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Barely Noticed by Cops, Non-Tribal Poker Rooms Thrive in Phoenix

Despite the felony conviction of an eccentric Valley poker-parlor owner, non-tribal card clubs still proliferate here.

It's Friday night at 10 p.m., and about a dozen people sit at two green-felt-topped tables at the Camelback Card Club when John Schnaubelt walks in. He's a large guy in his mid-40s and would have been noticeable even if he hadn't stared at the players and said, "Hello, ladies and gents!" in a suspiciously loud, looking-for-trouble kind of voice.

The card room, similar to many in the Valley that offer low- and high-stakes poker games, inhabits a small suite in a strip mall at 32nd Street and Shea Boulevard, next to a popular Thai restaurant. Besides the card tables (complete with surveillance cameras hanging over them) and an ATM in one corner, little about the club resembles a casino. The place looks like an office, with plenty of snacks and a refrigerator full of non-alcoholic beverages. A whiteboard informs newcomers that it will cost $40 to buy into a game, plus a $20 "dealer-appreciation" fee, while a bronze plaque on the wall asks players to tip a minimum of $2 per jackpot to the dealers.

Seeing Schnaubelt arrive, a man wearing a black shirt with the name of the club on it moves quickly from behind a counter at the far end of the suite, where players exchange cash for poker chips.

Jeff Archuleta, a manager and one of the organizers of the Camelback Card Room, is shorter and many pounds lighter than Schnaubelt, but he shows no intimidation as he walks up. According to his write-up on Meetup.com, Archuleta has an "extensive poker background" and recently returned from dealing the 2012 World Series of Poker in Las Vegas.

"You probably know you're not welcome here," he tells Schnaubelt.

Schnaubelt asks why.

"Is this a joke? You know the answer," Archuleta says. "I know you've been trashing the club every which way possible."

The players and dealers at the card tables take a momentary break from their games, listening to the exchange.

"Could you please take that outside?" an exasperated woman finally says.

And they do, sparring verbally on the sidewalk next to the parking lot in the cool night air. Their posture suggests that fisticuffs aren't imminent; the scene has the aura of an after-school showdown between former friends.

"I'll be back here with the police, probably," Schnaubelt tells the club manager.

"Yeah, I know, like you're really trying to shut everybody down. I heard about your wanting to do citizen's arrests," Archuleta sneers, barely glancing at a New Times reporter standing a few feet away. "You did the same thing everyone else is doing, and now you're going to say your shit don't stink?"

He's referring to the fact that, until two months ago, Schnaubelt was running his own poker club — The Tilted Jack at Union Hills and 19th Avenue. Archuleta says Schnaubelt is taking revenge against the Camelback club because he thinks "maybe we're stealing [his] business, or something."

Schnaubelt tells Archuleta that, late last year, another club — the Nuts Card Room in North Phoenix — got raided. And at the time, he taunts, he told an investigator with the state Attorney General's Office to check out Camelback because its owners have "deep pockets."

"Why?" asks Archuleta, sounding genuinely surprised. "You were running a club, too!"

"You're operating illegally."

"We're not operating illegally — no more illegally than any other club in town or [any club] that you would run," Archuleta says. "You're a fucking asshole, and you're a prick."

When asked by Schnaubelt how he makes money at the storefront club, which under Arizona law isn't supposed earn any "benefit" from poker games, Archuleta responds that he earns a salary and gets tips.

"How can you make a salary and [have that] not be considered a benefit?"

"I've [got] a private business owner — I run it as a private business entity," Archuleta replies, repeating that the business isn't illegal.

Schnaubelt tells Archuleta to "crawl back inside," but Archuleta responds that he'd rather stay outside and "kick off the dirt from my stoop rather than just sit out here and let it collect."

Schnaubelt says, "Maybe I'll just call 911 and report the felony going on here." Then, he gives Archuleta grief about the uniform he's wearing: "Do they make you wear that?"

Archuleta snaps back, "No, I wear it because I like to."

Schnaubelt walks toward the parking lot.

"Don't come back!" Archuleta yells after him.


Ironically, given his threats to call the cops on the Camelback Card Club, John Schnaubelt's actually a strong advocate of off-reservation poker.

Schnaubelt operated his own poker parlor, and Archuleta was one of the room's dealers.

Schnaubelt's a fellow activist and friend of Harold "Bud" Lee, a former Phoenix justice of the peace once known as "the rock 'n' roll judge." A few years ago, Lee was Arizona's most outspoken off-reservation poker activist.

