Texas Hold 'Em Poker Tournaments in Wyoming: Gambling or Just Good Times?

Wyoming Attorney General Pat Crank is currently reviewing the rise of Texas Hold 'Em poker tournaments in his state. In these tournaments, which are held at bars and restaurants, players pay a small entrance fee (usually $25) and are given a certain number of chips, which contain no monetary value. Eight players compete at one table, and continue to play until one player has won all of the chips. Although winners receive no monetary compensation, some receive free trips to larger tournaments, which are typically held in Reno and Las Vegas. (Burke, "Poker Tournaments Raise Questions," Casper Star Tribune, 5/22/05).

Professional gambling is illegal under Wyoming Law. The law defines it as "aiding or inducing another to engage in gambling, with the intent to derive a profit therefrom." Both the restaurants and the tournaments' sponsor, Clear Channel, insist that they do not "intend" to profit from the tournaments, and they maintain that the $25 entry fees are used only to defray administrative costs, pay out prizes, and make a donation to St. Jude's Childrens Hospital. Attorney General Crank wonders, however, if the hosting establishments may earn indirect revenue via food and beverage sales.

One way of testing the Attorney General's concern might be to compare the establishments' revenue before and after the tournaments were hosted. Beyond food and beverage sales, one might also wonder about the market value of the free advertising and exposure the establishments receive by hosting the tournaments. This is particularly true since some of the tournaments are broadcast on local radio stations.

Moreover, the establishments and Clear Channel are run by sophisticated business actors who presumably seek maximum profit -- their very decision to host the tournaments may evince an "intent to derive profit." Along those lines, why would these tournaments be held if profit was not the underlying desire? Are they really held solely to raise money for charities (which they do), or is it a mixed motivation -- say, profit and charity -- and how does that motivation comport with "intent to derive profit"?

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