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Breaking News: 2 Poker Clubs in Houston Raided, 9 Arrested

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On the morning of Wednesday, May 1, 2019, police raided the Post Oak Poker Club and Prime Social Poker Room in Houston, Texas. These two establishments are poker rooms that use a membership-based model to get around Texas' strict anti-gambling laws. Nine people involved with running these facilities were arrested on money laundering charges.

Post Oak Poker ClubPost Oak Poker Club

Prime Social Poker ClubPrime Social Poker Room

About the Enforcement Actions

Police Cruiser + Cop

Officials have stated that these arrests are the culmination of a two-year investigation. Since 2017, bank accounts controlled by the two clubs have recorded approximately $10 million in total deposits. The authorities contend that this money was laundered in connection with organized crime, and the bank accounts in question have been frozen. Here's some footage of the Prime Social club as the police were conducting their sweep, courtesy of Click2Houston:

Aerial Footage of Police at Prime Social Poker Club on May 1, 2019

The individuals arrested were:

  • Dean Maddox, owner of Prime Social
  • Brent Pollack, general manager of Prime Social
  • Steven Farshid, assistant general manager of Prime Social
  • Mary Switzer, comptroller of Prime Social
  • Daniel Kebort, co-owner of Post Oak Poker Club
  • Alan Chodrow, co-owner of Post Oak Poker Club
  • Kevin Chodrow, co-owner of Post Oak Poker Club
  • Sergio Cabrera, co-owner of Post Oak Poker Club
  • William Heuer, co-owner of Post Oak Poker Club

 

Police Arrest Poker Club EmployeesPolice Make Owner and Employees of Prime Social Poker Club Endure Shameful Perp Walk
Image Courtesy of KHOU.com

Ordinary players were not arrested or detained. However, law enforcement took their photographs and told them that they were witnesses. It's likely that some of them will be called to the stand to buttress whatever case prosecutors think they have against the management of the two poker clubs.

Harris County District Attorney Kim Ogg said in a statement:

Poker rooms are illegal in the State of Texas. 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. Players are not being targeted.

Photo of Kim OggKim Ogg, Wicked Witch of the West Houston Poker Community
(She's Also the District Attorney of Harris County)

Are These Clubs Illegal?

Question Mark - Red

According to Texas law, almost all forms of gambling are illegal. However, there are a few conditions that can make participating in real money gaming not a prosecutable offense:

(b) It is a defense to prosecution under this section that:

(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 TX card clubs all require the payment of a membership fee before anyone can access their games, which they argue makes them private places, meeting the criteria for the first condition. They avoid charging a rake, instead deriving revenue from membership fees and time charges, ensuring (they contend) compliance with the second. And the third element is satisfied simply by running fair games where there's no cheating occurring.

The crux of the matter is the second clause – the one prohibiting any “economic benefit other than personal winnings.” Opponents of Texan poker argue that the various fees that the cardrooms charge definitely constitute an economic benefit. Club managers counter that this economic benefit is not directly derived from the gaming tables but rather for the service of providing a comfortable, relaxing space for patrons to utilize for their entertainment.

Attorney General Ken Paxton was asked to render his opinion on the legality of these gaming centers in early 2018, but he declined to comment. The legal uncertainty surrounding them has therefore persisted until the present day.

Photograph of Ken PaxtonKen Paxton, Texas Attorney General

Arrests a Surprise

Surprise!

For many months, Post Oak Poker Club and Prime Social Poker Room have been operating in the open without any attempts to disguise their activities. The same is true of several other competitors in Houston. Some poker rooms in Houston actually hold municipal licenses, duly issued by the relevant governmental bodies, as game rooms.

Therefore, the recent clampdown by the police came as a total surprise to nearly everyone. Prime Social was about to hold a $150,000 guaranteed tournament over the course of May 1 - 5, but it's extremely unlikely that the event will now take place.

We've seen at least one report of a player who purchased thousands of dollars of chips at Prime Social, left the premises, and is now unsure of how to redeem his chips or if this is even possible. Given that the companies' funds have been frozen, there's every likelihood that all outstanding chips have become worthless.

Other card clubs in Houston are now uncertain of where they stand, and several of them, like Mint Poker, are closing preemptively to avoid any potential trouble:

Mint Poker Posts on Facebook in Wake of Raids on Two Other Poker Rooms

Though we were heartened to see the stance taken by Kings & Cards Poker Club:

Business as Usual at Kings & Cards Poker Club

Possible Behind-the-Scenes Wrangling?

