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After Almost Seven Decades, Legalized Casino
 Gambling May Return to Mexico
By Hugh Dellios, Chicago Tribune
Knight Ridder/Tribune Business News

Aug. 17, 2004 - TIJUANA, Mexico--In 1935, one of Mexico's national heroes, President Lazaro Cardenas, banned casinos across the country, putting a damper on the good times of Hollywood stars and mafia types who made Tijuana a playground of gambling and other vices during the Prohibition era.

Seven decades later, in a new world full of casinos, the gambling houses could return to Tijuana under a proposal before Mexico's Congress to again legalize them across the country.

The initiative, presented to Congress in April, worries some Tijuanans who remember the heydays of the casinos and fear their effect on a frontier city already grappling with violent drug smuggling and trying desperately to clean up its image.

The city's business community and other proponents argue that reintroducing casinos would merely recognize reality. They say it would allow the country to take advantage of the business escaping to 15 Indian-reservation casinos just over the border in California, not to mention the estimated 1,500 illegal casinos operating in Mexico.

"The world changed, and Mexico changed, or at least it's trying to adapt to those changes," said Carlos Mora, a Tijuanan spearheading a pro-casino campaign for a group of chambers of commerce from across the country. "On many things, Mexico is behind."

Nonetheless, casino backers acknowledge they may encounter opposition as the initiative comes up for a vote later this year. Tourism officials, who hope the casinos would complement Mexico's other tourist attractions, also have begun a promotional campaign across the country.

"Many people are not in favor, because of the other things that casinos bring," said Jose Galicot, president of the Tijuana Image Committee, which endorses the proposal. Opponents "think that for all the money the casinos will bring, we will have to spend even more on psychiatrists and police."

Some government officials fear the casinos would provide the region's notorious drug cartels another opportunity to launder their ill-gotten money.

The Roman Catholic Church, too, has voiced its concerns. In a column in a church publication in late July, the cardinal of Guadalajara, Juan Sandoval Iniguez, condemned the proposal, saying its promise of stimulating the economy was a "vain illusion." He warned that it could turn many Mexicans into gambling addicts.

"To wager money is a vice, and for that reason, an immoral act," Sandoval wrote.

After years of opposition, even within Mexico's business community, casino backers say they believe they have succeeded in building a consensus around the new initiative because it includes enough regulatory safeguards against abuses.

Mora said the proposal would prevent little casinos from popping up everywhere by requiring each operator to make a minimum $50 million investment. The casinos would have to be part of a hotel complex. And each operator would have to have some international experience.

The proponents envision that tourist destinations such as Tijuana, Ensenada, Acapulco and Cancun would be the primary candidates for casino licenses. Each city would have the final say in whether they want such an operation.

Mora said 267 congressman signed the initiative when it was first presented, meaning it probably would have the majority needed to pass Congress. However, the first casinos may not open until 2009 as the government sets up a gaming board and other mechanisms to regulate it.

Proponents say the casinos would generate thousands of jobs, development and substantial tax revenues. They estimate that all together the casinos could earn as much as $1.3 billion a year. By some estimates, the country's illegal casinos already do a black-market business of $500 million a year, while no one knows how much money leaves Mexico for Las Vegas or the Indian casinos over the border.

"You just go up [California Interstate] Freeway 5 to Freeway 8. Less than 20 minutes and you're there," Mora said.

Among the possible applicants for a casino license would be Tijuana's new millionaire mayor-elect, Jorge Hank Rhon, who owns Tijuana's Agua Caliente greyhound racetrack and other non-casino gambling enterprises throughout Mexico. Those businesses operate in Mexico under a 1947 amendment to Cardenas' casino-ban law.

In an interview before his election Aug. 1, Hank declined to take a position on the new casino initiative.

"I can solve the problems of my city without that," Hank said. "It's not the salvation of my city."

The proposal has reawakened lots of colorful memories about Tijuana's past casino days. The city had two main gambling houses then, one of them part of a racetrack complex where the famous underdog horse Seabiscuit once ran and where Tijuana-born Rita Hayworth danced.

"One time Al Capone came and he lost half a million [dollars] in one night," Galicot said, passing on a bit of local lore.

The initiative also has reopened a debate about Cardenas' true motives in banning the casinos.

The ex-president, a nationalist who is still revered for nationalizing Mexico's oil industry and expropriating foreign oil companies' property, is remembered by some as opposing the casinos because most of the profits went abroad. He is also remembered as a moralist reformer who wanted to correct his people's corrupt habits.

Others contend he had less altruistic motives and was interested mainly in foiling the cronies of his predecessor, President Plutarco Elias Calles. Some of them reputedly had interests in the casinos and ties to famous gambling-house gangsters such as Bugsy Siegel.

The proposal comes at a time when Tijuana needs an economic boost. Many of its maquiladora re-export factories have closed, and others have suffered layoffs because of low-wage competition from China and elsewhere in Asia.

But critics, such as Benedicto Ruiz Vargas, a political analyst at Iberoamericana University here, contend that casinos will not end up being the long-term job-creating solution the city needs. Rather, he said, they might be just another opportunity to use the border to make a quick buck.

"It's a matter of looking for the fast fortune," Ruiz said. "No matter the circumstances."

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