Gaming in Mexico: overview

Legislative framework of gambling regulation

Legislative framework of gambling regulation

◊ Status: Law stated as at 01-Oct-2016 | Jurisdiction: Mexico

 

Overview

images 1. What legislation applies to gambling?

Gambling is currently a permitted activity in Mexico, subject to the issuance of governmental authorisation to conduct gaming activities from the competent authority. Gambling is an activity subject to federal regulation rather than state or local level regulation (with the exception of tax issues (see Question 14)).

The United Mexican States first adopted a federal system in the Acta Constitutiva of 1824. However, as a result of political instability in those times, Mexico changed from a centralist to a federalist system between 1824 and 1857. It was in the 1857 Constitution that Mexico adopted a federal system which was retained in the Political Constitution of the United Mexican States (Constitution) now in effect and which dates back to 1917 and has not experienced any major amendments regarding the existence of Mexico’s federal government system. Under Article 124 of the Mexican Constitution, the authorities and competences not expressly assigned by the Mexican Constitution to federal government officials are deemed to be reserved to the states.

The 1917 Constitution did not originally include the authority to regulate gambling by the federal legislature. Section X of Article 73 of the Constitution (an amendment to Article 73), through a Decree published on 29 December 1947, specifically granted authority to the federal legislature to legislate on games where bets are crossed (wagers) and games played involving draws of numbers or symbols.

Based on the amendment to section X of Article 73 of the Constitution, the federal legislature enacted the Federal Games and Draws Law (Gaming Law), which was published in the Official Gazette of the Federation (DOF) on 31 December 1947 and has been in effect since 5 January 1948, as per the First Transitory Article of the Gaming Law. The Gaming Law continues to be the statute that currently governs and regulates gaming activities in Mexico.

Originally, the problem with the Gaming Law was that it was a very general statute that required either supplementary legislation or regulations to provide the necessary detailed content for its adequate application and operability. However, it was not until the Regulations of the Federal Games and Draws Law (Gaming Regulations) were published in the DOF on 17 September 2004, and came into effect 20 business days after, that the Mexican federal government acted to supplement the Gaming Law with a more detailed and thorough regulation of gambling activity.

The Gaming Regulations have subsequently been amended (first on 19 October 2012, then on 23 October 2013). Although they attempted to clarify the technical elements of slot machine gaming activities, specifically related to skilful electronic games, the first amendments were so ambiguous that many of them were again revised and clarified with the decree published on 23 October 2013. For example, under the 2012 amendments, gaming activities via slot machines (máquinastragamonedas) were permitted as long as there was authorisation through an express permit or authorisation issued by the Ministry of the Interior (Secretaría de Gobernación) (SEGOB), whereas now the conduct of such gaming activities is prohibited. However, the same devices that under the 2012 amendments qualified as slot machines are now permitted and qualify as electronic gaming devices for number or symbol draws through the definition of “draw of numbers or symbols through devices”.

Nevertheless, since the PartidoRevolucionarioInstitucional returned to power in December 2012, and specifically as of February 2014, the House of Representatives (Cámara de Diputados) and SEGOB made multiple commitments and communications stating that they will collaborate and work closely together to:

  • Draft a new legal framework that meets the needs of a globalised gaming industry and addresses all regulatory needs based on the technological developments now available.

  • Offer certainty and clarity to permit holders, gaming operators and their customers.

  • Incentivise growth and investment in the gaming industry.

  • Facilitate the application of such legal framework to SEGOB and any other competent authorities.

The result of those efforts is the Bill of a new Federal Gaming Law that is currently under review in the legislature and was filed on 27 November 2014 (Draft Bill). The Draft Bill’s main purposes are, among others:

  • To update the legal framework according to the evolution of gaming and betting and to acknowledge gaming activities that already exist (such as card games).

  • To create a new autonomous authority as Regulator of all gaming-related activities.

Definitions of gambling

2. What is the legal definition of gambling in your jurisdiction and what falls within this definition?

General definition

The Federal Games and Draws Law (Gaming Law) does not include a legal definition of gambling or wagers. Article 1 of the Gaming Law contains a general prohibition which states that within the national territory of Mexico, games of chance and games where bets are crossed are prohibited. Further, Article 2 gives some examples of what are considered to be games and expressly provides that the following games are permitted:

  • Chess.

  • Dominoes and others of similar nature.

  • Dice.

  • Bowling.

  • Billiards.

  • Ball games in all their forms and denominations.

  • Races, horse races and car races.

  • In general all kinds of sports.

  • Draws.

