Contracts And Poker: Is Texas Hold’em Legal In Texas?

In a series of columns, we have been looking at the extent to which poker is legal in various states, focusing on the legality of home games. Texas is an interesting case because, in spite of restrictive gambling laws, the poker scene is flourishing. Let’s look at how this can be.

As in most states, the laws in Texas start by making all gambling illegal. The Texas Penal Code provides that a person commits an 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.” There are penalties for violation of this law for both participants and organizers, but the latter face more serious charges, though both are misdemeanors.

There is, however, an exception to the rule that gambling is illegal. You have a defense to violating this statute if you can satisfy all three of these requirements:

(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.

So is a home game legal? Requirement (1) would be satisfied since the home would clearly qualify as a private place. Requirement (3) would also be satisfied, since in poker each participant has an equal chance of winning, but for skill or luck. The rub is Requirement (2): did any person receive any “economic benefit” other than their winnings? While the term is vague, if the host took a rake or collected a fee for participating in the game, that would likely constitute an “economic benefit” and the game would be illegal. But other than that, go for it!

There was a criminal prosecution brought in 1994 where the court analyzed this statute and found that it was not vague and that the operator of the game violated it. However, that was a fairly easy case – it involved a craps game, so Requirements (2) and (3) were undoubtedly not satisfied. Since the house has an edge over the players in craps, the operator of the game both received an economic advantage and had a better chance of winning than the players.

A few years ago, the underground poker scene began to move above ground, as various entrepreneurs saw an opportunity to test the meaning of the term “economic benefit.” They opened private clubs that offered members the opportunity to play poker.

The definition of “private place” in the Texas statute is “a place to which the public does not have access, and excludes, among other places, streets, highways, restaurants, taverns, nightclubs, schools, hospitals, and the common areas of apartment houses, hotels, motels, office buildings, transportation facilities, and shops.”

Since private clubs are not open to members of the public unless they secure membership, it appears that Requirement (1) would be satisfied. Requirement (3) would also be satisfied, since poker provides a level playing field.

The problem comes with satisfying Requirement (2). In order to comply, the clubs would not rake pots or charge a fee for participating in the game. Rather, they would charge a fee to join the club or require payment for time spent at the tables, which are arguably not economic benefits that come from the game itself. They are in effect saying, “Oh, the fee isn’t for entry into poker games, it’s for access to a private area in which poker happens to be played sometimes.”

If the game’s lack of economic advantage to the operators of the private poker club sounds like a thin argument to you, that view is shared by many law enforcement authorities. Raids on the private clubs are frequently reported in Card Player.

In 2019, the District Attorney in Harris County, the county in which Houston is located, not only charged the organizers of one club with violating the gambling laws, but also charged them with money laundering and participating in organized crime, which are felonies. Though the charges were brought with great fanfare, they were later quietly dismissed, presumably because county prosecutors had frequented the club, and not for the purpose of gathering evidence!

Ultimately, either a court will decide the fate of the private clubs or clarifying legislation could be passed. (See pg. 11 for the latest news.) The Texas legislature has entertained bills legalizing poker rooms and casinos, largely because of the outpouring of money to neighboring states like Louisiana and Oklahoma that permit card rooms, but so far these bills have gone nowhere. Texas has a few Indian tribes, but as explained in an earlier column, Under IGRA, the Indian Gaming Regulatory Act, a tribe can offer only the gambling that is legal in the state, so the tribes have no edge when it comes to offering poker.

No doubt we have not seen the last of these efforts to expand or constrict the game in Texas. The birthplace of road gamblers like Doyle Brunson and Amarillo Slim, and casino operators like Benny Binion, will undoubtedly continue to contribute to the colorful lore of the game. And hopefully, one day Texas hold’em will be freely played in its namesake state. ♠

Scott J. Burnham is Professor Emeritus at Gonzaga University School of Law in Spokane, Washington. He can be reached at [email protected].