Courts Left To Decide Fate of Texas Poker Clubs

Texas Attorney General Ken Paxton declined to give an opinion as to whether or not the membership card rooms that dot the state are legal, with his office citing a pending lawsuit between two of these clubs as a reason to refrain from comment. As a spokesperson for the AG’s office subsequently explained, it is not the department’s standard procedure to issue “an opinion on an issue we know to be the subject of pending litigation.” These poker rooms will therefore remain open until a decision is made by the courts, or new legislation from state lawmakers is introduced.

About the Poker Clubs

These card rooms don’t charge traditional rake or tournament fees for their services. Instead, individuals who wish to play must obtain membership and pay the associated fees. These memberships vary in length from daily to monthly and sometimes yearly, so people can choose whichever option makes the most economic sense to them. The reason for the development of this business model was to get around the strict Texas laws on gambling, which is prohibited throughout the state except if the following conditions are met:

(1) the actor engaged in gambling 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 first stipulation of the law is met by only allowing members into the clubs rather than permitting the general public to access the facilities. The third requirement is satisfied by running fair games without any cheating.

It’s the “economic benefit” clause that’s at the heart of the disagreement. Proponents of these card rooms contend that because there’s no rake being taken out of pots, nobody is deriving any economic benefit from the gambling. Opponents counter that the membership fees and other revenues generated by these clubs do indeed constitute an economic benefit.

Even since these membership cardrooms started to appear in the early 2010s, they have been contentious and have sometimes been driven out of business by local authorities. Nevertheless, they continue to operate in many locations, like San Antonio, Austin and Dallas. Houston even grants them licenses as game rooms although, of course, any statewide determination as to legality would trump Houston’s local ordinances. Most of these rooms offer additional amenities, like televisions, lounges and pool tables, to bolster their argument that they would be perfectly viable businesses even without hosting any gambling.

Attorney General’s Opinion Solicited

Back in January, State Representative Geanie Morrison sent a letter to the attorney general asking for clarification on the legality of these membership card rooms. The AG was widely expected to deliver an opinion by the end of July, and so his refraining from doing so has left some disappointed. Among them is Houston City Council member Greg Travis, who told the KHOU11 TV station, “It’s either legal or it’s illegal, regardless of what lawsuits there are.”

About the Lawsuit

The court case referred to by the AG’s office was filed in June. The ownership of the Texas Card House in Austin is claiming that the San Antonio Card House is breaking Texas law and therefore engaging in unfair competition. Because of the variety of ways that these clubs make money, i.e., memberships of varying length, seat rentals, food and beverage sales, et cetera, there’s plenty of scope for arguing that specific elements of a given business’ operations are against the law. The real reason for the suit is probably to obtain guidance on what exactly is legal and what is prohibited.

Possible Consequences

The civil case brought by the Texas Card House might backfire. The court may rule in favor of the defendant or, even worse, it could effectively ban these types of card rooms altogether. If this happens, then Texas residents who wish to enjoy poker would have to go outside the state perhaps to Oklahoma or Louisiana, both of which have vibrant casino scenes.

On the other hand, if the court rules that such card clubs are legal, even with severe restrictions attached, then the TX live poker economy could experience a major boom. Some individuals are likely dissuaded from participating due to not knowing if they’re patronizing an illegal establishment. The April shooting of popular Instagram personality Tom “3betpanda” Steinbach as he was leaving the Texas Card House didn’t help the public perception of these establishments either. Any decree explicitly legalizing these venues would therefore go a long way toward making them respectable in the eyes of potential customers.

Upcoming Poker Events

A couple of major poker tours have upcoming events booked for Texas. The Card Player Poker Tour (CPPT) intends to run six tournaments at the Post Oak Poker Club in Houston from July 30 – Aug. 5. WPTDeepStacks (WPTDS) has meanwhile announced a $1,000-buyin tourney at the Freerolls Poker Club in Houston Sept. 26 – Oct. 1. Neither of these events is expected to have any legal issues although similar tournaments might not be viable in Texas in the future depending on the court judgment eventually reached.

Commenting upon the latest development as regards the legality of poker rooms in Texas, Trent Daniel, co-founder of the Freerolls Poker Club in Houston, stated:

“The WPTDeepStacks is 100 percent on. While we have never been worried about the legality of the FreeRolls business model, of course, we are pleased that the attorney general of Texas opted to let the current lawsuit play out.”

Texas Poker History

Texas is the USA’s second largest state in terms of size and population with more than 26 million people residing there, a large number of whom are poker players. The Lone Star State has also produced a number of top players over the years, perhaps most famously Doyle Brunson, known as ‘Texas Dolly’, a 10-time WSOP bracelet winner who in 2006 was named by Bluff Magazine as the ‘Most Influential Force in the World of Poker’.

Texas Holdem continues to be the most popular variants of poker, and as its name suggests, the card game’s origin can be traced to Texas, or more specifically the city of Robstown, during the early 20th century.