Game rooms may return to Sullivan City

Sullivan City approved regulations for game rooms last week but refused to release any details about the decision.

During a meeting on April 3, the City Council unanimously approved regulations for game rooms “subject to legal review and as directed during executive session.”

City Attorney Frank Garza said he couldn’t discuss what, exactly, the City Council had approved — and said he advised the City Council not to discuss the decision either.

“If the things they instructed me to do don’t occur, then maybe it’s for naught,” Garza said. “Because they were subject to legal review and ‘directed in executive session.’ Those two caveats, I guess.”

A Starr County game room in September 2015. (Photo by Dave Hendricks / The Progress Times.)

In Texas, where gambling is tightly regulated, game rooms operate in a legal gray area.

Customers pay to play casino-style games on devices that mimic slot machines. Whether or not the devices are legal depends on how the games work and what the players win.

Traditional slot machines aren’t legal in Texas. The state also prohibits amusement devices from rewarding players with cash.

In an attempt to avoid legal problems, some game rooms purchase so-called “sweepstakes” machines and pay winners with silver.

“In my opinion, I think it’s all illegal,” said Hidalgo County District Attorney Terry Palacios. “But I can’t go by what I think. We just need to follow the law.”

Game rooms, though, remain big business in the Rio Grande Valley.

The Hidalgo County Sheriff’s Office regularly shuts down underground game rooms and seizes tens of thousands of dollars in cash. In Willacy County and Zapata County, game rooms with government permits operate openly.

Dozens of game rooms set up shop in western Hidalgo County during 2015, when Sullivan City and La Joya started handing out permits.

Sullivan City charged $3,000 per year for a permit and a quarterly fee of $750 per machine.

The game rooms shut down in July 2016, when the Hidalgo County District Attorney’s Office raided eight establishments.

Sullivan City, however, had already collected $423,000 in fees, according to information released under the Texas Public Information Act.

A sign at a Starr County game room in June 2015. (Photo by Dave Hendricks / The Progress Times.)

The issue re-emerged about six months ago, when the Texas Game Room Owners Association started talking with Sullivan City, said attorney Robert Flores of McAllen, who represents the association.

“We usually work with smaller cities that really need the help,” Flores said.

The association also worked with the city of Elsa, which approved regulations for game rooms in September.

Elsa required game rooms to pay $50,000 to apply for a permit, plus other fees. City Manager Juan Jose “J.J.” Ybarra said Elsa had issued one permit and hadn’t experienced any problems.

“We represent operators who want to do it the right way,” Flores said.

The association prepared an ordinance for Elsa and partnered with the city to enforce the regulations.

“It’s very, very intricate,” Flores said. “It’s very detailed.”

The 17-page ordinance is watermarked and stamped with: “This document is the Property of: Texas Game Room Owner’s Association — all rights reserved — duplication prohibited” on every page.

“The ordinance is the property of the association, not the city,” Flores said.

State Rep. Terry Canales said he found that absurd.

“The very nature of an ordinance is a law,” Canales said. “And that, in and of itself, cannot be copyrighted. Period.”

Along with game room regulations, Sullivan City approved a “Non-Circumvent, Non-Disclosure Business Network Development and Indemnification Agreement” with the association.

The terms of the agreement, which Sullivan City approved “subject to legal review” also remain unclear.

Sullivan City Councilman Jaime Villarreal said the City Council wanted more legal advice before moving forward.

“We want things to be done correctly,” Villarreal said. “And according to the laws.”