Can a Texas bar or restaurant with a liquor license legally host a Texas Hold'em poker tournament?

TX AG Opinion GA-0335: Can a bar with a liquor permit host a Texas Hold'em poker tournament?

Plain-English summary

A district attorney asked the Attorney General about poker tournaments at businesses that hold an on-premises alcoholic beverage permit (bars and restaurants that serve liquor). He laid out two different setups and asked whether each was legal.

In the first setup, players pay an entry fee (around $25 to $50) for tournament chips and compete in Texas Hold'em. The chips have no cash value during play, but the players who do best split a cash prize pool funded entirely by the entry fees, with the house taking no cut. In the second setup, players pay nothing and never risk any of their own money. They get chips with point values, and the top finishers win prizes such as t-shirts, gift certificates, or, in progressive tournaments, trips and entries into bigger events.

The Attorney General's answer turned on a single question: do the players risk anything of value? Under Texas law, a "bet" is an agreement to win or lose something of value at least partly by chance, and it requires both a prize and "consideration," meaning the player has to give up (or agree to give up) something to play. Hosting a place where bets are made is the crime of "keeping a gambling place." In the first setup, players pay to compete for prizes that include their own money back, and poker carries at least some element of chance, so a bet occurs. A permit holder running that tournament would violate Penal Code section 47.04(a) and the Alcoholic Beverage Commission's Rule 35.31, which can cost the business its permit, and it does not matter that the house keeps none of the money. In the second setup, since nobody pays or risks anything, there is no bet, the premises are not a "gambling place," and the permit holder may host the tournament legally.

The opinion also clarified a point poker players often raise: it concluded the long-running debate over whether poker is mostly skill or mostly chance was beside the point under the Texas statute. Because the statute only requires that a game be decided "solely or partially by chance," and poker has at least some chance in it, that is enough to make the entry-fee tournament a bet.

Currency note

This opinion was issued in 2005. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Who this opinion affected (as of 2005)

Bars and restaurants with an on-premises alcoholic beverage permit: The opinion concluded that hosting a poker tournament in which participants risk money or anything of value for a prize violated both Penal Code section 47.04(a) ("keeping a gambling place") and the Alcoholic Beverage Commission's Rule 35.31, while a tournament in which participants risk nothing violated neither.

The Alcoholic Beverage Commission: The opinion explained that under Rule 35.31 a permittee who commits or negligently allows a chapter 47 gambling offense on the licensed premises violates Alcoholic Beverage Code sections 11.61(b)(7) or 61.71(a)(17), and the Commission may, after notice and hearing, suspend (up to 60 days) or cancel the permit.

Poker players and patrons: The opinion concluded that whether poker is predominantly a game of skill or of chance was irrelevant under the Texas statute, because any element of chance is enough to make a paid-entry tournament a "bet."

The opinion noted one point it treated as settled rather than open: it concluded that the fact that the permittee takes no cut of the entry fees and does not profit directly from the gambling is irrelevant to whether the permittee violated section 47.04(a) or Rule 35.31.

Common questions

Can a Texas bar with a liquor license host a paid-entry poker tournament?
No. The opinion concluded that a holder of an on-premises alcoholic beverage permit may not host a poker tournament in which participants risk money or anything of value for a prize, because doing so violates both Penal Code section 47.04(a) and Rule 35.31 of the Alcoholic Beverage Commission.

What if the house takes no cut of the entry fees?
It does not matter. The opinion concluded the fact that the permittee does not profit directly from the gambling is irrelevant to whether the permittee has violated section 47.04(a) or Rule 35.31.

What about a free tournament where nobody pays or risks anything?
That is allowed. The opinion concluded that when participants do not pay to play and do not risk any of their own money, no "bet" occurs, the premises are not a "gambling place," and the permit holder may host the tournament without violating section 47.04(a) or Rule 35.31.

Isn't poker a game of skill?
The opinion concluded that under the Texas statute it did not matter. Because a "bet" is an agreement to win or lose something of value "solely or partially by chance," and poker involves at least some element of chance, the skill-versus-chance debate did not change the result.

Does the "bona fide contest of skill" exception cover a poker tournament?
No. The opinion, agreeing with an Illinois decision construing nearly identical language, concluded that a bet in a poker game is not excepted from the definition of "bet" as a "bona fide contest for the determination of skill."

What can happen to the bar's permit?
The opinion explained that committing the offense of "keeping a gambling place" lets the Commission, after notice and hearing, suspend for up to 60 days or cancel the permit under Alcoholic Beverage Code section 11.61(b) or section 61.71(a).

