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Casino watch 101404 update

October 14, 2004

 

Mexican casino legislation advances

 

(Edited translation compiled from Reforma, El Financiero, El Economista, Notimex, and a Chamber of Deputies’ news release; Mexico City, October 13 and 14, 2004)

 

The Tourism Committee of the Mexican Chamber of Deputies has introduced the latest version of the Federal Gaming with Wagers and Raffles Law that includes casinos.  The final national consultation report on the proposed legislation was also submitted.

 

Committee chairman Francisco Xavier López Mena said that the initial bill, that was submitted on April 29, 2004, had 175 articles whereas the proposal now has 233 articles after having gone through the public hearing process.

 

However, at the suggestion of the private sector the Tourism Committee will add a new impediment to the project, so that once the law is approved casinos will not be allowed to open in Mexico for a period of five years.  This measure is an effort to keep Mexican entrepreneurs from being at a disadvantage vis-ŕ-vis foreign investors.

 

Francisco Javier Bravo Carbajal, chairman of the Tourism Committee’s Infrastructure Subcommittee, noted that casinos in Mexico are coming although they still have to go through the committee and other legislative processes in order to be approved.  The Government and Finance Committees must also approve the bill before it can be sent to the Chamber of Deputies as a whole.

 

The 58 new articles and provisions include means to avoid money laundering, gambling addictions and unfair competition.

 

With respect to money laundering, because of the fear that poorly regulated casinos could be a means for that criminal activity the legislation must meet the guidelines of the international Financial Action Task Force on Money Laundering.  Furthermore, the proposal authorizes the Attorney General and the Secretariat of Finance and Public Credit to require and immediately obtain needed information directly from the permit holder or corporation, and from officials, all of who must respond within 48 hours after the application is verified.

 

The proposal is for casino investment to be 50 percent Mexican and 50 percent foreign.

 

The legislation limits the indiscriminate proliferation of casinos, authorizing only those that will guarantee successful competition with casinos in countries that are more developed in this activity.

 

The first casino will be authorized to open five years after approval of the Law so that Mexican businesspersons will have time to prepare.  (Note: One piece said five years after approval of the Regulation of the Law.  The April 29 document stipulates that the Regulation must be published within 90 days following formation of the Federal Gaming with Wagers and Raffles Commission.  The commission is to be in place within 180 days of publication of the Law.)

 

The governing body over gambling and casinos will be the Federal Gaming with Wagers and Raffles Commission that, in turn, will be under the jurisdiction of the Secretariat of Government.  The commission will only grant installation and operating permits when casino specifications, equipment and construction characteristics are comparable to the top 20 gross income casinos in the world, based on the year prior to the permit being issued.

 

As well, the commission will be able to set investment minimums for each of the locations where casinos may be established.  This in order to assure that permit applicants have sufficient funds to finance casinos as required.

 

Casino advertising and publicity will have specific rules and be controlled, regulation of casinos by the commission will begin during their construction period, and they may not be built in areas around social tourism centers or within 200 meters of educational and religious facilities.

 

In order to give Mexican entrepreneurs a level playing field with foreign investors, Bravo Carbajal said “the viable proposal is for casinos to open after a period of five years from promulgation of the new law, this because businesspersons have asked for enough time to be prepared and to be in a position to compete.”  The five-year period is also designed to keep foreign workers from displacing Mexicans who will have to be trained for the new jobs.

 

Presentation of the proposed legislation that could authorize casinos in Mexico caused tourist entrepreneurs who oppose the project to protest in the Chamber of Deputies.  The National Entrepreneurial Tourism Council (CNET) asked the committees to reconsider sending the bill to the Chamber of Deputies as a whole.

 

CNET president Gordon Viberg and Eduardo Sánchez Navarro, a hotel owner and developer from Los Cabos, Baja California Sur, where among the opponents who expressed concern due to the possible negative effects casinos could have on society, as well as the repercussions on economic and security issues.  They called for a time period to be set prior to publication of the bill, during which the National Autonomous University of Mexico would complete a study on the matter.

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         MexiData.info translation

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