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Insight MEXICO


GROWING CONFLICT OVER MEXICAN GAMING IN


GUANAJUATO AND YUCATÁN Controversy grows in two Mexican states, Guanajuato and Yucatán over gaming taxes and a potential ban


they will lose customers and incur significant loses.


The issue of gaming is causing growing controversy in the two Mexican states. Lawmakers in the State of Guanajuato are seeking to change gaming laws to restrict gaming while casino operators in Yucatán are battling a new tax in the courts.


The State of Guanajuato plans to introduce a new initiative which would ban the granting of any more licences. The initiative, which has the backing of local mayors and has been signed by state governor Miguel Márquez, would take the power to grant licences away from local municipalities and the state. Instead in what the governor has described an “historic decision” zoning laws would be changed whereby it would be illegal for land in the state to be used for the purpose of building casinos and sports betting shops.


The new initiative seeks to amend the State Constitution to take power away from local municipalities and the state when it comes to the granting of gaming licences. At present there are fourteen casinos currently in operation in the city of Leon, Irapuato, Salamanca and Celaya which have all been granted a licence by the regulatory body which comes under the control of Mexico’s Interior Ministry (SEGOB). However, the new initiative could run into difficulty as SEGOB has already granted two more licences to the city of León for operations which have yet to be constructed. However, similar initiatives to change zoning laws in order to reduce the proliferation of gaming have been put in place in other states such as Coahuila, Nuevo León and Baja California.


Meanwhile, casinos operating in the Mexican state of Yucatán are mounting a legal defence against a raft of new gaming taxes which went into effect on January 1st this year. Lawyers acting on behalf of gaming establishments located in the state have requested that they be exempt from the new tax arguing that it will mean that


The terms of the new Revenue Act imposes a 10 per cent consumption tax on players, as well as an additional tax of 2,000 pesos (around US$150) per machine which comes in the form of a fee for government supervision of each gaming machine. The consumption tax must also be collected by the casino whenever the customer adds credit to a gaming card and must be reported to the local tax authority. In response six of eight casinos currently operating in the state have requested that they be granted court protection from the new law claiming that it is a violation of their constitutional rights.


The new tax was put before the state Congress on November 25th last year and was passed the following month by a majority. The new tax is aimed at making up for a shortfall in state funds after major changes to Mexico’s tax laws were passed by the Federal Government and implemented by Mexico’s President Enrique Peña. Also going into effect on January 1st this year the new law, which is part of a much wider tax regime, repealed the REPECO law (Regime for Small Taxpayers) and reduces the amount payable for those who run small businesses. The new Revenue Act which went into effect in Yucatán is aimed at raising 200 million pesos to meet the shortfall in taxes: 120 million pesos of which will be generated by the new tax on casinos. The figure was based on calculating the average number of people who visit casinos in the state along with the number of slot machines operating on the premises.


The casinos have issued their complaint against both the governing body of the state and the Yucatán Congress: the governing body for issuing the law and the Congress for passing it. Both bodies have announced their intention to fight the casinos in the courts. If the casinos lose their battle then they could incur significant loses as they could be forced to pay a number of penalties for not paying the new taxes and will also be liable to pay additional back taxes. The court hearing will take place on March 12th.


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