In the Houston area alone, there are at least 19 poker rooms open, that KHOU.com analysis showed. MAP: Poker rooms in Texas The clubs cite a gray area in state law that allow them to operate. The Post Oak Poker Club is a legal, casino-style establishment that just opened in Houston. Courtesy Show More Show Less A new private, legal gambling poker club is now open in the Galleria area. On the morning of Wednesday, May 1, 2019, police raided the Post Oak Poker Club and Prime Social Poker Roomin Houston, Texas. These two establishments are poker rooms that use a membership-based model to get around Texas' strict anti-gambling laws. Nine people involved with running these facilities were arrested on money laundering charges.
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Houston Poker Club. SUN — WED from Noon to 2:00AM. THU — SAT from Noon to 4:00AM. Location 11460 Fuqua Street #300 Houston, TX. North Texas poker clubs gambling that state law, police won't make them fold Gambling is illegal in Texas. But private clubs are relying on the section of state law that offers a defense to.
Playing poker for fun dates back to ages ago when playing cards were first invented. As the second largest state in the US by both area and population, Texas has continued to register a high growth in the number of poker rooms to accommodate growing interest in poker.
The popularity of poker rooms in Texas, however, has not been without challenges considering that Texas has strict anti-gambling laws. This puts many poker room operators at a risk of finding themselves on the wrong side of the law, even without realizing it.
If you own and/or operate a poker room in Texas, you may have questions about the legal aspects of such businesses. If you’re thinking of opening a game room and have questions about Texas gambling laws for your game room, this post addresses these legalities.
Poker Rooms in Texas
The state of Texas allows some forms of gambling such as buying lottery tickets and betting on horse and dog races. Bingo and gambling for charity are allowed, as long as the organizers of such events do not profit from them. When it comes to card rooms, the law clearly states that:
- Poker is illegal in a public facility, which is why the card rooms should operate inside private clubs. Public places include but are not limited to hospitals, schools, streets, highways, nightclubs, shops, office buildings hotels, motels and shared areas of apartment buildings.
- No one should receive an economic benefit aside from their personal winnings. This also penalizes the act of bookmaking and/or betting on the outcome of a game, contest or on the performance of individual players.
- Except for the advantages of skills or luck of the players, all the participants should have the same chances of winning and the risk of losing.
It is illegal to possess and use information that gives you an unfair advantage on the outcome of a game or contest. Making use of illegal gambling devices is also strictly prohibited.
How do Texas Poker Rooms Make Money?
It is clear that the law forbids operators from making a profit from gambling. However, some Texan gamblers, eager to indulge in their passion without worrying about legal consequences, have come up with ingenious ways of earning income such as:
- Charging players membership fees to enter the premises. Becoming a member can be as easy as allowing the club to swipe your driving license. Some poker rooms also offer flexible membership models such as a $10 daily membership fee.
These methods, while not explicitly illegal, might cause trouble for game room operators in the future. One could argue that the card rooms are receiving economic benefits from the gambling activities they host, hence breaking the law.
Penalties of Illegal Gambling in Texas
The Texas Penal Code specifically makes it illegal to bet even a few dollars on a hand of poker. This is enough to lead to criminal charges, especially if that action is conducted in a public place. Section 47.02 of the Texas Penal Code makes this a Class C crime which is punishable by:
- Fines. Misdemeanor fines for illegal poker rooms in Texas range from a few hundred dollars up to $500. Note that fines can be separate or in addition to community services and probation.
- Community service and probation. Courts can also impose community service and probation for gambling convictions. The probation period can last up to 12 months or more.
If an operator conducts organized or professional gambling that promotes players to enter competitions in card rooms instead of simply playing in them, the penalties can be significantly increased. Section 47.03 of the penal code prohibits promoting or operating a gambling place. In addition, Section 47.04 makes it illegal to keep a location intended for public gambling use. These offenses are Class A and are punishable by:
- Jail or prison. Anyone convicted of these gambling offences can face up to one year in a county jail.
- Fines. The court can impose a fine of up to $4000 for misdemeanor gambling.
Sometimes, if a person is operating a poker room in public, he/she may lose their business license and be denied any future credentials to operate in the states of Texas.
Understanding Texas Poker Room Gambling Laws
It is important for one to understand how gambling laws work if they plan on operating a poker club. Both newcomers and industry veterans need help in the interpretation of the law, as legal aspects of a business can be both confusing and frustrating.
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Recently, more established poker clubs with bigger financial muscles have gone to court in an effort to seek a legal interpretation of exactly what is legal and what is not. One cannot plead ignorance in a court of law, so it is in their best interests to try as much as possible to understand the law.
Laws also keep changing with the times, so even the most informed poker room owner might find himself ambushed by a clause he didn’t know existed.
To that end, hiring a competent criminal lawyer with a thorough grasp of gambling laws comes in handy. A good attorney not only provides advice regarding current industry requirements but also keeps the client in the loop regarding upcoming changes in the law that might impact his or her business.
Consult With a Houston Game Room Attorney
Houston Area Poker Clubs
The Law Office of Matthew D. Sharp provides the best advice to those interested in or are already running poker rooms. All legal aspects of the business are discussed with the client, with the view of providing guidance on the best course to take.
With our years of experience in the industry, we provide not only historical background, but also future trends in lawmaking that might affect the client’s poker room. We invite all game room owners to call us and share their experiences and legal needs with us.
ByThe saga of Texas poker clubs has turned another page and taken the story in a new direction.
When two prominent Houston poker rooms – Prime Social Poker Club and Post Oak Poker Club – were raided on May 1, it looked as if the longtime skirting of poker laws in Texas was over. But that was far from the end of the story.
