Monday, August 29, 2005
Gaming permits in Mexico become more political
By Enrique Andrade González
The debate over Mexican gaming permits issued last
April and May, mostly for offsite betting book facilities and Bingo-type numbers parlors, has once again put pressure on the
Federal Access to Public Information Institute (IFAI), the agency that handles Mexico’s freedom of information requests. This due to a demand for the names of permit recipients, and documents containing
information regarding the authorizations and permits granted, that were not part of the data released voluntarily by the Secretariat
of Government on August 4.
And the Secretariat of Government has the obligation
to release the additional information.
One of the new permits was issued to a company named
International Wagers (Apuestas Internacionales), part of the Televisa television conglomerate.
That permit authorizes 65 books and 65 Bingo parlors, these to a company that was just established on February 21 of
this year.
Entertainment Mexico (Entretenimiento de México)
received permits for 30 books and 30 numbers parlors, as well as one for a horse and greyhound track, on April 29. This company was formed on March 29, 2005. Another relatively
new company, Gaming Promo (Promo Juegos), that was given 10 book and 10 numbers permits in April, was constituted on December
14, 2004.
So, three companies — none of which existed
less than a year ago — were issued 105 book permits and 105 numbers permits, 210 authorizations that along with others
that already exist seem more than enough for the national market. However the
critique aimed at Santiago Creel, the former Secretary of Government (and now presidential pre-candidate of the National Action
Party) who authorized the new permits is simply to insure that they were granted legally.
The concern, based on the number of permits approved
and the dates they were authorized, is that this could have been an abuse of authority and misuse of the law.
An in-depth investigation into the true beneficiaries
of these permits has not been made, nor has one been done regarding other entrepreneurs who might suffer financial losses
as a result of the new authorizations.
Legally, approval of these permits did not comply
with Article 22 of the Regulation of the Federal Gaming and Raffles Law. The
Regulation requires gaming marketplace experience of applicant companies to be substantiated, as well as verification of account
balances for the past five years, and these requisites were not met.
In an unexpected reaction, and with a spirit of willingness
for transparency, Creel announced that he had paid $24 million pesos [US$2.2 million] for 340 television ads, or $70,588.00
pesos for each campaign spot.
But according to an investigative article in El
Universal, researcher José Antonio Crespo found the average price of current commercials to be $257,000.00 pesos each. Hence Creel enjoyed discount favors from Televisa for a considerable amount, a result
that many see as payment for the communication giant’s gaming permits.
The Chamber of Deputies, which reconvenes on September
1, will have to conduct an in-depth investigation into this issue. Moreover,
President Vicente Fox must clarify the matter as the ultimate responsibility lies with the federal government.
Policy wise the decision to grant the permits cannot
be justified. This was a surprise, abusive and careless act, done to evade free
and open competition with rival national and foreign competitors in the gaming market.
Making matters worse, there was no consideration
for the negative consequences this would produce. Already certain businesspersons
who oppose gaming have taken out newspaper ads, warning against organized crime (also a synonym in Mexico for the drug cartels),
money laundering, addictions and compulsive gambling.
There is a legal remedy.
The first option would be for the Supreme Court to
resolve the constitutional challenge that the Chamber of Deputies has already filed against President Fox, for publishing
the Regulation. The charge is that the Regulation was promulgated contrary to
what is authorized in its governing Federal Gaming and Raffles Law, insofar as it addresses activities beyond the scope of
the Law.
The Supreme Court should declare the Regulation unconstitutional,
which would invalidate applicable actions taken while it was in effect. In other
words, the permits authorized according to the Regulation.
The second option would be for Congress at long last
to approve the new gaming law, and by doing so abolish the previously expedited Regulation.
This would nullify the permits.
Whatever, something must be done to keep Mexico’s
gaming business — that is designed to bring regional development and economic benefits to the nation, from being used
politically and in consequence monopolized by the few.
Enrique Andrade, a Mexico City-based attorney and business consultant, writes a weekly
column for MexiData.info. He can be reached via e-mail at enriqueag@andradep.com.
