Reporting on the Mexican Cartel Drug War

Arson Attack on Monterrey Casino Part of Battle over Gambling Industry

Saturday, August 27, 2011 |

Written by Steven Dudley

Buried in President Calderon's speech on a Monterrey arson attack which left more than 50 dead was the key to why it happened: the rise of illegal gambling establishments in Mexico under his watch, and the emerging battle in the underworld for control of these money-laundering havens.

In the middle of the afternoon on August 25 a group of armed men entered the Casino Royale in Monterrey, north Mexico. They poured gasoline around the building and set it alight, killing at least 52 people.

President Felipe Calderon rushed to condemn the killings, spending most of a 20-minute speech admonishing the "terrorists" for their barbarity and the United States for its consumption of illegal drugs, before hastily adding a single phrase which cuts to the heart of the matter -- the struggle for control of illegal gambling houses. (See 10-minute mark of video below.)

"I specifically ask the [judiciary] to review the legal decisions that have been taken, which allow the operation of many of these types of ... hidden transfer houses that criminals use in various parts of the country," the president said.

According to a recent article in Proceso magazine, the number of illegal gambling houses has risen from 198 to 790 since Calderon took office nearly five years ago. Many of these are illegal, the article adds.

An internal government report obtained by Proceso says that 140 of these businesses are unlicensed. This number fell from 185, in part, the magazine says, because illegal establishments were absorbed by legal establishments.

At the epicenter of this rise in gambling houses is the state of Nuevo Leon, of which Monterrey is the capital. Another excellent overview of the rise of these casinos from the Frontera Norte/Sur news desk (via Borderland Beat) said the number of casinos in the state increased from five to 57 in the last 11 years, adding that 31 are illegal.

Of these underground establishments, 12 are in Monterrey, according to a report by Mexico's ReporteIndigo. One of these was Casino Royale, a separate ReporteIndigo report says.

Aside from the uptick in phenomena that often accompany gambling, such as prostitution and gambling addiction (which Proceso chronicles in another excellent article), there are obvious connections to organized crime.

The United States government estimates that Mexico's criminal groups launder between $19 and $29 billion in proceeds from sales (Mexico's estimates are about half this). The money is laundered through numerous channels such as real estate, hotels, agricultural goods, transport companies, mineral trade, etc.

Heavily cash-driven establishments such as casinos have also traditionally attracted organized criminal groups. But casinos are technically illegal in Mexico, so the establishments themselves seek to have their games categorized as "skill" rather than "chance," thereby sidestepping the legislation, and leading to a proliferation of casinos posing as "foreign books" and "bingos," according to a 2009 report by the International Monetary Fund on money laundering in Mexico (download pdf file here).

What's more, the IMF says that authorities give out about five temporary permits per year for "fairs" and other local events. However, these "temporary" licenses have turned out to be more permanent in recent years, especially as their importance in money laundering schemes appears to be rising.

The result is rising tension in the underworld over who controls this lucrative and important business. This explanation of the Monterrey casino attack has been buried under other news narratives, namely the fight between the Gulf Cartel and their former armed wing, the Zetas.

In this fight, the Zetas are depicted as ruthless and incoherent. This week's events were no different. The gang was blamed for the deaths at Casino Royale. The motive, according to preliminary reports, was that the casino refused to pay its "quota," or extortion payment.

But there is something illogical about this argument. Criminal groups, while increasingly irrational and fragmented organizations, do not want to eliminate potential business opportunities, even those who are delinquent on their payments. They also do not routinely kill dozens of people in order to send a "message" about a relatively low rent activity, such as extortion.

They do, however, want to injure their enemies' businesses. Indeed, the first shots in this fight may have been fired two years ago, when assassins gunned down Rogelio Garza Cantu, alias "El Diablo," a prominent Monterrey nightclub owner, allegedly for failing to pay his quota to the Gulf Cartel.

Frontera Norte/Sur, however, says Garza was also part of the casino business. Just who his partners were in this business is not known, but the report adds that the current violence in the city may be the result of a battle between "casino mafias."

The evidence for this war is compelling and speaks to a problem that goes way beyond extortion payments. On May 25, four casinos in Monterrey were attacked and robbed simultaneously, signalling a fairly sophisticated operation.

The attack at the Casino Royale was also a sophisticated effort aimed at maximum destruction. As the video released by the Nuevo Leon government shows, the eight to 10 men involved were in and out of the place in less than three minutes.

The battle over the gambling business may be spreading to other areas as well. On August 15, a casino in Saltillo, Coahuila, was attacked by armed men. No casualties were reported.

None of this appears in Calderon's speech. Instead the president's focus is narrow in scope and decidedly lacking in retrospection about his own government's part in laying the groundwork for this tragedy.

