Author’s Note: As the gaming landscape changes in Mexico, there are new calls for the antiquated Betting and Raffles Law of 1947 to be replaced with a newer act that would more accurately reflect the gaming reality in Mexico. At the same time, the proliferation of slot parlors nationwide and the green-lighting of Class III gaming machines is creating an urgent need for mandatory standards for gaming devices.
Gaming law in Mexico dates back to the Betting and Raffles Law of 1947, that banned casinos and gaming throughout Mexico. While there have been almost innumerable attempts to replace the act, all attempts have failed thus far. But although slot parlors and bingo halls are ostensibly banned, that doesn’t mean that there are no slot parlors in Mexico. In fact, far from it.
This is thanks to an amendment in the form of an appendix to the old law, which was put in place under the presidency of Vicente Fox. Fox unsuccessfully attempted to do away with the old gaming act in 2005. However, he did manage to attach an appendix to the 1947 law that allowed for sports betting, as well as the opening of bingo halls and slot parlors nationwide.
The Secretary of Government (SEGOB), Mexico’s interior ministry, was given responsibility for the granting of licenses for these betting facilities. While there was initial controversy surrounding the large number of licenses initially awarded by then-head of SEGOB Santiago Creel, his decision was upheld by the Mexican Supreme Court in 2007. By the end of the following year, the Mexican gaming sector had grown by 110 percent. Since then, gaming has continued to expand at a fast rate in Mexico, with an estimated 7,000 slot machines nationwide and 300 slot parlors, many of which are large scale.
The push for new casino legislation has traditionally been motivated by a desire to improve the tourism industry; it was believed that Mexico could offer Las Vegas-style gaming in five-star hotels located in tourist hotspots. Now the impetus comes out of concern over the fast expansion of gaming nationwide, and controversy is once more gathering around SEGOB’s issuing of licenses.
In June, Lizbeth García Coronado, the secretary for the Tourism Committee in the House of Deputies, called for an end to the granting of gaming licenses in Mexico. In protest of the rise in the number of slot parlors nationwide, Coronado, along with a group of fellow protesters, installed a mini “casino” with five gaming tables near SEGOB’s head offices.
During the protest, the legislator pointed out that there are more than a thousand gaming establishments currently operating in Mexico without a license. Coronado also said that she had already submitted three reports to Mexico’s general attorney’s office against SEGOB officials for granting false permits and claimed that under the present administration, SEGOB had granted 200 casinos permission to expand their operations.
The legislator’s calls for an end to the issuing of gaming licenses come at a time when other elected officials are calling for a limit on gaming. In June, José Guadalupe Osuna Millán, governor of Baja California, pronounced himself in favor of putting an end to the proliferation of casinos in his state. Similar calls are being made in other states around Mexico, while other calls are being made in the Mexican Congress. Deputy Marco Antonio Vizcarra Calderón announced that in July he would submit a motion to Congress that would raise taxes on betting establishments nationwide in order to combat gambling addiction.
While these proposals are being put forward, some members of the Mexican Congress are now attempting to do away with the 1947 act. Led by members of the Partido Acción Nacional (PAN), the impetus has been growing over concerns about a lack of transparency in the issuing of licenses as well as the alleged pedaling of influence to gain licenses. Indeed, a new gaming law has been earmarked as a matter of urgency in the Mexican Senate, and the PAN party also supports moves that would allow for large-scale casinos in Mexico City in order to strengthen the tourism sector.
Class III Concerns
Although slot parlors and bingo halls are not permitted to house table games, slot parlors in Mexico are attaining an increasingly casino-like feel. This is largely due to the fact that SEGOB gave Class III slot machines the green light in August 2010. Previously, only Class II electronic-based bingo slot machines were allowed in Mexico and numbers, not symbols, were drawn electronically. It is believed that due to the opening of the Mexican market to new Class III slot machines, the number of slot machines in Mexico could easily double over the coming years.