Article 2 states that any other games not indicated should be considered prohibited.

Notwithstanding this list, the Gaming Law provides that the conduct of games where bets are crossed and draws of numbers or symbols occur require a permit from the Ministry of the Interior (SEGOB) (Article 4, Gaming Law). In addition, Article 3 of the Gaming Law provides that the federal executive power, through SEGOB, will regulate, authorise, control and supervise any kind of games where bets are crossed and draws occur.

In 2004, Article 3 of the Regulations of the Federal Games and Draws Law (Gaming Regulations) provided some legal definitions. These included the following:

  • Wager or bet. This means an amount which may be valued in Mexican currency and that is risked in a game contemplated by the Gaming Law and regulated by the Gaming Regulations, with the possibility of obtaining or winning a prize, which, when added to the risked amount, will be higher than the amount that was risked.

  • Chance. This means the uncertainty on which the result of a game is dependent and which is completely independent from the will of the player.

  • Game where a bet is crossed. This is any kind of game where a bet is crossed, among those provided by the Gaming Law and the Gaming Regulations and authorised by SEGOB.

  • Prize. This is a payment in cash or in-kind that is obtained by the winner of a game where a bet is crossed or a draw made.

  • Draw. This is an activity whereby the holder of a ticket through the prior selection of a number, combination of numbers or any other symbol, obtains the right to participate, whether gratuitously or through a payment, in a previously-established procedure which must be approved by SEGOB, pursuant to which a number, combination thereof, symbol or symbols is determined and the outcome of which results in the selection of one or more winners of a prize.

  • Draw of numbers or symbols through devices. This is an activity in which the participant, through an apparatus or device of whatever nature, subject to chance, makes a bet, through the insertion of a note, coin or chip, or through an electronic payment device or similar object, for the purpose of obtaining a prize.

Based on the above definitions contained in the Gaming Regulations and considering there is no definition of “gambling” in the Gaming Law, further definitions have generally fallen to the permit process, through which authorisation to conduct gaming activities is issued by SEGOB. SEGOB sets the parameters for what can be done and where and how such gaming activity can occur pursuant to administrative gaming permits issued to each individual gaming permit holder.

The Bill of a new Federal Gaming Law (Draft Bill) includes some of the definitions listed above, as well as the definition of “gambling”, which is any kind of game in which bets are made among players, viewers or any third party (Article 3, section XXII, Draft Bill).

Online gambling

There is no specific legal definition of online gambling in Mexican law.

The Draft Bill defines online gambling as gambling activity conducted through any electronic device which can be connected to the internet and without any physical contact among the participant and the permit holder (Article 3, section XXIII, Draft Bill).

Land-based gambling

There is no specific legal definition of land-based gambling in Mexican law.

The Draft Bill defines “live gambling” as an equivalent to land-based gambling. It defines it as gambling activity conducted at a table with the participation of one or several individuals, other than participants, such as card games, roulette or dice, and others which are conducted against the house or other participants (Article 3, Section XXIV, Draft Bill).

Regulatory authorities

3. What are the regulatory or governmental bodies that are responsible for supervising gambling?

The Federal Games and Draws Law (Gaming Law) provides that:

  • Any type of draw or game where bets are crossed cannot be conducted without the prior authorisation of the Ministry of the Interior (SEGOB), who will provide the requirements and conditions that the permit holder must comply with.

  • The Executive Branch, exercised through SEGOB, has the authority to regulate, authorise, control and supervise the games where bets are crossed, as well as any form of draws and such authority is exercised through the Gaming Bureau, which is the competent authority to authorise, control, supervise, and enforce all activities related to bets and draws and also to issue the relevant gaming licenses.

The authority/competence granted to SEGOB continues to be discretionary to a significant degree, as the scope of the Gaming Law and the Regulations of the Federal Games and Draws Law (Gaming Regulations), even after the 2012 and 2013 amendments, is still very broad and in many instances gaming activities are not thoroughly or consistently regulated, resulting in a great deal of room for interpretation. This inherent ambiguity in the regulations has led to a series of allegations of unequal regulatory administration, favouritism and corruption on the part of SEGOB.

For the purposes of this article, SEGOB acts through the competent bureaus or officials, as provided for in the Gaming Law, its Regulations or SEGOB Internal Regulations.

The Gaming Regulations also provide that SEGOB is the entity in charge of interpreting and applying the provisions of the Gaming Law and the Gaming Regulations for administrative purposes. Furthermore, the third paragraph of Article 2 of the Gaming Regulations provides that the Gaming Bureau is in charge of:

  • Any hearings, regulatory proceedings and the resolution of matters related to the supervision and surveillance of compliance with the Gaming Law and Gaming Regulations.