 

Lee aspired to own a franchise of poker-room locations ("Poker Wars," April 16, 2009). Because of his grand ambitions and loud criticism of state gambling laws, the ex-JP was targeted for prosecution and convicted by a Maricopa County jury this year on three felony counts.

Under gaming compacts with the state signed in 2002, only Native American communities are allowed to run gambling operations that include regulated poker games. State authorities say, in general, all poker establishments outside Indian casinos operate illegally.

Lee's activism and business ideas have been crushed by failures in the legal arena.

Yet Lee's punishment was no more than a slap on the wrist: one year of unsupervised probation. Two co-defendants earlier pleaded guilty to reduced charges. Still, Lee's club was closed and his probation terms bar him from opening another, under threat of a prison term. Another of Lee's former associates, Christine Korza, was sentenced this month to a year of probation and an $18,433 fine. Her club, Poker Nation, which Lee helped set up and which was mentioned prominently in "Poker Wars" and in the Arizona Republic, was shut down.

The 69-year-old former JP still is feisty despite his conviction. He's demanding that the federal government respond to his petition that aims to abolish the U.S. Bureau of Indian Affairs, take away the gambling monopoly from Indian reservations, and give poker lovers the right to run games and poker-related businesses wherever they want. He's written long screeds and the beginning of a book about his poker activism for his various websites.

Schnaubelt, with a wife and young twins to help support, is nearly as obsessed with Arizona's poker laws. He opened a card room in 2010 with a novel "co-op" angle to maintain the appearance of social gambling, which isn't banned under state law as long as only players benefit from games.

The business failed and closed last month. Lately, Schnaubelt has petitioned Phoenix and other cities to allow the regulation of card rooms, which he and Lee claim cities can do legally if they stand up to the state Department of Gaming. For a day job, Schnaubelt uses his computer skills for web marketing and other services. In his spare time, he threatens poker operators with citizen's arrests and informs on former competitors and partners.

Despite the wishes of Schnaubelt and Lee, the illegal status of non-tribal poker isn't going to change anytime soon. But, then, neither is the illicit poker-parlor industry itself.

A few high-profile busts of card rooms and their operators have occurred in the past three years, including Lee's, Korza's, and the Nuts Card Room's in Goodyear, raided last December. The enforcement actions occurred under Mark Brnovich, appointed director of the Arizona Gaming Department by Governor Jan Brewer in 2009.

Though Brnovich vowed he would wage war on off-reservation poker rooms in the state, authorities continue to have a lackadaisical attitude toward the establishments. The 16 poker clubs that the Gaming Department estimates do business in the Valley seem to exist in peace. Complaints about the rooms have decreased. They're not a law-enforcement priority — and, indeed, police face no shortage of more serious crimes to investigate.

A worker at one northwest Phoenix poker room says patrons enjoy the establishment because it's entertaining and closer than driving to Indian casinos.

"We get to know people, their style of playing — it's a lot of fun," she says.

She admits that she can only hope authorities continue to look the other way.

As long as no one makes a fuss, poker enthusiasts can get their fix, a few entrepreneurs can make money, and almost everyone's happy.

Schnaubelt and Lee, of course, plan to keep raising a ruckus.


Three years ago, Lee acted as though he held a royal flush, boasting far and wide that he was eager to take on the authorities in court.

"If they have to toss this old grandpa into the slammer before we get to make our point, fine with me," Lee blustered back then.

The state called his bluff.

A former Navy enlisted man, Lee used to be known as the "the rock 'n' roll judge" because he liked to play rock music in his chambers while serving as a JP for Maricopa County's Northeast Phoenix Justice Court. He took office in 1973, serving three four-year terms. Over that time, his libertarian views evolved, and he railed publicly against victimless crimes such as marijuana possession.

"I was surprised I got re-elected the first time and stunned the second time," he says.

Before life as a JP, he had obtained a marketing degree from Arizona State University. After his time in office, he founded several "network marketing" businesses, though he "never got filthy rich like some of my friends."

 

Lee had a lifelong interest in poker and came up with an idea in 2005 to form a card players' association that would issue charters and business plans for off-reservation poker rooms. He convinced others that his plan was legal, and several poker rooms were launched by various owners under his tutelage. Lee claimed three years ago that he collected up to 15 percent of profits from the rooms' owners (something he now denies).

Lee ran a Sierra Vista card room that was investigated by officials who determined it was illegal and recommended felony charges against him, but then-Attorney General Terry Goddard declined to prosecute based on a "lack of resources."

