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Texas Card Rooms in Jeopardy from Two Directions

Written by Jennifer Newell
Last updated on
Jennifer Newell

It was a rather genius idea. Since the state of Texas has refused to legalize poker or recognize poker as a game of skill (separating it from games of chance), poker players and enthusiasts took matters into their own hands.

Instead of opening poker rooms, they established member-only clubs. Anyone of age can become a member for any length of time, and they can enter their private club and play games. One of those games is poker. And those poker games have been thriving in Texas for years. Their popularity soared, especially just before and after the Covid shutdowns.

All of that is now in jeopardy from two directions. The Texas Card House is embroiled in a legal battle with a Dallas-based building official over its certificate of occupancy, and the most recent ruling sided with the official to revoke the license. The other threat comes from the legislature itself. One lawmaker introduced a bill to close a loophole in the current law that could make all poker rooms – even membership clubs – illegal in Texas.

Current Texas Gambling Law

The Texas Penal Code files gambling under Title 10 (offenses against public health, safety, and morals). Chapter 47 under that title is dedicated to gambling.

A person breaks the law if he (the law uses only the male pronoun):

-makes a bet on the results of a game or contest or on the performance of a participant in such;

-makes a bet on the results of any political nominations, appointments, or elections;

-plays/bets for money or thing of value at any game using cards, dice, balls, or other gambling devices.

The third point, however, has exceptions. The law says that defendants can claim that:

-the person(s) engaged in gambling in a private place;

-no person received any economic benefit other than personal winnings;

-the risks of losing or winning were the same for all players except for the advantage of skill or luck.

While the law doesn’t recognize the skill component in poker, poker players could try to claim it under the law. More importantly, membership clubs are private places. Technically, they are not open to the general public, as only members can enter.

House Bill 732

With years of talk about loopholes in the Texas gambling laws, one lawmaker decided to do something about it. State Representative Gene Wu, who represents part of the Houston area, filed a bill proposal on November 16 of this year.

HB.732 is “relating to the prosecution of the criminal offenses of gambling, keeping a gambling place, and possession of a gambling device, equipment, or paraphernalia.” Essentially, it is a revision to the current code, rewording of several sections.

Specifically, it changes the word “place” to “residence. And in the definition of a private residence, it changes “place” to “dwelling.”

That one word may seem insignificant, but as previously mentioned, it has been one of the loopholes through which poker rooms have defended their operations. Membership clubs can operate as a “private place” but not a “private residence.”

Wu wants the law to take effect on September 1, 2023. And it will only apply to offenses committed on or after that date.

Wu Claims Misunderstanding

When questioned about his intent on Twitter, Representative Wu responded that the bill had not been crafted with correct wording. While he did intend to fully give home games the right to operate, he does not want to stop poker rooms from operating.

In fact, Wu wants to legalize gaming fully in Texas. He believes that poker rooms should exist when licensed and regulated by the state. He understands that the current situation is a grey area that leaves the interpretation of the law in the hands of various county officials.

TCH Court Battle

This started out as a fight for an occupancy permit for the Texas Card House (TCH) Dallas, managed by CEO Ryan Crow. The Dallas room is one of four membership-based poker rooms in Texas, with sister rooms in North Austin, Rio Grande Valley, and Spring. Crow had worked with city councils of each city to ensure that his rooms were in full compliance with each city to obtain and maintain all permits and licenses.

TCH Dallas has been in operation since early 2020. It was the first in Dallas, though it did shut down for some time during the pandemic that year. Once it reopened, it operated through 2021, complete with a renewed certificate of occupancy issued near the end of 2020.

Suddenly, in January 2022, the city revoked said occupancy permit without explanation.

Crow appealed to the Board of Adjustment for the reinstatement of the permit. That process kept the doors open during the wait for the hearing. That appeal happened in March 2022, and it worked, as the board voted unanimously to reinstate the permit.

Dallas building inspector David Session was among a group of city officials determined to revoke that certificate of occupancy. They filed a lawsuit against the Board of Adjustment. They said that the decision to reinstate TCH Dallas’ permit was “illegal” and an “abuse of discretion.” Attorney Gary Powell argued that TCH provided a “safe harbor” for gambling, whereas the law was written to protect games in homes and not businesses built around it.

Losing Isn’t Everything

Civil District Court Judge Eric Moye heard both sides of the case this month and ruled against TCH Dallas, thereby revoking its certificate of occupancy.

“The Board of Adjustment abused its discretion,” Judge Moye wrote, “and made an illegal decision when it reversed the Building Official’s revocation of the Certificate of Occupancy.” Since that decision was made in error, the certificate is revoked.

While the cardroom will remain open as it appeals the case to a higher court, per legal advice, TCH attorneys plan to appeal that decision. In fact, they plan to appeal until the case – if necessary – goes to the Texas Supreme Court. They have gone far enough to keep going and obtain a legal precedent to keep membership-based card rooms open in Texas.

Future Uncertain

The future of Texas poker hangs in the balance.

Cardroom operators, in most cases, have worked closely with city and county officials to ensure that room openings are well within the law. They have worked overtime to adhere to legal wording and let local officials know that their members just want to play cards.

However, the police departments are not always on the same page. Just last month, law enforcement officials from the Tarrant County Sheriff’s Office partnered with the United States Drug Enforcement Administration (DEA) to raid the Watauga Social Lounge, a poker room and private club. That establishment has remained closed since the October 9 raid, which resulted in numerous arrests and the seizure of funds and equipment.

Each jurisdiction appears to act according to their own interpretations of the current law.

If Wu is serious about licensed poker rooms in his state, he must attach another bill to HB.732 to explain the safety and revenue that will come with fully regulated poker rooms. To protect card clubs, Wu can be the ally in the legislature that poker so desperately needs.

 

 

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