Reform on gaming and raffles

The amendments to the Regulations entail several changes to the gaming and raffles regime, including: the prohibition of raffle machines or slot machines and certain general modifications to the regime governing the application for and obtaining of permits. I. Prohibition of slot machines The Decree repeals Chapter VIII of the Regulations concerning “raffles of numbers or symbols through machines” (slot machines) and reiterates that the only betting games and raffles that may be conducted will be those established in the Federal Gaming and Raffles Law and its Regulations. The reason for their prohibition lies in safeguarding the rights of persons in a vulnerable condition, avoiding the potentially harmful effects of betting and games of chance that may impact the childhood, adolescence and youth of the country and its older adults, as well as the harm that may be caused to persons with a mental or psychosocial disability or those who suffer from some illness or addiction, such as pathological gambling or gambling disorder. It should be noted that, under the terms of the second paragraph of Article 12 of the Regulations, a slot machine is understood to mean “any device through which the user plays with a bet, by inserting cash or any other form of payment for the purpose of obtaining a prize”. Consequently, betting through slot machines is strictly prohibited. Along with such machines, the Decree likewise establishes that betting games with cards or equivalents in all their forms, dice, and roulette cannot be considered raffles and, therefore, are likewise prohibited. Permits granted prior to the entry into force of the decree that contemplate the possibility of conducting betting through slot machines will be respected; however, the maximum duration of such permits will be reduced to a minimum of 15 (fifteen) non-extendable years as of the entry into force of the decree, even in the event that the particular permit contemplated a longer duration. II. General changes to the permit regime The Decree establishes that permits will have a minimum duration of 1 (one) year and a maximum of 15 (fifteen) years – previously, the maximum term was 25 (twenty-five) years. In addition, permits will be strictly linked to the geographic location of the establishment, so that, in the event the permit holder seeks to change the location of its establishment, or to transfer said permit to another business it owns, it must apply for a new permit. In the particular case of legal entities, the permit application requirements increased. Previously, it was only required to: (i) exhibit a copy or notarized instrument of the articles of incorporation and (ii) evidence the legal representation of the applicant; now two new requirements are included: (iii) to identify by name, nationality, domicile and photograph the members or shareholders of any of the companies that make up the applicant and (iv) to submit a declaration that the shareholders have not been convicted of property, tax, or crimes related to organized crime or to resources of illicit origin. The Decree additionally eliminates the figure of the “operator”, a company hired by the permit holder to exploit the corresponding permit; consequently, the permit holder will be the only one that may establish and manage establishments in which games and raffles are carried out. In this regard, the rights of operators with respect to establishments that are currently in operation will continue to take effect until the conclusion of the term of the permits that gave rise to them, not including their extensions. Likewise, the authorizations of operators that are not exploiting or managing an establishment in operation will become void. It should be noted that, although the rights of operators will remain in force until the conclusion of the permit, this will give rise to a source of unemployment for those companies whose predominant activity was to exploit the permits in light of the Regulations. III. Impact Since the Decree respects the permits already granted under the regulations of the previous set of rules, the impact of the new regulations may not be immediate, but it will undoubtedly be significant. The Association of Gaming and Raffle Permit Holders and Providers asserts that the number of players will be greatly reduced as a consequence of the new prohibitions, which in turn would entail the loss of a countless number of jobs and, consequently, the reduction of the tax contributions obtained from activities related to gaming and raffles. This could imply a strong blow to the State’s finances, at least that is what Senator Víctor Fuentes anticipates, since, according to him, raffle machines were one of the largest sources of contributions at the federal and state level. For additional information about our firm and our team, click here. Likewise, you may contact our experts: Diego Sierra, Partner:+52 (55) 5258 1039 | dsierra@vwys.com.mx Alberto Córdoba, Partner:+52 (55) 5258 1016 | acordoba@vwys.com.mx Pablo Fautsch, Partner:+52 (55) 5258 1072 | pfautsch@vwys.com.mx

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