  • The issuance of permits.

  • Other gaming-related acts or activities.

The Gaming Bureau, which is an administrative unit of SEGOB, is assisted by the Government Unit of SEGOB. The Consultation Council assists the Gaming Bureau in complying with public policies on transparency and accountability (see box, The Regulatory authority).

In addition, Article 3 of the Gaming Regulations provides that a permit is an administrative authorisation issued by SEGOB, which allows an individual or entity to conduct and operate games where bets are crossed and/or draws occur. These administrative permits are issued for a set period of time, and their scope is restricted by the terms and conditions specifically determined in the permit itself, as determined and drafted by SEGOB or as a practical matter drafted by the permit applicant and approved by SEGOB. This is consistent with section XII of Article 12 of the SEGOB Internal Regulations, which provides that it is within the powers of the Government Unit of SEGOB, to supervise, process and authorise the acts set out in the Gaming Law and other applicable statutes and provisions, and that for such purposes, the Government Unit may be assisted by the General Director of the Gaming Bureau.

The Bill of a new Federal Gaming Law (Draft Bill) creates the National Institute of Draws and Gambling, which has more attributes and authority than the Gaming Bureau, but would still be part of SEGOB.

Gambling products

4. What gambling products have been specifically identified by legislation, and what different requirements have been established for each?

The Federal Games and Draws Law (Gaming Law) does not specifically identify gambling products but lists what may be considered as games, and if bets are crossed in any of those games or for any draws, a permit from the Ministry of the Interior (SEGOB) is required. However, demonstrating the inconsistency of guidance, in some instances the Regulations of the Federal Games and Draws Law (Gaming Regulations) do specify some gambling products, including but not limited to:

  • Horse races in formal horse race tracks.

  • Dog races in formal dog race tracks.

  • Frontón (racket games played in formal sport venues).

  • Horse races in provisional race tracks.

  • Cock fights in regional fairs.

  • Remote betting facilities or foreign books (locations for the taking and crossing of bets and wagers in sporting events and games permitted by the Gaming Law, broadcast in real time and simultaneously on video and audio, as well as for the conduct of number draws, which include bingo, lottery and electronic machine gaming).

  • Draws, which can be conducted in the following formats:

    • draws with the sale of tickets;

    • draws without the sale of tickets;

    • instant draws;

    • commercialisation system draws;

    • draws of symbols or numbers;

    • draws broadcast on mass communications media; and

    • draws of numbers or symbols through devices (which is the same as slot machine gaming in other jurisdictions and was considered to be slot machine gaming pursuant to the amendment to the Regulations published in October 2012 and reverted to in October 2013).

The Bill of a new Federal Gaming Law (Draft Bill) specifies the legal gambling products permitted, which are mainly the same as those listed above, expressly adding live gaming.

Poker

Poker is not specifically regulated. In the Gaming Regulations, Article 63 establishes that gambling card games are permitted in regional fairs.

In the Draft Bill, card games are considered as part of the live gambling category.

Betting

Betting is classified as remote betting.

Sports betting

Sports betting is classified as remote betting.

Casino games

Casino games are not specifically regulated. However, the Draft Bill considers them as live gambling.

Slot and other machine gaming

The amendment to the Gaming Regulations of 23 October 2013 authorised machine gaming. However, such activities are defined as draws of numbers or symbols through devices and, contrary to the 19 October 2012 amendments to the Gaming Regulations, slot gaming is specifically prohibited by the amendment to Article 12 of the Gaming Regulations. Nevertheless, the element that differentiates the prohibited activities (that is, slot machines) is the skill element, as slot machines are now defined as devices through which a user, subject to skill, makes a bet to obtain a specific or undetermined prize.

These recent changes were made to try to eliminate previous inconsistencies and clarify that machine gaming is permitted if the chance element and not the skill element is involved. However, there is still a great deal of confusion on the part of permit holders as to just what is and what is not allowed.

Terminal-based gaming

Terminal-based gaming might be considered as draws of symbols or numbers through devices.

Bingo

Bingo is under the category of draws of symbols or numbers.

Lottery

A lottery is under the category of draws of symbols or numbers.