The former JP took that as a green light to expand his operations, causing Goddard to revisit the issue.

State gaming agents raided a poker room affiliated with Lee's International Card and Game Player's Association, the Club Royale in Tucson, in December 2008, a few months after it opened. Undercover Department of Gaming agents spent many hours and hundreds of dollars at the club playing Texas Hold'em, and they later reported that the place sometimes brought in thousands of dollars a day.

The raid was preceded by a lawsuit against the club by the Pascua Yaqui Tribe, which runs its own casino and accused Lee of stealing the tribe's business. He's convinced that the tribe, directed by the U.S. Bureau of Indian Affairs, worked with the state to target him — though he admits he's got no proof of that. The club closed, and its two co-owners, Johnny Ray and Donna Rogers, later pleaded guilty to misdemeanor gambling violations.

Under state gaming director Brnovich, a lengthy investigation took place into another club linked to Lee, the Ace High Card Room and Social Club in Surprise. This time, Goddard charged Lee and two co-defendants with three felonies: conspiracy, illegal conduct of an enterprise, and giving advice or assistance to a gambling operation.

His partners, Ronald Curcio and Michael Orlando, pleaded guilty and agreed to testify against Lee at his trial. Orlando — a former New Jersey resident convicted of felonies in the 1980s, including illegal gambling, fraud, and conspiracy to commit extortion — described in his plea agreement how fees collected from players at the club were used to pay him, Curcio, and Lee.

As the eight-day trial began, Lee hoped to put to use his research about the "evil" BIA and his theories of why poker, even when played for money, isn't really gambling. His court-appointed attorney advised against the tactic, but it didn't matter: The prosecution moved to prevent Lee from using these concepts as a defense, and the judge agreed.

"I couldn't even mention the Bureau of Indian Affairs!" Lee fumes. "I'm being attacked by a criminal organization!"

In early February, Lee was convicted of on all three felony counts. Not a single reporter showed up to Lee's March 7 sentencing hearing, which embitters the former "rock 'n' roll judge." In a recent interview with him and Schnaubelt, Lee grumbled that perhaps the "gambling cartel" somehow influenced the news media to keep his story quiet.

Thanks to the Internet, he doesn't have to rely on anyone to get his message out. A couple of weeks after he was sentenced, Lee bought two new domain names and launched the websites www.convictatlarge.me and www.convictatlarge.com. Both help promote a book he's writing called, Out of Bounds: The Untold Story of the Arizona Poker War — Professional Poker Players vs. BIA Gambling Syndicate. He also muses on two other sites: www.icgpa.org and www.pokerplayerarmy.com.

In Out of Bounds, Lee expounds on his notion that the gambling status quo hurts Native Americans. He takes on Andrew Jackson, a "real douchebag" who gets the blame for Native American genocide. And more important to Lee's cause, he calls Jackson the founding father of the BIA gambling cartel. Abolishing the reservation system and handing Indian land to the Indians, without BIA involvement, has been a theme of Lee's since before his indictment. The book sample also calls out gaming chief Brnovich as the culprit who "personally led the effort to railroad" him and his association.

Another focus on www.convictatlarge.me is his renewed 2005 petition to the U.S. government, which he updated and posted online on November 23. In a long essay, he links his criminal case to the history of Jackson and what happened to the Indians:

"I now consider the case to be [an] opening salvo in a revival of the so-called Indian Wars fought against the indigenous tribes later enslaved by agents from the [BIA]."

Lee, who moved from Tombstone to a Tempe apartment in 2010, is appealing his conviction and insists that his goal of having the BIA abolished has a chance, if his conviction is overturned.

 

His light punishment, he believes, proves that the judge in his case, Bruce Cohen, became his ally upon seeing how the gaming department and the BIA treated him. He expects others will come around, too, if he can get enough people to listen.

But Lee has been harping on this issue for years, even writing a letter to Oprah Winfrey about the BIA, which he called "a goiter on Uncle Sam's neck" a few days after he was indicted in 2010. Lee doesn't believe that his campaign has made him foolish. Quite the contrary.

"The state has been made to look ridiculous," he insists. "They can't stop me from telling people they're a big bag of wind."

Lee — who lives on Social Security benefits, appears in poor health, and walks unsteadily with a cane — vows to keep up the fight until he can fight no more.


John Schnaubelt wrote in a September 17, 2010, post on an online poker forum that he had met and interviewed Harold Lee on camera that day for a possible documentary.

