Mexico’s Chamber of Deputies approves 50% tax on online gambling

• Mexico’s Chamber of Deputies approves increase in IEPS tax on online gambling from 30% to 50%.
• The reform targets several sectors including beverages, tobacco, video games, and fuel for revenue and health policy reasons.
• Industry experts warn the higher gambling tax may expand the illegal market, currently 60% of online gambling.

Mexico’s Chamber of Deputies ratified a budget reform bill raising the Special Tax on Production and Services (IEPS) on online gambling to 50%, up from 30%. The vote ended with 351 in favour, 129 opposed, and one abstention.

This tax increase is part of broader reforms affecting soft drinks, cigarettes, violent video games, and fuel, aiming to bolster federal revenues and support public health initiatives. The government forecasts a 10% rise in total revenue in 2026, reaching MXN 761.5 billion compared to 2025. The bill proceeds to the Senate for review.

Concerns over potential growth of illegal gambling

Experts caution that the steep tax increase could prompt players and operators to shift to the unregulated market, which already comprises roughly 60% of Mexico’s online gambling sector.

The Tax Administration Service (SAT) could lose MXN 12 billion or more if compliance drops. Analysts have warned that raising the tax would force legally installed operators to rethink their business models, highlighting risks to the regulated industry’s viability.

“Health taxes”

The reform also introduces an 8% tax on violent video games, complementing existing “health taxes” aimed at reducing consumption of harmful products.

While the government views the measures as a dual boost to fiscal capacity and public health promotion, critics express concerns about burdens on low-income consumers without guaranteed health outcomes.

Mexico’s move to increase IEPS taxes reflects a need to diversify fiscal resources and regulate fast-growing sectors. However, the proposed increases highlight the balancing act between raising revenue and maintaining a sustainable, regulated market.

As the Senate considers the bill, industry stakeholders look for clear guidelines that ensure consumer protection, fiscal stability, and avoid exacerbating the large illegal gambling market.