I Nelson Rose: Texas’s Poker Clubs Are in Trouble

The first poker club in Texas apparently got off the ground in 2015 and its been a pretty huge, albeit somewhat unknown, industry ever since.

The clubs charge for memberships.  Players also have to pay to rent their seats during games, generally around an additional $10-$15 per hour just to play.  Because they do not take a rake, club owners believe the establishments are legal.

Noted gaming attorney I. Nelson Rose doesn't believe it is that simple.

He writes this week: Perhaps someone should have reminded everyone involved that Texas has a lot of anti-gambling laws.  They include the crimes of “Gambling,” “Gambling Promotion,” and “Keeping a Gambling Place.” 

Rose quipped: "I don’t know the name of the lawyer who dreamed up the idea of playing poker as a private social club.  But I would love to see his or her Legal Opinion." 

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The Texas Card House in Dallas just found out its certificate of occupancy was being revoked.

"I think the poker clubs have some severe legal problems," Rose says.  "Arguing that poker, especially poker tournaments, are games of skill that won’t work in Texas.  “Gambling” is defined as playing or betting for money, “at any game played with cards.”

A person commits the crime of Gambling Promotion,” “if he intentionally or knowingly operates or participates in the earnings of a gambling place.”  And “Keeping a Gambling Place” is a separate crime. 

The clubs believe they are legal because they don’t rake the pots and are not open to the public.  

Rose says that is only a defense if the operator can prove all of the following:

(1) the gambling occurred in a private place;

(2) no person received any economic benefit other than personal winnings; and

(3) except for the advantage of skill or luck, the risks of losing and the chances of winning were the same for all participants.

"The bigger problem may be the 'no economic benefit' requirement," Rose claims.  "Eliminating the rake does prevent the game from being a “percentage game.”  But it does not prevent the club owners from receiving an economic benefit from the gambling, especially when they charge seat rentals only to players.  SA Card House of San Antonio even eliminated that distinction by taking a cut of tournament entry fees."

And while poker-related crimes are considered mere misdemeanors, there are instances where they can become federal crimes, courtesy of The Illegal Gambling Business Act ("IGBA").  

That's when five or more people make more than $2,000 in business a day in violation of state gambling laws.

- Ace King, Gambling911.com