How Lobbying has the Power to Transform an Industry
The US is an active breeding ground for innovation and startup businesses. Companies are constantly having to innovate to stay competitive. New technology is quick to emerge, however, legislation is not quick in keeping up. For many new businesses and emerging industries, laws can and do become a hurdle they have to overcome in order to grow.
The following case study on poker in Texas shines a light on how entrepreneurs had to take a big risk to pave the way for legalizing poker.
Case study: Social Card Club of Texas
In Texas, most forms of gambling are illegal, including the iconic poker game of Texas Hold’em. For the longest time, as popular as it is, poker had to be played in a private “underground” setting. The state law strictly forbids poker operators from taking a percentage of the pot, which many of the underground clubs disobeyed.
In the early 2010s, 2 friends who often played poker together, Dan Kebort and Sam Von Kennel, started tossing around the idea of a “legal” social poker club. With guidance from Sam’s lobbyist father, Tim, Dan registered himself as a lobbyist. He and Sam drafted a version of the state’s anti-gambling law that would strengthen the social-gambling defense, in addition to proposing the creation of a gambling commission to regulate new clubs. For the next two years, they tried to get it adopted by the Texas state legislature. Unfortunately, their proposals did not gain any traction.
A few years later in separate endeavors, Sam and Dan opened their own social poker clubs. They were operating on the business model of a membership and access-fee, making money only by giving players access into the club. As operators, they cannot keep any part of the rake. This was a legal gray area – a loophole that they profited from.
Following suit, many new social poker clubs began popping up around the state. The state leaves the decision of allowing poker clubs to the local counties. Because this law has gray areas, District Attorneys interpret them differently. Not all of the poker clubs get to stay in business – some get shut down while others remain open.
Sam and Dan joined an association for private poker clubs called Social Card Clubs of Texas (SCCOT), founded by Ryan Crow. SCCOT hired a team of lobbyists who helped draft a new piece of legislation, HB-2669, which would legalize poker clubs and create a gaming commission to regulate and license them.
This proposal, unlike the previous attempts, did gain traction – thanks to the help of lobbyists. A state representative agreed to sponsor it and a hearing on the bill was scheduled. On the day of the hearing, the legislature’s Licensing Committee ran out of time in its meeting, and so the bill was left pending.
Since April 2019, proposed bill HB-2669 remains pending. The lobbyists working with SCCOT informed officials about how these clubs are operating within legal realms. Attorney Generals and District Attorneys have eased shutting down poker clubs, which allowed more and more new businesses to pop up. This has kept the industry afloat for the past two years.
The first public social poker club was created in August 2015; today there are over 50 poker clubs operating around Texas. As more businesses are started and the poker association SCCOT grows in numbers, lawmakers will have to give more serious thought to the blooming industry and the livelihoods of those dependent on it.
Change is on the horizon
For everyday people and small businesses, it may feel like politicians and lawmakers are difficult to access. While people can attend town halls or send messages to the offices of politicians, it can be a real challenge to get their attention on specific issues.
As intermediaries between entities and lawmakers, lobbyists create an effective shortcut for citizens and businesses to get their cases heard. They expose lawmakers to the many different ways a piece of legislation can impact people and businesses.
Laws that are currently in place were created to address issues at the time of creation. Because needs evolve over time and new issues come up, some laws do get modified or added on, albeit slowly. Oftentimes it takes continuous ongoing discussion get issues moving along.
Lobbyists encourage power in unity. With the Social Card Club of Texas, it was under the lobbyists’ guidance that the association was formed. It is easier for lobbyists to represent a quickly-growing industry that’s unified behind a cause rather than taking on one small company that is trying to alter or add a new law. It simply takes altering a few words in a clause here and there, or passing ordinances in municipalities to get the ball rolling.
Thanks to lobbyists keeping up the dialogue with politicians on specific issues, new industries and businesses can continue to grow even under restrictive and outdated legislation. When legislation is adopted to meet evolved needs, innovation can flourish and push society along to new heights.
Susie Wu is the director of marketing at Echo Ridge, the parent company of Retaen. She helps guide the public outreach, social media, and marketing efforts for the Retaen network. Susie is a NYC native and Syracuse University graduate.