LV company hit by setback in Mexico

Friday, March 1, 2002 | 11:02 a.m.

The future of a small Las Vegas gaming company was thrown into doubt this week, after the company suffered a serious setback in its legal battle to open a gaming center in Mexico City.

Viva Gaming & Resorts Inc. announced a Mexican tribunal court had upheld an appeal to keep Viva's $4.5 million "lottery entertainment center" in Mexico City closed. The court ruled the center had to remain closed until a final decision is made by the Mexican Supreme Court.

"Viva currently has no source of income and has relied entirely on outside financing to fund its Mexican development and corporate expenses," the company said in a statement. "Such financing has ended and there is no assurance the company will be able to raise additional funds to continue its activities."

The news led to a massive sell-off in Viva stock, which trades over-the-counter. The stock closed Thursday at 13 cents, down 57 percent in the two days since the company's announcement.

Viva first opened the Mexico City center on Nov. 1 with 440 gaming machines, which paid winners in lottery tickets and prize vouchers, rather than cash. Mexican law prohibits gambling, but Viva argued the machines constituted games of skill.

Within hours of the center's opening, federal officials ordered the property's closure. Viva appealed, and in December, an appeals court ruled the center could reopen with 47 machines, though the property didn't reopen at that time.

Following the tribunal court's ruling, Viva's source of financing, Phoenix Leisure Corp. of Las Vegas, announced it was restricting further investments in Viva. The company has already invested $2 million in Viva.