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Betting on local poker clubs could be a losing hand

Poker club owners in the Coastal Bend could be playing a losing hand as they fight interpretations of current laws by local law enforcement.

While poker clubs have sprouted like mushrooms in the Coastal Bend, authorities are waiting for Texas Attorney General Ken Paxton to rule on whether the clubs are even legal. Hanging in the balance are four clubs in Corpus Christi, two in Kingsville and one in Alice.

At issue is whether these poker clubs meet the Texas gambling laws. Texas law outlines legal defenses for gambling. The practice is legal if the gambling is done in a private place; if no person has received any economic benefit other than personal winnings; and, except for the advantage of skill or luck, the risks of losing and the chances of winning are the same for all participants. To be legal, gambling must meet all the criteria.

Poker clubs in the Coastal Bend and across the state are being organized as private clubs. The thorny question is whether the owners of these poker clubs receive economic benefits. The struggle for the owners is to find some sort of revenue to fund the clubs and pay the expenses associated with them, including rent, leasehold improvements and furnishings such as tables and chairs.

Various ways of funding have been tried, some of which are clearly illegal. For example, a club that takes a share of anyone’s winnings (called “raking”) is in clear violation of the law. Also, if the dealer is tipped from a player’s winnings, the gambling is illegal. Additionally, the selling of food or alcohol is considered an economic benefit and so would make the club illegal.

Some models that poker clubs use for revenue are not so clear. Some clubs hold dealer appreciation nights during which dealers are paid money in appreciation for their services in exchange for additional poker chips. The money cannot come from anyone’s winnings.

Another common practice is to charge membership fees, seat rental fees or time-based fees. Whether this method complies with the current law is also unclear.

To clarify these uncertainties, Rep. Geanie Morrison (R-Victoria) recently requested a legal opinion from the attorney general as to whether these alternative forms of funding are legal or illegal under current law.

Paxton has yet to issue an opinion or indicate when an opinion might be expected. His office has not indicated how he might possibly interpret current laws.

Poker club owners are not betting on Paxton alone. They also intend to propose a bill to clarify current law to the Texas Legislature when it convenes in 2019. However, similar attempts in 2009 and 2015 were not successful. Attempts to pass a poker bill folded in 2009 after then-Gov. Rick Perry announced he would veto any legislation that expanded gambling in Texas. In 2015, Greg Abbott was governor, and although he did not threaten a veto, he did make it known he supported current law, going so far as to instruct legislators not to bother introducing gambling bills.

Meanwhile, most Coastal Bend clubs struggle to stay open, dependent on the opinions of individual local authorities. Of the two clubs in Kingsville, one has already closed — at least temporarily — because, while the city council gave approval, the district attorney and chief of police did not agree.

The 86th regular Texas Legislative Session is set to begin in less than a year, on Jan. 8, 2019.

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