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Column 042505 Thompson

Monday, April 25, 2005


Narco killings may freeze casino bill in Mexico


By Barnard R. Thompson


The initiative to reform Mexico’s gaming and raffles law, with amendments that would once again allow conventional casinos to operate at approved locations, had been moving right along in committee in the federal Chamber of Deputies.  Even with last-ditch efforts by opponents to put the kibosh on the casino part of the legislation, the all included bill looked like a good bet to finally make it to the floor before the April 30 conclusion of the current session of Congress.


That is until all hell broke loose in Monterrey.


Prior to June 24, 1938, casinos were legal in Mexico.  On that date however, then President Lázaro Cárdenas promulgated a decree that prohibited (with rare exception) casinos in the United Mexican States and its territories, based on logic that casinos by their very nature were magnets for organized crime, vice and exploitation by professional gamblers.


Over the ensuing years various attempts were made to overturn the 1938 decree, and while those efforts were largely unsuccessful certain allowances were added for short-term special event casino installation and operation permits to be granted.  This discretional authority still exists, vested exclusively in the Secretariat of Government.


The current campaign to resurrect casinos started in earnest in 1994, a process and debate that has dragged on for over a decade.  But just when it looked like a vote might come, on April 14 three drug trafficking and money laundry suspects were gunned down in Monterrey, Nuevo León, while meeting with would-be casino investors from Las Vegas, Nevada.


And members of Congress at once slammed on the brakes.


In September 2004 Mexico published a Regulation of the Federal Gaming and Raffles Law, finally getting around to a requisite guideline addendum to the 1947 Law.  The Regulation officially went into effect on October 14 — and gaming entrepreneurs quickly seized upon an ambiguity in the Regulation that per se does not incorporate casinos.


The lead sentence in Article 9 of the Regulation states: “Slot machines, in any of their models, will not be subject to authorization.”  No matter that the loophole is contrary to the governing Law, Monterrey soon became a betting center boomtown with slot and video machines, as well as bingo and books for offsite wagering, based on the interpretation that operating permits are not required.


Still, the different operators claim they also have necessary permits from the Secretariat of Government, whereas officials from that ministry in most cases say they do not.


On April 14 two visitors from the U.S.A. were in Monterrey, reportedly to assess local gaming operations, investment opportunities and casino sites, and to meet with potential joint venture Mexican partners.  In contacts arranged by real estate promoter Luc Pelchat, a Canadian who lives in the Monterrey area, Las Vegas residents Cherie Carter-Scott and Alberto Praxedis Jáuregui Zepeda met with at least three Mexican “investors” according to media reports.


The Mexicans are identified as José Cruz Fuentes Gaona, a former captain in the Mexican Federal Highway Patrol, Juan Daniel Favela and Luis Martín Moreno Rodríguez.


After visiting possible casino sites the group went to lunch at the Los Arcos Restaurant, near the Mandalay “Casino.”  Following lunch the foreigners walked to the Mandalay, to take a look at its facilities and operations, while the three Mexicans lingered briefly and then went to the Los Arcos parking lot to wait for the others.


But as the Mexicans strolled to their cars they were ambushed and executed by unknown assassins in a bloody hit that had all of the signs of inter-drug cartel warfare.


With the investigation still unfolding, preliminary reports identified Fuentes as a real estate investor.  Favela however, a resident of McAllen, Texas, had been under investigation by the U.S. Drug Enforcement Administration (DEA) and Mexico’s Attorney General (PGR) for border area narcotics trafficking, and by the DEA in Chicago.  According to police, Moreno too was under investigation by the PGR for drug dealing.


An immediate national cry went out, perhaps best encapsulated in a lead from Reforma Group newspapers: “The execution in Monterrey of three men tied to narcotics trafficking, who were negotiating the installation of a casino, has for the first time opened a line of investigation that reveals ties between organized crime and gaming houses.”


As to the vox populi in Congress, where another cycle of delays is almost certain to begin — deputies and senators alike are saying emphatically that all concerned must examine and investigate anew possible links between narcotics traffickers, money laundering and casinos.



Barnard Thompson is Editor of MexiData.info.  He can be reached via e-mail at mexidata@ix.netcom.com.