By Reid Jowers
Reporting Texas
“Poker rooms are illegal in the state of Texas,” Ogg said in a written statement. “We are changing the paradigm regarding illegal gambling by moving up the criminal chain and pursuing felony money. Hours after Houston police raided Prime Social and Post Oak poker rooms on May 1, the owners and operators found themselves face-to-face in a holding cell at the Harris County processing center. Want to play in a safe, legal Texas poker room? Look no further than Shuffle 512, Austin’s best poker room experience. Whether you’re a beginner, low limit grinder, experienced veteran or high roller, get in the action anytime with tournaments and cash game play. How the legal card rooms work. The card rooms that are popping up in Texas are private clubs that provide rake-free poker games, as well as bridge, backgammon, chess, and beyond. Instead of a rake, which would make the game illegal per the Texas Penal Code cited above, the clubs charge membership fees, and in some cases seat rentals.
Texas Card House General Manager James Combs is seen on March 2, 2019. Texas Card House is a private club and requires a daily, monthly or yearly membership. Brittany Mendez/Reporting Texas
On a Monday afternoon in March, Will, a 24-year-old software engineer in Austin, was relaxing during a break from a poker game at the Texas Card House in North Austin, where brightly lit rooms and affable service are a contrast to the image some people might have of a gambling establishment.
Will (his last name has been omitted to protect his privacy) started playing poker five years ago when friends introduced him to the game. He loved it.
“I like that it’s a beatable game. You focus and practice to get good. It’s a matter of skill rather than luck like blackjack or other games,” Will said.
The Texas Constitution prohibits most forms of gambling. The few exceptions include private gambling at home, betting on sanctioned horse and dog races, the state lottery and gambling at one of the three Indian casinos in the state. During the last several years, some gamblers have started using a loophole in state law to play cards for money at so-called card clubs, such as Texas Card House.
In 2015, Austin-born Texas hold’em poker player Sam von Kennel noticed a legal technicality that would allow him to open a gambling establishment. According to state law, gambling houses can operate as long as they don’t take a percentage of the pot. Von Kennel had an idea. Instead of taking a cut of the pot, he would charge membership dues and hourly or half-hourly fees for players to participate in a game. Based on his idea, von Kennel opened Post Oak in Houston, the first private social card club in Texas. Since then, about 30 other membership-only card clubs have sprung up around the state, he says.
On a typical weekend, Texas Card House hosts as many as 100 members at a time — a mostly male crowd that is diverse in ethnicity and age. Some poker games, the ones popular among regulars, have a buy-in of $300 and a potential payout of a few thousand dollars. Lower-stakes games have buy-ins as small as $40.
States that allow gambling still make a killing off casinos compared to the card houses in Texas. For example, Louisiana and Oklahoma annually average $2.4 billion and $4.4 billion, respectively, according to state revenue reports.
A tournament takes place at Texas Card House in Austin on March 2, 2019. Brittany Mendez/Reporting Texas
Although Texas poker rooms operate in a legal gray area, there is precedent for them elsewhere. California card houses that operate the same way are legally recognized by the state. Colorado, Florida, Minnesota, Montana and Washington also have card houses, but no other states do, according to the American Gaming Association’s 2018 State of the States report.
Not everyone agrees that membership-based gambling house are legal.
One of the naysayers is Rob Kohler, a consultant and lobbyist for the Texas Baptist Christian Life Commission.
“It would require a constitutional amendment to make commercial gambling legal in Texas,” Kohler said. “Private home gambling is legal, but these poker rooms are not that. They are merely hiding as a private establishment, but in reality they are commercial.”
Rodger Weems, chairman of Texans Against Gambling, argued in a 2018 Baptist Standard article that card houses run afoul of the law. According to Texans Against Gambling’s website, its mission is to “Improve the lives of people by freeing them from the lower standard of living, exploitation, and fraud that commercial gambling spreads.”
Justin Northcutt, co-owner of the Texas Card House, says Kohler and Weems are playing a bad hand.
“We work very closely with state and local officials and law enforcement to make sure they know how we do business,” Northcutt said. The business pays sales taxes, payroll taxes and its share of property taxes, he said. Northcutt declined to say how much it pays.
“It’s not a dark, hidden, dangerous underground place,” he said.
The appeal of membership-based card houses isn’t gambling, but the skill and challenge of poker, he added.
Poker dealer Delia Atwood collects poker chips at her table during a tournament for the Social Card Clubs of Texas, a non-profit formed in 2018 for social clubs and card playing enthusiasts, at the Texas Card House in Austin on March 2, 2019. Brittany Mendez/Reporting Texas
Poker Rooms In Houston Legal Sites
Mike Robinson, a Wesleyan University psychology professor, has been studying gambling addiction for a decade and a half through experiments on rodents.
