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Texas hold ‘em poker is keeping lawyers busy these days, but not at the tables. The wildly popular card game has created a buzz over the legality of using poker tournaments to raise money for charitable causes. Over the last year, organizations nationwide, from schools to churches to plain old poker-junkie groups, have turned to lawyers for help in battling what they deem as rigid charity poker laws. While poker tournaments have proven to be huge money makers for many charitable causes, not all states allow poker fundraisers, and authorities are increasingly cracking down on groups that try to host them. In California, for example, a business association recently was forced to cancel a poker fundraiser for a local library after state authorities sent notice that the event was illegal. In Texas, a poker tournament for breast cancer was canceled due to legal issues. And in Oregon, a mother trying to raise money for her kids’ school through charity poker ran into similar opposition. So what’s a charity that wants to cash in on the poker craze to do? “Consult with legal counsel and do it sooner rather than later,” advised attorney Kelly Elsea, who is busy helping the Wichita Amateur Poker League in Kansas launch a national poker tournament to benefit injured soldiers in Iraq. Elsea of Kansas City, Mo.-based Stinson Morrison Hecker’s Wichita, Kan., office sees poker tournaments as a new source of work for attorneys. “You’ve got licensing agreements, employee issues, corporate issues, intellectual property issues. You’ve got the whole gamut,” said Elsea, who believes charity poker has even more in store for lawyers in the near future. “I think the popularity in these types of events is growing. And as with any new business, everyone feels more comfortable with legal counsel.”
State Action New York: Pending legislation would legalize low-stakes Texas Hold ‘em tournaments. Minnesota: A measure would legalize no-entry fee Texas Hold ‘em tournaments with prizes of marginal value. Texas: A bill would make charity poker legal only in bingo halls. Oregon: A law legalizing charity poker tournaments passed in May 2005, but many private bars and clubs still want in on the action. California: A bill is pending that would carve out an exception to allow nonprofits to host charity poker tournaments.

A poker-hungry nation Over the last year, Texas Hold ‘em has spurred legislative action nationwide, with many state lawmakers bending to meet the demands of poker-hungry charities and private businesses eager to cash in on the game’s popularity. “Give the people what they want. That’s the No. 1 rule in politics,” said Maine state Senator Kenneth Gagnon, who voted in favor of a Texas Hold ‘em bill that would legalize charity poker in Maine. The bill has not yet been signed by Maine’s governor. Gagnon said he has no problem with charity poker events. They don’t pose the typical gambling problems, like addiction, he said. They’re held only occasionally. And the demand is already out there. “It’s such a big event. People are doing it online. People are going to other states to play in them,” he said. In the last year, bills to legalize Texas Hold ‘em tournaments for both charitable and private groups were introduced in at least half a dozen states, including California, Maine, Minnesota, New York, Oregon and Texas. The proposed measures vary state to state. For example, the New York bill would legalize low-stakes Texas Hold ‘em tournaments. A Minnesota measure would legalize no-entry-fee Texas Hold ‘em tournaments with prizes of marginal value. And a Texas bill would make charity poker legal only in bingo halls. Oregon passed a law legalizing charity poker tournaments in May, but many private bars and clubs still want in on the action. Attorney James Neill of Seattle-based Davis Wright Tremaine’s Portland, Ore., office, who specializes in gaming and hospitality law, noted that several of his bar and club clients have called him seeking guidance on hosting Texas Hold ‘em tournaments. He tells them right off the bat that Oregon law prohibits private clubs and bars from hosting such events, but that they might want to consider letting a charity host it for them. “I tell them that in those games the house cannot take a piece of the action. So I then tell them that there are other options. One of those is to allow a charity to come into your club and conduct it,” said Neill, noting that Oregon’s gaming laws are very strict. “If you conducted an illegal tournament for whatever reason, the state police would say you are promoting gambling and they would jump on you. No question about it.” For gaming lawyer Frank DiGiacomo of Philadelphia firm Wolf, Block, Schorr and Solis-Cohen’s Cherry Hill, N.J., office, the poker craze has spurred some new interest outside his usual gaming clients. Most recently, he said, financial services clients, such as commercial lenders, have sought his advice on offering employee incentive programs that have a gambling theme. For example, employees could earn “chips” during the incentive period for various achievements, and at the end of the promotional period, the company would host a casino night. There, employees could gamble with their “incentive chips” on games such as poker or redeem them for various prizes such as iPods. “Gaming’s