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