After charges of money laundering were dropped against their owners, the Prime Social Poker Club in Houston, TX, will reopen within the next few weeks. Additionally, with the dropping of all charges regarding the raids earlier this year, owners of the Post Oak Poker Club also saw charges dropped against them and have said they will reopen. But that news isn’t quite as good as it sounds as local authorities have passed along the case to the Federal Bureau of Investigation (FBI) for further work.

Big Mistake by Local Legal Experts

What was the reason that Houston District Attorney Kim Ogg dropped the charges and released the men? Apparently, owners of the Prime Social Poker Club had been in touch with Ogg’s Harris County District Attorney’s office regarding the legality of the club and its operations. They were supposedly given the OK from a person in the DA’s office that everything was in order and, as such, the owners of the Prime Social Poker Club went ahead with their opening.

Attorney Joe Magliolo, representing the Prime Social Poker Club, presented this evidence to Ogg and, after his review of the information, all charges were dropped against those operating the Prime Social Poker Club and the Post Oak Poker Club. There was a sizeable amount of money seized in the raids on the two clubs (more than $200,000) and that will be returned to the owners.

This doesn’t end the investigation into the two clubs, however. Ogg forwarded the case to the FBI for investigation because his office was hamstrung by the conflict of interest. There is no word from federal authorities about their investigations, except that they were complimented by investigators about their processes for handling money and their anti-money laundering efforts.

Quick Shutdown of Case After Initial Raids

The case dates back to May of this year when, in a stunning sweep, Houston police raided both the Prime Social Poker Club and the Post Oak Poker Club. Players who were in the club at the time of the raid were allowed to leave without charges. After the raids were complete, the following nine people were charged with felony money laundering:

Post Oak Poker Club

Daniel Kebort
William Heuer III
Alan Chodrow
Sergio Cabrera
Kevin Chodrow

Prime Social Poker Room

Dean Maddox
Mary Switzer
Brent Pollack
Steven Farshid

At the time of the raid and arrests, Ogg took a strong stance against the poker rooms. “Poker rooms are illegal in the State of Texas,” he bluntly stated in the press release following the police actions. The Chief of Police for Houston, Art Acevedo, echoed Ogg’s statements, saying, “We can’t allow illegal gambling to go on.” This was before, naturally, that it was learned that the DA’s office had been consulted and given the OK to the poker clubs to operate.

Are the Poker Clubs Legal?

By a look at the laws of the State of Texas, it appears that the poker clubs are operating within the legal guidelines of the state.

Texas law states that, while it is not illegal to play poker in the state, if there is money on the felt the operator of the game cannot take a rake or a fee from the actual play. The poker clubs have been able to get around this by not taking anything from the games but charging a “membership fee” for players to come in the door. Additionally, there is nothing taken from the pots that are played, but the businesses make additional money by selling food on the property (alcohol is banned in the clubs).

The clubs are also popular because of the distance that players would have to go to take part in a game. If it weren’t for the games in the major cities like Houston, San Antonio, Austin and others, poker players would either have to go to Oklahoma or Louisiana to play. Instead of this, many would take part in local, illegal “underground” games – which used to be the predominant way that poker players played in Texas – where the dangers of robbery and fewer player protections emerge.

Whether the dropping of charges is the end of the case in Houston is unknown. Federal action might await the poker clubs, but the local prosecution has been shut down. It is a situation that has to be watched carefully by the poker community.

3 Comments

  1. TXLawyer says:

    You are misstating Texas law. The actual language for one of the requirements for a defense to prosecution is “no person received any economic benefit other than personal winnings.” The owners are telling you this means “no rake.” But the statute just says “any economic benefit.” The millions of dollars that have flowed through their bank accounts clearly show that they received an economic benefit.

  2. Earl Burton says:

    Hello TX!

    Here’s the thing. It is a very interpretable statement. And the clubs interpret it as meaning “rake.” NO JURISDICTION has said this applies to any club fees (which is protected – if a club takes a membership fee for entrance, they are allowed a wide swath of activities) or the selling of food on the premises.

    Here’s a few takeaways:

    1. If the Houston DA had a case, why were they so quick to drop the charges?

    2. Why did SOMEONE (and the DAs office isn’t saying who) approve the clubs for action?

    3. Why had the authorities allowed the clubs to be open for well over a year IF they were in fact illegal?

    The laws aren’t as clear as you make out, ergo why the whole lot of them throughout the state haven’t been immediately closed down. As they have forwarded the case to the FBI (why is unclear as this is clearly a local and not a federal issue), the Houston DA has given up on trying to “police” the clubs and is either looking for the state legislature to do something (which isn’t going to happen soon) or looking for the feds to save them.

    Thanks for reading!

    EB

  3. CD says:

    Charging a membership fee is akin to the days of dry counties charging a membership to allow the service of alcohol. Playing poker at home is no different than drinking alcohol at home – both are always legal. The business owner is simply providing a private place to play poker (or any game) and being compensated straight up for that service. The general assumption has been that “no person received any economic benefit other than personal winnings” means that no one profits DIRECTLY OFF THE ACT OF THE GAMBLING ITSELF… other than personal winnings. Hopefully, that will be amended to clarify that assumption and put this to rest.

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