Mexico Gambling Tax: ISR Rates and Rules (2026)

How Mexico Taxes Gambling Winnings

Mexico has a well-established gambling industry with clear tax rules. The country taxes gambling winnings through its income tax system (Impuesto Sobre la Renta or ISR).

The headline: Gambling winnings in Mexico are subject to ISR withholding, with rates depending on the type of gambling and the amount won.

Mexico's Gambling Tax Structure

Federal income tax (ISR) on gambling:

• 1% provisional withholding on prizes up to certain thresholds
• 21% on winnings above thresholds
• Reconciled in annual tax return

The calculation:

• Operators withhold ISR at source
• Rate depends on whether winnings exceed "base gravable" threshold
• Annual reconciliation determines final tax liability

Withholding Rate Breakdown

Sports betting and games of chance:

• 1% provisional rate on smaller amounts
• 21% effective rate on larger winnings
• Threshold varies by state and prize type

Example:

• Win MXN 50,000 from sports betting
• Operator withholds portion as ISR
• Report on annual return for final calculation

The specific calculation involves comparing your winnings to exemption thresholds and applying appropriate rates.

Licensed Operators in Mexico

Gambling is regulated by SEGOB (Secretaría de Gobernación):

Major licensed operators:

• Caliente (largest Mexican operator)
• Codere México
• Betway México
• Strendus
• Playbet
• Big Bola
• Sportium México
• Numerous regional operators

Verification: Check SEGOB's registry for licensed permit holders.

Online vs. Land-Based Gambling

Online sports betting:

• Licensed operators must have federal permits
• Same tax withholding rules apply
• Digital receipts (CFDI) issued for wins

Land-based casinos and betting:

• Tax withheld before payout
• Physical receipt provided
• Same ISR rates apply

The ISR Calculation

Annual income tax context:

• Gambling winnings are "other income" (otros ingresos)
• Added to your total annual income
• Progressive ISR rates apply (up to 35%)
• Withholding is credited against final tax

Example scenario:

• Salary income: MXN 400,000
• Gambling winnings: MXN 100,000
• Total income: MXN 500,000
• ISR calculated on total, minus withholding already paid

Tax-Free Thresholds

Mexico does have some exemptions:

Lottery winnings:

• Federal lottery (Lotería Nacional): Special rate of 1%
• State lotteries: May have different rates

Sports betting:

• No general exemption amount
• All winnings subject to ISR

Important: Unlike some countries, Mexico doesn't have a large tax-free threshold for gambling winnings.

Professional Gambling

If gambling is your business:

Classification criteria:

• Gambling as primary income
• Systematic approach
• Significant time investment
• Professional-level activity

Tax treatment:

• Register as business activity
• File as actividad empresarial
• Can deduct related expenses
• Social security obligations (IMSS)

Practical note: Most recreational bettors remain under standard ISR rules.

Record-Keeping Requirements

Mexican tax law (SAT) requires documentation:

Keep records of:

• All CFDIs (digital tax receipts) from operators
• Betting history and statements
• Bank records of deposits/withdrawals
• Proof of ISR withholding

Retention period: 5 years minimum

Why important:

• SAT audits possible
• Prove income source
• Support annual declaration

Annual Tax Return (Declaración Anual)

Required information:

• Total gambling winnings from all sources
• ISR withheld by operators
• Other income sources

Filing deadline:

• April of following year
• Use SAT portal for filing

Tax credits:

• ISR withheld by operators credited to your liability
• May result in refund if over-withheld

Value Betting and Arbitrage in Mexico

For systematic bettors:

Tax considerations:

• All winnings taxable
• No special exemptions for method used
• Factor ISR into profit calculations

Market characteristics:

• Good coverage of Liga MX
• Major US sports well-covered
• Growing operator competition
• Improving odds availability

Practical impact:

• 21% rate on larger wins reduces edge
• Small wins taxed at 1%
• Annual reconciliation matters

Penalties for Non-Compliance

Failing to report gambling income:

Consequences:

• Back taxes plus interest (0.98% monthly)
• Fines: 55% to 75% of unpaid tax
• Potential criminal sanctions for tax evasion

SAT detection:

• Cross-references with operator reports
• Banking data analysis
• CFDI matching

Comparing Mexico to Other Latin American Countries

Mexico's rates are comparable to regional peers.

Key Takeaways

1. ISR applies to all gambling winnings in Mexico
2. Tiered withholding: 1% on smaller wins, 21% on larger amounts
3. Licensed operators withhold tax automatically
4. Annual declaration reconciles final tax liability
5. Keep all CFDIs and betting records
6. Professional gamblers may register as business activity

This guide is for informational purposes. For personal tax advice, consult a Mexican tax professional (contador público or fiscalista).