Slot machine ban in Mexico could have a positive impact on online gambling

Since November last year, the Mexican administration, led by President Andrés Manuel López Obrador, has taken a decisive step in reforming the gambling industry. Following the president's previous warning, a ban on slot machines in all casinos and gambling establishments has been instituted.

The passing of a decree reforming gambling regulation has important implications for the sector. While this could spell bad news for brick-and-mortar establishments, online platforms, including those offering Bitcoin games, could thrive instead.

The law prohibits new permits and renewals of slot machines in casinos, which could lead to the closure of gambling halls and a 90% reduction of the sector's contributions. The aim of this measure is to strengthen regulation and control in line with the Federal Gambling and Lotteries Act.

Potential impact

The upcoming reform will not apply retroactively. Therefore, casinos currently operating slots approved during Felipe Calderón's term of office will maintain this authorisation until the end of their concession.
However, these privileges are limited to a maximum of 15 years, regardless of previous agreements with the government. Once this period has expired, the rights cannot be renewed or extended.

Bernardo Verdejo Landeros, Marketing and Loyalty Director of Strendus' Online Division, highlighted the positive outlook for online casinos, projecting a revenue increase of up to 70%, which translates into potential revenues of $4.63 billion, exceeding previous estimates of a few months ago.

This is a significant increase compared to pre-regulatory reform forecasts for 2027 of $3.49bn, which is a 31% increase from the estimated revenue for 2023 of $2.39bn.

Strendus' head of online casinos highlighted the advantageous position of online casinos, as they are not affected by the new regulations, which creates ample opportunities for growth.
In addition, he suggested that the difficult conditions for land-based casinos could attract new competitors to the online space.

Overview of gambling in Mexico

Mexico has specific regulations governing the operation of casinos, and compliance with these legal requirements allows them to operate in designated areas. Casinos in Mexico have experienced growing popularity, especially in key tourist destinations such as Cancun, Mexico City and Monterrey.

Although regulations have largely interpreted and regulated the exceptions provided for in the law, there are notable loopholes and outdated aspects. For example, online gambling activities lack comprehensive descriptions and requirements, relying only on three articles of the Regulation and the Bureau's criteria.

Although gambling laws are a federal competence, local governments play an important role in casino gambling through property legislation, which is their exclusive competence.

Some local governments have imposed constitutional zoning retractions to prevent the expansion of new land-based casinos.

The casino industry has a significant impact on Mexico's economy. In addition to providing entertainment, casinos contribute to the economy through job creation, tourism revenues and tax contributions.

The casino market in Mexico is forecast to reach total revenues of USD 11.51 billion in 2022, with a projected CAGR (CAGR 2022-2027) of 11.18 per cent. This growth trajectory is expected to culminate in a market volume of USD 19.65 million in 2027.
Within this market, in-app purchase (IAP) revenue is forecast to reach USD 5.72 million by 2022, while paid app revenue is expected to reach USD 0.20 million.

In addition, advertising revenue in the casino gaming market is expected to reach $5.60m in 2022. The number of downloads in this market is estimated to reach 18.60 million in 2022, with an average revenue per download of $0.62.
A global outlook indicates that most of the revenue, totalling $3,358.00 million in 2022, is generated in the United States.

Bitcoin casinos

There are many online casinos that operate exclusively with Bitcoin as their main currency. At a Bitcoin casino, players can make deposits, place bets and withdraw winnings using Bitcoin.

These casinos operate exclusively with the Bitcoin cryptocurrency, providing users with a decentralised and secure method for transactions, including deposits and withdrawals.

They offer a higher level of privacy, allowing players to participate with a degree of anonymity. Many Bitcoin casinos implement "provable fair play", ensuring transparency and fairness in game outcomes.

Bitcoin casinos also often offer bonuses and incentives to players who use Bitcoin as their preferred currency. Although Bitcoin casino games offer advantages such as security and privacy, players should be aware of the potential risks, including the volatility of cryptocurrency prices.