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Legal Poker Rooms Defeat the Dallas City Attorney (For Now)

The city tried to walk back its decision to allow a poker room to operate, using a new interpretation of the Texas Constitution. One problem: the volunteer Board of Adjustments isn’t a court of law.
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The Dallas City Attorney’s Office, as it turns out, doesn’t know how to play cards. Many months ago, the city approved several poker rooms for business, then the attorney’s office decided it wanted them to shutter. Tuesday in front of the Board of Adjustment, the city’s lawyer learned he had a weak hand and should have folded well before the river card was turned.

The showdown started in December, when Building Inspection revoked a certificate of occupancy for a membership-based card room called the Texas Card House on Harry Hines. The decision forced the business to close 14 months after the city had given it permission to operate. The city attorney could provide no material evidence that any of the card room’s operations had changed over that time period, just that at least one of its attorneys and the building inspector had learned of a new interpretation of state law. It’s the same as it was all those months ago: 7,800 square feet and 26 tables.

Today, the Board of Adjustment said the city attorney did not provide any evidence that the Texas Card House was doing anything other than what it had received the official OK to do.  

“The land use is the same, and the initial approval was for commercial amusement inside for a fee,” said Board of Adjustment Chair Dave Neumann. “Nothing materially has changed.”

This matter has been the purview of Senior Assistant City Attorney Gary Powell, who was asked to investigate the legality of poker rooms upon his hiring, in 2021. On Tuesday, he failed to convince the board that allowing the Texas Card House to operate violated the state constitution’s ban on gambling. Or, perhaps, he failed to convince the board that it had the power to do such a thing in the first place.

Powell brought no evidence of arrests or any formal decisions or opinions from the Dallas County District Attorney. None of that exists. Instead, Powell came armed with a bevy of statutory interpretations that he unleashed on the volunteer-filled Board of Adjustment as if it were a court of law.

“There was never a good case made by the city,” said board member Lawrence Halcomb. “There was never a persuasive argument that new information came to light.”

This is a strange deal.

The Texas Card House is one of a few card rooms in town operating on a similar model. Players pay for a membership, then pay an hourly fee if they sit down to a table. The house doesn’t take a “rake”—a cut of the pot—and the risk is assumed by the players.

Those points are important. The state penal code allows for a gambling carve-out if the operator checks three boxes: the games have to occur in a “private place,” no “person” operating the room can benefit economically from the game itself, and the players assume equal risk. The Texas Legislature approved this so-called “safe harbor” or “affirmative defense” 49 years ago.

The model used by Texas Card House and its ilk structures operations to fit inside that legal loophole. They believe charging membership fees meets the state’s definition of a “private place.” Because the house gets none of the action at the tables, they believe the business isn’t benefiting economically from the wagering itself. And poker, they argue, is a game of skill. It isn’t like roulette. Good players know how to gather information, calculate odds, and assess their opponents. Heck, there are good and bad players. The difference between the two is skill.

Powell—and, in effect, the city—sees all this differently. He believes the Texas Legislature established those carve-outs for private homes, so you can invite your buddies over to play poker in your kitchen without fear of breaking any law. He argued that Texas Card House isn’t really a private place, because 650 people a day were coming in to play. He also contends that the state law defines “person” broadly, that it includes LLCs like the Texas Card House. And so those membership fees are, in effect, economically benefitting the “person.” (Powell claimed the Card House brought in $10 million in revenue last year, a figure that a spokesperson would not dispute.)

Powell was really arguing Tuesday that the City Attorney’s Office, the City Plan Commission, and the City Council had all screwed up when they allowed these businesses to operate because none of those municipal bodies understood the nuances of the Texas Constitution; he does. He presented this legal argument to the Board of Adjustment, even arguing that those three carve-outs established by the Legislature were unconstitutional.

Here is how he opened his argument:

“A society can’t exist and be organized unless you honor and respect the rule of law. That’s what this case is about,” he said. “And if the board rules the way I think the board should rule, it will be following the rule of law.”

The volunteers on the Board of Adjustment faced tough questions: are they the right body to interpret statute? Shouldn’t that be the job of a court of law, particularly when local law enforcement has made no such declaration? And, besides, the city had already granted permission to these card rooms before revoking that permission. So what gives?

The board posed that question to Megan Wimer, the assistant building official who first issued and then revoked the certificate of occupancy. Wimer said there were “one or two poker houses that were in the process of applying for permits” around the time that the city circled back to the Texas Card House. “There was a chain of events,” she said, where “the legality was questioned” and that “there were some public inquiries” that triggered the review.

She could recall no details about these other two poker houses or the members of the public that helped motivate the building inspector to revisit its decision. But, as former D Magazine writer Peter Simek detailed in this month’s issue, the card house that likely caused the problem was the Champions Club, which hoped to open in the old III Forks restaurant space off the Dallas North Tollway.

“Their location was a stone’s throw from the Bent Tree North Homeowners Association, and it was in a part of Dallas that lies in more conservative Collin County, where the district attorney has taken a hard-line stance against poker rooms.”

“Lo and behold, in mid-August of last year, the city said, ‘Oops, we’ve decided we’ve made a mistake so we’re not going to issue a CO for this use,’” said attorney Jonathan Vinson, who represented the Texas Card House.

Tuesday’s meeting didn’t offer conclusive proof, but here’s what pretty clearly happened: the outcry in Far North Dallas made it down Harry Hines, and the city rushed to pull the certificate of occupancy to have some backing for not issuing the one to the Champions Club, which has since sued the city.

In response to questioning, Wimer said she felt it was a fair assessment that the card room was “illegal on its face.” But that wasn’t what the city believed months ago.

“We had a different understanding or didn’t fully understand all the intricacies of the Texas state law in this instance,” Wimer said, defending the city’s decision to issue Texas Card House’s CO in the first place. “Looking at it with our new understanding of Texas state law, we would not have issued this CO.”

No other city in Texas has tried to wage this battle. Texas Card House has operated in Austin for eight years, Houston for three years, and Edinburg for two. Powell clearly anticipates this whole matter will get sorted out in the courts; maybe the Champions Club snakes its way to the Texas Supreme Court for a ruling.

The Board of Adjustment seemed to believe that this wasn’t the appropriate venue for a legal interpretation, and it held the city accountable for allowing this business to operate for over a year without incident. And, in some ways, there are pretty obvious benefits for allowing these poker rooms.

Underground card rooms are sometimes robbed, and without a CO at risk, they don’t have a lot of motivation to curtail drug use and other illegal activities. Powell brought up a case out in Smith County near Tyler, attempting to draw some sort of comp. But that operation was taking a rake. None of that was happening at the Texas Card House.

Instead, the board sided with Vinson’s argument:

“The Building Inspection Office and the City Attorney’s Office has taken it upon themselves to interpret this criminal statute and at least implicitly say that we’re criminally liable for violating the Texas penal code,” Vinson said.

And that is ultimately for a court to decide.

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Matt Goodman

Matt Goodman

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Matt Goodman is the online editorial director for D Magazine. He's written about a surgeon who killed, a man who…

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