Land-based gambling

Regulation/licensing

5. What is the licensing regime (if any) for land-based gambling?

The Federal Games and Draws Law (Gaming Law) and the Regulations of the Federal Games and Draws Law (Gaming Regulations) do not make a distinction between games of skill or games of chance. In any event, the element that would determine if any form of activity should be considered to be a gambling product, and therefore be subject to authorisation from the Ministry of the Interior (SEGOB), is if there is a wager, even if there are elements to classify any such game as a game of skill, or if there is chance in the determination of the winner of a prize.

Available licences

According to Article 20 of the Gaming Regulations, the following are available:

  • Permits for the taking of wagers in horse race tracks, dog race tracks, fronton venues, as well as for the installation of remote betting facilities and rooms for the conduct of number or symbol draws.

  • Permits for the taking of wagers in regional fairs.

  • Permits for the taking of wagers in horse races in provisional or temporary race tracks and cock fights.

  • Permits to conduct draws.

Eligibility

According to Article 21 of the Regulations, the permits listed above will only be granted in the following cases:

  • Permits for the taking of wagers in horse race tracks, dog race tracks, and so on, will only be granted to Mexican commercial companies.

  • Permits for the taking of wagers in regional fairs will only be granted to Mexican entities.

  • Permits for the taking of wagers in horse races in provisional or temporary race tracks and cock fights will only be granted to Mexican commercial companies and individuals.

  • Permits to conduct draws will only be granted to Mexican individuals or entities.

Application procedure

The length of the procedure to obtain the permits may vary according to many aspects, such as:

  • The full and correct delivery of all the necessary documents and requirements to the Gaming Bureau.

  • The number of permits that are under review.

  • The type of permit and other elements that may be considered before the issuance of a permit.

It is complicated to estimate a timeframe for the obtaining of a permit, as it depends entirely on the type of permit, the gaming environment and other external elements.

Duration of licence and cost

According to Article 33 of the Gaming Regulations:

  • Permits for the taking of wagers in horse race tracks, dog race tracks, fronton venues, as well as for the installation of remote betting facilities and rooms for the conduct of number or symbol draws have a minimum duration of a year and a maximum of 25 years and can be renewed for 15-year periods.

  • Permits for the taking of wagers in regional fairs, cock fights and temporary horse race tracks have a maximum duration of 28 days or the duration of the authorised season.

  • Permits for draws for advertising purposes last until the delivery of the relevant prizes.

  • Permits for draws with tickets, without tickets or instant draws have a maximum duration of a year.

The Gaming Bureau also has discretion to determine the duration within the limits set out above. The permits themselves are free of charge, but depending on each type of permit and the prizes to be received or the income the permit holder obtains from undertaking the authorised gambling activities, permit holders will be obliged to pay rights or duties.

6. What are the limitations or requirements imposed on land-based gambling operators?

Prohibitions

The only express prohibition under the Federal Games and Draws Law (Gaming Law) and the Regulations of the Federal Games and Draws Law (Gaming Regulations) is under Article 9 of the Gaming Law. This states that places where games and bets are crossed, or where draws are wagered, must not be established close to schools or offices. However, in practice this restriction is not enforced by the Gaming Bureau or Ministry of the Interior (SEGOB) and is considered out-of -date, but is still in the Gaming Regulations.

Restrictions

There is no specific particular limitation or requirement for permit holders, such as a ban on local residents gambling.

Article 5 of the Gaming Regulations lists general access restrictions on gaming facilities to individuals who are:

  • Minors (under 18 years).

  • Under the influence of alcohol.

  • Carrying weapons of any kind.

  • Police or military officials on duty.

  • Altering the order and peace of the facility with their behaviour.

  • Cheating or have been caught cheating in a game.

  • Not complying with the permit holder’s internal regulations previously approved by SEGOB.

The Bill of a new Federal Gaming Law (Draft Bill) intends to change or supplement these restrictions as follows:

  • The minimum legal age to participate in gambling activities would be 21 years.

  • People registered in the self-exclusion programme would not be able to participate in gambling activities.

  • Employees of the National Institute of Draws and Gambling would not be able to participate in gambling activities.

Anti-money laundering legislation

The Anti-Money Laundering Law provides that games with wagers or draws that result in transactions that equal or exceed the minimum legal wage applicable in Mexico City multiplied by 325, are considered as a “vulnerable activity”. The permit holders are obliged to report to the Ministry of Finance and Public Credit when such transactions are equal or exceed the minimum legal wage applicable in Mexico City multiplied by 645 (Article 17, section I, Anti-Money Laundering Law).

“Vulnerable activities” are those considered under the law as transactions in which money laundering is more likely to exist and individuals conducting those types of activities are subject to certain obligations pursuant to the Anti-Money Laundering Law. With respect to gambling activities, permit holders must (Article 18, Anti-Money Laundering Law):

  • Identify the users and confirm the information provided through official documentation, and maintain copies of such documentation.

