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Column 092704 Thompson

Monday, September 27, 2004


Mexican government publishes gaming law Regulation


By Barnard R. Thompson


After 57-years the Mexican government published a Regulation for the Federal Gaming and Raffles Law of 1947 on September 17, 2004, that will officially go into effect on October 15.  And while it cannot alter that which is allowed under the 1947 law or that which is not, the Secretariat of Government prepared directive does clear up certain ambiguities while detailing permit requisites and regulatory standards, plus it defines operating rules and regulations.


What it does not however is authorize casinos, something that can only be done by replacing or amending the law itself.  In fact, casinos are not mentioned once in the Regulation’s 153 articles.  Still, it is interesting to note that some of the language in the document is almost verbatim to that in the draft proposal on gaming that is now before Congress, pending legislation that so far at least includes casinos.


With that said, one should not jump to the conclusion that the Regulation is a prelude to passage of the initiative authorizing casinos, although the way it is structured amendments and additions could be made quite quickly and easily.


According to the document, the objective of the secondary code is to regulate the law’s provisions for authorization, control, vigilance and inspection of gaming, both when betting is involved and for raffles or the like.  The only exceptions are activities that come under the jurisdiction of Mexico’s National Lottery that operates under a separate authority.


As for betting activities, the new Regulation covers horse and dog racing, jai alai, casino-type activities at fairs, numbers and bingo-type facilities, cockfights and off-site betting or foreign books.


A new Gaming and Raffles Advisory Commission is to be created, with members to be in place 45 business days after October 15.  Counted among the Commission’s varied responsibilities, it will serve the Secretariat of Government as an advisory body — duties that will include opinions and recommendations regarding permit applicants and/or on the issuance or denial of all permits.  The Commission will also oversee the permit issuance process so as to insure that applications are reviewed expeditiously and transparently.  Too, members and staff will be involved in gaming research, studies and analyses, along with the organization of working groups, seminars and conferences.


The Under-secretary of Government will chair the Commission, plus it will include three additional officials from that ministry.  The seven member Commission will be completed with three citizen appointees, individuals with noteworthy backgrounds in business, education or economic research who will be named by the Secretary of Government.


It should also be pointed out that the new Commission abrogates the National Horse and Dog Racing Commission that was created in 1974.


As an example of what is found in the seven page Permits section of the Regulation (that includes 40 articles), it states that betting and raffle activities can be organized and operated only after written permission has been granted by the Secretariat of Government.


Well.  Once again casinos are not part of this Regulation as they are presently disallowed in Mexico, however based on the new permit guidelines it seems appropriate to mention two seemingly interconnected issues.


In the congressional debate that is now taking place on casinos, one of the concerns is how to revoke existing permits for certain gaming activities that were improperly issued by the Secretariat of Government during past administrations.  Time limits for some of those questioned authorizations have also been manipulated to exceed statute or permit defined limits.


A second issue that is part of the current casino debate is the understanding that gaming activities are what need to be regulated, not just gambling locations.


With respect to illegal activities — those that have no permits or authorizations whatsoever, government and legislative researchers estimate that there are some 1,200 illegal casinos currently operating in Mexico, as well as 2,450 illicit racetracks and 5,000 unlawful slot machines.


The new Regulation also brings Mexican gaming and raffles into the Internet era, doing so with the intent to provide (hoped-for) transparency.  A database will be available on an Internet site to be setup and maintained by the Secretariat of Government, with up-to-date information that is never more than ten business days behind.


Among other things, the database will include information on every permit granted and/or modified.  Each permit holder will be identified, as will all management-level operators, companies and individuals hired or contracted.  As well, the financial status of each permit holder will be made public, plus quarterly and annual financial reports of the businesses will be posted.