Monday, January 29, 2007

Mexican Court Finds Gaming Rules Constitutional

By Enrique Andrade González

As expected, the Mexican Supreme Court ruled the Regulation of the Federal Gaming and Raffles Law constitutional on January 22, 2007.  This in response to a complaint filed by the federal Chamber of Deputies in late 2004, challenging the legality of the Regulation published earlier that same year by the Vicente Fox government, that allowed the Secretariat of Government to issue permits for numbers gaming parlors, including those with Bingo-type electronic machines, and offsite betting books.

Too, as part of its debate on the Regulation the Supreme Court decided to conduct an interpretation of the Federal Gaming and Raffles Law of 1947 according to the following terms.

First of all, the 1947 Law includes a general prohibition against games with wagers within Mexican territory.  This clause in the Law was a direct endorsement of the closing of casinos that had taken place in the 1940s, mainly in northern Mexico.

Second, and regardless of the aforementioned prohibition, the same Law makes exceptions and allows certain specific games.  These include table games and ball games; human, animal and vehicle races; and in general all sports activities.  As well, the Law authorizes raffles.

And third, if any of these games go on with the placing of bets, authorizing permits issued by the Secretariat of Government will be needed.  Without said permits, whichever of the gaming activities and the wagering will be prohibited.

The Regulation authorizes the executive to name those authorities in charge of the issuance of gaming permits, officials who will likewise supervise the development of gaming activities.  In this sense, the Court also recognized the constitutionality of the Gaming and Raffles Consulting Council.

Taking all of this into account, the Supreme Court acknowledged the constitutionality of permits that have already been issued, or that may be granted in the future, for gaming and spectator events with wagering that take place during regional fairs; seasonal horseracing; cockfights; and raffles with numbers and symbols.

As to permits issued for remote betting centers, better known as books, the Court acknowledged their legitimacy by virtue of this being a matter of offsite wagering centers that take bets from afar for horseracing tracks, dog tracks, jai alai frontons, and all types of sports events.  Furthermore, it recognized the constitutionality of Bingo or numbers and symbols raffles, both during fairs and in remote betting centers.

The Court ruled that card games and roulette are constitutional on a seasonal basis, however this can only be during regional fairs.  The Law does not include this subject, meaning that the Secretariat of Government does not have the authority to issue authorizations for these betting games — nor however is it prohibited from doing so.

This latter point could suggest an incipient reemerging possibility that authorizations for casinos are on the horizon.  For this to happen however, new legislation would have to be approved.

Article 9 of the Regulation states, among other things, that “Slot machines, in any of their models, will not be subject to authorization.”  On the other hand, these “electronic machines” are not specified among the authorized games in the governing Law, and by exclusion they are thus illegal according to some critics.  Yet these machines are now in use in gaming parlors found in Mexico City.

In general terms, permits can now be obtained to open establishments for offsite betting on horse races, dog races, jai alai or any sports event.  As well, numbers and symbols games with wagering are allowed as long as the requisite permits have been issued.

But for these establishments to become casinos, they would also need authorizations for card games, roulette, dice, and slot machines.

However the missing link for casinos does not necessarily lie within this ruling by the Mexican Supreme Court on the Regulation, nor with the executive.  This is an issue that will have to be decided by Congress — where the applicable legislation has been in committee and at an impasse for years.

As to the Law, considering its age and perhaps in connection with proposed reforms, amendments and/or the new legislation, if another complaint or constitutional challenge is filed it too could become a subject of debate for the Supreme Court in coming months.

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Enrique Andrade, a Mexico City-based attorney and business consultant, writes a weekly column for MexiData.info.  He can be reached via e-mail at enriqueag@andradep.com.