The Growth of Mexican Casinos and 'Casino Mafias'

Frontera NorteSur

Although the Mexican Congress has balked repeatedly at approving Las Vegas-style gaming, casinos and other gaming establishments have nonetheless spread like wildfire across the country in recent years. The Mexican newsweekly Proceso has reported that the number of gaming enterprises — legal and illegal — exploded from 123 in 2000 to at least 790 in 2011. An estimated 12,000 people work in the industry.

In the violence-torn border state of Nuevo Leon, the number of gambling joints jumped more than ten times in the last 11 years, increasing from only five to 57 businesses. The expansion began under the Vicente Fox administration, when former Interior Minister Santiago Creel issued new permits before leaving office in 2005 to engage in an unsuccessful bid for the presidency, and continued into the Felipe Calderon administration.

A business that is widely suspected as an important outlet for money laundering boomed at precisely the same time Mexico and Washington were expanding the so-called drug war against organized criminal groups. And, especially in the northern border states, casinos have been magnets of violence.

On May 25, for example, four Monterrey casinos were simultaneously assaulted by gunmen who beat and robbed clients, pilfered cash registers, and machine-gunned the exteriors of the buildings.

“The Interior Ministry gives the (gaming) permits, but the states and municipalities assume the costs,” observed Hector Gutierrez de la Garza, a state lawmaker for the Institutional Revolutionary Party (PRI) in Nuevo Leon.

Two years ago, a high profile killing in Monterrey took the life of lawyer Rogelio “El Diablo” Garza Cantu. A well-known table dance entrepreneur who was also linked to the burgeoning casino sector, Garza was gunned down in broad daylight while he was leaving a 7-11 store.

The brazen shooting also took the life of a convenience store employee who attempted to elude the gunfire, and wounded Garza’s chauffeur as well as a taxi driver who happened to be at the wrong place at the wrong time.

While the US media, in particular, often reduce Mexican violence to a battle over drug and migrant smuggling routes to that country, some Mexican press accounts describe the raging violence that’s devastated the once thriving industrial city of Monterrey as a confrontation between “casino mafias.”

Federal legislator Lizbeth Garcia Coronado, a member of the Mexican Chamber of Deputies’ Tourism Committee, as well as another dedicated to investigating compliance with the existing federal gaming law, recently said that 31 of Nuevo Leon’s 57 casinos were illegal.

In some outlets, roulette and other games not permitted under current Mexican law have appeared.

As well, corruption of politicians and judges has emerged as an issue connected to the gambling boom.

Congresswoman Garcia, a member of the opposition Party of the Democratic Revolution (PRD), filed legal charges last May against two high-ranking Calderon administration officials responsible for regulating the gaming business: Interior Minister Francisco Blake and Maria Guadalupe Lopez Mares, the assistant director of gaming and raffles. In her complaints, Garcia alleged irregularities in the gaming sector.

A month later, the federal Attorney General’s office (PGR) announced the detention of Esiquio Martinez Hernandez, the secretary for the Ninth Administrative Court District in Mexico City. Martinez allegedly received about US$1 million dollars in his bank account from unidentified sources in 12 Mexican states — including Nuevo Leon — during the last ten years. In one action, the Ninth Court granted a legal stay that allowed the Paradise Casino to avoid a shutdown. Martinez’s boss, Judge Alvaro Tovilla Leon, has been suspended pending the PGR’s ongoing investigation.

In Nuevo Leon, a controversial politician is waging a fight against the spread of gaming to his town. Mauricio Fernandez, mayor of the affluent Monterrey suburb
of San Pedro Garza Garcia, blamed casinos for encouraging social disorder, violence, prostitution and money laundering. And he’s also taking aim at the judicial system for allegedly fomenting vice.

“This country will not advance or do away with organized crime whatever the will of President Calderon or anyone else if we don’t fix the judicial system,” Fernandez told Proceso. “If this country continues with a system of corrupt judges and a system of impunity, it will be impossible to fix any problem … and, of course the casino issue is part of this package.”

Nuevo Leon state legislator Hector Gutierrez de la Garza said government policy should be to bring casinos under control, but not entirely eliminate them. He contended that many of the permits issued under Creel do not have transparent ownership, including one license whose owners consist of businesses headquartered in unspecified “tax havens.”

But at least one gaming magnate is practically a household word.

According to Proceso, former Tijuana Mayor Jorge Hank Rhon possesses 149 gaming businesses throughout Mexico. The flamboyant PRI politician was front and center in the Mexican media last month when he was detained twice and then as almost as quickly released from custody.

In the first instance, Hank was arrested by Mexican soldiers at his Tijuana home after more than 70 rifles and pistols were found in the possession of employees or on the businessman’s property. Jorge Hank's son Alejandro disputed the weapons violations charges, accusing the Mexican army of planting guns for picture-taking purposes.

In the second matter, Hank was briefly questioned by the Baja California State Attorney General’s office in relation to the August 2009 murder of Angela Maria Muñoz Cervantes, the girlfriend of Hank’s son Sergio Hank Krauss. Reportedly, a protected witness in the US tied the elder Hank to the crime.

Interviewed on Mexican radio, Maria Elvia Amaya, Hank’s wife, said the murder investigation was an old story that would not implicate her husband.

Coming just weeks prior to the crucial gubernatorial election in the State of Mexico, where Hank originally hails, media speculation was rife about possible political motives behind the detention of a prominent PRI politician at a moment when the party was busy sowing the seeds of victory on its the road to the much-hoped-for reconquest of the Mexican presidency in 2012. Federal Attorney General Marisela Morales denied there was any “witch hunt” underway.

Hank’s detention was initially viewed as a bold move against entrenched corruption, but the state’s sudden reversals left the government with a good smattering of proverbial egg on its face. The day after his release on June 14, an undaunted Hank attended a Tijuana soccer match between the Mexican Sub 22 squad and the Independiente team of Medellin, Colombia.
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Sources: El Diario de Juarez/Proceso, July 9, 2011. Article by J. Cervantes and L. Campos. Frontera.info, June 17, 2011. El Sur/Agencia Reforma, June 14 and 17, 2011. Articles by Benito Jimenez and editorial staff. El Diario de Juarez, June 15, 2011. Co.Terra.com, June 15, 2011. Proceso/Apro, June 7, 2011. Reporte Indigo, September 20, 2009. El Norte (Monterrey), June 27, 2009.