BajaNews - 8-14-2006 at 04:48 PM
http://www.signonsandiego.com/news/mexico/tijuana/20060814-9...
Slot-like machines may skirt 1947 law
By Anna Cearley
August 14, 2006
TIJUANA ? Inside a storefront on the city's tourist strip, a minicasino full of gaming machines has opened despite laws prohibiting most forms of
gambling in Mexico.
Several hundred machines chirp and beep as patrons, hunched over electronic screens, sip drinks and smoke cigarettes at Caliente. With hardly any
publicity, this gambling room on Avenida Revolucion, open 11 a.m. to 6 a.m., has become an attraction for locals and visitors since it started
operating several months ago.
Part of Tijuana Mayor Jorge Hank Rhon's business empire, the venue bills its games as ?Bingo Electronico.?
Mexican law restricts gambling to sports betting and dominoes, dice and pool. Most Las Vegas-style games, such as poker and blackjack, are considered
illegal, and they aren't part of the Caliente room on Revolucion. The country's 1947 law, of course, couldn't have envisioned and doesn't cover video
gambling machines.
In the past two years, Mexico has seen a quiet proliferation of minicasinos stocked with the machines. Mexican companies have interpreted new gaming
regulations issued in 2004 as legalizing video gaming devices, though some lawyers and gambling experts say they are exploiting a loophole.
Many of the machines at Caliente look and sound like slot machines. But Mexican gaming groups say they have a bingo-like element, and other qualities,
that allow players to affect the game in minute ways, making the machines legal under additional gaming regulations issued in 2004.
?These are bingo terminals,? Hank said. ?Whatever is in the law is what I do.?
Attempts to interview a representative of Mexico's Department of Gambling and Raffles, which issues and monitors permits, were unsuccessful. An agency
official who wouldn't give his name said only: ?It's a delicate issue.?
Similar machines at Indian casinos in the United States stirred debate in the 1990s when they first appeared, amid differing legal interpretations.
The Mexican Supreme Court is considering whether the 2004 regulations are valid, or if they should be modified, but gambling experts widely believe
the machines are here to stay.
'Lots of interests'
The future of machine gaming in Mexico is of particular interest to U.S. casino companies and machine manufacturers, international resort developers,
and Mexican gaming barons who have a foothold in the business. They await the day when Las Vegas-style casinos can operate legally here.
?There are lots of interests in this industry,? said Fabian Monsalve, a Guadalajara-based attorney specializing in the gaming law and regulations with
the firm Baker & McKenzie.
Mexico is one of the few countries in Latin America where full-scale gambling isn't legal, according to a study by Mexico's Instituto Ciudadano de
Estudios Sobre la Inseguridad. History, politics and the strong influence of the Catholic Church have prevented it from proliferating, some experts
said.
?It seems like no one wants to take responsibility for legalizing it, once and for all, in the country,? said Donald Brennan, vice president of
development for Nevada Gold & Casinos Inc., which owns and manages casinos in the United States.
As a result, said several gambling industry experts, while Mexican authorities may appear to be officially opposed to wide-scale gaming, the country
is actually opening up to it.
Business is booming for U.S.-based game machine manufacturers. Video Gaming Technologies Inc. has sold more than 1,000 games in Mexico that are
similar to the machines at Indian casinos, said Robb Vecchio, vice president of the company's international division.
He and others in the industry estimate that as many as 60,000 of the machines could be operating in Mexico within the next three years.
Vecchio said the company was in negotiations with the Hank's Caliente Group. About half of the company's 80 or so sports betting sites in Mexico
already have the gaming machines, said Richard M. Stern, Caliente Group's U.S.-based legal counsel.
The gaming hall on Avenida Revolucion, 25 miles south of downtown San Diego, is the most public site so far in Tijuana, though it's not the first.
Company officials said the Caliente Group installed machines at the Caliente racetrack a year ago and last month put about 100 machines into the lobby
of the Pueblo Amigo Hotel, which Hank owns.
The Caliente room is packed with machines. Customers can use dollars or pesos to buy a card with a code, which is then used to play at the machines.
Winnings are collected with the same card.
Three types of games are available. One is a full-fledged electronic bingo game with numbers and cards appearing on the screen. The other two have a
bingo component, but the screen looks like a slot machine where the point is to spin and align a series of symbols, pictures or numbers.
U.S. gaming experts said these kinds of games were usually interconnected through a central system to conform to the bingo concept, and to determine
the jackpot hit.
A restrictive law
Tijuana was renowned for its lavish Agua Caliente Hotel and Casino until gambling was declared illegal in 1935 by Mexico's reformist President L?zaro
C?rdenas. For decades under the country's restrictive 1947 gaming law, which still stands, the industry was largely limited to sports and racetrack
betting. Several key players have come to dominate the industry, including Tijuana's mayor.
From the start, groups found ways around the 1947 law. Casino card games and roulette, backed by vague legal interpretations, showed up at fairs and
festivals.
Attempts to update the 1947 law to deal with new developments in gaming, have met with resistance in Mexico's Congress. So in 2004, the Ministry of
the Interior, which oversees the gambling and raffles department, issued regulations that allow for certain types of numbers-based games.
?I think this slight change in the language kind of flew under the radar,and I don't know if the powers that be knew what would happen,? said Roger
Gros, editor of Global Gaming Business, a trade publication that monitors world gaming trends.
Before the regulations, some gaming groups had opened rooms with machines by obtaining a court injunction, known as an amparo, to prevent government
action against them. Others simply opened clandestine casinos. As many as 1,500 such casinos are said to operate in Mexico, according to news reports.
Caliente Group officials said they didn't obtain an injunction for any of their gaming machine locations.
Enter 'casino-lite'
Gustavo Almaraz Monta?o, a Mexican attorney and lobbyist for gaming groups in Mexico, said the country's gaming legislation required a complete
overhaul. But with prospects dim, according to many experts, the establishment of minicasinos appears to be the next step.
?Casinos aren't allowed, and it would require some major political decisions that no one wants to get into ? so instead we have establishments moving
forward with what I call, 'casino-lite,' ? said Barnard R. Thompson, a consultant and columnist who closely follows Mexican gaming.
Steve Penhall, general manager of the El Cajon-based Sycuan Resort and Casino, which is owned and operated by members of the Sycuan Band of the
Kumeyaay Nation, said he doubted the competition would hurt the tribe's business. He said that about 4 percent of Sycuan's gamblers come from Mexico.
?Most of our business is from recreational gamers who are up here for other reasons, so they stop and visit us,? Penhall said.
But other gaming experts aren't so sure ? especially if Mexico can offer competitive casinos with resort-type facilities.
?All these border cities are very lucrative places to put casinos,? said Gros of Global Gaming Business. ?Even though you have Indian casinos there,
in many cases they are somewhat remote so it would be easier for people in San Diego to just go to the resorts in Baja.?
Not everyone is pleased with the new machine gaming on Avenida Revolucion. Rosalva Lopez, a Tijuana city councilwoman, said the gambling hall opened
without a council discussion.
A member of the National Action Party, a party in the opposition in Tijuana, she wonders if there is a conflict of interest because the mayor, an
Institutional Revolutionary Party member, has financial interests in Caliente.
?I think this requires more discussion,? she said. ?This carries a risk of addiction among many families who don't have resources, who could lose
their homes, and that worries me.?
Other critics say that expanding gambling in Mexico could lead to more money laundering, a problem primarily associated with illegal drug trafficking.
The mayor said he saw no conflict of interest, and that the Caliente gaming room obtained many local permits before opening. As to possible negative
effects, Hank said ?we haven't seen it or felt it.?