Aviv Sher, CEO of Codere Online, is waiting to see how Mexico’s online gambling market will be defended against the black market, as licences are asked to comply with sin taxes of 50%.
Speaking at the SBC Día Digital webinar, Sher conveyed to industry audiences his disappointment that the leadership ranks of the Morena government had rejected industry pleas to withdraw gambling from its sin tax proposals for the 2026 Budget.
Mexico’s gambling trade association, AIEJA, has been campaigning for a review of the 1947 Federal Law on Games and Lotteries, a century old legislation widely regarded as outdated in a digital era. Sher is a keen supporter of this campaign.
The year-long campaign called on Morena lawmakers to overhaul a framework approaching eight decades in age, arguing that reform would strengthen consumer protections, safeguard sports integrity and unlock fresh investment into tourism and IT infrastructure — two economic pillars championed by President Claudia Sheinbaum.
Yet, without formal consultation, Morena placed gambling alongside alcohol, tobacco and high-sugar drinks within its new sin tax regime — a controversial classification that Sher believes fails to distinguish between regulated gaming and informal activity.
Sin Tax era
Sher reiterated a core warning: the IEPS sin tax measure applies only to licensed operators.
“The only real difference between a legal and an illegal operator in Mexico is the tax burden,” he said. “If you increase that burden by 50%, you widen the competitive gap in favour of the black market.”
For Codere, survival is not in question. Sher acknowledged that the company’s established scale and operational footprint in Mexico provides resilience. “We are large enough to absorb the impact,” he noted, “but margins will shrink, and that affects reinvestment.”
Smaller operators, however, face a “more existential challenge”. Sher cautioned that reduced competition could ultimately weaken the regulated ecosystem, the very market segment responsible for compliance, player protection and fiscal contributions.
The big squeeze
Sher confirmed that marketing budgets will inevitably contract under the new tax environment. The uncertainty lies in whether this contraction benefits licensed incumbents or simply hands greater visibility to offshore and unregulated brands operating beyond Mexico’s fiscal reach.
“Less marketing means less visibility for regulated platforms,” he warned. “And if players cannot clearly identify the regulated offer, the black market fills that vacuum.”
The CEO further signalled caution regarding new Mexican investment, irrespective of the commercial uplift anticipated from the FIFA World Cup 2026. While activity levels are expected to rise, Sher questioned whether profitability would follow under heightened taxation and rising acquisition costs.
Morena faces World Cup spotlight
Sher maintained that the liabilities of Mexico’s regulatory and tax decisions will be visible during the World Cup, an event that will place Mexico at the centre of global attention.
“This is a showcase moment for Mexico as a modern economy,” he remarked. “If the regulated industry is weakened at precisely the moment global demand peaks, we must ask who ultimately benefits.”
Codere has been preparing for the tournament for more than a year, developing customer engagement strategies and experiential activations. Yet Sher tempered expectations: increased betting volumes do not automatically translate into sustainable returns when fiscal pressure intensifies.
For Sher, the question is no longer whether operators can adapt, but whether Mexico’s policy framework will evolve fast enough to protect the integrity of its licensed market at a pivotal economic moment. As such the Morena government will have to face the consequences of its own direction on gambling.