He defended Lee from snipes by other forum members: "He's not a crackpot, but a jackpot. Sorry to disappoint. He's pretty confident that he'll be able to defend himself against the DOG mafia. Don't be surprised when the state dismisses the charges rather than suffering the embarrassment they've brought upon themselves."

Of course, that didn't work out so great. Neither did Schnaubelt's own poker venture, The Tilted Jack, which he'd incorporated just days before Lee's indictment.

Schnaubelt says he already had sunk about $10,000 in permits and other expenses for the firm's location at 18425 North 19th Avenue at that point — so there was no turning back. He had come across the ex-judge's name in researching his own venture. When he heard of Lee's troubles, he called and offered assistance. That led to the first meeting and interview and, later, to Schnaubelt's volunteering as Lee's trial manager. Earlier this year, he sat with Lee at the defense desk every day of the trial.

Interestingly, considering Lee's talk of the BIA-controlled casinos, Schnaubelt's online résumé says he used to have Gila River Casinos as a client in a former business. In 2009, he says, he helped start the still-operating Poker Union at 7th Avenue and Union Hills. Esho Odisho, listed as that limited-liability corporation's sole member, agreed to split any proceeds with him 60/40, with Schnaubelt's meriting the smaller amount because he could invest only his time and energy, while Odisho put $30,000 into the business, he says. (Odisho's articles of incorporation state that the business' purpose is "retail sales of poker supplies.")

Schnaubelt says he split with his partner when Esho "decided to stop paying me" after 10 months. Schnaubelt finally opened his own establishment in summer 2010. He maintains that the place was "not a card room" but a "civil and social movement that may offer members a facility from time to time."

The Tilted Jack's website, which announces that the place closed last month, appears to advertise a card room. There's a picture of the "player of the month" and a list of hundreds of players and their winnings. (The top player, "Jette," is said to have won 57 tournaments and $24,205.)

Schnaubelt argues that his club represented true social gambling, that players were the only ones who benefited. However, he adds that a cooperative can hire dealers or even hire himself as a web designer — which belies the idea that only players benefit from poker at such an establishment.

Lee's association and several other clubs operate under a similar idea — they're just a large bunch of friends playing poker.

Yet the very existence of storefront poker rooms, many of which are open seven days a week and might occasionally have cash games that last until dawn, appear to violate the legal interpretations posted on the Arizona Department of Gaming's website.

No one is supposed to "benefit" from non-tribal gambling, directly or indirectly, under Arizona's gaming rules. The host of an off-reservation establishment can take nothing from what is wagered or won and is forbidden from using gambling to attract people to a restaurant, bar, poker-supply shop, or other entity that makes money. Even a "suggested 'voluntary' donation" from players is disallowed, the site says.

Schnaubelt claims he had the only legitimate model for an off-reservation poker club, and that's why he invested $30,000 in The Tilted Jack while knowing he wouldn't benefit. He claims he did it to advance the cause of poker.

He wanted to "protest the BIA syndicate gambling empire," avoid playing poker on an Indian reservation, and show that it was possible to run a card room "not unlawfully," he says. But he had to close after two years because the "unquestionably illegal operations surrounding us smeared us and infiltrated and recruited players, all because I was outspoken against the rooms claiming to be legal when they aren't."

 

Schnaubelt has asked the cities of Phoenix, Tempe, and Peoria in recent weeks to regulate card rooms. That's long been one of Lee's goals, though cities have been mostly cool to the idea. A card room in Gilbert was forced to close in 2010 after city leaders questioned its legal status.

Lee and Schnaubelt believe that cities can authorize and regulate poker rooms, legally, without complying with state gaming rules, because no specific law exists prohibiting the parlors.

They express the need to keep poker "pure," without the exploitative quirks of Indian poker tables: Dealer "rakes" of the jackpot, the steep per-hand cost to stay in games, the lottery-like random drawings of "jackpot poker." But it's difficult to separate their talk of purity of the "sport" from their previous ambitions to operate successful poker rooms.

"I never denied that I was motivated by the idea that I would gain a great business enterprise, but my goal was an [association for poker]," Lee says when asked about financial incentive.

Even harder to understand is Schnaubelt's need to give authorities detailed information about every poker room he discovers — unless Archuleta is right that Schnaubelt simply is seeking revenge against former competitors.

A player at a local club who knows Schnaubelt described him as on an "obsessive mission." Even Lee says he advised Schnaubelt against providing information to the "DOG police," because he doesn't think it's good for their cause.

