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Mexico poised to OK Vegas-style casinos

Nov 5, 2002 7:02 AM

   The odds of Las Vegas-style casinos in Mexico are improving by the day. A new federal gaming law is expected to win approval at the national legislature Dec. 15.

    “I am now predicting it will pass,” says Donald Brennan, vice president of development for Nevada Gold & Casinos Inc.

   Brennan, who lived in Mexico for four years in the early ’90s, envisions the casino legislation allowing about 65 percent foreign ownership in casinos, with 35 percent held by a Mexican partner.

   Conservatively estimated to be a $3 billion-a-year market, Mexican casinos have drawn interest from north of the border.

   Susan Bala, president and chief executive officer of Racing Services Inc., says the $3 billion figure is a low-ball number.

    “I think it’s an exponentially much larger number,” Bala said. Some say the market across from the Laredo-Brownsville region alone could at least generate $600 million yearly.

   Racing Services Inc., which operates eight books in Mexico, is preparing to open a horse and dog track across the border from Laredo. Mexico has had legal racetracks since the 1930s and race and sports books since the 1970s.

   On the casino front, several Las Vegas operators have been quietly eyeing the Mexican market.

   Harrah’s, which recently established its presence in San Diego County, has publicly stated that it would consider forming partnerships with Mexican investors

   Bill Wortman, a partner in the new Cannery Casino in North Las Vegas, has expressed interest in building a gaming complex in Reynosa, Mexico, across the border from McAllen, Texas.

   The former Caesars exec said he and unidentified Mexican partners would spend $100 million to build a casino and 18-hole golf course in the community of nearly 1 million people. He has provided no further details.

   Now, with Mexican President Vicente Fox poised to sign legislation establishing a National Gaming Commission, casino action is sure to heat up.

   A draft of the bill calls for casino applicants to explain the origins of their investments. They will not be permitted to build within 200 meters of schools, hospitals or churches. No casinos on cruise ships will be allowed to operate while docked in Mexican ports.

   Mexico’s about-face on gaming was triggered by the country’s economic downtown and a desire to attract more tourist dollars. There also was a recognition that some 1,000 casinos are already operating illegally — and making a bundle tax-free.

   “We can’t continue to believe that by ignoring the problem it will cease to exist,’’ said Luz del Carmen Lopez Rivera, a congresswoman who supports legalizing gambling. “Lack of rules propagates clandestine arrangements, bribes and all the vices that result from an activity without any control.’’

   Gaming consultant Steven Gallaway of the Innovation Group advises prospective gamers to select a substantial, wealthy and well-respected Mexican partner to have any chance at licensure. “If you don’t, don’t get in there,’’ he warns.