How Social Clubs (TX) Are Navigating In The Gray Area

Hot Climate

Social clubs are popping up around Austin, Houston, and San Antonio quicker than small town gossip. For someone looking to blaze a trail for poker in the lone star state, getting involved in this venture would be equivalent to wagering your livelihood on unpredictable outcomes; it’s a gamble for sure, and there’s other opponents at the table ready to call if they feel you’re bluffing. Sure, you might be familiar with the game of poker, but bluffing won’t get you far in this market. Best practice is to delve into all the technicalities surrounding this type of gaming establishment before committing to your cards. 

Educate yourself about the loopholes and regulatory processes put in place on federal and state levels. Then, enlighten yourself with all the perplexing history surrounding all that is gambling in the state of Texas. There is enough controversial information online to make your head spin. On a grand note, the cultural scene of poker is indeed thriving, and rumor has it, there are more up and coming social clubs opening soon with players impatiently waiting to get in on the action.

Believe it or not, most businesses rely on word-of-mouth marketing which can impact a businesses means for success. In Texas, we find there are strong opinions regarding the validity of gambling in the state, which makes for a great deal of chit-chat. The most outrageous theories flood the pages of online forms, with gossip regarding local social clubs. The clamor usually arises from disgruntled players that have lost money in the heat of the game, but usually with little legitimate operational insights. Many instances of social media slander prove to be irate x-employees or warring clubs trying to defame one another. These pseudonymous platforms make fact checking difficult, but a few valid points come to the surface: Can social clubs really survive in this contentious environment? There is such a buzz surrounding recreational poker in texas, and with valid concern from those in favor of the sport.

Despite the fact that poker is illegal, it is still being played in membership based clubs around the state called social clubs. This certainly explains the dubious climate surrounding social club operations. Those that oppose the movement are typically with political and religious organizations that openly loathe the gambling community, and make efforts for a rocky environment for club owners. Those in favor are looking forward towards a more progressive gambling landscape in Texas; Fully aware of the economical benefits gambling establishments bring to the state. These supporters are making efforts to legalize poker with help from reputable resources at legislation levels and from out of state enterprises. Needless to say, poker remains an illegal venture in Texas and a slippery slope to climb as a business owner.

So you want to own a social club? Well, it can bring unforeseen challenges to the table. Social clubs are considered high risk enterprises that leave club owners, most times, without financing resources. When traditional financing comes with unreasonable interest rates, owners tend to cut corners as well as cut employment positions to save on capital exposure. Taking advantage of high APR credit cards could be the band-aid needed in the moment, but does not prove to be a reliable source of credit in the long run. When operators have no choice but to pinch pennies, it tends to provide a domino effect of a dysfunctional working environment. When operations are compromised, the guests will take notice and head to the forms to speak out. Finding private equity partners might be your best chances for obtaining the working capital you’ll need to thrive.

We’re hoping to shed some light on the current temperature of the social club market, especially for those on the fence about gray market operations in good ol’ Texas.

Loophole Operations

Despite all the uncertainty surrounding poker in Texas, there are currently 63 social clubs that operate legally. How is gambling illegal in Texas, yet poker can be permissibly played? Using membership based systems opened the door to a loophole operation that provides for a justifiable means of gambeling in Texas. What that means is with the right permits, licenses, and accounting methods, poker can be permitted to play for recreational enjoyment.

To partake in games and amenities at a social club, patrons are required to sign up as a club member and pay membership fees to allow the patron to participate in that social club’s games and tournaments. Memberships can range in amounts ($) depending on the membership you choose to sign up for and the amenities you’re interested in. Every social club location you visit may offer a variety of amenities such as food/bar service, message and lounges to enjoy, while others strictly offer daily games and tournaments and appear to be not as extravagant.  

In addition to membership dues, special fees may apply depending on what games and tournaments patrons want to participate in. A seat rental fee to partake in the action would be considered a special fee. Seat rentals can be charged hourly or half-hourly depending on the game at hand. That’s a lot of different fee’s right? Actually, hourly rates and membership fees can be more practical for the avid poker player than the traditional poker rooms found in casinos, where the minimum buy-ins and cost per hand is much higher than what you would see in member only card clubs. 

Being a membership based card room allows for a safe, fair and neutral territory for poker enthusiasts to gather and play. Social club owners should be proactive in maintaining a safe gaming facility where they abide by state laws and regulations to avoid legality issues and increase their efforts for success. 

Heritage of Poker

So you ask yourself why all the hostility in this arena? Perhaps diving deeper into the history of gambeling might paint a clearer picture about Texas poker laws. There is no definitive finding as to who originated the game but we do know our ancestors all played a similar game of cards. As Europeans migrated to America, so did their card games, religion and disease, not in any particular order. The most historical event in US history was the start of the California Gold Rush. When it began, it reinvigorated the American economy. As the money supply increased, so did the interest to bet a day’s hard work in gold with a hand of poker. Minors, soldiers and common folk alike would sign up to play poker, placing bets against other opponents in hopes of tripling a day’s pay in wages. It was the thrill of the game and the chances of becoming rich overnight that further increased poker’s popularity around the US.

When Europeans migrated to America, they sought opportunity for wealth and religious freedoms. At various times in history, gambling and religion shared very similar elements in common, such as believing in the unknown, and having faith in the possibilities by taking chances. As christianity made its way to the US, their views on gambling became objectionable and critical, as gambling started to intertwine with booze and crime. Gambling was then viewed as greed, and greed was sin. When religious reformation was taking place, many other religions took a liberal attitude towards gambeling also. In due time, poker was considered a vice and forbidden in many states including Texas. Unfortunately, those same out-of-date views on gambling remain in many states.