Man Pushing Ball

Though all the Texas cardrooms are essentially in the same business, and so there's a general alignment of interests on their part, they're also motivated by free-market competitive concerns. We've heard rumors that certain parties might be trying to muscle other organizations out of Houston, driving all the profits into their own greedy hands.

Texas Card House, which currently owns an Austin card club, had plans to open up a second property in Houston in May. Word on the street is that the heavy-handed suppression of the two competing poker clubs may not have been entirely a surprise to the principals of Texas Card House. Still, all the info we've received in this direction is merely hearsay and speculation.

Texas Card House InteriorInterior of Texas Card House in Austin
Looks Pretty Empty - Could They Be Trying to Drum up Some Action in Houston?

Also worthy of consideration is the fact that there's a bill moving through the convoluted works of the Texas Legislature to formally license and regulate “social gaming establishments.” In fact, there was a hearing about this proposed legislation on April 30.

The complex machinations of parliaments, regulators, government enforcers, politicians, and bureaucrats are well beyond our ken here at ProfessionalRakeback. We're more comfortable endeavoring to construct unexploitable three-betting ranges and calculating poker bonus effective rakeback percentages rather than getting inside the heads of the powers-that-be. We can't help but conclude, though, that it's not unreasonable to suppose that the recent raids were related somehow to political maneuverings pertaining to this bill. It may be the case that Facebook user Curtis Hathcox is thinking along the correct lines:

There May Be Political Motivations Behind the Houston Anti-Gambling Raids According to One Facebooker

Public Perception Dismal?

As businesses that have some legal questions surrounding them, the future of Texas card rooms is heavily dependent on how they're perceived by the public at large. Unfortunately, there have been a few unfortunate incidents that have marred their public reputation.

In May 2018, Instagram sensation Tom “3betpanda” Steinback was shot while leaving Texas Card House in Austin in an armed robbery gone wrong. This raised worries about how safe these poker halls are and whether it would be best to avoid them even if they are legal.

In June 2018, Texas Card House was in the news again when its owner actually sued the owner of SA Card House (in San Antonio) for unfair competition. Our sources have stated that this was a bit of legal chicanery whereby the two rooms were angling to get a ruling favorable to themselves, but to ordinary citizens of Texas, it looked like squabbling between two competitors that put a shadow over the entire Texas membership poker industry.

Groups like Stop Illegal Gambling Houston have sprung up to combat these cardrooms. Furthermore, there have been occasional complaints that they are public nuisances. Of course, there's no end to meddlesome do-gooders who seem incapable of refraining from interfering in what adults do privately.

Perhaps this mindset was responsible for the creation of HB 4364, introduced in the Texas House of Representatives on March 8, which would prohibit Texans on SNAP assistance from purchasing certain foodstuffs and drinks. Like many well-intentioned plans formed by those concerned about our moral rectitude, this proposal will almost assuredly do more harm than good while being easy to circumvent and costing a king's ransom to enforce. With that said, if government is going to provide food for people, all 42 million of them, it should at least make sure to provide relatively healthy food that does not result in double the normal rate of obesity which in turn places enormous burdens on taxpayer funded Medicare and Medicaid systems.

Some Texas poker organizations have been attempting to counteract the negative image they sometimes project by being active in charities and other worthy causes. However, the effectiveness of this strategy is debatable.

Christmas Toy Drive and Prime SocialThe Houston Police Department Seemed Willing Enough to Participate in
the Christmas 2018 Charity Toy Drive at Prime Social Poker Club

Online Poker Still Present

Online Devices

Though there are a few advantages to live poker, the game plays pretty well online too. And while the TX offline poker scene has a few legal kinks to work out before it's free of unwarranted interference from the cops, the internet sites that spread card games don't have to worry about this. The busybodies in Austin might want to shut them down, but they can't, and neither can they bother you if you elect to play poker privately on your computer.

For a rundown on the best online poker destinations servicing the Lone Star State, read our TX online poker guide. If you reside elsewhere in the United States, check out our page on the best offshore USA online cardrooms.

Comments

Here we go again. Out of the light and back into the dark.

If you're like me, you've played in Houston for 15 years. You've played in private homes, apartment complexes, golf clubs, bars, and club houses. Maybe you were safe, maybe you weren't. You've played in houses and apartments that were rented for the sole purpose of hosting games. You've parked down the road, at a Church, in a public place, and been driven down the street to the game to keep cars off the street and maintain a low profile.

