Mexico Debates Pros, Cons of Legalization

Secretary of Tourism Silvia Hernandez has - at times - made the legalization of casinos in Mexico the centerpiece of her plan to bring in hundreds of millions of dollars in foreign investment by building up to 10 "Integral Tourism Centers."

But with congressional elections scheduled for July 6, the Ministry of Tourism is now saying the casino issue is "frozen" until the next presidential elections in 2000. Casino advocates, however, say this announcement is nothing more than election-season posturing by the ruling Revolutionary Institutional Party. Still, they will probably not get a gambling law when Congress reconvenes in September.

"If there is a positive analysis of the composition of the new Congress on this subject, there is a very good likelihood that the initiative could be introduced in the March 1998 session," says David Ellsworth, a San Francisco-based lawyer and investment banker who represents several American casinos and lobbies in Mexico for the legalization of gambling.

In draft legislation proposed this year, hot spots like Cancun, Acapulco, and Baja California would be developed first, then Mexico City and cities close to the US border. Though no one yet knows what the final plan will look like, one Tourism Ministry report estimated the centers would cost between $250 million and $400 million apiece.

The Mexican Congress has taken up the gambling issue annually, but each time it has failed. A stigma has been attached to casinos ever since President Lazaro Cardenas banned them in 1936, blaming them for moral decay and corruption.

But since the 1994 peso devaluation, the government has been looking for new investment sources. And casino legalizations in the Caribbean have put Mexican resorts at a disadvantage, officials say. The Tourism Ministry estimates that 10.5 percent of US gamblers would be attracted to Mexico if it built casinos now. Mexico wants to hop on the bandwagon before the other two big holdouts, Cuba and Belize, do.

Only a handful of projects would be pre-approved by the government on a strictly competitive basis. "It would be a mess if we let a casino go up on every street," says Tourism Ministry spokesman Javier Solis. "Mexico is not trying to be Las Vegas, but to make gambling a part of entertainment."