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Mexico Shockwaves: Government Proposes Massive Tax Hike on Gaming to 50%
The Mexican gaming industry, spanning online sports betting and brick-and-mortar casinos, is reeling from the proposed 2026 Economic Package.Mexican Finance Minister Édgar Amador submitted the package, which includes a dramatic increase to the Special Tax on Production and Services (IEPS) applied to gaming.If approved, the tax on operators' Gross Gaming Revenue (GGR) will jump from the current 30% to a staggering 50%.
Latin America's Steepest Gaming Tax
The proposed increase, which targets products deemed detrimental to public health, is part of a broader "sin tax" initiative. This move would place Mexico among the regulated markets with the highest gaming tax rates in Latin and South America. The tax hike is a key component of President Claudia Sheinbaum’s administration’s plan to close a substantial budget shortfall, with the tax increases on sin verticals projected to generate an additional $2 billion in revenue for Mexico in 2026.
This potential financial burden is compounded by existing obligations: 30% federal corporate income tax on annual net income; local sales taxes on gambling winnings ranging from 4% to 6%; and local consumption taxes on gambling reaching up to 10%.
Budget Shortfall and Legislative Timeline
The proposed tax changes are a direct effort to address the estimated $76 billion shortfall in the federal budget plan for 2026. Along with gaming, the package proposes significant tax increases for tobacco sales (a 160% to 200% increase, effectively doubling the cost of smoking), soft drinks (an increase of 17 cents per liter), and violent or adult video games (an 8% hike).
The legislative process requires the budget plan to pass through the Chamber of Deputies and the Senate, with a final approval expected by November 15. This deadline has set the clock ticking for operators who will be scrambling to assess the financial viability of their regulated operations under the proposed 50% GGR tax rate.
Industry Calls for Modernization
The tax controversy coincides with a rising chorus of voices calling for regulatory reform. Key stakeholders, including the Association of Permit Holders, Operators and Suppliers of the Entertainment and Gambling Industry, are publicly demanding a repeal and update of the antiquated Federal Gaming and Lottery Law of 1947, which they deem fundamentally outdated for the modern online gaming sector.
