Mexico's Televisa plans big expansion into the gaming business

Launched earlier this month, Grupo Televisa SA's gaming business now has 3,500 machines in pharmacies and convenience stores across Mexico and plans to have 10,000 by the end of the year, De Angoitia said.

Customers can buy tickets on one of four games or "multijuegos" for as little as us$ 0.05 and win cash bonanzas of up to us$ 1 million. The results are posted on a website and on Televisa's TV channels.

"Our gaming business is underway," De Angoitia said. "We are very happy with its performance." He did not say, however, how much income it had generated since its launch. Televisa has also opened five bingo parlors and plans to open another 10 by the end of the year, he said.

Mexico's gaming industry has long been dominated by a government-run National Lottery, but analysts believe it has huge private-sector potential. Rogelio Urrutia, an analyst at ING Financial Markets in Mexico City, said he estimates the Mexican gaming market could be worth about us$ 4.6 billion, equal to the country's media advertising market.

Some of that money will be made in off-track betting and other gambling but Urutia predicted the lion's share will be in lotteries and bingo. "Televisa is getting into the most profitable side of gaming. That is where the big money is going to be," Urrutia said.

Investment banks have estimated Televisa could generate revenues of about us$ 200 million from the games this year and more than double that in 2008. The company had total revenues of about us$ 3.45 billion in 2006.

De Angoitia said the gaming investment will be part of a total capital expenditure of about us$ 300 million this year, similar to the us$ 298.5 million it invested in 2006.