                                 ATTORNEYGENERALOFTEXAS
                                              GREG        ABBOTT




                                                  June 20,2005



 The Honorable John W. Smith                               Opinion No. GA-0335
 Ector County District Attorney
 300North Grant, Room 305                                 Re: Whether a business that holds an on-premises
 Odessa, Texas 79761                                      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.’ The frost 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 ,OOO.OO)    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




          ‘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].
The Honorable John W. Smith - Page 2                              (GA-0335)



                   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.CODEANN. $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. 5 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. 0 47.01(l).

         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 defmition.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 “[tlhe legal meaning of ‘bet’ involves not
only the ultimate winning of something ofvalue 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,




         ‘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 NJ. STAT. ANN. 0
2C:37-l(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. MTVNetworks, 796 F. Supp. 743,746
(S.D.N.Y. 1992) attached which quotes the New Jersey statute) (attachment to Brief).
The Honorable John W. Smith - Page 3                                 (GA-0335)



under such circumstances, the participant “plays and bets for money or other thing of value.” TEX.
PEN.CODEANN. § 47.02(a)(3) (Vernon 2003).3

         In order to constitute a “bet” under section 47.01 (l), 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
“[wlhile 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 TurfClub, Inc., 25 1 P.2d 926,929 (Colo. 1952); State
ex rel. Evans v. Bhd. ofFriends, 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 “[wlhether 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 soZeZyor


        31tis a “defense to p rosecution 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. Q47.02(b)(1)-(3) (Vernon 2003) (emphasis added).
The Honorable John W. Smith - Page 4                    (GA-0335)



partially by chance.” TEX. PEN. CODEAM\I. $ 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. $47.0 l(l)(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)(l). 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(l)
of the Penal Code on the ground that it is a “bona fide contest for the deterrnination of skill.” TEX.
PEN.CODEANN.0 47.01(1)(B) (V emon 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(l).

        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. CODEANN. $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 11.6 1(b)(7) or section
61.7 1(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
The Honorable John W. Smith - Page 5                              (GA-0335)



premises4 See 16 TEx. ADMIN. CODE $ 3531(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 35.3 1. 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 35.3 1 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, supru note 1, at 2.



         4Section 11.61(b) of the Alcoholic Beverage Code provides that “[tlhe [Alcoholic Beverage] commission or
administrator may suspend for not more than 60 days or cancel an original or renewal permit ifit 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 Am.          $ 11.61(b) (V ernon 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).
The Honorable John W. Smith - Page 6                   (GA-0335)



        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.CODEANN. $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.CODEANN. $47.01(3) (Vernon 2003). As a result,
the establishment does not commit an offense under section 47.04 of the Penal Code.

        Jn specific answer to your second question, a holder of an on-premises alcoholic beverage
permit may, without violating both section 47.04(a) ofthe Penal Code and, as acorollary, Rule 35.3 1
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).
The Honorable John W. Smith - Page 7                 (GA-0335)



                                      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,



                                             GRJ!&& 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