  • In case a business relation is established, get the users or clients to state their occupation.

  • Confirm with customers the information regarding the beneficiary of the activity, if applicable.

  • Save, protect and avoid the destruction or cover-up of information or documentation regarding the vulnerable activity.

  • Grant access to undertake visits and inspections.

  • Carry out reports and filing obligations.

Online gambling

Regulation/licensing

7. What is the licensing regime (if any) for online gambling?

Online gambling is not specifically regulated in Mexico. References to online activity appear in a few Articles of the Regulations of the Federal Games and Draws Law (Gaming Regulations), indirectly addressing issues related to online gambling. However, such references to online gambling cannot be considered as a thorough or precise regulation of online gambling activities.

Nevertheless, and as previously noted, even though the Federal Games and Draws Law (Gaming Law) and the Gaming Regulations exist, the Ministry of the Interior’s (SEGOB’s) authority/competence to regulate, authorise, control and supervise gaming activities is discretionary, as the scope of the Gaming Law and the Gaming Regulations is still very broad and can be made more specific or even broadened by language included in a permit issued by SEGOB. This broad discretion has already appeared in some, but not all, issued permits granting specific authorisation for the conduct of internet gaming or online gambling as determined by SEGOB, pursuant to the Gaming Law and Gaming Regulations.

In connection with online gambling pursuant to the Gaming Law, the statute is silent, which should not be considered as a prohibition on conducting or operating authorised gambling activities using a specific means of communication such as the internet, because:

  • The Gaming Law was published in the Official Gazette of the Federation (DOF) on 31 December 1947 when the internet as a form of communication was non-existent.

  • If a gaming activity was authorised, as a result of the generality of the Gaming Law, SEGOB has to, as a matter of practice, set out with reasonable specificity the terms and conditions of such authorisation in the corresponding gaming permits.

Under these circumstances, conduct via the internet or similar technologies is not the authorisation of a form of gaming which is new, but rather just a different means by which a gambling activity is conducted which reflects the evolution of transmission technology.

In connection with online gaming pursuant to the Gaming Regulations, Article 85 provides that the remote betting gaming facilities can take bets over the internet, the phone or electronically, for which purpose they must establish an internal control system for the transactions performed using those means of communication, describing in writing the proceedings and rules that give assurance that the integrity of the games is protected and to prevent the manipulation of the betting system. Such a system must record, at a minimum:

  • The account number and identity of the individual placing the bet.

  • The date, time, number of transactions, wagered amounts and a record of requested picks or selections.

Article 85 also provides that the corresponding method (the method used to solicit bets using those means of communication) must be previously approved by SEGOB.

Further, Article 86 of the Gaming Regulations provides that wagers/bets will only be taken or crossed in cash, except for those conducted/placed through the internet, via telephone or electronically. In these cases, it is considered that the wagers and bets were placed when payment confirmation is received from the corresponding banking institution, regardless of whether the confirmation is made to the player or the permit holder.

The Gaming Regulations further provide that certain permit holders (that is, those with a permit to operate a remote betting facility) must comply with the requirements for the issuance of receipts and, specifically for internet, telephone or electronic wagers/bets, should provide that no ticket will be issued, but that:

  • The information will be recorded in the central betting system immediately after payment.

  • The player will have access to consult or print a certification of their folio number and be informed of their rights arising from the gambling transaction.

  • With specific regard to telephone wagers there is a provision that they shall be recorded in an audio file.

In connection with this, the language used by the Gaming Regulations is ambiguous, and therefore subject to interpretation, as it only uses the word “apuestas” (bets/wagers generally on sporting events) while allowing the remote betting facilities to use means such as the internet, telephone or any other electronic means to conduct the gaming activities they are authorised to conduct. The strict interpretation of this “apuestas” reference may lead some to consider that only bets on sporting events may be crossed using online means of communication. However, taking into account that under Article 104 of the Gaming Regulations, draws may be conducted via the internet or the telephone network, it can reasonably be interpreted that any form of bet, which includes any form of authorised draw, may be conducted through those means of communication (that is, through the internet, telephone or any other electronic means).

The apparent contradiction in the Gaming Regulations has, as previously mentioned, been resolved in favour of broader internet wagers on gaming, through SEGOB’s issuance of permits that are more inclusive of online games.

