Getting a poker room in Dallas wasn’t easy.
Texas Card House was on the forefront of the Texas gambling wave when it opened in 2014, and the company was able to pave the way for poker clubs opening throughout the state by navigating the murky legal waters that the business treads in. While gambling is illegal in Texas, the card houses say that because poker is a game of skill it does not fall under the legal definition of gambling.
And, because the card houses do not claim a portion of each game pot, or a “rake,” they say there is no profitable benefit to the establishment through the game. Instead, money is earned through membership dues or hourly club access fees.
Texas Card House opened the doors of its first Dallas location in early 2020, following months of negotiation between the card house, city staff, the city attorney’s office, the board of adjustment and the Dallas Police Department.
The city population was “clamoring” for poker, Texas Card House CEO Ryan Crow says.
Not long after opening, the city changed their minds and revoked the certificate of occupancy that had been issued to Texas Card House, telling the business they were operating illegally.
“There’s just so much demand in (Dallas.) And the reason clubs haven’t popped up all over is just because of the legal challenges that we face here,” Crow says. “Obviously, everyone in the industry is watching. And when we start getting these legal challenges … no one really wants to open.”
Crow credits City Council member Cara Mendelsohn as an outspokenly hostile opponent of card houses in Dallas.
After a July 2021 incident in a District 12 illegal poker room left one man with a slashed throat and in serious condition, Mendelsohn told constituents that she was working with State Representative Matt Shaheen to shut down all poker rooms in the district. Mendelsohn has since staved off the opening of several poker rooms in District 12, and made it clear to potential operators they “are not welcome.”
Throughout several lawsuits and counter lawsuits — which the city spent $550,000 on as of January 2023 — Texas Card House and the two other card houses involved in the suit, Shuffle 214 and Poker House of Dallas, have been allowed to remain open.
Mendelsohn has said that if laws have loopholes, like those that currently allow card houses, the gray area needs to be clarified rather than taken advantage of.
“If you read the state law, it seems clear that the business model of the poker rooms is illegal since they are receiving a benefit,” Mendelsohn wrote in a constituent newsletter shortly after the 2021 incident. “Poker rooms are making millions of dollars annually. If it is deemed the poker rooms are illegal, the City of Dallas should not be issuing a certificate of occupancy for an illegal business.”
In January 2022, City Council member for District 1 Chad West made a “business-friendly” proposal that he hoped would put an end to the litigation stalemate.
“The city manager confirmed that staff will work with the city attorney’s office to craft a land use category that considers current penal code restrictions on card houses and also provisions that will protect neighborhoods, such as proximity limitations,” West said in that month’s city council meeting.
In the last 12 months, no such land use category has been drafted.
City Staff did provide a brief update at the Dec. 12 Government Performance and Financial Management Committee meeting, after being pulled in “kicking and screaming,” West says.
In the briefing, Bertram Vandenberg, interim chief of general counsel for the city attorney, said the Zoning Ordinance Advisory Committee, who will be tasked with developing the land use category, would consider limiting clubs to certain entertainment districts in the city. Vandenberg declined to say whether a new land use ordinance would eliminate the current litigation with Texas Card House, Shuffle 214 and Poker House of Dallas.
Just getting an update on the possible land use category was a “very painful process,” West says, in part because a lack of urgency from constituents has left city staff “content” with waiting on the courts to decide on the legal legitimacy of card houses.
Homelessness was one of the most urgent issues on the city council’s agenda in 2023. There was a city council election in May, and preparation is underway for a $1.1 billion bond in 2024. Despite the proposed solution in January, poker was not the talk of 2023.
“Why would staff put their necks out on the line to provide a legal path when the courts are going to figure it out for us,” West says. “There’s not people clamoring for these card houses other than the owners.”
Crow disagrees.
The Las Colinas poker room is the highest-performing location for Texas Card House, which operates in six cities. The North Dallas location isn’t far behind.
On an average night, he estimates between 500 and 1,000 people visit the two locations. Those people didn’t learn how to play poker overnight when Texas Card House opened, Crow says. They were playing underground, or traveling to Oklahoma.
Each person who travels to Oklahoma represents taxes that Texas has lost, he says. In 2022, Texas Card House brought over $1.1 million in property and sales tax revenue to Dallas.
And underground games can quickly turn dangerous because of the hesitation to call the police when there is a threat, a “very common story in the community” Crow says.
“If something happens, we have armed security, and if something major happens, we call the police. A lot of those games that are running illegally, they’re not going to call the police because they’re running an illegal game and they’re going to get arrested,” Crow says. “It happens all the time. It doesn’t get reported, unless it devolves into a shooting, or somebody getting stabbed.”
It’s a danger that West acknowledged in his 2023 plan, where he warned shutting down the Dallas card houses would only push more games underground.
As a small business owner, West says he is sympathetic to the poker rooms that opened under the pretense of operating legally, before the city “changed the rules” on them. He now plans to propose a resolution that will allow the card houses that opened prior to the city’s change of heart to continue operation until a state-wide decision on gambling is made.
“These businesses came in, they invested capital and time and effort, in some cases they bought land and buildings,” West says. “I’m hoping to find a path to legalization for them, and then everyone else can wait until after the state figures out.”
The state-wide perception of gambling is a tricky one, Crow says.
The lottery and bingo are forms of gambling that have been deemed acceptable, but he doesn’t think the taboo of games like poker or places like casinos will be going away anytime soon. It’s going to take people from around the state becoming more comfortable with different types of gambling to legalize it in Texas, he says.
It’s a conversation the Texas legislature has been tossing around for years. A conversation that has been stirred even more since the recent partnership between Dallas billionaire Mark Cuban and Miriam Adelson, the owner of a mega-successful Las Vegas casino and resort company.
And a conversation that Crow says will not end overnight.
“We want to be friends with the city of Dallas, we want to be wanted here. We’ve tried to have the conversations when they’re willing to,” Crow says. “(In Texas) I think (legalization) is a five to 10 year project, but I do think ultimately it’s what ends up happening.”
