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The president of Mexican gambling trade group AIEJA has said the biggest challenges facing his market continue to be over-taxation and a complicated legal code that has been stitched together to patch over a gambling law not updated since 1947.
Speaking to Vixio GamblingCompliance at ICE last week, Miguel Ángel Ochoa Sánchez discussed the biggest challenges the Mexican market is facing, and whether the upcoming presidential election on June 2 will bring an easier future for the industry.
“Sixty percent of the online gambling offer in Mexico is not legal, so it competes unfairly with that which is legal,” Ochoa Sánchez said.
“That is the first challenge as there is a law to update, because the current law is from 1947 and there was none of the technology of today; there was no internet, there were no cell phones, machines, etc.”
The 1947 federal law he refers to banned most forms of gambling, but several hundred de facto casinos operate in Mexico anyway.
Those properties have found their legitimacy in a 2004 decree and subsequent amendments that followed to allow for casino games under the guise of drawings of numbers or symbols, constructing a complicated and tenuous legal framework that few can navigate and most find frustrating.
Last November, outgoing President Andrés Manuel López Obrador (AMLO) signed a decree to amend the 2004 regulation and outlaw such drawings via machines, as well as other casino games determined by dice, cards or roulette wheels. Those legal changes will not become effective until current operating permits expire, however.
Ochoa Sánchez named over-taxation as the next hurdle for Mexico's gambling industry.
“Today in Mexico taxes are paid to the federation and the Mexican government, taxes are paid to the states and taxes are paid to the municipalities. Then, every year they change them, they add a new tax every year, they increase the percentage,” he said, referencing a recent trend of new gambling taxes being applied on a state-by-state basis.
He said the volatility creates instability for investors, and advocated for tax reform that would consolidate state and municipal taxes.
Last March, Mexico’s Supreme Court also ruled in favour of a double taxation by upholding two articles of the financial code, which jointly tax the revenues of gambling organisers and gaming machine owners, in addition to imposing a value added tax.
At the time, lawyers said that the taxation was not necessarily a huge problem for the gaming industry, but that it was an abuse of authority.
Finally, the perception of Mexico as a dangerous place where the gaming industry is all guns and money laundering grates on Ochoa Sánchez.
“It’s not true in Mexico, it does not happen. But American movies always portray something bad,” he told Vixio.
As for the upcoming elections, it is looking increasingly likely that when AMLO leaves office, former Mexico City Mayor Claudia Sheinbaum will be sworn in as his replacement. She has been endorsed by AMLO and has a hefty lead in the polls.
“We believe that with her we could come to some arrangements,” concluded Ochoa Sánchez, “such as the three issues I have just raised.”