In addition, the Gaming Regulations provide that the way in which bets/wagers arising from remote betting facilities may be collected or crossed, and prizes paid pursuant to that, must be set out in the permit holder’s internal gaming regulations (which are approved by SEGOB). The limitations must also be set out in the internal gaming regulations, and are specific to each permit holder. Therefore, each permit holder’s gaming regulations approved by SEGOB may limit or broaden the extent of the gambling activities or gambling offering that may be conducted via the internet or through other telecommunication means.

Furthermore, pursuant to the last paragraph of Article 85 of the Gaming Regulations, SEGOB has to approve the method used by the remote betting facility permit holder to solicit and conduct bets using any designated means of communication (for example, the internet). As a result, the specific type of gambling products and the extent to which they may be conducted or offered via the internet will depend on the scope of each permit holder’s permit, the permit holder’s internal gaming regulations approved by SEGOB, as well as the methodology to conduct gaming activities via the internet or using other means of communication approved by SEGOB.

In addition, under the Gaming Regulations, any form of drawing may also be conducted through the internet. This situation arises under Article 104, which is contained in Chapter I of Book Four of the Gaming Regulations. It provides that where draws are conducted in the Mexican territory in which participants are obtained through the internet or via telephone, a folio number must be given to the participant, and in each case the player or participant must have access, via the internet, to consult or print a certification of their folio number and the rights to which they are entitled as participants of the draw.

The Gaming Regulations further provide that the winner of the draw may be determined by the use of computer systems which, applied adequately, randomly determine the winning numbers. However, this system may only be used when the characteristics/computer system through which the winning numbers will be randomly determined are disclosed by the permit holder to SEGOB, and SEGOB may conduct inspections to verify the correct functionality of such systems.

Available licences

As stated, under the current Gaming Law and its Regulations there are no available licences specific for online gambling activities.

Eligibility

Only permit holders who conduct authorised gambling activities will be eligible to conduct the same gambling activities for which they are authorised using online or other electronic means.

Application procedure

Currently the application procedure is the same as for any land-based gambling operation (see Question 6).

Duration of licence and cost

Duration and cost are the same as for land-based gambling activities (see Question 6).

8. What are the limitations or requirements imposed on online gambling operators?

There are no specific provisions applicable for online gambling operators in Mexico.

Also, there are no independent or autonomous online gambling activities currently authorised in Mexico: any online gambling operation must be linked to a land-based gambling permit (see Questions 6 and 7).

Prohibitions

The prohibitions are the same as for land-based gambling activities (see Question 6).

Restrictions

The restrictions are the same as for land-based gambling activities (see Question 6).

Anti-money laundering legislation

The anti-money laundering legislation is the same as for land-based gambling activities. (see Question 6).

B2B and B2C

9. Is there a distinction between the law applicable between B2B operations and B2C operations in online gambling?

The Federal Games and Draws Law (Gaming Law) and Regulations of the Federal Games and Draws Law (Gaming Regulations) do not make a distinction between the law applicable to B2B operations and B2C operations.

In any event, online gambling products can only be offered to an entity that is a duly authorised permit holder who has obtained its corresponding permit from the Ministry of the Interior (SEGOB). This permit should expressly allow the offering of any such online gambling products. The ability to offer these products will also be determined based on the permit holders’ internal gaming regulations approved by SEGOB, as well as the methodology to conduct gaming activities via the internet or using other means of communication approved by SEGOB.

There is no restriction governing or regulating the offering of B2B services to a Mexican permit holder who has been authorised to offer online gambling products, as long as the ones contracting with the player are the directly authorised permit holders, even when such online gambling products are offered through a white label site run by a third party supplier. As the offering is in conjunction with the permit holder’s authorisations, the activities of the B2B provider will be bound by the permit’s requirements and approved methodologies for online play. As a result, SEGOB may dictate server location and any and all technical aspects of the B2B provider’s operations as they are derived from the permit holder’s authorisation.

Technical measures

10. What technical measures are in place (if any) to protect consumers from unlicensed operators, such as ISP blocking and payment blocking?

There are no technical measures in place to protect consumers from unlicensed operators in the Federal Games and Draws Law (Gaming Law) or the Regulations of the Federal Games and Draws Law (Gaming Regulations).

Mobile gambling and interactive gambling

11. What differences (if any) are there between the regulation of mobile gambling and interactive gambling on television?

There are no differences between the regulation of mobile gambling and interactive gambling on television.