Background and statutory framework

The opinion worked through chapter 47 of the Penal Code. Section 47.04(a) makes it an offense to knowingly use or permit another to use property as a "gambling place," which section 47.01(3) defines as property used for "the making or settling of bets" (among other things). A "bet" is "an agreement to win or lose something of value solely or partially by chance" (Tex. Pen. Code Ann. § 47.01(1)). Although the statutory definition does not spell out the risk element, the courts and prior opinions read "bet" to require both a prize and consideration, that is, the giving or agreement to give something of value to play (Odle v. State, 139 S.W.2d 595, 597 (Tex. Crim. App. 1940); Tex. Att'y Gen. Op. No. JM-412 (1985)). Applying that to the entry-fee tournament, the players risked $25 to $50 for the chance to win prizes drawn from their pooled fees, satisfying prize and consideration.

On the chance element, the opinion acknowledged a national split: some courts treat poker as predominantly a game of chance (for example, Indoor Recreation Enters., Inc. v. Douglas, 235 N.W.2d 398 (Neb. 1975)), and others as predominantly skill (for example, Ginsberg v. Centennial Turf Club, Inc., 251 P.2d 926 (Colo. 1952)). Texas opinions had treated the "predominant factor" question as a fact issue. But the opinion concluded the Texas statute made that debate irrelevant, because "solely or partially by chance" is satisfied by any element of chance, and it found no authority that a card game like poker lacks any chance beyond that attendant on every human endeavor. It also rejected the "bona fide contest for the determination of skill" exception in section 47.01(1)(B), following People v. Mitchell, 444 N.E.2d 1153 (Ill. App. 1983). Finally, it tied the criminal offense to the permit consequences: Alcoholic Beverage Commission Rule 35.31 (16 Tex. Admin. Code § 35.31(b)(14)) makes a chapter 47 gambling offense on licensed premises a ground for suspension or cancellation under Alcoholic Beverage Code sections 11.61(b) and 61.71(a).

Citations

Statutes and rules:

• Tex. Pen. Code Ann. §§ 47.01(1), 47.01(1)(B), 47.01(3), 47.02(a)(3), 47.02(b)(1)-(3), 47.04(a) (Vernon 2003)
• Tex. Alco. Bev. Code Ann. §§ 11.61(b), 11.61(b)(7), 61.71(a), 61.71(a)(17) (Vernon Supp. 2004-05)
• 16 Tex. Admin. Code § 35.31(b)(14) (2004) (Alcoholic Beverage Commission Rule 35.31)
• N.J. Stat. Ann. § 2C:37-1(b) (West 1995)

Cases:

• Odle v. State, 139 S.W.2d 595, 597 (Tex. Crim. App. 1940)
• Indoor Recreation Enters., Inc. v. Douglas, 235 N.W.2d 398, 400 (Neb. 1975)
• State v. Taylor, 16 S.E. 168 (N.C. 1892)
• Ginsberg v. Centennial Turf Club, Inc., 251 P.2d 926, 929 (Colo. 1952)
• State ex rel. Evans v. Bhd. of Friends, 247 P.2d 787, 797 (Wash. 1952)
• State v. Coats, 74 P.2d 1102, 1106 (Ore. 1938)
• Adams v. Antonio, 88 S.W.2d 503, 505 (Tex. Civ. App.-Waco 1935, writ ref'd)
• People v. Mitchell, 444 N.E.2d 1153, 1155 (Ill. App. 1983)
• Click v. MTV Networks, 796 F. Supp. 743, 746 (S.D.N.Y. 1992)

Other authorities:

• Tex. Att'y Gen. Op. Nos. V-238 (1947), V-544 (1948), V-1483 (1952), WW-222 (1957), C-619 (1966), JM-412 (1985), JM-1267 (1990)
• Op. S.C. Att'y Gen. (Jan. 22, 2004), 2004 WL 235411

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0335
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2005/ga0335.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

June 20, 2005

The Honorable John W. Smith
Ector County District Attorney
300 North Grant, Room 305
Odessa, Texas 79761

Opinion No. GA-0335

Re: Whether a business that holds an on-premises alcoholic beverage permit may host a poker tournament (RQ-0305-GA)

Dear Mr. Smith:

You ask whether a business that holds an on-premises alcoholic beverage permit may host a poker tournament under two specific fact scenarios.[1] The first situation you describe as follows:

