlash from horse racing and betting sectors, which argued they were being unfairly targeted.
If Mexico goes ahead, similar problems may arise.
The Legislative Timeline
The proposal will go through several key steps:
- 20 October 2025: Chamber of Deputies debate deadline
- 31 October 2025: Senate review of the Revenue Law
- 15 November 2025: Finalisation of the Expenditure Budget
- If approved, the budget will be published in the Official Gazette within 20 days
- New rules expected to start in early 2026
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