GAMING PERMITS:
Mexico’s Federal Government gaming permits cover a variety of legal wagering activities such as horse and dog racing, Jai Alai games, live bingo, video machine gaming, sports books and all sports internet wagering web sites. Original issued permits have a life of 25 years which can be renewed. Mexico's laws are specific as to ownership of the permits, they are not transferable.
However, an existing gaming corporation can be sold; this requires a 100% sale of the company’s assets for the permit to legally change ownership. This type of total asset sale of a gaming corporation is the only way to acquire complete control of the company and the primary asset which is the gaming permit.
Another ownership option is investing in an existing gaming corporation, if the owners are open to investment partners. In this type of investment one would receive stock or interest in the gaming corporation. Other opportunities exist when gaming operation contracts can be negotiated with an the gaming corporation. This agreement is where a contracted management company operates a gaming business location or locations under the gaming corporation’s permit.
Presently PLAYMEX is offering a limited number of single and multi-location gaming corporations For Sale as well as Joint Venture and Contract Management opportunities for experience gaming operators. Purchasing 100% of the Mexican gaming corporations are available to qualified investors.
Potential buyers must provide a LOI and POF to be considered. Once those standard business formalities are met then confidential company information is provided. Should the potential investor wish to move forward with the purchase, a deposit of 10% is required and placed in an attorney escrow account. At that point the transaction would be under contract at the agreed sale price and can close in as little as 30 to 90 days depending on the complexity of the transaction involved.
FAQ
Q1. I thought casinos were illegal in Mexico?
A1. Casino gaming was banned by reformist Mexican President Manual Cardines in 1938; however, several other forms of gambling remained legal. Legalize gaming was reinstated back into Mexico’s laws in 1947. Those regulations and newer ones now in place make only certain forms of gambling games illegal. At this point not really the games themselves but the devices used to deliver the games.
The primary case example is a playing deck of paper cards which are called gaming devices, they are forbidden! Another illegal gaming device is a mechanical roulette wheel. Therefore all gambling games played with a deck of paper cards or uses a mechanical wheel is illegal.
However, with the governments newly authorized Class III machine up grade all major casino games are legal when delivered by video gaming machines. When using virtual electronic images of cards and other game symbols the forbidden paper gaming devices are replaced and all is deemed legal.
Q2. The price quoted for a single location permit in addition to legal fees is $2.5M_USD, what exactly does that get you?
A2. The Federal Government permits to operate a gaming business in a single location. With it you can operate live bingo games, all major casino games that are presented with virtual electronic images delivered by video gaming machines. Casino games like bingo, keno, slots, 21, poker, roulette and baccarat are all permitted under the new Class III machine authorization.
The same permit includes a sports book, allows for satellite sports simulcasts and one Internet all sports book wagering web site. Live spectator sports permits are similar in price that offer Jai Alai games, horse and dog racing. These permits are optional and can be installed in a single location gaming permit.
Q3. What kind of money can be made in the gaming business?
A3.
1000 machines x $100 gross win x 1 location x 365 days = $36,000,000 gross
1000 machines x $150 gross win x 5 locations x 365 days = $273,750,000 gross
1000 machines x $200 gross win x 15 locations x 365 days = $1,095,000,000 gross
The projection above is just for stand alone machine not including any other games or sports book profits.
With the Mexican Government’s recent legalization of Class III random number generated machine games clears the way for stand alone multi-game video machines and multi-player table game machines. All major casino games are now legal in the jurisdiction slots, 21, poker, baccarat, roulette keno, and bingo. Therefore any total profit projection would be more than the numbers above many other gaming revenue streams are not included. However, stand alone slot games are KING they by far generate more money than any other game in the business.
Because of the delivery in virtual electronic images and not with a traditional deck of paper cards the wagering entertainment has expanded dramatically. Paper cards are forbidden as well as mechanical wheel games such as roulette. This important step up from the previous Class II bingo environment opens gaming machine manufacturer’s extensive game libraries; the result escalates the entertainment factor for player to the limit; providing all their favorite games!
Q4. Does it cover equipment and is it a franchise?
A4. One would think this would be a simple yes or no answer, however, it’s not, there are variables involved.
Each gaming corporation’s sale is different depending on what stage the gaming corporation is in regarding operations. In some cases the gaming corporations might have operating locations in which machines are in place and in others they are non-operational and no gaming activity or revenues are involved.
In an active gaming corporation one or more locations may have a substantial income from their gaming activities attached as well as other profits generating from the business. The permits authorize in addition to gaming machines, live bingo, sports books and Internet sports book. The transaction may involve Food & beverage and hospitality incomes as well. That sale price will be quite different from a non-operational single $2.5M_USD permit.
