Texas Poker Clubs Fear They May Need to Fold With New Law

DALLAS (Associated Press) — Jody Wheeler is betting on a business model he bills as a legal and safe place to play poker.

He opened FTN Poker a month ago in a former shoe store off Lake Forest Drive in McKinney. He hired lawyers to ensure that his private social club operated within the law. And he’s been up front with city officials about what he’s doing.

“I’m trying to bring poker from the shadows to the light,” he told The Dallas Morning News .

Whether he’s successful depends in part on police and their interpretation of the law. Several card clubs in Dallas and Plano have shut down in recent weeks over questions about their legality. Several others looking to capitalize on the popularity of these so-called poker rooms have put their plans on hold.

Gambling is illegal in Texas. But state law offers a defense against prosecution when gambling takes place in a private place where no person receives an economic benefit beyond personal winnings and the chances of winning or losing are essentially the same except for the advantage of skill or luck.
 

That means the house can’t take a percentage of the pot. Dealers can’t earn tips either. Clubs that run afoul of Texas law are often found to be violating the private aspect or making money in connection with the game.

“I wouldn’t touch it with a 10-foot pole,” Johnathan Grego said of poker rooms.

Instead, he makes his living running poker tournaments for bars and restaurants through his business, Community Card Player. His model lets people play poker for free to try to win cash prizes. His money comes from the venues, which pay a flat fee, regardless of how many people show up to play.

“It’s so crucial in how you do it,” Grego said. “If you’re doing it aboveboard, it’s 10 times harder.”

Wheeler said he modeled his business after private country clubs, where poker games are common. FTN Poker charges a monthly membership fee as well as an hourly fee that members pay as soon as they enter the club. With nine custom-made tables, poker is the predominant game.

But a smaller table is available for backgammon, chess and other board games. Ten flat-screen TVs line the walls. And people who just want to hang out get charged the same hourly fee as those playing poker.

FTN Poker has attracted more than 500 members so far during open enrollment, which lasts another month. After that, prospective players will have to be sponsored by a member to join.

The Texas attorney general’s office has no formal opinion on poker rooms. A spokesperson pointed to the gambling law for clarification.

But that law is open to interpretation and the political will of a particular city.

On Sept. 7, Dallas police executed a search warrant at CJ’s Card Club on Walnut Hill Lane. Police filed a report alleging the keeping of a gambling place. The case remains under investigation. A department spokeswoman declined to release any further information.

The club has since closed, its website and Facebook page have been shut down, and its operators could not be reached.

Around that same time, Poker Rooms of Texas closed after Plano police questioned the legality of that operation. The club opened late last year in a strip center storefront on Parker Road off Independence Parkway. It reportedly attracted scores of players each night.

Its website states that it “is working with local authorities to resolve operational issues.” Its owners did not return messages.

The website for Lucky’s Card Room in Fort Worth says the club is temporarily closed while it works on a new location. And the site for TopSet Poker Club in Plano stated that its grand opening, formerly set for September, has been delayed while it considers options in light of problems identified at similar businesses.

Big Texas Poker Club opened in late August in a commercial building off Jupiter Road in Plano. Owners Fred and Heather Zimmerman said they did their homework to ensure that they would be legal. Three weeks later, they shut down to avoid arrest.

“This is a legitimate business, and it’s better than illegal poker rooms,” Fred Zimmerman said.

The couple said they were transparent about their club as they sought a city permit to open. Only after they started gaining members did they receive “threatening letters” from police stating that their business model violated the state’s gambling law.

Plano City Attorney Paige Mims said certificates of occupancy are about the fitness of a building and have nothing to do with the activity inside. As for whether a private card room can operate, she said the city does not give legal advice.

Police spokesman David Tilley declined to go into details about his department’s conversations with the poker rooms. “Gambling is illegal in the state of Texas,” he said.

The Zimmermans started a GoFundMe page to help raise money for their legal efforts. They have renamed their business Big Texas Game Club and have added a pool table, an air hockey table and other games. They are working with attorneys to make changes in hopes of reopening. But police aren’t giving them much feedback about what’s acceptable, Fred Zimmerman said.

They cited the success of Texas Card House, which has been operating since early 2015 in Austin and now has two locations. It’s believed to be the first of its kind to use a membership model and charge players by the hour to play poker. Most of the poker rooms around the state have used a similar model.

The problem is, that mode is illegal, said Ryan Crow, one of the owners of Texas Card House. He said the Austin club revised its business model four months ago after talking with attorneys. No longer is the club’s revenue tied to the amount of time players spend seated at the poker table. Members now get charged upon entering the club, whether they play poker or not, Crow said.

“It may not sound like a big deal, but in the eyes of the law, it’s pretty material,” he said.

Crow said he had been poised to sign a lease to expand into Dallas last month when the other clubs shut down. Dallas police won’t give him a straight answer about what’s allowed, he said.

“We don’t want to give up on it,” Crow said, “but we also don’t want to go where we’re not wanted.”

Shutting down the poker clubs doesn’t stop people from playing. Many return to underground games, where the operator typically takes a portion of the pot from each hand, which violates the law.

“They’re everywhere,” said Wheeler, adding that police should focus on those illegal games rather than businesses like his that he says are trying to operate within the law.

McKinney police have yet to weigh in on Wheeler’s FTN Poker. Spokeswoman Carla Peritz said last week that authorities had discussed the business with the Collin County district attorney’s office but that no decision had been made on how or if officials would deal with it.

“We are evaluating the legality of that establishment,” Peritz said.

Wheeler believes there’s nothing to decide, but acknowledges that his hands are tied.

“I believe we’re doing it the right way,” he said, adding that what happens is not up to him. “The city has all the power.”