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Column 121205 Thompson

Monday, December 12, 2005

 

Mexican casino plan dies yet again

 

By Barnard R. Thompson

 

The Tourism Committee of Mexico’s federal Chamber of Deputies, the lead working group among three in Congress considering reforms to the 1947 Federal Gaming and Raffles Law – legislation that could include the reintroduction of full fledged casinos in Mexico, will not move the reforms out of committee.  This according to Tourism Committee chairman Francisco López Mena (PAN, Quintana Roo), who declared the subject “dead” during what remains of this administration.

 

Instead deputies will focus on passage of a new Tourism Law before the current legislature leaves office, according to López.

 

Mexico will elect a new president, and both houses of Congress, on July 2, 2006.  The incoming legislature will take office on September 1, while the next president will be inaugurated on December 1, 2006.

 

“It is a complicated matter, especially in an election period, which is why we decided not to advance a bill that could run the risk of polarizing the parties (involved) as happened with casinos,” López said.  He also indicated that committee members in favor of casinos, and those opposed, are absolutely split and unable to come to any type of agreement.

 

The real effort to once again allow casinos to operate in Mexico began in the latter part of the Carlos Salinas de Gortari administration (1988-1994), and deals had actually been struck for congressional approval.  However in 1997 the rug was pulled out from under the casino advance, so as to politically embarrass and discredit a cabinet minister in the Ernesto Zedillo administration and Institutional Revolutionary Party (PRI) government who had the audacity to seek a gubernatorial candidacy also coveted by a top PRI leader.

 

Ever since the issue has been politicized, with proponents expecting passage year after year and opponents doing their ongoing utmost to block all initiatives.

 

And now the casino debate can be expected to start anew in the fall of 2006.

 

In 1934, President Lázaro Cárdenas banned casino gambling in Mexico – with certain exceptions, so some wagering activities are today legal if and when an operator has the requisite permit(s) from the Secretariat of Government.

 

As to what is authorized under permit authority, Article 2 of the Federal Gaming and Raffles Law allows board games, dominos, dice, bowling, and pool.  Ball games are allowed, as are races and most sporting events.  And raffles.

 

Article 2 concludes: “The games not listed will be deemed as prohibited for legal purposes of this Law.”

 

Almost 60 years after the Law was promulgated, the Mexican government finally published a Regulation for the Federal Gaming and Raffles Law on September 17, 2004, that went into effect on October 14.  And with it gaming entrepreneurs seized upon a loophole to countermand the 1947 law.

 

The lead sentence in Article 9 of the Regulation states: “Slot machines, in any of their models, will not be subject to authorization.”  With that new betting centers, with video and slot-like machines, as well as numbers game parlors and sports books for offsite wagering, began to spring up with operators claiming to have the corresponding permits from the Secretariat of Government.

 

A month after the Regulation was published however, the Chamber of Deputies filed suit with the Mexican Supreme Court charging that the Regulation should be declared null and void, as it is contrary to the governing Law.  That lawsuit is still before the Court.

 

Earlier this year, in the months before Santiago Creel resigned as Secretary of Government on June 1 (in a failed attempt to become the National Action Party’s candidate for president of Mexico), his ministry granted new permits, and updated some that had been previously issued, for 176 foreign books and 206 numbers game parlors.

 

But warning signs flashed as 65 permits in each category went to a new applicant, Apuestas Internacionales, S.A., a company formed by Mexico’s media giant Televisa.  Furthermore, election related allegations were made, claiming that Creel had issued the permits to gain sweetheart deal advertising rates for his campaigns.

 

With the ensuing uproar, now Secretary of Government Carlos Abascal quietly placed a hold on the Creel era issued permits, supposedly until the Supreme Court rules on the Chamber of Deputies’ challenge of the Regulation.  It should also be noted that those responsible do not seem to know which integrated circuit driven machines should be classified as slot machines and thus prohibited, and which should not.

 

In the meantime, and in anticipation of Abascal lifting the hold, Apuestas Internacionales and three other groups are already buying new electronic gaming machines and arranging for their importation.

 

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Barnard Thompson, a consultant, is also editor of MexiData.info.  He can be reached via e-mail at mexidata@ix.netcom.com.