Monday, January 2, 2006
Mexican Court may void betting Regulation
By Barnard R. Thompson
In the labyrinthine world of Mexican politics, governmental
affairs, and policymaking – often called Kafkaesque by Mexicans themselves, the adage attributed to Yogi Berra fits
well: “it ain’t over till its over.” Take for example gaming
and gambling establishments, what’s legal and what’s not, and will the incessant debates ever be brought to an
end?
With the start of the New Year some gaming issues
are expected to be resolved, yet other things have surfaced anew and several ongoing matters may last virtually forever.
The recent surge in gaming activities in Mexico has
been largely on the strength of three factors: the September 2004 promulgated Regulation of the Federal Gaming and Raffles
Law (that went into effect in October of that year); new permits, and the broadening of previously existing authorizations,
issued by the Secretariat of Government (SEGOB) in the spring of 2005 (prior to Santiago Creel stepping down as secretary);
and for want of understanding, guidelines and rules governing, what are called in the aforementioned latest permits, “electronic
terminals.” A euphemism meaning “gaming machines,” vis-à-vis
“gambling machines” (the latter being a cute term that denotes Las Vegas-type slots).
In 2000, when Vicente Fox took office as President
of Mexico, there were 21 master permits for foreign books and numbers parlors in Mexico.
And early on the Fox government initiated an administrative review of the previously issued permits, which led to the
revocation of seven for different reasons, leaving 14 in effect.
On September 17, 2004 the Regulation of the Federal
Gaming and Raffles Law was published by presidential edict, which according to a SEGOB official “opened the possibility
to any person or company to apply for a (gaming permit).”
The Regulation also defines the formalities in order
to obtain a permit, and it instituted a Citizens’ Council. Council appointees
took office in February 2005, with duties that include review of all new permit applications.
In February, March and April the secretariat and
council analyzed more than 20 gaming permit requests, seven of which were authorized.
Just prior to Creel’s June 1 resignation they were granted officially, three tied to permits already in effect
and four new authorizations. In all, the permits allow a total of 176 foreign
book establishments, and 206 bingo-type numbers parlors.
In November 2004 then president of the Chamber of
Deputies, Manlio Fabio Beltrones (PRI), filed a challenge regarding the constitutionality of the Regulation with Mexico’s
Supreme Court.
According to the complaint, the Regulation violates
Articles 49 of the Constitution as the executive branch of government sought to reform the 1947 Federal Gaming and Raffles
Law with a regulation, ignoring the division of powers and intruding in the domain of the legislative branch. The claim, that is still pending before the Supreme Court, also charges that constitutional Article 73,
point 10 was contravened as it stipulates that Congress alone can legislate on wager gaming and raffles, among other things.
As well, Article 89 is cited with the argument that
President Fox overstepped his authority as the Regulation allows betting activities that are prohibited according to the governing
law.
Key here is Article 9 of the Regulation: “Slot
machines, in any of their models, will not be subject to authorization.”
In opposition, while Article 2 of the 1947 Law allows board games, dominos, dice, bowling, pool, ball games, races,
most sporting events, and raffles, it concludes: “Games not listed will be deemed as prohibited for legal purposes of
this Law.”
So, permit holders jumped on the Regulation’s
(intended?) loophole in Article 9. They opened and expanded betting parlors,
installed new gaming machines, and exploited the opportunity. This as the Supreme
Court deliberates on the constitutionality of the Regulation itself – while trying to figure out the difference between
electronic terminals and slot machines, or if either type should be allowed according to Mexico’s laws?
In a Christmas week interview, Héctor Gutiérrez de
la Garza stated quite emphatically that the Supreme Court will declare the Regulation unconstitutional in January 2006. The PRI deputy, who chairs a special congressional committee investigating the legality
of the SEGOB issued gaming permits, claimed insider information although he couched this by saying no one knows court decisions
before they are handed down.
Yet if Gutiérrez is right – and should the
validity of the permits be upheld, then entrepreneurs will have to find new means to justify “gaming machines.” A technical and legal debate that must already be underway, one where politics and
influence well may be on a par with jurisprudence, and rhyme or reason.
Barnard Thompson, a consultant, is also editor of
MexiData.info. He can be reached via e-mail at mexidata@ix.netcom.com.
