Texas Poker Clubs Facing Some Obstacles, Scrutiny as City of Dallas Revokes Permits

February 14, 2022
Texas Poker Clubs Facing Some Obstacles, Scrutiny as City of Dallas Revokes Permits

The growth and popularity of poker clubs in Texas may be hitting some roadblocks. The City of Dallas has revoked permits for some of the establishments over the last few weeks.

One of those was Texas Card House, which also operates clubs in Houston, Austin, and the Rio Grande Valley. The move comes after Texas Card House owners worked with city leaders in 2020 to ensure the club met city regulations.

The club was eventually approved for a permit to operate in a strip mall center. But the city now appears to be reneging on that agreement and charged the club with “keeping a gambling place.”

“We spent about two and a half years trying to find a location that we could open that the city approved of,” company CEO Ryan Crow told CBSDFW.com.

Poker clubs have flourished in the state over the last few years, but now face some headwinds. The revocations also bring up questions about whether they technically meet state laws.

How do Texas poker clubs operate?

While Texas Hold’em may be the most popular form of poker, casinos and card rooms aren’t officially legal. Home games are legal, but no establishment can officially take a rake from a pot or a tournament fee.

Instead, poker rooms operate as social clubs or country clubs. They charge players an hourly seat fee, dues, or some other form of payment that isn’t officially based on taking a rake from each pot.

Players pay their fees and simply play poker rather than golf, tennis, or some other sport. Proponents argue that this keeps the clubs within state law.

That notion hasn’t faced much legal scrutiny, but with the Dallas moves that may be changing. Poker clubs initially were mostly located in South Texas from Austin to San Antonio to Houston.

However, they’ve also now spread to Dallas-Fort Worth in recent years. The actions by the City of Dallas may have some concerned about the game’s future in the Lone State State. 

For Crow and Texas Card House, closing down operations would be costly. Owners spent considerable money to create a nice room for the market. If the club closes more than 200 employees would lose their jobs and players would lose a safe alternative to underground rooms around the city.

“Unfortunately our city attorney has decided to change the idea of what he believes constitutes card rules according to the law,” City Councilman Omar Narvaez told CBSDFW.

Texas Card House is appealing the ruling by City of Dallas officials.

A growing market

Numerous poker clubs have popped up throughout Texas in recent years. The state offers a massive market for poker operators. Many properties now offer regular cash games and tournaments.

That includes major guarantees and even streamed cash games. Some mid-circuit tours have even made stops in the state. Some rooms openly advertise on sports radio stations and in other media.

Recently, several big names in the poker world have added their names to the club ownership ranks. Mike Matusow and Doug Polk have taken stakes in Texas poker rooms.

Polk owns a stake in the Lodge Poker Club in Austin, along with Brad Owen and Andrew Neeme. Matusow recently announced his own entry into the market with Poker House of Dallas.

Johnny Chan also owned a Houston-area club called Johnny Chan’s 88 Social. That property closed in December however, and a new owner stepped in and reopened as 101 Poker Club.

However, just because there are numerous poker clubs throughout the state doesn’t mean they actually fall within state law. Owners argue that because players simply pay a membership fee and seat rental means the establishment isn’t taking a rake.

That legal argument remains untested and there is a real assumption of risk that club owners take on. State Attorney General Ken Paxton or local officials could crack down at any time. 

That appears to be what’s happening in Big D. Some legal experts believe the clubs may be in trouble. But so far Paxton’s office has generally remained quiet and clubs have faced action on the local level.

Operating in a grey area?

Professor I. Nelson Rose is a gaming legal expert and runs the Gambling and the Law blog. He believes a simple reading of Texas law means clubs face a tenuous existence.

“I think the poker clubs have some severe legal problems,” he noted in a recent blog post. “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.”

Under Texas law, operators can defend against state law by showing:

  1. The gambling occurred in a private place.
  2. No person received any economic benefit other than personal winnings.
  3. Except for the advantage of skill or luck, the risks of losing and the chances of winning were the same for all participants.

Rose says clubs offering daily memberships make it difficult to argue the clubs are private. He has even more concerns with the “no economic benefit” clause.

“Eliminating the rake does prevent the game from being a ‘percentage game,’” he notes. “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.”

Where does the Texas poker scene go from here? Plenty of questions remain, but one thing is certain. The clubs continue bringing in plenty of Texans looking to play some cards. USPoker will continue to follow the story.

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