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Fire crews had to free dozens of people trapped by smoke and flames.
Officials suspect organised crime was behind the attack, one of the deadliest since President Felipe Calderon launched his crackdown on the cartels in December 2006.
In a tweet, Mr Calderon said the attack was "an abhorrent act of terror and barbarism" that requires "all of us to persevere in the fight against these unscrupulous criminal bands."
State police officials quoted survivors as saying gunmen had burst into the premises and tried to rob it, before emptying fuel from tanks they had brought with them, AP news agency reported.
Officials said those inside had hidden in toilets and offices when they heard explosions instead of trying to get out and had suffocated as smoke engulfed the building. Some reports suggest the emergency doors of the premises had been locked.
TV images showed relatives outside the casino demanding information about their loved ones.
"My wife came here for a celebration... she was having dinner with her friends," one man told Milenio TV as wept, Reuters reported.
State Attorney General Leon Adrian de la Garza said a drug cartel was believed to be responsible for the attack and warned that more bodies may be found.
Home to some of Mexico's largest companies, Monterrey and the state of Nuevo Leon have seen rising violence as the Zetas and Gulf cartels vie for for control of trafficking routes to the US.
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