Government Proposal and Tax Adjustment
The Mexican government recently unveiled its 2026 Economic Package, which includes a measure that could reshape the country’s gaming industry: an increase in the federal excise tax (IEPS) on casinos, sports betting, and lotteries, raising it from 30% to 50%. This adjustment would increase the direct tax burden on gross gaming revenue (GGR) by 66.7%.
What is IEPS?
IEPS is not unique to gaming. It is a federal tax applied to products and services that have a perceived social impact, such as tobacco products, sugary beverages, fuel, and gambling activities. Revenues are directed toward public programs, particularly those related to health and prevention.
The Scale of Mexico’s Gaming Market
Mexico is one of Latin America’s largest regulated gaming markets. According to the National Institute of Statistics and Geography (INEGI), casinos and lotteries generated over 42.2 billion pesos in revenue in 2025. Of particular note, 87% of these transactions originated from online channels, a development that serves to underscore the accelerated digital transformation that the sector is undergoing. With over 81% of the population connected to the internet and using smartphones, Mexico is a fertile ground for digital expansion.
A Heavy Fiscal Framework
Although tax increases on gaming are in line with global trends, Mexico’s fiscal framework is different from that of other jurisdictions. In addition to federal taxes such as IEPS, gaming operators must also pay state and municipal levies, income tax, and various social contributions. Together, these taxes can amount to an effective burden of over 60%. Increasing IEPS would further intensify the already demanding fiscal environment.
Potential Impact on Casinos and Communities
The potential impact is multifaceted. Brick-and-mortar casinos in Mexico provide thousands of jobs and sustain value chains in tourism, hospitality, transportation, and entertainment. A substantial increase in operating costs could force operators to reduce staffing levels or even close unprofitable operations, which would affect communities that rely on these jobs.
Investment and Innovation Risks
When it comes to investing, when there is more uncertainty about the economy, people often become more cautious. Operators may delay expansion projects, equipment renewal, or new infrastructure investments. This could impede the modernization of the sector and diminish Mexico’s attractiveness to international investors. In a market where global suppliers compete to introduce innovative technologies, such as live gaming, real-time streaming, and advanced CRM systems, hesitation from local operators could slow the adoption process.
Competitiveness and the Illegal Market
Competitiveness also comes into play. It is estimated that approximately 60% of online platforms in Mexico operate without a license. If the burden on regulated operators increases, the gap between them and illegal operators could grow. This could reduce the state’s tax base and weaken consumer protections, which is an unintended consequence contrary to the government’s fiscal goals.
Lessons from International Experience
International experience shows that higher taxes do not automatically result in higher revenues. If the legal industry contracts while unregulated activity grows, the government could collect less income tax, social security contributions, and value-added tax from tourism and casino-related services. In contrast, balanced taxation can encourage compliance, protect consumers, and attract sustainable investment.
A Pivotal Moment for Mexico’s Gaming Industry
Therefore, Mexico’s proposal is about more than percentages. It represents a pivotal moment to redefine the relationship between the government and the industry. The market remains attractive, with high volumes, rapid digital adoption, and an ecosystem open to innovation. The challenge lies in designing a framework that ensures solid fiscal contributions while preserving competitiveness for responsible operators.
Looking Ahead
Mexico has an opportunity to turn this proposal into a catalyst for a stronger, more sustainable, and globally competitive gaming sector—one that continues to generate employment, innovation, and economic development for the country and the region.
