Mexico is drawing nearer to the completion of three new casinos as can be seen by a development site in Baja California as well as two others in Tamaulipas on its eastern coast.
Interestingly, as competing initiatives go on the ballot to potentially allow sports betting in California, Mexico has allowed it since 1947. Betting apps have been added over the last several years, so online sports wagering is thriving south of the border.
High hopes are placed on Mexican casinos to boost local economies and draw in more tourists from abroad. Following the COVID-19 pandemic, the Mexican government approved the expansion of gaming rooms in the country. At present, there are 379 physical casinos under 37 permits.
In 2017, Mexico outlawed casinos but lifted that ban a year later. Since then, it’s been playing catch-up in an industry witnessing explosive growth. A total of 850 casinos are permitted under the new law.
Tamaulipas to add 2 casinos
Tamaulipas’ capital, Ciudad Victoria, is poised to get two new casinos. Construction of the facilities is taking place at a rapid pace and is nearly complete.
Several casinos in the northeastern state, particularly in the cities of Matamoros and Reynosa, are already operational following the reversal of the casino ban five years ago.
Right now, 11 casinos are running in Tamaulipas. With the addition of two more, the state will have generated around 3,000 new jobs.
Aside from that, the new casino will provide much-needed tax revenue to the city and state. The amount these casinos would pay in tax revenue would be subject to the tax authorities.
A third gambling establishment will open in Mexicali, the capital of Baja California. An old establishment called La Chinesca in the city’s Chinatown will house the new casino. It was once a favorite of Charlie Chaplin, Rudolph Valentino and Al Capone.
The Chinesca Casino had previously acquired all the licenses and permits it needed to open. On Sept. 2, the casino held its grand opening. Mexicali is a border town not far from San Diego. With a population of more than 1 million (2018), it’s the second largest city in Baja.
Prohibition created border town frenzy
Mexico’s border towns first came to light for the American public during the 1846-1848 Mexican-American War. A more comprehensive understanding came with the 1910-1929 Mexican Revolution. By 1919, on the eve of Prohibition, the towns had become downright popular.
At the time, Mexico, which was still reeling in revolutionary turmoil, sought to find revenue to fund urban development, especially in the sparsely populated northern lands.
Abelardo Rodriguez, Baja California’s territorial governor, incentivized American entrepreneurs to set up shop south of the border. They had been displaced by federal alcohol and state gambling prohibitions.
Tax revenues from these businesses would fund the construction of highways, waterworks and other infrastructure. Attracted by employment opportunities and higher wages, migrants from Mexico’s interior flocked to the border. Tijuana went from a sleepy frontier town of 1,200 people to a city exceeding 12,000 by 1933 when the Volstead Act was lifted.
San Diego built highway to the border
Although the creation of a ‘sin city’ so close to home made many Southern Californian moral reformers nervous, it didn’t take long for San Diego business interests to pave a highway to the border. Pretty soon, Tijuana became a popular destination for thirsty Americans to bypass Prohibition at home.
From 1919 to 1933, alcohol, casinos and horse racing were all prohibited in California, but were easily accessible in Tijuana. As a result, impressive pleasure palaces were constructed, and the city’s legendary Agua Caliente Casino was the crown jewel of the era.
The city that was Vegas before Vegas began to lose its luster by the time Nevada legalized gambling in 1931 and Prohibition ended in 1933.
Turbulence amid casino industry rapid growth
Today, Mexico’s gambling industry continues to expand at an incredible pace; perhaps a little too fast for authorities to keep up with. The industry fell under a shroud of negative reviews after a string of reported clandestine activities.
These peculiar happenings included two of Matamoros’s properties being evacuated after both received bomb threats. Also, casinos in Sonora faced scrutiny for allegedly not paying their fair share of taxes to the government. And finally, there have been accusations of government extortion and illegal surveillance.
To make matters worse, casino revenues dipped for a while. In 2019, lotteries, raffles and gambling generated tax revenue of $168 million in U.S. dollars. In the following year, that figure dropped down to $102 million.
But things are on the rise south of the border. Research and Markets predicts Mexico will see a compound annual growth rate of 23% through 2026.