“We haven’t gotten the rodents to play poker, but the idea is the same,” Robinson said. Success in gambling — winning or almost winning a hand in a poker game, for example — activates the brain’s reward system, and addicts keep gambling in an attempt to reactivate those pathways.
Texas Card House revokes or bans members that show gambling addiction or bad behavior, Northcutt said, and the business is a part of the Social Card Clubs of Texas, a non-profit formed in 2018 that seeks to promote responsible card playing and create better communities.
Kohler, of the Texas Baptist Christian Life Commission, doubts the validity of these claims. He and the Christian Life Commission want to explicitly outlaw card houses, but since the Attorney General’s Office has refused to offer an opinion on the matter, the fate of these establishments is in the hands of local law enforcement.
Law enforcement across the state has been mostly tolerant, but in 2017, CJ’s Card Room in Dallas was raided by police and effectively shut down. Anti-gambling proponents such as Texas Against Gambling have called for law enforcement to continue raids.
Will said the risk of a police raid doesn’t bother him. “I don’t think most people will either,” he said. “It won’t matter because people will still find a way to play.”
On Wednesday, the law came down hard on a pair of Texas poker rooms.
Around 11 a.m., Houston's Post Oak Poker Club and Prime Social Poker Club were raided by authorities and nine people arrested. Prime Social owner Dean Maddox and General Manager Brent Pollack were both led out in handcuffs just before a five-day, $150K GTD tournament was about to take place at their establishment. Also arrested were assistant GM Steven Farshid and comptroller Mary Switzer.
Over at the Post Oak Poker club, co-owners Daniel Kebort, Alan Chodrow, Kevin Chodrow, Sergio Cabrera, and William Heuer were all arrested.
Charges levied against them include money laundering, gambling promotion, and engaging in organized criminal activity.
'We got two of the bigger ones today and this is just the beginning. We need to shut them down.'
'Poker rooms are illegal in Texas,' District Attorney Kim Oggsaid in a written statement. 'We are changing the paradigm regarding illegal gambling by moving up the criminal chain and pursuing felony money laundering and engaging in organized crime charges against owners and operators.'
According to reports, the raids were the results of a two-year investigation that included undercover police officers posing as players. The Houston Chronicle reports that documents state undercover officers 'were asked to pay a membership fee, a door fee and a fee to play at a poker table.'
Poker Rooms In Houston Legal Court
Texas poker rooms have operated in a gray area where they function in a similar fashion to a country club on a membership model. Players simply play a fee and play. The club doesn't take a rake, instead driving revenue throughout memberships and hourly fees.
According to Texas law, poker is only allowed if it meets the following requirements:
- No person received economic benefits other than personal winnings.
- Gambling must be in a private place.
- Except for the advantage of skill or luck, the risks of losing and the chances of winning were the same for all participants.
That said, the rapid rise of the rooms, and the problems that came along with it including a lawsuit between Austin and San Antonio clubs, as well as a high-profile shooting, were sure to catch the attention of authorities.
'We cannot allow illegal gambling to go on,' Houston Police Chief Art Acevedo said in a written statement. 'It drives organized crime and fuels other criminal activity.'
He continued: 'We're not going to tolerate it. We got two of the bigger ones today and this is just the beginning. We need to shut them down. If you want to have these kind of establishments, the legislature needs to authorize it, otherwise we're going to do our job and shut them down.'
Since 2017, authorities claim $10 million in bank deposits have been made by the clubs. Those funds are now frozen and face seizure.
Poker Players Left Hanging
The raids came at an inopportune time for Prime Social players, many of whom had registered for that day's tournament. Their buy-ins, as well as all chips in play, became worthless when authorities entered and froze all assets.
'Nobody seems to know anything right now, so that's kind of why I came over here to try to find out,' said poker player Sean Maggio. 'I feel shocked like they took something away from me.'
One thing authorities did make clear was that players were not being targeted, rather they were after the owner and operators.
Wayne Dolcefino, a consultant for Prime Social, believes the raid was unnecessary given the club operates above the board and has done charity work for the community.
'They don't take a penny out of that money,' he said according to Click2Houston. 'I just don't believe the guys that I know have done anything wrong. And I believe they've been very, very meticulous about the way they keep records.'
Several other clubs operate around the state, and while it's business as usual for them as of now, the recent crackdown at Post Oak and Prime Social are sure to have consequences for the entire Texas poker-playing community.
Lead image: Post Oak Poker Club Facebook.