Poker Room

Two Phoenix Men Indicted on Illegal Poker Room Charges

Two Phoenix, Arizona men have been indicted on multiple felonies in connection with the operation of an alleged illegal poker room within a sports bar near Phoenix’s northern edge. Arizona Attorney General Mark Brnovich announced that an Arizona grand jury has indicted John Anthony Schnaubelt, 53, and David Lee Dilettoso, 62, over the alleged illegal games being offered at Toso’s Sports Bar and Grill. The sports bar was the site of a January raid that ended the poker games being offered there.

Schnaubelt and Dilettoso each face three felony counts, according to the Arizona AG’s Office statement. Schnaubelt owned and operated an Arizona corporate entity called Real Poker LLC and is alleged to have organized the games, which ran from at least June 2018 to January 2019. Dilettoso is the owner of Toso’s, which is located just off I-17 near Phoenix’s northern edge. The charges are related to the frequent offering of Brnovich’s “Real Poker” events at Toso’s, many of which appear to have been affiliated with an entity called the Arizona Poker Tour, which offers small tourneys with sub-$100 buy-ins and appears to date back to at least 2014.

Dilettoso and Toso’s also face additional liquor-law charges associated with the operation of the alleged illegal games in the sports bar.

The indictment published by Brnovich’s office offers few details beyond the listing of the charges themselves. Schnaubelt and Dilettoso are each charged with conspiracy, operation of an illegal enterprise (a racketeering charge), and promotion of gambling. Dilettoso and the parent entity of the sports bar, Daddy’s DDTK Inc., were charged with a second count of promotion of gambling along with seven separate liquor-code violations.

The indictment declares that the “conduct” (referring to the frequent events) were “authorized, solicited, commanded or recklessly tolerated” by Schnaubelt in his role as Real Poker’s “high managerial agent”. The same “authorized, solicited, commanded or recklessly tolerated” descriptors are also affixed to Dilettoso in his role as the owner/operator of the sports bar where the game occurred.

The Real Poker operation was raided on January 1st, with the following acknowledgment and claim of innocence published at that time on the operation’s website, presumably by or under the direction of Schnaubelt:

Evidence exists online of the games’ frequent occurrence, though a reference within the indictment to the unlawful gambling allegedly occuring “eleven times” was lightly excised from the published indictment.

Many states have legal loopholes that allow small-stakes cash games and tourneys to operate. One such example are bar leagues, which offer free entries and award non-cash prizes, and operate on the premise of drawing traffic, and thus food and drink sales, to the hosting venues.

Another and more popular option is the charity-event route. Often found in the Midwest and surrounding states, charity-games laws allow for registered non-profits to serve as the hosts of real-money games. Usually there are limits on the types and frequencies that the games can be offered, and those games have come under legal fire as well, particularly in Michigan, which had to rein in some abuses a few years back.

A third workaround has been the private-club approach, as epitomized in the Houston poker-club scene which was the target of a couple of high-profile raids in May. The membership approach by these private poker clubs is designed to circumvent rules about the house profiting in the form of rake, one of several litmus tests often used for whether gambling is illegal.

However, it’s not clear that Schnaubelt’s Real Poker operation fits cleanly into any of these workaround categories, despite its declaration of being “amusement gambling”. Real Poker’s website does list attributes that would seem to qualify it as a membership-based group, as follows:

However, despite the existence of memberships, if additional tourney fees were being charged, it may well make the whole membership concept moot in legal terms. It was also likely a poor idea to tie the poker activities to the Toso’s bar operations. Here’s one of many examples of promotions that exist that likely raised the eyebrows of Arizona investigators:

These and other promo graphics imply that additional tourney entry fees were charged, over and above the stated membership fees. Though not specified in the indictment, it’s likely to be one of several issues brought up as the case progresses.

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