By Enrique Andrade González

Notwithstanding guarded secrecy with respect to certain pending matters before Congress, the Mexico City daily Milenio recently ran an article on what issues can be expected to reach the floor in the Chamber of Deputies during this congressional period. Of those, full debate is anticipated on the new Gaming with Wagers and Raffles Law, an initiative that was submitted last April 29 and that, after 70 years, would permit casinos to be put in place in Mexico.

As with other priority areas and opportunities related to private and foreign investment, the subject of casino approval encompasses historic, social, political and religious values and assessments. As such, the casino debate — and their possible authorization — represents a potential electoral cost to the political parties and party members represented in congress.

Currently there are important economic interests, led by key groups in opposition to casinos, that are aggressively lobbying congress and getting their messages out to the public in op-ed columns and full-page newspaper ads. These groups, such as the Catholic Church, include many who are legitimately concerned about crime, organized crime and money controls.

But there are also a number of important hotel owners who see casinos as risks to their tourism markets and they are not prepared to make new investments or compete with new enterprises.

Among those in favor of casinos are potential investors who recognize the opportunities in starting new businesses. Others include developers and promoters of places where casinos might be located, such as Acapulco, Los Cabos, Cancún and Puerto Vallarta.

As for approval of the legislative proposal, that will depend on the outcome of negotiations between the Institutional Revolutionary Party (PRI) and the National Action Party (PAN). Furthermore, to the best of anyone’s knowledge there are current splits in each of those two parties, with some deputies in favor while others are opposed.

Factors favoring casinos that will have to be part of the debate include results from a report by the National Gambling Impact Study Commission in the U.S.A. According to those surveyed 86 percent support casinos, plus gaming has created not only thousands of direct jobs but indirect positions thanks to ancillary and nearby businesses.

Such factors have made gaming the main industry in various communities, and casinos are the main source of income for a number of American Indian tribes. And those factors say nothing about tax revenue paid to all levels of government.

Negative points mentioned in the report, that have been well publicized in Mexico, include increased crime, money laundering possibilities and family disintegration that can result from gambling addictions.

The gaming bill now in congress tackles these issues, requiring that a federal gaming commission be established to oversee procedures and controls in an effort to prevent operations that use illicit gains, and to keep permit holders from attaining unfair advantages in the marketplace. Permit holders must also insure the scrupulous behavior of assistants, and take whatever appropriate steps are necessary to counteract the secondary effects of gambling on patrons and communities.

With respect to taxes, the bill deems that said revenue would be shared equitably between the federal, state and municipal branches of government.

Some aspects not included in the initiative, that will surely be part of the future Regulation of the proposed law, are criteria for the authorization of casinos. They could include such stipulations as those set forth in Article 8 of the gaming law of Madrid, Spain: “… and that they include economic solvency, a Spanish company with a minimum of €12 million Euros and (integrity assurances) for partners.”

Considering the demands and restrictions imposed on foreign investment by other Mexican laws, it is thought that casinos will guarantee new investment, the creation of real jobs and new tourism development. This would be similar in intent to Venezuela’s casino control law that only allows casinos in five star hotels with a minimum of 200 rooms.

Wager gambling currently exists in Mexico, even with the prohibition of Article One of the current gaming law that dates from 1947. There are horse and dog racetracks, foreign books, Internet gaming, lotteries, cockfights, etc., and the best way to legalize all of this is for it to be regulated by the new law.

Moreover, casinos are needed in Mexico to create jobs and to allow tourist ports to compete on the international market. Plus casinos will bring governments additional income. In this particular case the political cost will not necessarily be negative.

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Enrique Andrade González (a www.mexidata.info columnist) is an attorney and Mexican business consultant with offices in Mexico City. Lic. Andrade, who received his LL.M. in Constitutional and Protection (“Amparo”) Law from the Universidad Iberoamericana, is also a law professor at the Universidad Intercontinental. His e-mail address is enriqueag@andradep.com.