While the possibility of new gaming legislation is once more in the cards, the need for an established and fixed standard in electronic gaming equipment has become more and more urgent. The forerunner in this regard is NYCE (a Spanish acronym for Electronics Standardization and Certification), a non-profit civil association formed by a leading group of companies from the electronics, telecommunications and information technologies sectors in Mexico.
The Betting and Raffles Law of 1947 naturally does not cover the complexities and technical sophistication of modern gaming equipment, and in April 2006, members of the government working as part of the Technical Subcommittee of Gaming Standardization met for the first time with members of NYCE. The purpose of this meeting was to create technical standards that were not covered by the Betting and Raffles Law and would guarantee, among other important issues, the randomness of gaming equipment operating in licensed slot parlors in Mexico.
As a result of this meeting, in January 2007 the first government-approved guidelines for gaming were published. Entitled the “The Information Technology System of Electronic Terminals for Drawn Numbers and Betting,” or more commonly known as “The Standard for Bingo Games,” the new guidelines set the government standard for gaming equipment nationwide.
In 2009, NYCE was accredited by the government as a gaming certification board, and using the government guidelines published in 2007, today NYCE allows manufacturers the possibility to certify their equipment so that it meets government standards. Although not compulsory, these standards for gaming are widely recognized by local governing bodies in Mexico as standards set up under a wider law—specifically, the Mexican Law for Metrology and Standardization.
Via NYCE, which has been instrumental in developing standards for the sector, today manufacturers can choose between a “Prototype Certificate,” where only the model is tested at a recognized laboratory, and a “Product Certificate,” where not only is the prototype tested in a laboratory, but also on site.
In order to more fully accomplish this task and ensure the integrity of gaming in Mexico, in 2008 NYCE signed a business alliance with Gaming Laboratories International (GLI). GLI and NYCE agreed to jointly develop testing standards, to press for compliance to those standards, and to encourage the Mexican government to adopt mandatory testing standards for gaming devices.
CEM talked to Gerardo Pozo Villar, vice manager of games and lotteries for NYCE, to see what the future might hold for the dynamic Mexican gaming market. He says: “The gaming market in Mexico now finds itself in a state of steady growth. Today there are about 300 slot parlors throughout the country, and through exhibitions we have noticed an upsurge of manufacturers that are trying to set up shop in Mexico with their very own offices and representation. You can see this as well when you go to a game room and observe the increase in the number of machines and the diversity of brands that currently operate in these rooms.
“Effectively we know that there are different proposals to modify the Betting and Raffles Law, as well as proposals for reforming the regulations regarding this law, but we have no certainty that they will be approved in the short term. But the possibility that large-scale casinos in hotels will be allowed is high, although not in the short term, due to the fact that the reforms for the gaming law are currently being analyzed by the House of Representatives’ Chamber of Tourism commission. As a result, the tourism industry could in the future be reinforced with the implementation of casinos in hotels.
“In gaming rooms today, you can find bingo and single-player machines, electronic tables, and all kinds of games based on number balloting that can run on their own hardware or from a server. As for Type III slot machines, this actually did provide the Mexican market with the necessary groundwork for allowing the great machine and system manufacturers from around the world to express interest in entering and kick-starting a market that used to be limited solely to bingo games.”
Although the Mexican government is once again considering new gaming legislation, this is by no means the first time it has done so, and legislation designed to do away with the 1947 act has often failed—and often at the very last step, leaving many insiders and industry experts disappointed. While the Mexican government seems to be struggling to catch up, it is becoming increasingly apparent that the gaming industry in Mexico is changing at a very fast fate nonetheless. As this situation continues, organizations such as NYCE are performing an increasingly important role in pushing for and maintaining standards in the ever-expanding Mexican gaming industry.
James Marrison has been covering the casino industry in Latin America for over seven years and has written in-depth features on every country in the region. Marrison has worked as a research contributor for Global Betting and Gaming Consultants and serves as a consultant for industry professionals for the Gerson Lehrman Group. Marrison is also a researcher into the online gaming markets in Europe.
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