In fact, all charges were dropped against the nine club executives in July. All cash seized was returned.
It wasn’t a change of heart by the District Attorney, though. It was a conflict of interest as the DA found out about ties between her office and a consultant. The case was not only dropped, but the poker clubs were eying litigation.
That new case has now been filed. Prime Social is suing a Houston law firm for gross negligence.
Catching Up
When the raids happened on May 1, the Harris County District Attorney’s office and Houston Police Department worked together to arrest nine club owners and managers, freeze company bank accounts, and seize bank balances.
“Poker rooms are illegal in the state of Texas,” DA Kim Ogg said.
As a result, she charged the nine people with a range of crimes, including felony money laundering and engagement in organized crime.
#BREAKING Heavy police presence at Prime Social poker room in southwest Houstonhttps://t.co/FGB1w0ho5t
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— ABC13 Houston (@abc13houston) May 1, 2019
Many thought it spelled absolute doom for poker clubs in Texas, but the DA suddenly had a change of heart. She dropped all charges on July 16 and returned more than $200K in seized funds.
Ogg’s office cited “multiple potential conflicts of interest” in her office, as one was former contract employee but also a potential defense witness. That put the situation in the hands of the FBI.
Meanwhile, Prime Social Club Attorney Wayne Dolcefino expressed outrage at the entire situation. More than 100 employees lost their jobs. The clubs were unable to make money during the shutdowns.
Further, it turned out that a consultant named Amir Mireskandari had approached both poker club operators during the two-year investigation and offered to help legitimize their clubs under Texas law through legislation, permits, and legal assistance. The cost was $250K, some of which Prime Social paid. Post Oak did not.
Mireskandari, it seems, also worked for the Harris County DA’s office, assisting in the investigation of those exact poker rooms.
The entire situation became complicated and began to look bad for the DA. The poker clubs, on the other hand, became the victims in the eyes of the law.
NEW: Representative for Prime Social releases statement after County Attorney drops nuisance lawsuit, calling lawsuit 'a joke in the first place.' Statement also says company is working to rehire employees and open back up. LATEST ON DROPPED SUIT: https://t.co/m7ih5AcJc8@KPRC2pic.twitter.com/dOHEiu7UIP
— Aaron Wische (@KPRC2Aaron) August 8, 2019
Lawsuit Filed
This week, Prime Social’s parent company, Bayou Social Club, filed its lawsuit against Jones Walker LLP, a Houston-based law firm.
Prime Social had hired the firm, which advertised representation with gaming law experts, to work with city officials to pass a new Houston ordinance to formally recognize private poker clubs as legitimate businesses.
Jimmy Ardoin, an attorney with Jones Walker, allegedly told Prime Social that it needed to pay $250K to an investigator to begin building the case for the ordinance. That investigator, presumed to be the aforementioned Amir Mireskandari, was the one also working with the District Attorney.
Prime Social began to make payments, referred to in the court document as “significant sums,” to cover the license fee under the new ordinance and Jones Walker’s representation throughout the process. But when Prime Social figured out there was no ordinance being considered, they stopped payments and terminated the relationship with Jones Walker. Soon after, the raid took place.
The charges against Jones Walker are misrepresentation, negligence, and breach of fiduciary duty.
Houston's Prime Social poker club sues Jones Walker, the law firm the club retained after it claimed to be working on an 'anticipated' legalization ordinance in the Texas city. Oddly, the word 'shysters' does not appear in the complaint. https://t.co/ncqvrBiXRQ
— Haley Hintze (@Haley_Hintze) September 5, 2019
The lawsuit seeks “monetary relief over $1,000,000” for actual damages, punitive and/or exemplary damages, pre-judgment and post—judgment interest, and legal costs.
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The Hudgins Law Firm is representing Prime Social in the case. Wayne Dolcefino, a current consultant representing Prime Social, has been outspoken on behalf of the club throughout its ordeal. It even put out this video to explain what happened:
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Selective Prosecutions
Channel 2 in Houston pointed out that more than a dozen poker clubs have operated and continue to do so throughout the duration of the Prime Social and Post Oak ordeals. Those were the only two clubs raided – they appear to be the largest of the poker clubs in the Houston area – while all others have been untouched by the law.
The Houston Police Department and Harris County DA’s Office both declined to answer questions about the seemingly selective prosecutions.
It boils down to the interpretation of the law by each city or town in Texas, but if Harris County is going to target two clubs, there is no reason to leave the others alone.
Texas State Senator Paul Bettencourt pointed out that there is a significant “gray area” in the law regarding gambling. Traditional poker in casinos may be illegal, but the activities inside of a private, membership-only club is different. There is no rake taken from the games. Thus, there is no economic benefit from the actual poker games other than personal winnings. The club’s revenue does not depend on the games themselves but on membership, as well as food and drink sales.
Bettencourt believes the courts may deliver a ruling in one of several pending cases that could dictate the letter of the law. If not, he said he wants the legislature to look at the issue.
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Prime Social Open Again
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As of Thursday, September 5, Prime Social is open again. The grand reopening welcomed players back more than four months after the raid.
The club has a new Twitter account that does not mention poker but certainly promotes it.
We're hosting our first tournament since our grand reopening Sunday, September 8! Come out, have some fun, and win big!
-$10k gtd
-20 minute levels
-30k Starting Stack
-5k Early Bird Bonus
-5k Staff Bonus pic.twitter.com/z6vOmdJnFJ
— Prime Social (@PrimeSocialTX) September 6, 2019
The website still calls Prime Social “Houston’s Best Poker Room.” And it lists the tournaments, cash game availability, and specials for veterans and seniors.
As for Post Oak Poker Club, it appears that it will not reopen.
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