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8 Borderland Beat Comments:

Anonymous said...

that fat cat Hank Rhon from Tijuana is the head of this hydra. he was the most corrupt mayor in a long time. i loved it when he got all cry-baby when arrested for illegal arms. what a cabron. now, after one term PAN mayor Ramos, tijuana has elected another fat cat PRIista for its current mayor. stupid.

Anonymous said...

One things only, open season on these bastards...

"L"B said...

"But there is something illogical about this argument. Criminal groups, while increasingly irrational and fragmented organizations, do not want to eliminate potential business opportunities, even those who are delinquent on their payments. They also do not routinely kill dozens of people in order to send a "message" about a relatively low rent activity, such as extortion."

REALLY???...so it has never been the policy of extortionists to burn down a place because the owners didn't pay? ...

i disagree..it is standard operating procedure ..to encourage the recalcitrant owners to paying up on time next time

low rent activity such as extortion..low rent...REALLY..

protection/extortion rackets in conjunction with gambling and prostitution form the basis of just about all professional criminal organizations..ever heard of Las Vegas?..


The attack at the Casino Royale was also a sophisticated effort aimed at maximum destruction. As the video released by the Nuevo Leon government shows, the eight to 10 men involved were in and out of the place in less than three minutes.

sophisticated?..REALLY?..gasolene and matches in broad daylight is not what you could really call "sophisticated"

i think you are looking for the word BRAZEN instead

sorry to pick at your article there Steven..but it is full of holes ...

anybody knows protection/extortion is the biggest racket there is ..if you get big enough... you get a flag ..your own country ..your "crew" is called an army..and then the mordida is called taxes...the jefe de jefes .is called president ..king ..prime minister...

drug dealers ARE the "low rent" dirty hands /dirty business guys... usually working for the top guys..just like the cartels work for the Mexican and US governments


i don't think the author of this article has ever been around any crooks

Anonymous said...

It was sophisticated. That was a large casino. Slam full of video machines. Many isles made by the way the staged the machines on the floor. It seems they knew the layout. Each man probably had a lane to follow with his gas can and they met at a predetermined point for ignition. Throwing gas here and there would burn some shit up but not completely torch the place like this one did. The whole place was engulfed and burning uncontrollably within a minute or two. This was well planned out regardless of the crude method used. One of the things I was impressed with was the use of the natural smoke screen they created as they exited. I am sure it was not planned because the wind could have been from a different direction but it worked effectively. Brito can call it brazen and critique it as not being sophisticated but it was a well thought out attack. Crude, inexpensive, and effective. Don't get me wrong, I do not support or condone this by any means. I am only saying that to claim the attack was not sophisticated only because they used gas and matched is wrong. 10 dollars of gas and some free matches found in any bar and they took down millions in revenue. Thats pretty good economics any way you look at it. If it is economically sound as a decision, then there must be some sort of sophistication to it. I could drink Don Perignon and piss on your shoes. Does the champagne make the piss more sophisticated?

Anonymous said...

Researched, referenced and logical. Sorry, "L"B, but this article has depth and it does make sense. But - it doesn't necessarily tell the whole story behind this particular incident.

"L"B said...

sorry guys..i just disagree..

to me sophisticated is catching the place empty...sabotaging the electrical system.., or something else that would leave the source of the fire a mystery..except for the vital clue necessary to use to prove culpability when contacting the owner to make more demands...

and also .killing 52 people ..drawing heat and the attention of the whole country ..bring the anger down ...is not my definition of sophisticated..crude and heartless yes ...sophisticated no


no ..sophistication would be pissing IN my shoes when i was not looking..leaving the source forever a mystery.....jajajjaa

Anonymous said...

Why does a poor degraded country like Mexico need GAMBLING????

Anonymous said...

Texcoco Mex said

5 people involved on the casino attack were arrested

Carrazco Lucio Carlos Espinoza, alias "El Chigua", 25, Javier Alonso Morales Martínez, alias "El Javo", 37, Jonathan Jahir Reyna Gutierrez , 18, Juan Angel Flores Leal, alias "The Fields", 20, and Julio Tadeo Berrones, alias "El Julio Reyes' 28.

At the press conference, the Attorney Adrian de la Garza, presented a video which shows the group of people getting gasoline in fuel containers at a gas station minutes before perpetrating the attack.

It also appears that the Equinox gray van seen in the video of the attack was found.

The recording also showed that the group of vehicles, including a Minicooper and Optra, move through Gonzalitos Avenue, heading to the casino.

The president said the motive for the attack would have been to pressed the establishment to pay a fee, which is known as derecho the piso or tax.

Presumably there was a disagreement with the owners and thats why it was attacked, but this is still under investigation, said Medina.

He said that apparently the attack was against the business and not against the population, but the criminals were out of control.

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