Mexican Congress holds Hearing on Gaming

The future of legal Mexican gaming, numbers parlors, books and one day maybe even casinos, along with the associated investment, development and recreational opportunities: a never-ending question, yet there are still some waiting and wanting to know what might be coming down the pike.

And finally Mexico’s Chamber of Deputies has opened the next chapter in the more than a decade long cliffhanger. Still, the latest move may be little more than a cyclical stage in an epic story that could last longer than Methuselah lived.

The special committee investigating questions raised in the Chamber of Deputies, with respect to charges that the executive branch of government’s 2004 decreed Regulation of the Federal Gaming and Raffles Law is unconstitutional, finally held its hearing on March 8. A hearing that also touched on issues of compliance with gambling regulations, and politically suspect irregularities in the issuance of 2005 numbers parlor and book betting permits.

A hearing with few if any issues resolved, yet with maybe a shadowy glimpse of what might come to be.

Undersecretary of Government Arturo Chávez Chávez was called before the special committee, and he assured deputies that the federal government would comply with whatever decision the Supreme Court reaches on the constitutional challenge of the Regulation filed by the Chamber. In late 2004 the Chamber of Deputies brought the constitutional complaint before the Supreme Court, however the Court has yet to rule on the matter.

The Regulation, that does appear to go beyond what can be allowed constitutionally, contains a loophole in Article nine: “Slot machines, in any of their models, will not be subject to authorization.”* So subsequent to its 2004 publication 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. A situation that was exacerbated by both new and expanded permits issued in 2005.

Chávez insisted that the 2004 Regulation was promulgated in strict compliance with Article 89 of the Mexican Constitution, and that it is not contrary to the governing Federal Gaming and Raffles Law of 1947. He also said however, that until the Supreme Court renders its long awaited decision on the complaint the Secretariat of Government will honor the word of Secretary Carlos Abascal, which is not to issue additional permits until the verdict is in.

Questions regarding the permits issued in 2005, shortly before Santiago Creel resigned as Secretary of Government to seek the presidential candidacy on behalf of the National Action Party (PAN), were many. Among other objections, the claim has long been that a large block of those permits were issued to a newly formed affiliate of Televisa, Mexico’s huge media conglomerate, in exchange for sweetheart campaign advertising agreements for Creel.

Deputy Nancy Cárdenas (PRD) asserted that 17 permits for 417 raffle parlors and 319 betting centers have been irregularly granted. Irregular as a regulation cannot contravene a law, and furthermore the permits do not even comply with this Regulation.

Chávez countered that the current administration has issued only seven new permits that authorize the opening of 198 establishments. He also noted that a request to suspend the Regulation while it is under Supreme Court review was denied, meaning that the Regulation remains in effect.

Illegal gaming and slot machine related questions were also high on the deputies’ lists. Questions summed up when the Undersecretary responded: „In 2005 there were 4,139 slot machines seized, of the estimated 70,000 nationwide, more (seizures) than during any other similar period. The Regulation of the Federal Gaming and Raffles Law clarifies concepts and prohibits operation of the cited machines.“

Chávez added that the seizures, done cooperatively by multi-jurisdictional federal, state and municipal agencies, are proof of the federal government’s will to end illegal gaming.

Sergio Penagos García (PAN) said that today’s Law dates from 1947, which impedes timely and efficient efforts against illegal gambling. Penagos argued that the antiquated law must be reformed to meet current demands and conditions. He called for gaming to be regulated by a modern and strict law, with special emphasis on the regulation and control of existing gaming activities, while doing away with clandestine lotteries that represent illegal and untrustworthy competition to Mexico’s National Lottery.

As to next steps, Special Committee chairman Héctor Gutiérrez de la Garza (PRI) is calling for the formation of an expanded working group to review rules and regulations related to a new federal gaming law, an initiative that is bogged down in Congress that so far includes casinos.