Lodge Card Club Raided / Grand Jury does not indict any Lodge employees

By the end of summer sounds reasonable. How much money do u have there?

While not the worst outcome by any means, this really sucks for everyone involved. Considering the Full Tilt fiasco, I hope you guys get paid relatively quickly and without issue. I believe Doug

If the state proceeds via TABC to LAJ with a finding that the basic business model is illegal gambling (only take an administrative hearing), I don't think the other site (or likely any room) remains open very long. Once the first one falls, the others are likely to s/d. This is true even if they "appeal" (tech. it is not an appeal) the ALJ decision into civil court.

At that point, the club(s) will need to find a way to "overturn" the ruling but it is going to be difficult and lengthy process. This is the adantage the state/DA has by not pressing criminal charges. It allows TABC to lead the administrative action efforts where state burdens are greatly reduced.

Once one club (assume The Lodge) is found to be illegal gambling, any citizen can file to have any club s/d for a year as a nusciance. The burden then shifts for "that club" to demonstrate why their operation is different than the Lodge was. And how theirs is really legal.

Only if they are fools.

These are not the only liabilities outstanding. Once they, esp. if it is all the owners in proportion to their ownership %, pay they have likely shredded any liability protection the LLC provided them.

You don't get to pick and choose who gets paid and in what order.

Now after everything wraps up, there are a couple of paths. Lodge could win, get all their money back, re-open and continue on. In that case, no reason for Doug, et al to pay the players as the Lodge will do it as a regular course of business.

But if the Lodge loses, eventually files BK, after that is settled. Doug, et al, could choose to personally pay who they want with personal money. Since the corp debt was discharged against any assets they had and the creditors got what was there, and the LLC closed, Doug's actions would not be corp as there is no corp then. He can give who he wants his money.

But that highly unlikely to happen soon or even this year, unless the The Lodge just rolls over and shutsdown permanently. Assuming that the other location is somewhere in the mix as a sub LLC. That would have to be spun out and or s/d and reopened completely separate.

But that actually gets very tricky because while BK and liabilities can climb up the corp structure, they don't go across or down the structure (or at least not w/o fraud involved)

not to state the obvious

but the law is clear that the club needs to be truly private to not be considered gambling and if they arent checking memberships at the door they sound f-cked

I think the silver lining of this whole situation is that the case is so high profile that a court case is inevitable, possibly even with the Texas Supreme Court, and the murkiness surrounding Texas poker will ultimately be resolved one way or the other. A clear set of guidelines could be established that allows businesses to operate without the fear of shutdown once everything is defined. Other clubs in the state should be supporting The Lodge in their efforts to obtain clarity through court, regardless of the outcome.

The Supreme Court already declined to review the TCH Dallas case after TCH won in an appellate court. And the city spent over half a million dollars litigating it.

That was over a permitting issue. This is obviously quite a bit more severe of a case with assets seized, etc. Not sure it will make it to the Supreme Court though.

But as it stands, because of Civil Asset Forfeiture laws, now the work is on The Lodge if they want to try and fight it and prove the seized funds are legit and should be returned.

Yes but
1. Being private means more than just checking at the door
2. However, if that was Lodge only flaw, that is an easily fixed defect
3. Being private place alone is enough to make the gambling legal

Main point, while allowing non-members to wander was an issue, I don't think it is a big enough issue alone. Certainly not enough to f*ck the entire biz model of all rooms. But if they knock out a second of the three legs (economic benefit), that one is the biggie.

By sticking to the admin law path, the state is keeping it where they have the advantage.

That case, esp the appeal, had little to nothing to do with gambling law. It turned on a case of the judge substituting his opinion over that of the zoning board. Significant because the law is clear that as long as the board has any even the slimest of rational basis for the decision, the judge must defer to them. That doesn't apply here.

So once the appeal court ruled as a matter of law (not fact) that the judge errored, there really wasn't anything that further appeal would accomplish.

But the case itself had nothing to do with the particulars of the biz model. It was about deference within the gov't.

I wonder if this whole lodge situation will bankrupt doug and he has to go back to grinding poker

I doubt it will bankrupt him (unless there are large civil penalties) but I'm more curious about whether or not he stays in Texas if they lose the case. I can't imagine he would.

Not even then. As long as the state goes administrative/civil, the actions will be against the Lodge not Polk personally. Very unlikely any penalty / fine is applied personally or even could.

Nobody knows what his net worth is. He's a smart guy so we can probably safely assume he's not overleveraged with the Lodge but who really knows besides him and those close to him? He may have personal guarantees with lenders that could be additional liabilities on his horizon in addition to him stating that he would make people right on their outstanding poker chips.

Other than Texas, I'm not sure what poker landscape he may consider attaching himself to that is in a comparable situation. The northeast is the armpit of live poker. Colorado and Kentucky probably doesn't make any sense either. Biloxi area is probably worse than the northeast.

I’m the person who always looks at the 1-3% scenario…

Is there even a small possibility that Doug and investors could have this location permanently closed, refuse to pay people, and still have plenty of profit when its all said and done?

If it is possible, could it also be possible for this to happen at other locations and still come out in the positive?

Possibly permanently close…definitely possible. Some would say probable. IMO it depends on State/TABC/DA intentions. I believe the business model is likely in violation of the law but does state/TABC want to steer it to a less illegal model or do they want to sd all rooms. I believe state has grounds to achieve their goals but don’t know what they are.

Refuse to pay? Well totally up to Doug, et al and the outstanding liability. He has said not gonna happen but until things shake out and at least get close to complete no one really knows. Probably not even him.

But if poker in TX goes away, the carcass of Lodge has no value. So there will not be plenty of profit left. It comes down to what if anything Doug, et al have extracted already.

If the state intends to spread any finding across other rooms, the state will succeed

I would not be so optimistic on the timeline. If Doug says customers will get paid, I believe him. But the legal process moves very slowly. Based on my experience with the Full Tilt freeze and a recent crypto company bankruptcy, this could easily take several years.

Agreed. PLO Professor mentioned in a recent video that in Michigan when they shut down his club no charges were filed until about a year later.

If I operate a card room in Texas I'm starting the steps to shut down yesterday until legislature or a court clarifies things.

I guess the lesson here for me in this case, and I'm not a high limit player, is to NEVER leave money or chips in the cardroom that could possibly be confiscated by government pirates. I can see how this is a logistical challenge for some, but not the majority.

Has Doug paid the players?

I wonder how much money Choctaw and Winstar pumped in to get this done? Choctaw and Cherokee have spent millions upon millions keeping a casino out of my city since both have one that borders it.

If this was a Choctaw/Winstar thing starting with an Austin based room would be a weird choice. They could at least knock out TCH Dallas and Las Colinas and get the traffic back for themselves in the process. Winstar doesn't even have an open poker room right now.

That is MONTHS away at best. The legal process is almost defnitely going to take 9+ months at best unless Lodge settles or just gives up and files BK. Even then months not days/weeks.

Polk would be a complete fool to get out ahead of the process. I don't think he is a fool. If he is, his legal counsel will still try to hold him back.

This says nothing about him or his commitment etc. It is just they way legal processes work.

If this is your attitude, you would not be operating a card room in TX. The TX operators have long known something like this was possible. They can 99.9999% believe they are operating perfectly legally, but could not ever be certain.

The smart ones likely long ago have taken steps to limit how much capital is exposed to seizure. The less smart ones are doing so right now.

Note, I am not making any comment on you or your opinion, only that with that opinion you would not have chosen to open because this risk is not new.