hot. Poker’s hot. And [companies] are trying to latch onto that interest and make their sales-incentive programs more interesting by having this kind of poker theme to it,” said DiGiacomo, noting that companies in Pennsylvania have launched such gambling-themed incentive programs. “It incentivizes the staff and there’s the ability to take what you’ve earned and somehow increase that at the end of the promotion with a casino night,” he said. DiGiacomo noted that such casino-themed incentive programs are legal in most states whose gambling laws are more flexible in terms of what is and isn’t gambling. But states with strict gambling laws, such as New Jersey and New York, outlaw such events because they would be considered gambling. For example, DiGiacomo said he has clients in Pennsylvania who have successfully launched casino-style employee incentive programs. But he has advised clients against doing so in states such as Ohio, Texas, Utah and West Virginia, where gambling laws are more strict. Texas authorities are also cracking the whip on Texas Hold ‘em tournaments, which, ironically, are banned in the state for which they are named. In Houston, for example, organizers were forced to cancel a poker tournament in May that would have benefited The Susan Komen Breast Cancer Foundation. Assistant District Attorney Marc Brown said the DA’s office in Harris County, Texas, got a tip about the planned event, which would have violated a Texas law that prohibits poker tournaments in public places where the house takes a cut and players pay to play. He had to break the news to the organizers that they had to cancel the event. “There were people who were not happy with us. And the thing that I kept trying to stress was, ‘We didn’t write the law,’ ” Brown said. The issue was also a personal one for Brown. “My dad is currently battling cancer. And of course anything that could raise money for cancer is near and dear to my heart. So I didn’t relish doing it,” he said. “I felt that I was right on the law, but you hate to tell people who are trying to do something worthwhile that they can’t do it.” Meanwhile, Brown said his office has received several calls from charities that are still interested in hosting Texas Hold ‘em benefits. He tells them that such events are illegal and advises them to get an attorney and contact their legislator if they don’t like the law. The phones have also been ringing off the hook at the California Attorney General’s Office, which has been inundated with requests by charities looking to host poker tournaments. But, like Texas, California also forbids poker charity events. “Unfortunately, the only answer we can give them is, ‘Don’t hold the game,’ ” said Nathan Barankin, spokesman for California Attorney General Bill Lockyer. Barankin said that in the last month, the AG’s office has made hundreds of phone calls to charities that have publicized charity poker tournaments, unaware of the law. He noted that while many charities only recently discovered the popularity of such events, they are now learning that they’re illegal. “When we’ve heard about games or events, we’ll pick up the phone and call people and usually they’re upset about the law, but they’re glad they knew it,” said Barankin, noting that the state has caught some flak for shutting down some charity events. “We ain’t cracking down on squat. All we did was tell them what the law was.” Under current law, a charitable group that conducts a Texas Hold ‘em event would be guilty of a misdemeanor and subject to a year in jail or a $5,000 fine. Changes in California Barankin, meanwhile, anticipates some legislative changes on the horizon for California charities. Currently, a bill is pending in the state Assembly Appropriations Committee that would carve out an exception to allow nonprofits to host charity poker tournaments. A hearing on the bill is likely this month. Assemblyman Alberto Torrico sponsored the bill after learning that reputable nonprofit groups were running into trouble with the authorities regarding casino night fundraisers. “Several well-established and reputable nonprofit organizations in my district had been informed by law enforcement that their upcoming ‘casino night’ fundraisers would violate state law. I believe there should be a simple way to exempt such events from those restrictions as long as appropriate safeguards are included to limit the size, scope and frequency of nonprofit gambling,” said Torrico, who sees poker tournaments as viable sources of money for essential services. Michigan gaming and hospitality lawyer Eric Eggan of the Lansing, Mich., office of Detroit-based Honigman Miller Schwartz and Cohn, said charity poker tournaments have also proven to be financial windfalls for struggling charities. He said that in Michigan-which he called one of the more progressive gambling states-Texas Hold ‘em tournaments have helped revive the state charitable gaming industry. He said participation in charity events, like bingo or Las Vegas nights, was down as many people opted to go to casinos instead. But about a year and a half ago, charities saw a big jump in donations and participation when the state lottery commissioner rolled out a series of new poker games, including Texas Hold ‘em, allowing charities to host such tournaments.

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