Ridiculous rake - Starting a legal poker game

[binions]

After a rash of hijackings and a couple of police busts, Houston underground poker games are raking the hell out of it. 10% up to $25 or $35 per hand in 5-10 and even 5-5 games NL and PL games. $300-500 is coming off the table every hour, and a few of us are getting sick and tired of it.

In Texas, it is a defense to gambling that:

(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.

See Section 47.02 of the Texas Criminal Code. In this way, a group of friends getting together at someone's house to play cards is a defense to a gambling charge so long as the house makes no money from hosting the game.

However, prosecutors have busted taverns for hosting no-rake poker tournaments in Texas because, while the house did not receive rake, they did receive increased beer sales as a result of hosting the tournament. In Texas, they take the "no economic benefit" to the house requirement pretty seriously.

But what about a nonprofit association? This is my idea. By definition, a nonprofit association makes no profit. There are many forms it might take. It does not have to be tax exempt or 501c3.

As it turns out, Chapter 252 of the Texas Business Organization Code provides for Unincorporated Nonprofit Associations. All that's required is 3+ members and that it keep books and records that are available for inspection by the members. It can do some other things voluntarily, like appoint an agent for service of process or file a statement or authority with respect to real property or file a d/b/a, but 3 members and open books are the only requirements.

http://tlo2.tlc.state.tx.us/statutes....000252.00.pdf

So, some of my friends and I are thinking of starting, say, the "Houston Poker Co-op," an unincorporated nonprofit association. Additional members (i.e. players) will be invited to apply to join. In other words, the Co-op will be private in nature.

We'll probably start in a hotel room, eventually hope to rent an apartment or loft. In other words, the games will be held in private places.

Here's how it will work. Players can buy in for cash, check or credit card. Co-op dues will be collected on each buy-in. 5% on cash buy-ins, and 8% on check/credit card buy ins. You buy in for $500 cash, you get $475 in chips. No pot will be raked.

Club dues go to operating expenses, like rent, playing cards, chips, food. At the end of every quarter, if there is a surplus, the Co-op will host a poker freeoll tournament and give away the excess funds back to its members. In this way, the "house" makes zero profit, only getting its expenses reimbursed.

We do plan to have dealers at the games, who work on tips alone. Perhaps a game girl who works on tips.

Thoughts? Will it fly?

[craigmarq]

IANAL, but dealers working off tips are economically benefitting from the gambling.

C

[DeadMoneyDad]

[ QUOTE ]


Thoughts? Will it fly?

[/ QUOTE ]

This is sometimes called the "pool room" model. As long as the organizing or hosting group doesn't profit then it "should" fly.

However even a dealer's schools have been shut down in States where gaming was legal, because in part a profit was made.

Your structure is a little weak in that you have no sure income stream. Winners provide no new income, big loosers may come and go, and breakeven players do not provide enough additional income to keep you going.

As always consult a lawyer in your State.



D$D

[Tuff_Fish]

[ QUOTE ]

.
.
Here's how it will work. Players can buy in for cash, check or credit card. Co-op dues will be collected on each buy-in. 5% on cash buy-ins, and 8% on check/credit card buy ins. You buy in for $500 cash, you get $475 in chips . No pot will be raked.
.
.
Busted
.
.


Club dues you aren't collecting dues, you have a pay to play model go to operating expenses, like rent, playing cards, chips, food. At the end of every quarter, if there is a surplus, the Co-op will host a poker freeoll tournament and give away the excess funds back to its members. In this way, the "house" makes zero profit, only getting its expenses reimbursed.

We do plan to have dealers at the games, who work on tips alone. Perhaps a game girl who works on tips. I would like to hear somebody knowledgeable weigh in on this particular aspect. Can the dealers be said to be profiting?...probably
Thoughts? Will it fly?

[/ QUOTE ]

[Vex]

[ QUOTE ]

But what about a nonprofit association? This is my idea. By definition, a nonprofit association makes no profit. There are many forms it might take. It does not have to be tax exempt or 501c3.


[/ QUOTE ]

"Profit" and "economic benefit" are not the same. Nonprofit organizations receive economic benefit, unless for some reason it is an organization devoted solely to flushing money down the commode.

The structure you propose involves the organization receiving economic benefit directly from poker buyins.

It doesn't matter that the money is used to pay expenses or is refunded to contributors.

IANAL of course, but I'd bet a lot of money the words "economic benefit" were carefully chosen instead of "profit" in Texas law.

Maybe you could try to pull it off if you:

1> Did not charge any fees and relied solely on charitable donations to pay the expenses.

2> Allowed anyone to play whether they donated or not.

But even then I'd still bet you'd get busted and found guilty. This IS Texas you're talking about after all.

Hopefully in 2009 the Legislature will pass legalized poker.

[Tuff_Fish]

[ QUOTE ]

.
.
In this way, a group of friends getting together at someone's house to play cards is a defense to a gambling charge so long as the house makes no money from hosting the game.
.



[/ QUOTE ]

Looks like your answer is right there.

I would go so far as to suggest that you might even get away with dealers working strictly for tips. If nothing is asked for the privilege of playing, then no foul.

Scenerio:

Texas Ranger shows up at your game and wants to play.

"Fine, come on in"

Texas Ranger buys in for a couple hundred. Plays a few hours, NEVER TIPS, and is not pressed to do so, is up $40, and gets up to leave.

"Ok sir, how many chips are we cashing in?"

"$241"

"Here you are sir, you have a nice evening"

Texas Ranger leaves and reports what to his superiors? "Hey, they had a card game going and the guys would tip the dealer most of the time. I never tipped and nobody uttered a peep."

"OK, go solve a murder tomorrow"

[img]/images/graemlins/grin.gif[/img]

[ghidorah]

I thought about starting my own church called “The Holly Rollers” and have a charity poker and craps game a few nights a week. I live in Ohio, and you can have charity games, but the rake has to go to a charity. The rake would go to the church, and I could pay my self and the dealers (lay ministers) by a salary. Any folks familiar with the law think it could work?

[Tuff_Fish]

[ QUOTE ]
I thought about starting my own church called “The Holly Rollers” and have a charity poker and craps game a few nights a week. I live in Ohio, and you can have charity games, but the rake has to go to a charity. The rake would go to the church, and I could pay my self and the dealers (lay ministers) by a salary. Any folks familiar with the law think it could work?

[/ QUOTE ]

I would have a plan B ready. You know, the one where you run like hell for the border.

Tuff

PS: While churches are given a lot of leeway, clearly fraudulent schemes like this usually end with bad results.

PPS: However..... can you post the relevant statutes. Better minds than mine can take a look.

I thought California was a slam dunk for a similar charity idea til I found a tucked away bit of law that absolutely destroyed any such notion.

[RUFFNECK]

There was a club that ran a similar model down in southside(Webster or League City) a few years back, it ran w/o a problem for a few months.

In that room there was actually quite a few law enforcement players(like most Houston rooms), who all believed the way it was being run was legal under TX law.

A local official got word of the place and they were basically told to shut it down or else.

Its funny in Houston there might be more games running on a nightly basis than Vegas.

The big hurdle there is the bible thumpers and the odd year only meeting legislature.

[Quanah Parker]

All these creative work-arounds reminds me why Prohibiton results in profitable opportunities for those willing to bend and break the law.
While it's possible to play poker legally in Texas, the restrictions in place make hosting a poker game a dangerous and labor intensive operation for anyone who is looking to accept strangers and maintain a large enough base of players to keep games running.
So, anyone who wants to run a legal game either quits from all the free work required or decides to go illegal to cover costs.