The Regulations of the Federal Games and Draws Law (Gaming Regulations) refer to the taking of bets/wagers for games and draws over the internet, telephone and other means of communication. However, whether mobile and interactive gambling on television can be offered depends on the scope of each permit holder’s authorised activities, the permit holder’s internal gaming regulations approved by the Ministry of the Interior (SEGOB), as well as the methodology to conduct gaming activities via the internet or using other means of communication approved by SEGOB.

Social gaming

12. How is social gaming regulated in your jurisdiction?

In the context of social gaming, or gaming content offered on social networks, if games are free to play, such gaming activity would not be subject to the Federal Games and Draws Law (Gaming Law) and Regulations of the Federal Games and Draws Law (Gaming Regulations) and would not be specifically regulated by any other statute in Mexico.

Notwithstanding this, given the nature of Mexican gaming statutes (outdated, ambiguous and giving the regulator a great deal of discretion), some entities undertaking social gaming activities have approached the Gaming Bureau to obtain a ruling or written confirmation of criteria. However, the Gaming Bureau has so far taken the position that the corresponding activities fall outside the scope of its competence and therefore are not subject to Mexican gaming regulation.

Further, if those social gaming activities do not involve a wager which may result in the payment of a prize to the participant, as defined by the Gaming Regulations, such gaming activities would not be regulated as a gambling activity in Mexico.

In addition, in the event that players using social gaming products are allowed to purchase extra credits for real money, but there is no actual prize to be paid (that is, if the player wins only the benefit of receiving additional credits which allow the player to continue playing), such “prize/benefit” does not qualify as a prize under the Gaming Regulations and the Gaming Law, and therefore it is still not regulated as a gambling activity in Mexico.

The Bill of a new Federal Gaming Law (Draft Bill) provides that social gaming would be excluded from the application of the law, as long as there is no bet or wager that can result in obtaining an economic benefit or loss in such activity.

Gambling debts

13. Are gambling debts enforceable in your jurisdiction?

The Federal Civil Code contains a chapter about the “gambling contract”, which provides that obligations resulting from bets crossed in prohibited or unauthorised games would not enforceable (Article 2764, Federal Civil Code). However, obligations resulting from bets crossed or wagers made in authorised games would be enforceable if the resulting loss does not represent more than 20% of the participant’s net worth. Furthermore, the right to enforce and collect gambling debts expires in 30 days (Article 2767, Federal Civil Code).

Tax

14. What are the applicable tax regimes for land-based and online gambling?

Land-based gambling

Gambling permit holders, whether in a land-based facility or online, are subject to a 30% tax rate that results from the special tax on production and services (Impuesto Especial Sobre Producción y Servicios) (IEPS). Under Article 2, Section II, item B of the Special Tax on Production Services Law, the tax applies to:

  • Games where bets are crossed and draws are made which require a permit pursuant to the Gaming Law and the Gaming Regulations.

  • Games of skill which employ the use of equipment and the development of those games using visual electronic displays (such as numbers, symbols, figures or other displays of a similar nature conducted in the Mexican territory).

  • Games of chance.

The Mexican Supreme Court in Amparo en revisión471/2001; Distribuidora Liverpool, S.A. de C.V. 9 de Septiembre de 2003 decided that both the individual state and the federal government both have authority to impose taxes on games where bets are crossed and draws are made.

Even before the case referenced above, local governments imposed taxes on gambling permit holders. In general terms, the way these taxes or contributions are imposed is through:

  • Local tax codes, fiscal statutes or municipal income and budget resolutions, which provide that gambling activities should be subject to a certain contribution, which is determined as a percentage of the amounts wagered, less the prizes paid (for example, on the net win of the gambling permit holder).

  • Special taxes on the players that obtain prizes when participating in gambling activities.

For example, Articles 147 to 155 of the 2014 Tax Code for the Federal District (Mexico City, DF), provide for a 12% contribution to be applied on the net win of gambling permit holders and a 6% contribution on the winnings or prize to be paid by the winner of a prize in a gambling activity.

In connection with gambling on electronic terminals, some states or municipalities charge a specific monthly contribution for each electronic gaming device in operation at the corresponding gaming facility, such as the municipalities of Rosarito, Ensenada and Mexicali, in the State of Baja California.

Recently, the State of Yucatán passed an amendment to the local tax laws, creating a 10% tax to customers of gaming venues on all transactions taking place at a gaming facility. The gaming terminals suppliers or providers are also jointly liable for the payment of such taxes, in addition to a monthly contribution for each gaming device at each venue. The consequence of such new taxes is that gaming operators are likely to close their venues in the State of Yucatán.

