Vegas-style casinos under consideration in Mexico

Celeste Tarricone

Monday, May 6, 2002 | 9:34 a.m.

MEXICO CITY -- The options are few for anyone who wants to gamble in Mexico. They can go to the horse races or buy a lottery ticket -- or enter the shady world of illicit dog fights and underground poker parlors. That may soon change.

Mexican lawmakers are pushing to end a 70-year-old ban on casinos in areas frequented by tourists, arguing that they will attract tourists and foreign investors and create jobs. President Vicente Fox is also in favor.

The Tourism Commission in the lower house of Congress is putting the finishing touches on a bill that would legalize casinos, possibly at the next legislative session starting in September.

In the 1930s President Lazaro Cardenas directed Congress to ban gambling, worrying that casinos were dens of organized crime and corruption. But politicians now say that, properly regulated, they are a sound economic gamble.

Casinos in beach resorts, border towns and Mexico City, open to foreigners and Mexicans alike, could generate as much as $1.3 billion in revenue a year, plus an extra $1 billion for the government in taxes and licensing fees, according to estimates prepared for Congress by the National Council of Business and Tourism.

But Mexico would need more than $2 billion in investments to build at least 11 casinos and accompanying hotels, the council says.

Critics say Mexico would have to overcome heavy odds to set up a regulatory system that foreign investors could trust, and make sure that casinos are not used for money laundering.

"That's the big thing that Mexico needs to look at, and pass a statute that tightly controls gaming operations," said James Jones, a former U.S. ambassador to Mexico who now represents U.S. gaming businesses interested in setting up casinos here.

The proposed law calls for a commission to do everything from issuing licenses to investigating finances. "The law is going to have power," said Jaime Mantecon, the legislator leading the casino effort in Congress. "We want to create a law that doesn't allow for any illegal activity whatsoever."

Without tough regulation, says Frank Fahrenkopf, president of the American Gaming Association, "No American licensee is going to take a chance of jeopardizing their license in the States to open a casino in Mexico."

But if such a law is passed, plenty of foreign investors are interested, say representatives of the gambling industry in the United States.

William Wortman, director of the Nevada Palace Hotel and Casino, has proposed building a gambling complex in Reynosa, Mexico, across the border from McAllen, Texas. The Oneida Indian Nation has expressed interest in Acapulco and Mazatlan. There has been talk of building a casino complex across the border from Laredo, Texas, although no developer has stepped up to take on the project.

Mexico and Brazil are the only Latin American countries without resort casinos, said William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

Last year more than 19 million foreigners visited the country, spending $8.4 billion, according to Mexico's tourism ministry.

Plenty of Mexicans also would line up to play cards and the slots if casinos become legal, especially if they are built in urban areas.

Mexico already has a thriving -- but illegal -- gambling industry offering everything from poker to cock fighting. They are estimated to be earning more than $1.6 billion a year, and allegedly cheating the government out of more than $900 million in taxes.