Out of curiosity, we took a look at the state’s religious demographics because we know there is a strong correlation between gambling and spirituality in Texas. We come to find that 77% of Texas is of Christian faith. It could be the reason why Texas continues to take such a firm stance against gambling and forbid poker playing. It’s a known fact that Texan’s hold firm in their religious beliefs and take pride in their religious freedoms. In Fact, Texas has the strictest gambling laws in the country, but even having opposing beliefs can’t stop poker from being played permissibly as it is today. An activity that took shape in early America has made its way through the good and bad times of our historical upbringing and into our culture today.

Being The Underdogs

Besides all the day to day operations and management of a poker club, operators also have to keep in mind that you’re operating in a gray area that comes with hefty restrictions. And if that isn’t enough, your business will be actively monitored, without question.  It seems as though Texas legislation is actively making it harder to open and operate social clubs these days. 

In 2019, in Harrison County, the district attorney and Houston PD were conducting a 2 year joint investigation into two separate social clubs (separate owners) located in west Houston. Both businesses were accused of laundering money and engaging in organized criminal activity. Both social clubs bank accounts were being monitored, and both businesses were making large, partially cash deposits throughout a short period of time (12 months) into multiple business operating accounts. Naturally, a red flag went off, and the district attorney and Houston PD labeled this as obvious deception. 

The back story; Charges were dropped because the district attorneys and Houston PD were going after these poker clubs for reasons of public nuisance and assumption of fraud without hard evidence.  A vendetta is not reason enough to harass a business because of the market they operate within; They quickly learned that evidence is key. The accused parties obviously had the financials to back up the deposits and were fully licensed. Imagine being attacked for depositing revenue and being successful at what you do? Good News: Both clubs are still open and operating today. Bad News: They did take a hit to their reputation, and we are finding that it doesn’t seem to be an uncommon circumstance. 

Out of state enterprises are looking to roll the dice on gambling facilities in Texas, hoping to bring positive transformation to their market. The Las Vegas Sands group recently spent upwards of 10 million dollars in lobbying to bring Casinos and destination gambling resorts to Texas, only to have their agenda vetoed as a result of politicians’ disapproval of gambling due partly by their religious beliefs and political stance. The Sands Group plans to stick to their guns and continue their campaigns to bring legal gambling and resort casinos to Texas. It would seem like an uphill battle but they are confident they will find support from across the state. The Sands Group is fully aware of the potential in the space with player interest on the rise; With strong efforts, the future of poker and other Vegas type gambling is bright.

High Demand

The poker market is hot, and there is an influx of players looking somewhere to double their chips, especially now that covid protocols are easing up. Based on poker statistics, the demand for card games has risen steadily each year for online and live card games. Before the pandemic, 6.8% of the net adult population played a variation of poker on a regular basis. That’s 40 million people in the world that would engage in poker oftentimes. When the pandemic was at its worst, prompting a lock down that closed all gambling facilities, your avid poker player found themselves needing to fill the poker void. The next best thing to live poker was – Online Poker

Naturally, there was a surge in online gaming during lockdown, and for some it filled their poker appetite. Now that the live poker scene is experiencing a surge of players interested to get back in the saddle it really is drawing interests to potential business owners to open up shop. What we are experiencing now is an influx of poker players and a boom of new social club launchings. This is a tremendous opportunity to cater to the rise in interests for poker games and tournaments. Why not open a social club for poker? Can it really be as easy as having faith in your dreams? For some, the answer is yes, especially those who have the poker expertise, but only if they have a core understanding of the efforts it takes to operate such an enterprise. 

To be in this business, an entrepreneurial spirit is required. An authentic business owner with honest intentions in the space. It’s not only about the game of poker, it’s also a tactical game of sorts where creativity thrives. All social club operators have one shared goal in common and that is keeping players interested, happy, and their surrounding community content with poker operations. Aside from fulfilling their business ownership interests, they must be aware of the regulations that allow them to operate legally. 

Poker Culture Today

Whether you’re a leisurely player, a lifestyle professional or just a fan, you can appreciate all the elements it takes to host poker in Texas. Despite all the misinformation found online, social clubs seem to have the odds in their favor these days. The wonderful thing about poker is its adaptability to a risky market. We are seeing the resilience of the poker community and their ability to conform to an ever changing gaming environment, proving that social clubs can be successful in Texas. 

Thanks to loophole operations, the game of poker can be structured in such a way that overrides the general rule of thumb in most counties. Of course, in any industry, there is going to be factual information that’s worth acknowledging and a lot of hearsay that could influence even the most liberal believers to take a deeper look into matters. We suggest staying away from conspiracy theories and look at the cold hard facts of the social club operations. Getting involved as a patron might provide the best outlook for how social clubs are managed and enjoyed today. 

We all walk a fine line when it comes to any leisurely gambling activity. We surely understand the concerns of those in opposition of the poker movement, and at the same time see the effort being made from the gaming community to provide fair and reasonable poker games. Will there ever be a joining of the two worlds? One can only hope that others start to educate themselves on this matter and find a middle ground. Thanks to a lot of hard work, poker can be 100% regulated and enjoyed. The rules are slightly different but the passion for poker prevails in Texas. 


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