Expanding Horizons: The Thriving Casino Industry in Mexico

Mexico’s narrative weaves back to the zenith of the Aztec Empire, echoing the cadence of their civilization until the Spanish conquistadors set foot on its shores in the 16th century. In the wake of the Aztec decline, the Viceroyalty of New Spain rose, with Mexico City emerging as its vibrant nucleus, its foundations laid upon the remnants of the ancient capital, Tenochtitlan.

The ensuing centuries bore witness to a melding of Spanish and Indigenous cultures, birthing a society with a distinct ethos, a crucible that ignited the flames of the Mexican War of Independence in 1810. The struggle endured until 1821 when the Kingdom of Spain reluctantly acknowledged Mexico’s sovereignty, though its embrace of independence wasn’t fully sealed until 1836.

Within this intricate tapestry of history and geography, Mexico stands as a beacon of resilience and opportunity, a land where the past intertwines seamlessly with the present, offering a fertile ground for innovation and enterprise. It’s no wonder that amidst its dynamic environment, businesses, including online casinos and sportsbooks, find an irresistible allure, drawn by the promise of diversity and vibrancy that defines this captivating nation.

Unraveling Mexico’s Contrasts

Amidst the turbulence of government-cartel clashes, Mexico has risen as a regional powerhouse, but economic disparities persist despite boasting one of Latin America’s largest economies. Historically, strict regulations dominated, with state-owned enterprises sustaining the economy. However, crises in the 1970s and ’80s, coupled with a ’90s peso devaluation, shook its stability.

The advent of NAFTA in 1994 sparked a manufacturing boom, accompanied by extensive privatization and trade reforms. These changes propelled Mexico onto the global stage, showcasing its resilience and adaptability in the face of economic challenges.

In a Nutshell

Renowned for its historic silver mines and abundant oil reserves, Mexico has transformed into a key player in the global marketplace, with the United States as its primary trading partner. Strategic legislative collaborations, especially with the US and Canada, have fueled Mexico’s economic resurgence, aiding its recovery following the 2008 global economic crisis.

Despite ranking as the world’s 12th largest economy, Mexico grapples with stark wealth inequality, with approximately 41% of its population living below the poverty line, contributing to a comparatively low GDP per capita. While there has been a modest 3% decrease in poverty rates from 2008 to 2018, according to BBVA research, the absolute number of affected individuals has increased by nearly three million.

Nonetheless, Mexico maintains a steady annual economic growth rate of 2%, largely driven by a robust service sector that accounts for over 60% of the GDP. Moreover, the nation benefits from abundant natural resources, particularly in agriculture, which further bolsters its economic resilience. The gambling industry also thrives, boasting combined annual revenues of $2 billion from both online and land-based casinos, including estimations for the unregulated sector.

63% of Mexican players would rather gamble online than at a brick-andmortar casino.

The pandemic dealt a heavy blow to brick-and-mortar casinos, but it propelled iGaming to new heights, fueled by increased internet accessibility and the ubiquity of mobile devices. A 2021 YouGov survey unveiled a striking preference for online gambling among Mexican respondents, with 63% favoring it over traditional casinos, notably with a robust 39% female participation rate.

Despite the absence of specific regulations for the online gambling sector, its potential looms large. Legalization could yield significant economic benefits, especially considering the unregulated sector’s already impressive $400 million in revenue compared to the taxed operations’ $50 million. While awaiting regulatory clarity, more operators are opting for the legal route, with licensed entities now constituting 60% of the online gambling industry, according to Alfonso Pérez Lizaur, president of APJSAC.

Demographic Insights: Profiling the Players

With a population exceeding 130 million and projected to hit 148 million by 2030, Mexico ranks as Latin America’s second-most populous nation and the world’s largest Spanish-speaking country.

This demographic tapestry is rich and varied, with the majority identifying as Mestizo—a fusion of Spanish and Indigenous heritage—while other significant segments trace their roots to African, Arab, Asian, and European ancestries. Spanish culture, particularly Catholicism, has left an indelible mark on Mexican society.

Beyond its ethnic diversity, Mexico’s demographics are shaped by its geographical distribution, with 20% residing in rural areas and 80% in urban centers, with a sizable 75% concentrated in the central region. Economically, approximately 60% are part of the workforce, while 38% of adults have attained upper secondary education.

Sports Betting Fervor

Mirroring the fervor found throughout much of Latin America, football stands as a national obsession in Mexico, especially during the World Cup. This fervent enthusiasm often spills over into sports betting, with football taking the spotlight, though horse racing, bullfighting, and cockfighting also draw widespread interest as betting opportunities.

While sports betting takes center stage, Mexico offers a diverse range of other games of chance. Bingo, reminiscent of its popularity in the US, remains a cherished pastime, often utilized for charity or leisure, alongside a lasting affection for lotteries. Casino gaming, both in-person and online, holds considerable influence, offering a plethora of options from slots to card games such as Caribbean Poker, Texas Hold’em, and Stud Poker.

Legal Framework

Mexico, composed of 32 states, operates under centralized federal legislation, though certain areas like gambling regulations may vary at the state level. Governed by the Federal Gaming and Raffles Law of 1947, the gambling sector underwent significant changes with the introduction of regulations in 2004 allowing for slot machines.

A 2013 presidential decree mandated domestic production or legal importation of these machines. Additional legislation in 2010 and 2011 addressed data protection, while the 2012 Law for the Prevention and Identification of Operations with Resources of Illegal Origin outlined anti-money laundering policies.

Offline gambling predominates in Mexico, with local licensing overseeing casinos, slot machine establishments, and sports betting, totaling 36 licensed companies to date. Lotteries operate under state monopolies, while fantasy sports remain unregulated. B2B suppliers are exempt from licensing but must disclose shareholder and beneficiary information, with land-based operators subject to a 30% income tax.

More than a quarter of Mexicans aged 12 to 65 have tried gambling at least once in their lifetime.

Online gambling in Mexico resides in a gray area due to outdated legislation that predates the Internet era. Despite this, Mexican players frequently engage with foreign offshore platforms. A 2014 bill aimed to amend existing laws and establish the first official regulations for the online sector, but has struggled with tax policy clarification and faced hurdles in the country’s congress.

Raffles and number games such as bingo and lottery are officially regulated for both online and offline operations. Some regulations stipulate that online gambling is only permitted when affiliated with offline casinos, with other online or offline gambling verticals generally prohibited.

Mexican gambling legislation remains open to diverse interpretations, lacking clear restrictions, technical requirements, certifications, or explicit definitions. Each state is empowered to adopt its stance toward online operators.

In 2021, the National Regeneration Movement proposed an update to gambling legislation aimed at regulating both online and land-based sectors for enhanced convenience. AIEJA President Miguel Ángel Ochoa emphasized the strategic importance of renewing federal gambling laws to foster sectoral growth and position Mexico as a global leader in betting services.

With its sizable population, upper-middle-income status, fervor for sports and betting, high internet and mobile penetration rates, and impending regulatory improvements, Mexico’s iGaming future appears promising. In summary, Mexico presents an enticing opportunity for entrepreneurs and investors in the iGaming sector.