Decree amending several provisions of the Rulings of the Federal Law on Gambling and Raffles
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On November 16, 2023, the Secretary of the Interior published the "Decree amending several provisions of the Ruling of the Federal Law on Gambling and Raffles" ("Decree") in the Federal Gazette ("DOF"). The Secretary of the Interior mentioned in the regulatory impact assessment1 that the modifications to the Rulings seek to discourage gambling addiction, because this disorder affects several persons and has repercussions or indirect costs to society.
The Decree sets forth several modifications to the Rulings of the Federal Law on Gambling and Raffles ("Rulings"), including new obligations and prohibitions for casinos, betting houses, dog tracks, racecourses, remote betting centers, drawing rooms of numbers or symbols (i.e., bingos), among others ("Betting Centers"). These changes can be summarized as follows:
The Decree provides a rule to ban all the activities that are not expressly mentioned in the Federal Law on Gambling and Raffles. One of the most relevant implications that such a rule brings is the prohibition of "slot machines".2
Under the previous rulings, slot machines were prohibited in connection with betting;3 but the previous rulings did allow the use of similar machines in drawing numbers or symbols games (pursuant to articles 137, 137 Ter and 137 quater of the previous rulings). The Decree eliminates these provisions and bans the use of all types of slot machines. The Decrees also prohibit bets with cards or similar games, as well as craps, roulette and slot machines by distinguishing that such games will no longer be considered as "draws" (sorteos).4
Permits and Operation
The permits granted by the Ministry of Government to carry out gambling games will be limited to a single event or per establishment, so that a permit holder may not operate several establishments under a single permit. In addition, a permit holder will require a new permit when they change the location of the previously authorized establishment.5
The Decree eliminates the definition of "operator" by deleting article 30 of the Rulings. This article allowed permit holders to carry out the activities authorized on their permits jointly with an operator through a joint venture, services agreement, or any other type of agreement.
Likewise, the Rulings provide that permit holders must comply with new requirements that allow the identification of the members or shareholders of the requesting entity to obtain new permits; i.e., (i) name, nationality, address, official identification with photograph, and (ii) the shareholders of the requesting legal person must submit a statement under perjury stating that they have not been prosecuted or convicted for certain crimes (e.g., tax crimes, property crimes, organized crime, among others).6
Permit holders who perform betting activities at racecourses, dog tracks, frontons, remote betting centers and draw rooms for numbers or symbols, together with observing the above obligations and prohibitions, will have to comply with the following additional obligations: (i) to apply for permits related to these particular activities, interested entities will need to provide information of the expected workforce in the Betting Center – which must include the expected number of jobs at the establishment and information on the type of employment relationship and working conditions of the betting center staff –,7 and (ii) keep and update annually the information on the employment relations between the permit holder and the staff in charge of the establishment.8
The Decree also reduces the validity period of permits for Betting Centers from 25 to 15 years9 and finally, in the case of remote betting centers, the Decree extends the minimum period permit holders have to request authorization from the Secretary of the Interior to carry out special or promotional events from 15 to 30 days.10
The rights that the competent authorities will obtain from the activities carried on Betting Centers11 will be determined by the Secretary of the Interior through guidelines.12 The Decree provides 60 business days to the Secretary of the Interior to issue such guidelines.13
The Decree provides that:
i It will enter into force on the day following its publication in the DOF (i.e., November 17, 2023);
ii. From the entry into force of the Decree, the terms and validity of legacy permits will be respected. However, (i) unused legacy permits at the entry into force of the Decree will be void, and (ii) legacy permits that include activities not considered by the Decree, will be respected, provided that they do not exceed the validity of 15 years,14 otherwise, only a validity of fifteen years will be recognized from the publication of the Decree.15
iii. The Secretary of the Interior will have 60 business days to issue the guidelines related to the rights that permit holders will have to pay to the Federal Government, and
iv. All legal, administrative, and regulatory provisions that oppose the Decree will be considered null.
Final considerations and means of defense
The Decree includes excessive provisions that affect the activities carried out by permit holders. Permit holders have solid arguments to challenge the constitutionality of such modifications through a constitutional trial ("juicio de amparo"). To submit a constitutional lawsuit, permit holders could challenge the Decree at two moments: (i) within the next 30 business days after the entry into force date (i.e., self-application norms); or (ii) 15 business days after the notification of an act of the Secretary of the Interior that applies any of the new provisions included in the Decree.
In this case, the Decree can be challenged by permit holders that perceive damage to their interests as a self-application norm through an amparo trial within the next 30 working days from the entry into force of the Decree (i.e., January 2, 2024).
Along with submitting the amparo lawsuit, permit holders could request an injunction against the application of the Decree that could last during the lifetime of the amparo trial. Yet permit holders should consider that District Courts will have to assess the public interest and social order to grant an injunction against the Rulings.
1 Submitted before the National Regulatory Improvement Commission (CONAMER).
2 The Decree provides (article 12, second paragraph) a new definition of "slot machine" as "any device through which the user bets, by inserting cash or any other form of payment to obtain a prize".
3 Article 12, first paragraph of the Decree.
4 Article 91, last paragraph of the Decree.
5 Article 20 of the Decree.
6 Section 21, section IV, paragraphs c) and d), of the Decree.
7 Section 22, section XVII, paragraphs a), b) and c) of the Decree.
8 Section 29, section XIII bis, of the Decree.
9 Section 33, section I, of the Decree.
10 Section 78 of the Decree.
11 Section 3, fraction XV bis, of the Decree defines "participation" as "the right that the permit holder must pay to the federal authority with respect to the gains obtained [in Betting Centers]".
12 Section 8 of the Decree.
13 The Fifth Transitory Article of the Decree; does not clarify whether the 60 working days that the Secretary of the Interior has to issue the guidelines must be computed from its publication or from its entry into force.
14 Provided for in Section 33, section I, of the Decree.
15 See Second Transitional Section of the Decree.
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