Schnaubelt denies he's vindictive. He says he believes that if the authorities shut down the state's illicit poker rooms, "people will get tired of Indian casinos" and push for legal poker. His preference would be "citizen's arrests and vigilante justice," because it would be the most newsworthy, he claims. But perhaps that's just talk — he adds that while he might like to go after certain clubs with which he has a beef, his wife doesn't want him risking the family's safety.

For now, besides provoking Archuleta, Schnaubelt maintains a list of poker rooms (and their level of unlawfulness, in his opinion) at www.phoenixpokerclubs.com, a site that was used previously to promote one of Lee's activist groups, Arizona Poker Army.

By destroying off-res poker, Schnaubelt believes, he can save poker.


The overall number of poker clubs may be higher than authorities know because underground clubs don't have storefront locations.

In the case of the Nuts Card Room, owner Harry Glazer and his associates hosted high-stakes card games at the Bunker Indoor Golf & Training until someone tipped off Goodyear police, leading to the December raid on the Nuts club in Phoenix. (Schnaubelt says he had nothing to do with the tip.)

When one card room closes, usually for financial reasons, another opens to take its place. It seems that the few prosecutions under gaming department director Brnovich hardly have been a deterrent. Glazer, the apparent ringleader of the Nuts operation, pleaded to just one felony charge of promotion of gambling and received the same sentence as Lee — a year of unsupervised probation — though he had a different judge. Glazer was ordered to pay a $33,000 fine, which shouldn't be much of a financial hardship considering police estimate his operations brought in more than $600,000 a year.

Brnovich is a former writer and researcher for the Goldwater Institute, which strongly touts the spirit of free enterprise, and he has libertarian leanings. That makes his duty as government regulator of a gambling monopoly an oxymoron. But Brnovich, while a legal scholar and listed as an unpaid "expert" on a range of subjects for www.policyexperts.org, can throw the book as well as read it. He was a former prosecutor focusing on gambling violations for the U.S. Attorney's Office before his appointment as state gaming chief.

For the 2009 New Times article, Brnovich described how unregulated gambling "can attract cheaters, crooks, and corrupting influences like moths to a flame." He claimed he would be "extremely hands-on" in dealing with gambling violators and said he intended to "find the necessary resources" and a willing prosecutor to take on Lee and other poker scofflaws.

While he did take on Lee and a few others, Brnovich admits to New Times that he didn't find the resources he mentioned back then. In fact, he says, the agency has one fewer investigator for such tasks than when he took his job. He insists that the department is doing its best with the resources it has. If lawmakers want him to bust more card rooms, "we could make it a higher priority," he says. "Before we got here," he says, "no one was investigating these cases."

He stresses that the department's main function is to help tribes regulate casinos and to ensure that the state gets its proper cut of gambling earnings. Since 2004, the department's website shows, the state has received more than $800 million as its percentage of the take — which runs from between 1 percent and 8 percent of all casinos' gross earnings.

 

Brnovich says he's heard tribal members talk about the off-res poker rooms, but none has asked him "formally" to do anything about them. Even if a tribe did, he says, his job is to serve the state, not the tribes.

The Indians could push the issue, if they wanted. A "poison pill" clause in gaming compacts between the state and the reservations allows tribes to ignore "limits" in the compacts if the state doesn't curtail non-Indian gambling. Without the limits, the tribes could put slot machines in every convenience store on reservations and expand casino operations.

The number of non-tribal poker rooms never has grown large enough to become more than an annoyance to the tribes.

The Arizona Indian Gaming Association didn't return calls on the matter.

Residents in the neighborhoods around the card rooms haven't complained much lately, Brnovich says.

Schnaubelt says a gaming agent told him two months ago that the state believes as many as 30 to 36 illegal card rooms operate in the Valley.

Asked about that, Brnovich says he thinks there are fewer rooms than three years ago when he went after Bud Lee. But he adds, "We don't know how many more would have opened" if it weren't for the enforcement deterrent, he says.

Pressed for actual numbers, Brnovich replies flippantly, "Stats are for losers."

However, Brnovich's chief of staff, Rick Medina, replied later to New Times with the numbers.

Gaming intelligence agents estimate that 19 illegal card rooms operate in Arizona, with 16 of them in the Valley.

This is the same number of card rooms that agents believed the Valley had three years ago, when authorities went after Lee.

With resources tight, off-res poker rooms appear destined to stick around. If members of the poker community, especially John Schnaubelt, learn to play well together — and not upset the BIA cabal.


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