You've paid an unknown amount of rake, you've been "owed" at cash out, you've worried about your car in the parking lot, and then you've worried about walking to it. You know someone who knows someone who was robbed or raided.

Being able to play locally these last two years has been a gift. Not having to drive to Lake Charles and pay huge room rates while local clubs competed for members by lowering fees, providing amenities, and hosting great tournaments has been such welcomed relief. There is a market and businesses competed for their share and the individual won. If this sounds familiar to anyone... well, you get the point.

If you're like me, you're middle-aged. You have a real job, responsibilities, maybe a spouse and a family. The dream of "going pro" is long gone. The overhead is too high. Rolling up a stake and moving to Vegas? Nah, once a year at best. These clubs offered an escape. At the table I didn't have work stress. At the table I wasn't worried about this or that. At the table I could be who I wanted to be. If I made a little money? Great! Sign my daughter up for summer Dance Camp, my son up for some private swim lessons, have a nice Saturday out with the wife! The job paid the bills but poker helped make life fun.

It's confusing. There's widespread support in the community. The game is played regularly and used to raise money, publicly, for all sorts of charities. The law is clear. "A person commits offense if he, plays and bets for money or other thing of value at any game played with cards, dice, balls, or any other gambling device." Well, except when it isn't. "A bet does not include an offer of a prize, award, or compensation to the actual contestants in a bona fide contest for the determination of skill or endurance."

As we prepare to go underground once again understand this; poker won't go away. You'll always be able to find a game. Yet, the stakes are now higher. The blinds didn't go up but our risk has. I remember one of the best pieces of advice I was ever given about playing underground, "Don't break the law while you're breaking the law." Keep that in mind as the bright public lights fade.

Good luck to you all. Play well, run better, and now more than ever... be safe.

Your perspective on this issue should be a guiding light to anyone who reads this, particularly the politicians and bureaucrats involved in bringing these raids to fruition.

Not to mention the hundreds of jobs that were provided to good people in the community. These clubs gave good paying jobs to people and all employees paid taxes to the State. One of the reasons I believe the employees werent targeted.

I personally do not believe money laundering was involved, they claim that since they say the poker is illegal all money obtained from the poker makes the profits considered money laundering.

These people that ran these clubs did everyone in the community a huge favor, they took the games out of the underground and provided a safe and thriving environment for all concerned.

What is more alarming is the State provided many of these clubs licenses to run with fees and background checks to then turn around and arrest the people and charge them with RICO and organized crime as well as money laundering. This is a catch 22 but the timing of these bills being presented on April 30 and the arrests to occur on May 1st is too much to ignore. There is money behind getting these clubs out of business, to make room for others waiting in line?

These busts have left many without jobs, they did not even get to receive their last paychecks as the bank accounts from these clubs have been frozen. If the HPD and the FBI and the DA think they are doing this to eliminate crime, they have just the opposite now they will go underground to be forced to face higher fees and also no protection as each club had security for all.

Poker is a game of skill and the players are not going to quit playing because of this they will just find other venues. Its sad to me that when there are serious crimes such as drugs, robberies, rapes and kidnapping this is what the City of Houston chooses to spend there police officers time on. These clubs not only did charity work and donated to many establishments, the players are nothing short of some of the best people I have ever known. We have raised money for funerals and done events to help in the effects of fire and when the Hurricane Harvey devasted Houston. So while they City says how terrible these people are, they would be the first one there to offer their hands to help the community.

Just really tired of seeing the people portrayed as thugs and criminals when they have done so much for me and others in the poker world. Just wanted to share my thoughts on why this was a terrible day for the City and why the police and DA should be ashamed of themselves.

Dont worry election day is not far off and Major Turner will be gone and I believe so will Chief Acevado and Kim Ogg is looking pretty smug these days as well. She accepted funding from George Soros for other nefarious things in the Houston area and the community is sick to death of the riff raff in our local government. Just saying....

Damn Ginger, we were all ready to give away the best post ever trophy, and here you come along with a well thought out and rational argument!

This was an amazing post with real a real home town perspective of someone we can all clearly see cares about the city of Houston and its residents.

Thank you so much for sharing your perspective. We would love to hear more from you Ginger. If you ever get around to reading this reply, please take a few minutes and find the "Contact Us" link at the bottom of any page on our website. Reach out to us. We would love to talk with you about getting some boots on the ground information in the Houston poker scene (any other Houstonians reading this, please feel free to contact us as well, we would like to speak to you too!). There's a good chance we could publish some of your writings too :)

Cheers!

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