The early afternoon players sitting at one of the eight new poker tables at Ho-Chunk Gaming Madison resemble those you might see during a televised high-stakes tournament on ESPN2.
Wearing hoodies, ball caps and ear buds, the players rest their elbows on the black leather padding and take care not to spill their soft drinks. There’s little chit-chat between the hands of Texas Hold ’em.
But there’s one key difference between this carpeted poker room near the Yahara Golf Course and a traditional “Las Vegas-style” casino: no cards, no chips and no dealer.
All the action is electronic, triggered by a touch screen that regulars know works best with the flick of a credit card instead of a sweaty fingertip. Dealing up to one hand per minute, the machines keep the play snappy.
Players press a button to view their two down cards and place their bets. The machine provides the sound effects: the click of plastic chips, the ruffling of cards on the flop.
“It’s so fast I can play two or three hours and get in as many hands as I could playing five hours somewhere else,” says Tyrell Rosemeyer, 20, a UW-Madison junior from Fennimore who was visiting Ho-Chunk Madison recently with his girlfriend and waiting for an open spot at a 10-player table.
The PokerPro tables installed in late November are part of the transformation of the facility still known to most locals as the Dejope Bingo Hall. From 10 a.m. to 4 a.m. seven days a week, poker players can reserve a table with friends or sit in with strangers. There is also a “practice table” for newcomers.
Ho-Chunk Madison, which has been advertising the new poker room on TV and in newspapers locally, has additional plans to host tournaments and other events. Offering poker, electronic or otherwise, is one way to attract a younger audience to a facility often dominated by middle-class retirees playing electronic bingo machines.
“We’ve been the best-kept secret in town but that is about to change,” says Carole Laustrup, a veteran of the Indian gaming business and manager at Ho-Chunk Madison.
There’s one big problem, however. Playing poker for money at the bingo hall is illegal, according to state and local officials.
Attorneys with the state Division of Gaming maintain the new poker machines violate the state’s 2003 compact with the Ho-Chunk Nation, which limits the Madison facility to Class 2 games such as bingo-themed slot machines. Other Indian gaming establishments in Wisconsin are permitted to offer Class 3 games like blackjack, roulette and other table games normally associated with a casino.
“There is a difference of opinion here,” says attorney Mike McClure of the state Division of Gaming. “We’re looking to get a ruling from a third-party arbitrator.”
The tribe has already offered its take on the issue. It cites an opinion from the National Indian Gaming Commission, an independent federal regulatory agency, which says PokerPro is a Class 2 device and permitted under the current rules.
A technical difference between a Class 2 or Class 3 gambling device hinges on whether the game is “banked,” meaning players are competing against the house as in blackjack or “non-banked,” meaning players compete against each other as in bingo. In poker, the house makes its money by collecting a commission or “rake,” generally 5 to 10 percent of the pot up to a predetermined maximum. At Ho-Chunk, the rake is 10 percent of each pot with a maximum of $5, and the percentage goes down if there are less than seven players at the table.
If nothing else, offering poker at Ho-Chunk Madison would seem to violate the spirit of a 2004 Dane County referendum, in which nearly two-thirds of voters rejected expansion of gambling at Dejope, a native word meaning “four lakes.”
“This is very worrisome,” says Marilyn Townsend, a Madison attorney who headed the No Dane Casino effort and continues to oppose any expansion of gambling here.
Still, Townsend says she’s not surprised the tribe has introduced poker, given the facility’s location right off a major highway and the number of young people and college students here.
“Madison is a wealthy community and they are drooling to get their hands on the people here,” she says.
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Enhancing the offerings at Ho-Chunk Madison is understandable given the flagging revenues for Indian casino gaming across Wisconsin.
Wisconsin’s 11 Indian tribes, which operate 27 casinos across the state, took in a record $16.2 billion in betting or “handle” in 2006. But as with the rest of the economy, tribal gambling revenues since then have fallen, dropping to $15.1 billion in 2010.
Under compacts negotiated with the state, the tribes are required to make annual payments based on their “win” or gross income from gambling operations. These payments range from 1.75 percent for the small tribes to 6 percent for the Potawatomi but have fluctuated widely because of various one-time payments linked to the opening of new casinos or other circumstances.
In 2010, the state collected $50.7 million in payments from the tribes, which regulators with the Division of Gaming say is about on par with an average year. The state collected $122.6 million in 2009, a figure boosted by a $60 million payment from the Ho-Chunk to settle a previous issue.
It’s unclear whether Gov. Scott Walker, whose spokesman Cullen Werwie declined to speculate, would pursue an expansion of Indian gaming as one way to generate more state revenue. The St. Croix Chippewa have been pursuing a casino in Beloit, so far without success.
What is clear is the popularity of poker. Some 80 million Americans played one form or another last year, according to industry estimates, although it’s difficult to count precisely given the varying laws in different states.
The federal government in 2006 attempted to crack down on Internet poker, a craze that hit college campuses in particular. Federal regulators pressured banks and credit card companies to stop transferring money to overseas gambling sites, a move that met with mixed success.
But for many, the attraction of poker is playing against other people, whether friends, strangers or competitors on the local tournament circuit.