Persons of an unknown number would pay a nominal fee to enter the "Texas Hold-Em" Tournament. The fee is probably negotiable but would be in the range of Twenty Five to Fifty Dollars ($25 to $50) per person. A "Texas Hold-Em" Poker Tournament would ensue with the registered players participating at various tables and using chips that although have a money denomination actually represent no money changing hands. (For the Fifty Dollar ($50.00) buy in the player would receive One Thousand Dollars ($1,000.00) in chips that have no actual cash value.) As the Tournament progresses the players that accumulate the most chips will by skill force out the less skilled players and at the end of the evening the winners at each table will accumulate and play a final table at which a certain number of prize places will be paid by the establishment to those persons winning the Tournament. The house intends to take no cut of the entry fee of each player and the entire prize pool that is generated by the number of players times their entry fee will be paid back to the winner players at the end of the night either in a first through third or first through fifth or first through eighth combination depending on the number of players.

Request Letter, supra note 1, at 2.

Section 47.04 creates the offense of "keeping a gambling place." That statute provides, in relevant part:

(a) A person commits an offense if he knowingly uses or permits another to 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.

TEX. PEN. CODE ANN. § 47.04(a) (Vernon 2003). "Gambling place" is defined as "any real estate, building, room, tent, vehicle, boat, or other property whatsoever, one of the uses of which is the making or settling of bets, bookmaking, or the conducting of a lottery or the playing of gambling devices." Id. § 47.01(3). "Bet" is defined in section 47.01 as "an agreement to win or lose something of value solely or partially by chance." Id. § 47.01(1).

The statutory definition of "bet" as a noun is inartfully drafted, in that it does not directly state that a person must risk something of value in order to fall within the definition.[2] In Odle v. State, 139 S.W.2d 595 (Tex. Crim. App. 1940), however, the court approved the following language: "The legal meaning of the term 'bet' is the mutual agreement and tender of a gift of something valuable, which is to belong to one of the contending parties, according to the result of a trial of chance, or skill, or both combined." Id. at 597. Furthermore, in Attorney General Opinion JM-412, this office concluded that a "casino nite" held by a school district in which "no person gives or promises to give anything of value in order to participate lacks the element of consideration that is essential to the offense of gambling under section 47.02 of the Texas Penal Code." Tex. Att'y Gen. Op. No. JM-412 (1985) at 2. The opinion declared that "[t]he legal meaning of 'bet' involves not only the ultimate winning of something of value but the initial giving or agreement to give something of value." Id. Thus, a "bet," for purposes of section 47.01(3) of the Penal Code, which defines "gambling place," inter alia, as a place for the making or settling of bets, requires the elements of prize and consideration. Under the facts you have described, a participant in the referenced poker tournament would be required to risk a sum of money ranging from $25 to $50 for the opportunity to win a prize that necessarily includes part of the money the participant has paid. It seems clear that, under such circumstances, the participant "plays and bets for money or other thing of value." TEX. PEN. CODE ANN. § 47.02(a)(3) (Vernon 2003).[3]

In order to constitute a "bet" under section 47.01(1), an agreement "to win or lose something of value" must also possess the element of chance, either "solely or partially." Id. § 47.01(1); see also Odle, 139 S.W.2d at 597 (legal meaning of term "bet" is the mutual agreement and tender of a gift of something valuable, which is to belong to one of the contending parties, according to the result of chance or skill or both combined). Thus, we must determine whether "Texas-Hold-Em," a form of poker, wholly or partially embraces the element of chance. In a recent opinion, the Attorney General of South Carolina considered the issue of whether "the game of poker constitutes a game of skill or one of chance." See Op. S.C. Att'y Gen. (Jan. 22, 2004), 2004 WL 235411, at *2. In concluding that the element of chance predominates in poker, the opinion acknowledged that "[w]hile there is a split of authority, several courts have concluded that a live poker game is a game of chance rather than skill." Id. See, e.g., Indoor Recreation Enters., Inc. v. Douglas, 235 N.W.2d 398, 400 (Neb. 1975) (evidence supported trial court's conclusion that poker is predominantly a game of chance); State v. Taylor, 16 S.E. 168 (N.C. 1892) ("It is a matter of universal knowledge that no game played with the ordinary playing cards is unattended with risk, whatever may be the skill, experience, or intelligence of the gamesters engaged in it.").

