Action | Promulgation of regulations for Texas Hold’em poker tournaments by the Department of Agriculture and Consumer Services |
Stage | Proposed |
Comment Period | Ended on 5/10/2023 |
I write this public comment as Counsel for Cheers–a Virginia nonprofit entity which qualifies to hold a Virginia charitable gaming license–to address 3 issues on the proposed regulations: (1) "No Tipping"; (2) "Ban on Concurrent Tournaments"; and (3) "Use of Proceeds". For the reasons stated herein, the 3 regulations addressed in this comment will not withstand a challenge in Court given that they violate state and federal law, are discriminatory, arbitrary, and capricious, conflict with the Virginia Code, and exceed the authority granted by the Virginia General Assembly to regulate the conduct of Texas Hold’em poker tournaments for eligible charities like Cheers.
Texas Hold’em Poker was legalized by the General Assembly in 2020, under the auspices of SB 936, for the benefit of qualifying charities and signed into law by Governor Northam. In 2022, the General Assembly passed SB 402, which vested the power in VDACS to write regulations in order to effect the purposes of SB 936, i.e., the legalization of Texas Hold’em Poker. Notably, the definitions from SB 936 remained intact, except that SB 394 – also passed in 2022 – added one additional limitation that charitable organizations could not host Texas Hold’em games which had “no predetermined end time” or where the players wagered “actual money or poker chips that [had] cash value.”
Since July 1, 2022, VDACS has been tasked with writing the regulations.[1] It has taken nine months to finally release those regulations for comment. During that time, nonprofit charities – which had a legal right under SB 936 to play poker free from criminal penalty and had successfully played the game in 2020-2021 without any prosecution – were faced with a minimum civil penalty of $25,000 if they continued to host games. So, they waited in good faith for VDACS to complete the regulations and re-open the game.
Having reviewed the draft regulations with my client, I offer two (2) key observations:
Permit me to elaborate.
These are just a sampling of the regulations that we find extraordinary. Again, the easiest test for the logic of a regulation is as follows: “Does a professional casino follow this rule if it is conducting the same activity?” If the answer is “no,” then the rule is presumptively discriminatory against charities. That alone renders it “arbitrary and capricious,” especially since charities that play these games are already subject to scrutiny by the IRS to ensure compliance with their charitable mission. There is no need for VDACS to duplicate that review.
These proposed regulations–as addressed above, supra, and in the public comments to date–stifle the ability to properly conduct Texas Hold’em poker tournaments. For the foregoing reasons, they will not withstand a challenge in Court given that they violate state and federal law, are discriminatory, arbitrary, and capricious, conflict with the Virginia Code, and exceed the authority granted by the Virginia General Assembly to regulate the conduct of Texas Hold’em poker tournaments for charities.
In summary, we believe the regulations are fundamentally anti-charity and anti-poker. We ask that they be revisited across the board. Thank you.
Sincerely,
J. Chapman Petersen, Esq.
[1] Notably, there was an initial set of regulations which was adopted in December 2020 by the Board of Charitable Gaming. Those regulations were suspended by General Assembly action during the 2021 session and then rescinded by the second enactment clause of SB 402.
[2] See “World Series of Poker” on ESPN.
[3] “Adjusted gross” is defined as the amount of proceeds retained from the game once the prizes are paid out. In other words, if $1,000 is gambled and $800 paid out in winnings, then the “adjusted gross” would be $200.