The primary business model used in Mexico for video gaming machines and other gaming related software and hardware is they are leased or placed by the manufacturer on location with a participation of profits agreement attached. This agreement could be with the gaming company who are the permit owners or with a contracted management company operating the casino. The new owner may be obligated to carryover that contract or may be able to renegotiate or engage another manufacturer or manufacturer’s equipment.
When permit locations are operational, in most cases you would have the option to keep the name and any good will developed by the previous owner of the business in the sale, all which is negotiable. Or as the new owner can change names, locations or business model and franchise if it’s a multi-location permit.
If an investor purchases a non-operational multiple location permit package they could pursue a franchise business model and offer individual location casino operations as a branded franchise.
The bottom line in this business is to engage wagering entertainment anywhere in the world one must have a government permit or permits. In Mexico to operate in multiple locations one permit can cover a number of different locations. However, the number of locations is defined on one permit as well as any of the other gaming authorizations.
As mentioned gaming equipment is normally obtained from various machine manufactures on a lease or participation of profit basis. The manufacturers supply the equipment and receive a negotiated percentage of the profits for doing that. This cuts the capital equipment start up costs for the business substantially.
State of the art computer server systems that contain the game wagering entertainment library as well as all the necessary accounting software is required to operate a gaming business in Mexico. It’s utilized to transmit game content to the display terminals / slot machines the players use to place bets.
The cost of the system runs in the area of $15,000 per terminal to buy outright. When investing in hundreds or thousands of terminals it adds up to a major investment. Normally startup operations engage in lease or participation deals with the manufacturers reducing that multimillion dollar equipment expenditure substantially. This is done simply by negotiating a percentage of the net win to the manufacturer.
Q5. Are permits guaranteed to operate?
A5. It’s a Federal Government registered permit that has no restrictions on the location or the number of machines you want to operate. Pay your taxes and you can operate all you want. If you don’t pay your taxes you will have the Mexican IRS at your door step. They know exactly what you owe them in real time; it’s built into the accounting software of the gaming machine server operating systems.
Q6. Are there casino competitors?
A6. Yes, there are store front type operations throughout Mexico. Their marketing model targets primarily to the Mexican National population. Live bingo games, 300 to 400 video gaming machines and a sports book is the normal offering in this type of operation.
None or very few at this point operate out of high end hotels that we know of. Stand alone big Las Vegas style casinos is another option that is has not been exploited as well. With this kind of business model like with most location, location, location is the name of the game. The ideal would be to have a high end location that allows the owner to service the tourists and locals alike in a popular tourist city local.
Q7. Can permits be obtained from other companies and is the price you’re offering completive.
A7. Yes and no, most are not for sale and prices are all over the map with up front and back end royalty or management contracts attached to every deal we know of. Some of our gaming clients have these offers; we offer investment in existing corporations, JV’s, and operational contracts as well as the outright sales.
Depending on you resources and experience it’s really best to buy if your have the opportunity to do so, we offer that opportunity. In our opinion we offer outstanding gaming business opportunities, perhaps one of the best gaming permit opportunities in the world; however, they are limited!
The outright sale is for a Mexican Gaming Corporation that includes 100% of its assets. Therefore ownership belongs 100% to the buyer of the company whatever those assets may be. That’s the only way under Mexican law that the gaming permit assets can transfer ownership.
There is no back end royalty or management requirement by our company in an outright sale. The buyer does not give up a percentage of the business for the privilege of doing business with us. It’s a cash deal period. We can provide expert management services; however, it’s not mandatory.
Q8. Do we have to buy an expensive hotel from you?
Using that kind of space for a gaming entertainment application would return the hotel owner a substantially higher ROI than any other kind of rental they were originally built for. In addition to the space rental the gaming entertainment would generate revenue to restaurants and bars the hotel operation owns, not the gaming business.
With this type of business model you lease space in 5 star locations. If you like the 5 star model you can ask the hotel owners if they are open to this kind of business. They may well offer to be your partner as the permit owner you have that option.
Existing commercial space in resort cities can be purchased or leased then refitted into mini-casinos. Shopping center locations, existing bar, restaurant and night club facilities can be redesigned and developed into highly profitable gaming enterprises. Another option would be if suitable land is available then you could develop a stand alone casino or mega hotel resort casino of any size.
Large Mexican gaming companies that own most of the store front casinos do not sell their licenses they are simply to valuable. They sell stock or contact operations to experienced gaming companies and do very well with the back end royalty income. Permits are not readily available to most people that may want to enter the gaming business. In a nut shell you need to know someone in the business, PLAYMEX is that someone.
Should anyone have questions that are not covered in FAQ contact us.
The saying in the gaming business is if you don’t play you can’t win. In
Best of Luck
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