Mexico casino fire spurs corruption probe

Mexico casino fire spurs corruption probe
by Katherine Corcoran and Elliot Spagat


MONTERREY, Mexico - A casino fire that killed 52 people in the northern city of Monterrey last week has put new pressure on the Mexican government to regulate a rapidly growing gambling industry that many believe is vulnerable to corruption, money laundering and extortion.

The state of Nuevo Leon, where Monterrey is located, launched a new offensive Wednesday against casinos as a videotape was released of the brother of the city's mayor taking wads of cash inside an unidentified gambling establishment days before the deadly arson attack.

Mexico's gaming boom has occurred under the administration of President Felipe Calderón, which has led a bloody crackdown on organized crime. The Calderón government says it has not approved a single casino permit since he took office in 2006 and instead blamed judges for issuing injunctions to allow gambling halls to operate outside of local authority.


Since March, a federal judge and a court secretary have come under investigation for their rulings approving casino operations.

London-based researcher Gambling Compliance Ltd. says Mexico may have eclipsed Brazil, Panama and Argentina as Latin America's largest gambling market. Mexico's largest gambling interest, the publicly traded Spanish company Codere S.A., says the boom has outpaced government regulation.

Gambling businesses must report their earnings to Mexico's tax agency, which has had trouble monitoring the income of legal operations, let alone illegal ones.

Nuevo Leon Gov. Rodrigo Medina announced initiatives to ban new betting operations and to better regulate existing ones. He launched a corruption probe into Jonas Larrazabal, brother of Monterrey Mayor Fernando Larrazabal, who was seen on tape visiting casinos and being handed large amounts of money.

The newspaper Reforma, which published the images Wednesday, estimated that one wad of cash passed in a cellphone box was $32,000. Mayor Fernando Larrazabal said that he supports the probe.

At least two proposals to better regulate gambling have been pending for months in Mexico's Congress, one that would create a federal gaming commission, according to a Gambling Compliance report.

Gunmen entered the Casino Royale in Monterrey last Thursday, spread gasoline and set the building on fire, trapping and asphyxiating dozens of gamblers and employees in what's believed to be a case of extortion.

Officials say the five suspects arrested so far confessed to being part of the Zetas drug cartel. Authorities says they are searching for seven others.



Calderon gives state of union address
By Nick Miroff and William Booth

MEXICO CITY — In his annual State of the Union address Friday, Mexican President Felipe Calderon pledged to press the fight against organized crime and police corruption during his final year in office.

But he backed off from branding last week’s casino firebombing in Monterrey an act of drug cartel “terrorism,” after the brother of the city’s mayor and a state policeman were taken into custody in a widening investigation.