On the other hand, a number of state courts have held that poker is not predominantly a game of chance. See, e.g., Ginsberg v. Centennial Turf Club, Inc., 251 P.2d 926, 929 (Colo. 1952); State ex rel. Evans v. Bhd. of Friends, 247 P.2d 787, 797 (Wash. 1952); State v. Coats, 74 P.2d 1102, 1106 (Ore. 1938). In Texas, several attorney general opinions have declared that a particular game is a "game of chance" if chance predominates over skill. See Tex. Att'y Gen. Op. Nos. JM-1267 (1990), C-619 (1966), WW-222 (1957), V-1483 (1952), V-544 (1948), V-238 (1947). See also Adams v. Antonio, 88 S.W.2d 503, 505 (Tex. Civ. App.-Waco 1935, writ ref'd) (dicta to the effect that gaming statute was violated in instance in which chance predominates over skill). Attorney General Opinion JM-1267 stated that "[w]hether any of the gaming activities about which you ask [including poker] involves the dominating element of skill, as opposed to chance, is a question of fact that cannot be resolved in the opinion process." Tex. Att'y Gen. Op. No. JM-1267 (1990) at 6.

In our view, however, the plain language of section 47.01(1) of the Penal Code renders irrelevant the matter of whether poker is predominantly a game of chance or skill. As we have indicated, the word "bet" is defined as "an agreement to win or lose something of value solely or partially by chance." TEX. PEN. CODE ANN. § 47.01(1) (Vernon 2003) (emphasis added). If an element of chance is involved in a particular game, it is embraced within the definition of "bet." We have not found any authority holding that there is no element of chance involved in a game played with cards, including poker, other than the chance attendant upon every human endeavor.

Moreover, section 47.01 provides that the term "bet" does not include, inter alia:

(B) an offer of a prize, award, or compensation to the actual contestants in a bona fide contest for the determination of skill, speed, strength, or endurance or to the owners of animals, vehicles, watercraft, or aircraft entered in a contest.

Id. § 47.01(1)(B). In People v. Mitchell, an Illinois court examined a statute that contained language virtually identical to that quoted above. The court declared:

In our opinion, the poker game played under the circumstances of the instant case [hold 'em poker] is precisely the type of "game of chance or skill" which falls squarely within the plain meaning of the activity proscribed under subsection (a)(1). Although there was some testimony tending to indicate that the poker games involved some degree of skill, we do not find the jury's implicit conclusion that they were not "bona fide contests for the determination of skill" so improbable as to warrant a reversal. Both direct and circumstantial evidence was introduced to support the conclusion that the games, in fact, required a combination of skill and chance, and that they were definitely not the type of "bona fide contests" excepted from subsection (a)(1).

People v. Mitchell, 444 N.E.2d 1153, 1155 (Ill. App. 1983). We agree with this court that a bet in a game of poker, of whatever type, is not excepted from the definition of "bet" in section 47.01(1) of the Penal Code on the ground that it is a "bona fide contest for the determination of skill." TEX. PEN. CODE ANN. § 47.01(1)(B) (Vernon 2003). In addition, because at least some element of chance is present in a game of poker, a "bet" in such a game constitutes an agreement to win a thing of value at least "partially by chance." Id. § 47.01(1).

Under the scenario you have described, then, a bar or restaurant that hosts a "Texas Hold-Em" poker tournament would violate the prohibition against "keeping a gambling place." See Request Letter, supra note 1, at 2; TEX. PEN. CODE ANN. § 47.04(a) (Vernon 2003). Chapter 47 of the Penal Code does not contain any specific reference to a person or company that holds an on-premises alcoholic beverage permit. But pursuant to Rule 35.31 promulgated by the Alcoholic Beverage Commission (the "Commission"), a permittee contravenes section 11.61(b)(7) or section 61.71(a)(17) of the Alcoholic Beverage Code if he or she violates or negligently allows another to violate "any gambling offense described in Chapter 47 of the Texas Penal Code" on the licensed premises.[4] See 16 TEX. ADMIN. CODE § 35.31(b)(14) (2004). Thus, committing the offense of "keeping a gambling place" permits the Commission, after notice and hearing, to suspend or cancel the license of a permittee pursuant to either section 11.61(b) or section 61.71(a) of the Alcoholic Beverage Code. The fact that the permittee does not profit directly from the gambling is irrelevant to the question of whether the permittee has violated either section 47.04(a) of the Penal Code or the Commission's Rule 35.31. In specific answer to your first question, a holder of an on-premises alcoholic beverage permit may not, without violating both section 47.04(a) of the Penal Code and Rule 35.31 of the Alcoholic Beverage Commission, host a poker tournament in which participants risk money or any other thing of value for the opportunity to win a prize.

