The city of Dallas failed to convince the Texas Supreme Court that its intervention was warranted in a dispute that started after the city granted, then revoked, then reinstated, a certificate of occupancy to a local poker room.
The state’s high court on Friday decided it would not hear the case that asked it to decide whether the Fifth Court of Appeals got it right when it determined in August 2024 that the Board of Adjustment’s decision to reinstate the certificate for Texas Card House should stand and had been wrongly usurped by a trial judge who found the poker house was illegally operating.
That outcome is a win for Texas Card House and its lawyers at Greenberg Traurig.
“Fortunately, we wound up in the right place with the right result in the Texas Supreme Court,” shareholder Brian Mason told The Texas Lawbook. “But it’s very unfortunate that it took us four years to get here.”
“It’s unfortunate that the city of Dallas caved to political pressure, and now it’s cost Dallas tax payers. My hope is that this is the end of the road, that they will find a way to not continue to go down this path, that the litigation will stop and the city will see Texas Card House for what it is, and that is a very well-run business that provides significant benefits to the city and that does it the right way.”
Kirsten M. Castañeda of Alexander Dubose & Jefferson, who represented the city on appeal, declined to comment when asked about the outcome and any possible further appeal.
The Lawbook spoke with a handful of attorneys who have represented other poker house clients in criminal and civil proceedings involving municipalities who said more clarity for the murky legal space where poker clubs and card houses currently operate would be welcomed.
“They are all operating in a gray area, the attorney general has not taken a position on the poker rooms, so there’s very little guidance,” said Zachary Fertitta of Hall Maines Lugrin. “And really, enforcement against these poker rooms is on a county-by-county basis. We really could use some uniformity, but thus far there’s been none. No one wants to wade in at the state level to clarify this.”
“So it really depends on who your district attorney is and how they perceive the statute, the particular establishment and the way it operates,” he said. “So, it’s a mess.”
Jay Stewart of Hance Scarborough, who has lobbied on behalf of casinos, said that in every legislative session for the past 20 years he can recall the pro-poker camp pushing for laws that would clearly make operations like Texas Card House legal, while anti-gambling stalwarts push for laws that would clearly make those same operations outlawed.
“It’s lobbied hard on both sides,” he said.
The Texas Card House case was apparently not the vehicle to provide the clarity both sides crave.
“I don’t see the Texas Supreme Court, or really the Fifth Court of Appeals, saying that all of this is perfectly fine,” Stewart said of the outcome. “They say the Board of Adjustment is a quasi-judicial body and could have fallen on either side.”
“It’s vague, I think, to the detriment of a lot of people,” he said. “Because it’s an open question, lawyers win in the end. Because it’s vague, we can argue both sides.”
History of the Case
According to court documents, TCHDallas 2, which operates as Texas Card House, alleged that for two years it worked diligently with the Dallas city attorney and city council to make sure its plans for a commercial poker house wouldn’t run afoul of the law, and in October 2020 it was issued the certificate of occupancy.
Then in December 2021, the chief building official for the city revoked the certificate on grounds that the poker house “violated Texas Penal Code section 47.04,” court documents show.
Section 47.04, titled “Keeping a Gambling Place,” makes it a class A misdemeanor to knowingly use or let another use as a gambling place “any real estate, building, room, tent, vehicle, boat, or other property whatsoever owned by him or under his control, or rents or lets any such property with a view or expectation that it be so used.”
But if the gambling occurred in a “private place,” or if no one received “an economic benefit other than personal winnings,” and the chances of winning were the same for all participants, those are affirmative defenses to prosecution.
Texas Card House appealed the revocation of its certificate to the Board of Adjustment, which, after hearings, unanimously voted to reinstate the certificate of occupancy.
That’s when the dispute made it to court. The city building official filed a petition in April 2022 seeking to reverse the Board of Adjustment’s ruling, and Dallas County District Judge Eric V. Moyé did just that after a bench trial in October 2022.
Judge Moyé wrote that the Board “abused its discretion and made an illegal decision” in reinstating the certificate of occupancy.
Texas Card House appealed in November 2022. In a 12-page ruling, the Fifth Court of Appeals panel explained the trial court had failed to “afford the required deference to the BOA’s decision.”
“If reasonable minds could have reached the conclusion the BOA must have reached to justify its action, the trial court must uphold the BOA’s order,” the panel wrote. “In other words, the party challenging the BOA’s findings must establish that the BOA could only have reasonably reached one decision. We conclude the trial court effectively substituted its discretion for that of the BOA in this case in which the BOA could have reached multiple decisions.”
Dallas’ Flip-Flop
Court records shed some light on what led the city to change its mind about issuing the certificate of occupancy to Texas Card House. Records also state that after Texas Card House got the greenlight, other businesses applied for certificates of occupancy to operate similar poker houses elsewhere in Dallas, including Champions Club, Dallas Poker Club and Fifty-Two Social.
Megan Wimer, who was at the time the assistant building official involved in the issuance and revocation of the certificate, testified to the Board of Adjustment that “there were complaints received and questions asked” after Texas Card House was issued its certificate. She said the revocation was in part “based on inquiring from laypeople and the general public.”
A city attorney also testified that “what really has changed is … neighborhood concern and resentment,” which included input from “several HOAs that stood up against it.”
Wimer denied the applications of the other three poker houses seeking certificates of occupancy, according to court records.
“I think it really smacks of what happened here in Houston,” Fertitta recalled, referencing his representation of a poker club called Prime Social, which was granted a certificate of occupancy, allowed to operate for a period of time and then raided and shut down by authorities before being allowed to reopen.
“That’s what I call opportunistic enforcement,” he said. “It’s a money grab that cannot be tolerated.”
Criminal defense attorney James P. Whalen of Frisco, who has represented clients in gambling cases, said he believes it will take a criminal case rather than a civil case to get any clarity on this issue in Texas.
“You’re going to have to have a case where someone gets charged and files the right motions to eventually get to the Court of Criminal Appeals to get some clarity on this statute,” he said.
For now, “we stand in the status quo of a gray area,” he said.
“But this is typical Dallas — they do things without thinking,” he said of the municipal government. “They had two years to think about this, and to turn around at the last minute and say, ‘Oops, never mind’? Come on, people.”