After city of Dallas flip-flops on poker rooms, some owners aren’t ready to fold

When Dallas sanctioned its first private poker business in 2020, Joe Vongkaysone said, he thought the city would turn into a major hub for the game and wanted in.

Vongkaysone began contacting city officials that fall about possibly opening a poker club in northwest Dallas. He said he was advised by city officials on which potential locations had the proper zoning for hosting card games and tournaments, informed about parking requirements and what permits would be required.

Based on that, he and his business partners agreed to sign a lease for space in a strip mall off West Northwest Highway. They applied for a city certificate of occupancy in February 2021 to allow Dallas Poker Club to open. After the group spent about $500,000 in renovations, Vongkaysone said, he initially struggled to make sense of a letter from the city seven months later denying the permit, citing the state’s law against gambling.

Vongkaysone isn’t alone. Three businesses operate as private poker clubs in Dallas after receiving approval from the city to host card games where players collect winnings. Now, the city wants to show all of them the door.

“Poker was legal in Dallas until all of a sudden, it wasn’t,” said Vongkaysone, who has since opened another poker club in Watauga in Tarrant County. “It didn’t make sense because they were welcoming clubs with open arms and then were shutting the door in our face.”

The city changed its stance After Far North Dallas residents last year opposed the establishment of one near their neighborhood. Saying city officials misunderstood the law, Dallas is now banning poker rooms from opening and trying to shut down existing groups already sanctioned by the city.

The certificates of occupancy for those businesses, required by Dallas code for them to operate, were approved by mistake, according to the city.

The rules debated

The city now faces three lawsuits in Dallas County district court challenging the interpretation that poker rooms violate Texas’ prohibition on gambling. A section of the law on who is and isn’t allowed to receive financial benefits from the games is among the key issues at dispute between the city and operators.

Vongkaysone is part of one of the suits.

Gambling is illegal in Texas, including betting money or anything of value at any game played with cards, dice, balls or other devices. But it is legal if the games occur in a private place, if no person receives any economic benefit other than personal winnings, and if all players have an equal shot at winning except for the advantage of individual skill or luck.

Since poker is a game of skill, supporters argue, it doesn’t fall under explicit gambling. Poker businesses have been allowed to legally operate by charging membership or access fees to patrons instead of directly collecting money from the games.

The profit for businesses and employees comes from membership fees, food and beverages served, and cash tips. The businesses argue that any winnings players give directly to workers doesn’t violate the law because tips aren’t mandatory, and they are free to spend their winnings any way they see fit.

The ambiguity also has led to inconsistency at the appeals level. Separate panels of Dallas’ board of adjustment, which hears challenges of development code decisions, since October have agreed with and rejected the latest city stance that poker club businesses are illegal. The citizen board has 15 members, but panels of five members hear appeals.

The board has allowed one poker room to keep operating, while preventing two other prospective businesses from opening. A fourth business hoping to keep its existing permit will go before a panel this month.

The Dallas County district attorney’s office declined to comment to The Dallas Morning News on the matter and the Texas attorney general’s office did not respond to questions on Dallas’ interpretation of the law.

There are at least 30 private poker clubs that operate in Austin, Corpus Christi, Dallas, Lubbock, Midland, the Rio Grande Valley, San Antonio and Waco.

What the city says

According to Dallas officials, poker club businesses violate a specific section of the law that bans someone from allowing property under their control to be used as a place where placing or settling bets, bookmaking or other forms of gambling occur.

Poker clubs are also illegal because there are economic benefits beyond the money players earn from winning, according to Dallas Senior Assistant City Attorney Gary Powell.

At a March board of adjustment hearing on the revocation of an operating permit for Texas Card House, Powell said he believes the language in the law is broad and legislators didn’t have commercial poker businesses in mind when it was approved.

“They expected it to be for games played in people’s houses and at their dinner table, where people aren’t charging other people to come and play,” Powell said. He said Texas Card House was earning more than $10 million a year.

“There’s an economic benefit made by the dealers, the owners and many other people,” Powell said at the meeting. “There’s economic benefits all over this.”

Powell also disagreed that the games occur in private places, arguing that the businesses are in commercial areas anyone can get to and barriers for adults to play are low.

Jonathan Vinson, an attorney representing Texas Card House, said clubs have the right to refuse or revoke memberships. Clubs allow only players to get money directly from the games.

The city has issued certificates of occupancy to at least three businesses to operate as private poker clubs since 2020: Texas Card House in northwest Dallas near Farmers Branch, Shuffle 214 in Lake Highlands and Poker House of Dallas in the Stemmons Corridor near Dallas Love Field.

But two more groups who sought similar certification in 2021 were denied by the city, which claimed the purpose for using their sites was illegal.

An application for Champions Club in Far North Dallas was denied in August, a month after owners applied. Dallas Poker Club’s application was denied in September. Their site is about 5 miles south of Texas Card House.

Two other groups, 52 Social and Sportsbook Poker Club, also couldn’t get city approval.

Several of the clubs have other locations in Austin and Houston.

Dallas’ building inspection division issued notices in December to Texas Card House and Shuffle 214, saying their occupancy certifications were erroneously approved and were being revoked.

According to Powell in court documents, the city reviewed the state law on gambling in August and realized it had been interpreting it wrong by allowing poker clubs to operate in Dallas. City Attorney Chris Caso had even told City Council members during a public meeting in 2019 that the businesses were perfectly legal.

Unhappy residents

Dallas’ review of the law came amid public pressure from near the Champions Club site who voiced concerns through emails, residentss petition and public comments to city officials claiming that the businesses were illegal and that their neighborhoods would be negatively impacted by allowing gambling near their homes .

The owners of Champions Club and Dallas Poker Club appealed their denied applications to the city’s board of adjustment. Two separate panels of the citizen board upheld the denials that fall, citing the city’s new stance that the rooms are illegal.

Both groups and the owners of 52 Social have since sued the city in an attempt to get a federal court judge to order Dallas to allow them to operate in the buildings they’ve already leased.

Megan Wimer, an assistant building official in the city’s inspection division, said during the March meeting that “public inquiries” to the city related to the opposition of poker rooms led to her department seeking the city attorney’s office review last summer.

“Questions were asked regarding the legality of this particular certificate of occupancy, which caused us to revisit it and that’s what prompted the re-review and revocation,” she said last month. “Based on our current understanding, now that we understand it better, we now see and have taken the position that the game of commercial poker does not comply with state law.”

But board of adjustment members in March disagreed with city officials and overturned the revocation of Texas Card House’s certificate of occupancy. Board members noted the state law and the poker club’s business model hadn’t changed since the city allowed the group to operate, and the city presented no outside opinions to support its change of stance.

“It seems like the opinion was changed either by political reasons or possibly public backlash,” said board member Kathleen Frankford before the panel voted unanimously. “It seems pretty clear to me that the business is doing what they set out to do.”

The city can appeal the board’s decision.

On April 19, Shuffle 214 is scheduled to have a board of adjustment panel hear its challenge to the city revoking its certificate of occupancy.

Vongkaysone was encouraged by the board’s decision on Texas Card House’s certificate. “A win for them is a win for all of us,” he said.

Dallas has a large underground poker scene, he said, and the games likely won’t stop if successful in banning all poker clubs.

Vongkaysone said he still hopes to open Dallas Poker Club one day, though he isn’t sure he’d bet on it.

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