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Column 041904 Thompson

Monday, April 19, 2004


Casinos in Mexico — that is the question?


By Barnard R. Thompson


After 70 years, will the Mexican government once again legalize the operation of gambling casinos — that is the interminable question?  A question that has taken on near epic proportions, with some in Mexico doubting if the possibility even exists and others simply asking when might the allowance finally be approved?


Well, it looked like the questions would start to be answered on April 15, however as on numerous previous occasions over the past eight years action has been put off, again by the Mexican legislature, this time to April 27 — so they say.


An actual breakthrough seemed to be emerging as a revised bill, backed by members of the Tourism Committee, has been circulating in the federal Chamber of Deputies in recent weeks.  The newest of now three replacement drafts (one sans casinos) to the obsolete Federal Gambling and Raffles Law of 1947, the compromise initiative appeared to have the multiparty support needed to advance towards committee mark up until an opposing faction within the National Action Party (PAN) got into the fray.  As such, the process has been delayed by yet another effort to gain consensus and insure the requisite votes.


The latest initiative to regulate gaming activities would also allow freestanding Monte Carlo or Montreal-type casinos at a limited number of select locations in Mexico.


The proposed legislation has 178 articles that include the creation of an autonomous National Betting Games and Raffles Commission under the Secretariat of Government, or interior ministry.  Said regulatory commission would be responsible for not only permits and authorizations, but also oversight of gaming facilities and activities in Mexico.


The Secretariat of Government would chair the federal commission, with other members representing the Secretariats of Treasury, Tourism, Public Security, Energy and the Attorney General.  Membership would also include one senator and one federal deputy, plus six public members named by the president and ratified by the senate.


While foreign investment will be allowed, the corporate structure must include a minimum of 50 percent Mexican ownership.  Once awarded, concessions will be for 30-years.


Substantive proof of the legal origin of all investment and development funds must be shown.  As well, strict internal and external security systems are obligatory, with penalties for noncompliance ranging from cancellation of a concessionaire’s permits to the possibility of up to 15 years in jail.


Permit holders must also comply with requirements set forth in the Federal Law Against Organized Crime.


The proposed taxation totals 18 percent, with four percent of the net income going to the federal government, six to the state and eight to the municipality where a casino is located.  Those levies are over and above all other federal, state and local tax requirements.


Building and operating permits will also be needed from state and municipal governments.  As well, casino business plans will have to include regional development and tourism promotion programs.


In addition to meeting the requisites to win a concession, permit holders will have to comply with additional licensing and building mandates.


To qualify applicants will have to guarantee construction of a casino that is at least 12,000² meters [129,168² feet] in size, with minimums set therein for gaming areas, restaurants, bars and other types of entertainment or amusement.  Construction of an urban infrastructure contiguous to the casinos is also a requirement.


A minimum of 1,000 jobs must be created.


The minimum number of slot machines is 1,250, plus at least 40 gaming tables for card games, dice, roulette and wheel of fortune.  Betting transactions are limited to Mexican pesos, with a MP$90,000.00 [approximately US$8,000.00] cap on wagers.


Underage players will not be allowed, and anyone who is inebriated, under the influence of drugs or armed will be barred from casinos.  Gaming participation will be off limits to police and military personnel.


The latest initiative would also govern seasonal casinos at fairs and carnivals, and those aboard cruise ships that operate within territorial waters.  As well, its sphere of responsibility includes bingo-type games, remote wagering centers, sportsbooks, horse and dog track racing, cockfights, jai alai and raffles.


Assuming the initiative passes its latest hurdles, one week after acceptance — the aim is to accomplish this before the current legislative session ends on April 30 — the legislator’s plan to initiate a 15-day series of public hearings in ten separate cities (public events that could prove more fun than going to a casino).


The ensuing goal is to submit the approved initiative for mark up to law during the regular legislative period that will begin September 1, 2004.


Note: On background see:

Might casinos be in the cards in Mexico? (MexiData.info, 02/26/04);

Mexico’s vote on gambling casinos expected (MexiData.info, 10/21/02); and

¿Casino(s)? ¡Casi-sí! (MexiData.info, 11/19/01)