City Of Edcouch Repeals Ordinance Allowing 8-Liners After FBI Raid

Written By TJ McBride on December 1, 2023
A map of the Texas city of Edcouch on a story about the city council repealing a gambling ordinance after FBI raids.

The Texas city of Edcouch has repealed its gaming ordinance that allowed for 8-liner game rooms to operate. This decision came after recent raids by the Federal Bureau of Investigation.

Local lawmakers voted unanimously on Nov. 16 to repeal the ordinance over legal fallout stemming from allowing businesses to house the slots-like machines.

The raids on Edcouch City Hall, Elsa City Hall and two game rooms are part of a greater investigation by Homeland Security Investigations and FBI into money laundering. There has been no indication that local lawmakers knowingly violated any money laundering laws.

Both Edcouch and Edna believed they were on solid ground to legalize, tax and regulate 8-liner machines. Obviously, state and federal authorities saw it differently.

Edcouch city attorney urges immediate repeal of gaming ordinance

Outside of three tribal casinos in Texas, there is almost no gambling allowed in the state. There are no sportsbooks and no state-regulated casinos. Law enforcement has conducted numerous raids of businesses housing 8-liner machines all across the state.

In an effort to avoid raids and make money from gambling, both Edcouch and Elsa saw opportunities to regulate and tax gambling rooms. Both followed advice from companies that promised town leaders that they could enact ordinances to legalize 8-liner machines even though Texas law prohibits their operation.

That gamble by local officials may have proven to be a bad bet. Regardless of the city ordinances that were passed, Edcouch became the target of state law enforcement and the FBI. In the FBI’s raid of Edcouch City Hall, it seized documents related to the ordinance.

Edcouch City Attorney Roel Gutierrez made it clear in a two-page letter that the city needed to repeal its ordinance immediately after the raids.

“(I)t has become apparent that the operation of these game rooms does not align with the legal assurances previously provided to the City Council by the representatives of the Greater Texas Gaming Coalition.

“The coalition’s admission of their inability to effectively police the game rooms at all times heightens the city’s exposure to legal and reputational risks. Moreover, the execution of a federal search warrant at City Hall for evidence of money laundering indicates a severe breach of trust on behalf of the administrator and the operators of the game rooms and signals potential legal ramifications under federal statutes.”

Ignorance is no defense, Edcouch city manager says

The raid on Edcouch City Hall took place on Oct. 18. It lasted several hours. Dozens of documents related to the game room ordinance were seized as well as police records on a person who is facing felony drug charges. Also, records on how the city utilized funds from Operation Stonegarden were taken. That operation is a federally funded grant for law enforcement.

At the conclusion of the FBI’s investigation, charges could be levied against city council that allowed laws to be broken, regardless of intent. According to Edcouch City Manager Victor Hugo de la Cruz, ignorance is not a viable excuse.

“The attorney kind of explained that … the money laundering act and explained to them (the city council) that not knowing is not an excuse. It kind of places the city in a pretty bad spot if there is, in fact, something going on or something illegal going on. Not knowing is not a proper defense.”

Gutierrez said the city believed the Greater Texas Gaming Coalition when it told the City Council that regulating the game rooms was legal.

“We’ve been told that everything that’s been going on is legal. This gaming coalition told us that there was nothing wrong with what they were doing. … And we believed them. But when … we have the FBI investigate, that put us on notice and they were telling us straight up that they believe that, no matter what, if there’s money being exchanged, it’s illegal gambling.”

According to Hugo de la Cruz, the Greater Texas Gaming Coalition is not returning calls since the raid. Additionally, he said he feels blindsided by local police. He said if they had warned city officials of the potential illegality of these game rooms, the ordinance would not have been passed.

“Had that happened, I can guarantee you that the commission would have probably voted against it.”

Efforts by PlayTexas to contact Greater Texas Gaming Coalition President Mitch Killion and owner Matthew Killion were unsuccessful.

Elsa Town Hall and two game rooms also raided

One week after Edcouch City Hall was raided, Homeland Investigations (HSI) agents raided Elsa City Hall and two game rooms in the area. Search warrants were served at both Sizzling Sevens and The Lucky Hive on the same day that Elsa City Hall was raided.

The raid of Sizzling Sevens led to 14 arrests on charges such as possessing gambling equipment and engaging in organized crime.

Like Edcouch, the town of Elsa had passed a gaming ordinance to regulate eight-liner game rooms. It included a one-time license application fee of $50,000 and a limit of five licenses. Elsa had hoped its efforts would allow these businesses to operate legally, but those hopes have since dwindled.

Elsa City Attorney Gus Aceveno sent out an email on behalf of the city.

“In light of recent law enforcement inquiries, the city of Elsa wishes to reassure its residents and the public in general that the city is in full cooperation with the Office of Homeland Security.”

City Manager Juan Jose Ybarra also made a statement.

“We have always prioritized running a transparent government, and our cooperation with the Office of Homeland Security is in line with this commitment.

“Our goal is to ensure that the city of Elsa remains a safe, trustworthy and progressive community for all its residents.”

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TJ McBride

T.J. McBride is a writer and reporter based in Denver, Colorado who covers the Denver Nuggets as a beat writer and the current gaming landscape in Texas. His byline can be found across many websites such as ESPN, FiveThirtyEight, Bleacher Report, and others.

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