Does Paying Taxes Legalize an Online Gaming Operation? A Legal Perspective
By Gerardo Ballesteros Félix Díaz
Legal and Corporate Consultant in Gaming and Raffles
This is no minor question. As the market continues to evolve and new operators seek to participate, it is fundamental to distinguish between complying with tax obligations and complying with the regulatory framework that governs the activity itself.
From a legal perspective, both concepts belong to distinct areas of law and produce entirely different consequences.
Two Independent Obligations
Mexican legislation establishes that organizing and operating gambling games is a regulated activity. The Federal Law on Games and Raffles (Ley Federal de Juegos y Sorteos) and its Regulations stipulate that operating these types of activities requires a permit granted by the General Directorate of Games and Raffles of the Ministry of the Interior (SEGOB).
This permit constitutes the administrative act that legally enables the operation.
On the other hand, any individual or legal entity earning income within national territory may be subject to fulfilling tax obligations. This includes paying Income Tax (ISR), Value Added Tax (IVA), and, where applicable, the Special Tax on Production and Services (IEPS).
Although both obligations can coexist, they legally answer to entirely different purposes.
Why Paying Taxes Does Not Equate to Having a Permit
In tax matters, the State’s objective is to collect contributions derived from the generation of income. Conversely, administrative regulation seeks to authorize, supervise, and control specific activities deemed to be of public interest.
Therefore, under a legal interpretation, the fact that a company complies with its tax obligations does not substitute the requirement of having the corresponding administrative authorization.
- In other words: Paying taxes proves compliance with a tax obligation, but it does not constitute an authorization to run a regulated activity.
The Autonomy Between Tax Law and Administrative Law
One of the principles widely recognized by legal doctrine is the autonomy of the different branches of law.
While Tax Law aims to guarantee revenue collection to sustain public spending, Regulatory Administrative Law seeks to protect public order, legality, consumers, and the proper functioning of activities subject to state authorization.
From this viewpoint, compliance with the Tax Administration Service (SAT) does not modify or replace the regulatory powers that belong to the Ministry of the Interior (SEGOB).
Risks for Operators
The existence of tax obligations does not eliminate the potential consequences stemming from a breach of sector-specific legislation.
An operation lacking the proper permit could face administrative proceedings, sanctions, or any other measure provided by applicable law, regardless of whether it is up to date with its taxes.
Because of this, it is crucial for operators to understand that both regulatory spheres must be complied with simultaneously.
A Matter of Legal Certainty for the Industry
The online gaming industry continues to evolve and face new regulatory challenges. In this context, it is indispensable for operators to have clarity regarding the scope of each legal obligation.
Tax compliance is an essential element within any formal economic activity, but it does not replace the administrative requirements that the legislature has established to develop regulated activities like gambling.
Maintaining this distinction helps provide greater legal certainty to both operators and the authorities responsible for supervising the sector.
Editor’s Note
The opinions expressed in this article belong exclusively to the author and do not necessarily represent the editorial stance of iGaming México.