All local taxes need to be determined on a case-by-case basis, depending on the location where the gambling product is offered and the income generated. Finally, some gambling permit holders are currently pursuing legal actions to fight the imposition of certain local taxes as they may be inconsistent with the taxation principles of equity and proportionality.

Finally, gambling permit holders are subject to all the taxes required from any other Mexican corporation, such as:

  • Income tax on the income arising from their gambling activities.

  • Flat rate corporate tax, which is credited against the income tax paid.

  • Value added tax (VAT), to be paid on services and products procured by the gambling permit holder, which is also credited against the VAT collected by such gambling permit holder.

However, in connection with VAT, the amounts wagered by players are not subject to VAT, therefore the VAT collected by gambling permit holders is very limited, which could represent a problem to gambling permit holders as they have very small amounts of collected VAT to be credited against the VAT they should pay to procure products and services.

Online gambling

The regime for land-based gambling also applies to online gambling (see above, Land-based gambling).

Advertising

15. To what extent is the advertising of gambling permitted in your jurisdiction? To the extent that advertising is permitted, how is it regulated?

Land-based gambling

Advertising authorised gambling activities is permitted in Mexico. Article 9 of the 2013 amendment to the Regulations of the Federal Games and Draws Law (Gaming Regulations) provides that the advertising and marketing of games where bets are crossed and draws are authorised under the Federal Games and Draws Law (Gaming Law) and Gaming Regulations, as well as of the gambling facilities where those gambling activities are conducted, is permitted pursuant to the applicable provisions.

In any event, advertising and marketing of gambling activities can only be conducted when the corresponding gambling permit has been obtained and such advertising is subject to the following restrictions:

  • The authorised gambling activities must not be explicitly advertised.

  • The advertising must be clear and precise to prevent inducing by error, deceit or confusion the services offered.

  • Any advertising must indicate the permit number authorising the conduct of such gambling activities.

  • Any such advertising must indicate that minors may not participate in those activities.

  • Advertising must include messages that invite players to play responsibly (responsible gaming) and for the primary purpose of entertainment.

Online gambling

There are no specific requirements for online gambling activities, therefore the same rules for land-based gambling would apply.

Developments and reform

Legal development

16. Has the legal status of land-based and online gambling changed significantly in recent years, and if so how?

Land-based gambling

See Question 1.

Online gambling

See Question 1.

Other

See Question 1.

Reform

17. What, if any, are the likely short-term and long-term developments/legislative amendments concerning gambling in your jurisdiction? Are there any proposals for reform?

There is a Bill of a new Federal Gaming Law (Draft Bill) to be discussed by the Mexican Congress. Nevertheless, since 2000 there have been multiple unsuccessful efforts to create a new gambling legal and regulatory framework and, except for the 2004 Regulations of the Federal Games and Draws Law, and some subsequent amendments, gambling activity is in much need of major legislative amendment and reform (see Question 1). The relevant proposals of the Draft Bill have been discussed throughout this article, but the outcome of the current discussions and the actual approval of the Draft Bill or any other proposals for reform on the gambling sector, including a new gambling legal framework, remains uncertain.

Land-based gambling

See Question 5.

Online gambling

See Question 7.

Social gaming

See Question 12.

 

The regulatory authority

Gaming Bureau

W www.gob.mx/segob

Description. The Gaming Bureau is part of the Ministry of the Interior (SEGOB). As previously stated, the Gaming Bureau is created by the Internal Regulations of SEGOB (Articles 2 and 16) and is attached to the Government Unit under the Sub-minister of Interior (Article 11).

The Gaming Bureau is the competent authority to:

  • Oversee compliance of the Gaming Law and its Regulations.
  • Grant permits and enforce the fulfilment of the terms and conditions set out in these.
  • Propose and execute the policies and programmes for the conduct of gambling and the operation of games with wagers and draws.
  • Support the Government Unit to co-ordinate the federal, local and municipal authorities in gambling and draws-related matters, as well as pursuing prohibited activities.
  • Impose fines for the infringement of the Gaming Law and its Regulations.
  • File complaints before the competent authority regarding possible felonies committed in gambling activities.



Online resources

Federal Legislation

Wwww.diputados.gob.mx/LeyesBiblio/index.htm

Description. Official website of the House of Representatives. Contains all the up-to-date federal laws and regulations.

Bill of a new Federal Gaming Law (Draft Bill)

Whttp://gaceta.diputados.gob.mx/PDF/62/2014/nov/20141127-XII.pdf

Description. This website contains the Bill of a new Federal Gaming Law (Draft Bill) presented before the House of Representatives.

There are no official or unofficial websites containing information in English.

Source: Practical Law

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