You describe the second scenario in the following terms:

[A] question has arisen about retailers, bars and restaurants who hold Texas Hold-'Em Poker tournaments. In these tournaments, consumers do not pay to play and do not risk any of their own money at any time during the tournament. Chips are assigned point values and those players with the most points at the end of the tournament are provided prizes, anywhere from t-shirts to gift certificates. In progressive tournaments, winners are awarded a chance to play at the next level tournament with an opportunity to win even greater prizes such as vacations to Las Vegas, Nevada, and entry into World of Poker Tour events ($10,000 value). Since participants are not betting or risking their money or anything of value during the game and nothing is lost by participants, do these tournaments constitute gambling under Texas Penal Code Ann. Sec. 47.02?

Supplemental Request Letter, supra note 1, at 2.

Again, we note that section 47.04(a) of the Penal Code provides, in relevant part, that a person commits an offense if the person knowingly uses or permits another to 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. See TEX. PEN. CODE ANN. § 47.04(a) (Vernon 2003). Under the facts you have presented in this second scenario, "consumers do not pay to play and do not risk any of their own money at any time during the tournament." Supplemental Request Letter, supra note 1, at 2. Pursuant to the test promulgated by the court in Odle, this lack of "tender of a gift of something valuable" means that no "bet" has occurred. Odle, 139 S.W.2d at 597. In such case, the property does not meet the statutory definition of "gambling place." As we have indicated, a "gambling place" is property used in "the making or settling of bets." TEX. PEN. CODE ANN. § 47.01(3) (Vernon 2003). As a result, the establishment does not commit an offense under section 47.04 of the Penal Code.

In specific answer to your second question, a holder of an on-premises alcoholic beverage permit may, without violating both section 47.04(a) of the Penal Code and, as a corollary, Rule 35.31 of the Alcoholic Beverage Commission, host a poker tournament in which participants do not risk money or any other thing of value for the opportunity to win a prize. See id. § 47.04(a); 16 TEX. ADMIN. CODE § 35.31(b)(14) (2004).

SUMMARY

A holder of an on-premises alcoholic beverage permit may not, without violating both section 47.04(a) of the Penal Code and Rule 35.31 of the Alcoholic Beverage Commission, host a poker tournament in which participants risk money or any other thing of value for the opportunity to win a prize. A holder of an on-premises alcoholic beverage permit may, without violating either section 47.04(a) of the Penal Code or Rule 35.31 of the Alcoholic Beverage Commission, host a poker tournament in which participants do not risk money or any other thing of value for the opportunity to win a prize.

Yours very truly,

GREG ABBOTT
Attorney General of Texas

BARRY R. McBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee

Footnotes

[1] Letter from Honorable John W. Smith, Ector County District Attorney, to Honorable Greg Abbott, Texas Attorney General (Dec. 17, 2004) (on file with Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter]; see also Supplemental Letter from Honorable John W. Smith, Ector County District Attorney, to Honorable Greg Abbott, Texas Attorney General at 2 (Dec. 30, 2004) (on file with Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Supplemental Request Letter].

[2] By contrast, a New Jersey statute defines "gambling" to mean "staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the actor's control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome." See N.J. STAT. ANN. § 2C:37-1(b) (West 1995) (emphasis added); Brief from Charles E. Humphrey, Jr., to Honorable Greg Abbott, Texas Attorney General (Jan. 25, 2005) (on file with Opinion Committee) (Click v. MTV Networks, 796 F. Supp. 743, 746 (S.D.N.Y. 1992) attached which quotes the New Jersey statute) (attachment to Brief).

[3] It is a "defense to prosecution under this section" 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.

TEX. PEN. CODE ANN. § 47.02(b)(1)-(3) (Vernon 2003) (emphasis added).

[4] Section 11.61(b) of the Alcoholic Beverage Code provides that "[t]he [Alcoholic Beverage] commission or administrator may suspend for not more than 60 days or cancel an original or renewal permit if it is found, after notice and hearing, that any of the following is true:

(7) the place or manner in which the permittee conducts his business warrants the cancellation or suspension of the permit based on the general welfare, health, peace, morals, and safety of the people and on the public sense of decency[.]

TEX. ALCO. BEV. CODE ANN. § 11.61(b) (Vernon Supp. 2004-05). Likewise, section 61.71(a) provides that "[t]he commission or administrator may suspend for not more than 60 days or cancel an original or renewal retail dealer's on- or off-premise license if it is found, after notice and hearing, that the licensee:

(17) conducted his business in a place or manner which warrants the cancellation or suspension of the license based on the general welfare, health, peace, morals, safety, and sense of decency of the people[.]

Id. § 61.71(a).