Mexico Ordered to Pay $92.7 Million to US Investors Over Casino Closures

An arbitration tribunal has ordered Mexico to pay $92.7 million to a group of 39 American investors. This decision stems from the 2014 revocation of permits to operate five casinos.

The tribunal, in a two-to-one vote, found that the Mexican federal government, specifically the Secretaría de Gobernación (Interior Ministry), violated the investors’ right to fair and equitable treatment. This right is protected under the rules of the North American Free Trade Agreement (NAFTA).

The case, known as B-Mex LLC v. Mexico, has been in litigation since 2016. The arbitration award was issued on June 21st but only recently published this week by the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

The plaintiffs initially sought $152.4 million in compensation for the casino closures in Naucalpan, Villahermosa, Mexico City, and Cuernavaca. The Mexican government argued that the lost business was worth, at most, $11.8 million.

The arbitrators awarded $80.8 million for this loss. The casinos operated under the business name Juegos de Video y Entretenimiento. The Segob closed them due to issues inherited from the company Entretenimiento de México.

The Director General of Games and Sweepstakes at Segob at the time was Marcela González Salas, a politician affiliated with the Institutional Revolutionary Party (PRI), who passed away in 2023.

The arbitration award also requires Mexico to pay $4.5 million for the unexercised rights to open two additional casinos and an online casino. This is significantly less than the $15.5 million sought by the claimants. An additional $7.5 million was awarded for legal fees and arbitration costs.

The final payment amount could exceed $100 million due to the inclusion of interest at a rate of 4.57 percent per year, accrued over the past decade.

To defend against this case, the Secretaría de Economía (Economy Ministry) spent $2.7 million on lawyers, travel expenses, and expert fees.

Arbitrator Raúl Vinuesa, of Argentine and Spanish nationality, dissented, arguing that the plaintiffs failed to prove inequitable treatment or any political motivation on the part of Segob.