Card rooms are booming in states where poker is legal. Online directories list games and tournaments, including regular events at Badger Bowl or Scatz Sports Bar in Madison, where players compete for points rather than cash. For many younger men, poker has replaced video gaming as the leisure time favorite.
“I like it because you have to be good to win,” says Cory Wunderlin, 29, of Madison who calls himself a regular at Ho-Chunk Madison and says he took home $780 in winnings recently.
Much of the interest in poker has been driven by the popularity of Texas Hold ’em, a seven-card game where betting skill is paramount. Televised tournaments — including new technology that lets viewers see the cards from all angles — took the game more mainstream than ever and made national figures of such players as Madison’s Phil Hellmuth.
“When you think about it, there really aren’t that many places where you can play poker live,” says Matthew Kredell, a writer with PokerNews, a gaming website. “These electronic tables are one easy way to introduce it.”
PokerPro manufacturer PokerTek Inc., a publicly traded company (Nasdaq:PTEK) headquartered in Matthews, N.C., is banking on it.
“The management team built a fantastic room for its players and we’re excited to be part of bringing poker to the greater Madison area,” says PokerTek CEO Mark Roberson about Ho-Chunk Madison.
PokerTek was dealt a PR blow last year when its machines were taken off the floor at the Excalibur Hotel and Casino in Las Vegas after some high-rollers said they preferred real dealers. But the company maintains sales are increasing and notes a recent expansion into Europe.
Poker aficionados debate whether the machines are any better or worse than a live dealer. Casinos love the machines since they work 24-7 for free and without benefits. Winning players like them, too, because they never demand a tip.
“Is electronic poker more fun than a real dealer?” asks local player Cero Zuccarello. “Not for me and I think most would agree. But it is more convenient and cheaper in many ways. In exchange for not getting to hold the cards and chips you also get to forgo tipping $1 per hand that you win, which can be the difference between being a long-term loser and a break-even player.”
Machines may also appeal to a younger crowd used to playing online. Moreover, they never make a mistake and they keep a record of the cards played, one advantage to other forms of poker.
“I lost $600 once on a dealer mistake,” laments Kredell.
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Known as the Wisconsin Winnebago until a tribal constitutional name change in 1994, the Ho-Chunk Nation long envisioned a casino at the intersection of U.S. 12-18 and Interstate 90 on Madison’s southeast side.
The tribe bought 4.5 acres there in 1983, with the property qualifying as “tribal trust land,” on which gambling is permitted. It later purchased the neighboring Holiday Inn Southeast hotel, which has since been torn down.
In 1992, the tribe floated plans for a $20 million, 125,000-square-foot casino at the site, employing up to 950 people. It projected state and local tax collections at $9.9 million for the first year and $12.7 million by the third year.
But local officials — most vocally state Sen. Fred Risser — balked at the idea of a casino in Madison. Instead, the tribe was issued a Class 2 permit for the site, which restricted the facility largely to bingo-themed games of chance.
Still holding out hope for a full casino, the Ho-Chunk in 1996 completed construction on the 1,600-person Dejope Bingo Hall, easily visible from the interstate. The facility sat vacant for three years as the tribe and city bickered over details such as enforcement of local ordinances, traffic laws and other legal questions relating to tribal land. Tribal officials eventually agreed to pay the city about $90,000 annually for municipal services including police, fire protection and other services. Those payments, indexed to inflation, continue today.
The $30 million Dejope Gaming & Entertainment finally opened for business in the summer of 1999, offering Class 2 games only. The facility began hosting concerts and special events, including a 2000 boxing match featuring Madison champion Eric Morel.
The idea of expanding Dejope into a casino got a boost in 2003 when Gov. Jim Doyle’s administration renegotiated gaming compacts with the state’s Indian tribes. These compacts increased payments to the state in exchange for allowing Wisconsin tribes to offer the same games as neighboring states — a move that effectively opened the door to full-fledged casinos statewide.
“American Indian casinos are here to stay,” Doyle’s secretary of Administration, Marc Marotta, said at the time. “The question is whether state taxpayers are going to benefit. Every dollar we collect from the tribes is a dollar taxpayers won’t have to pay.”
The most lucrative deal allowed the Potawatomi tribe extra games and longer hours at casinos in Milwaukee and northern Wisconsin. In exchange, the Potawatomi agreed to pay the state $84 million over two years with ongoing future payments, nearly five times what it had been paying.
The new compacts also included a provision to turn the Dejope Bingo Hall into a full-fledged casino — but only if Dane County voters agreed. To sweeten the pot, the Ho-Chunk offered to pay Dane County and Madison at least $3.5 million each in annual payments for 15 years.
A heated debate preceded the February 2004 referendum, with the tribe pumping an estimated $1 million into the campaign. Local political leaders were split on the issue, with County Executive Kathleen Falk backing a casino and Madison Mayor Dave Cieslewicz opposing it.
What was expected to be a close vote, however, turned into a rout. The referendum went down by nearly a 2-1 vote.
• • • •
Today, local politicians are staying away from the casino issue for the most part. While they might cherish increased revenues, they likely fear the wrath of an electorate that was dead-set against the idea seven years ago.
Falk, who is stepping down in April, declined to comment on the current situation at Ho-Chunk Madison or whether Dane County should revisit the casino issue. So did County Board Chairman and candidate for county executive Scott McDonell.
Former Mayor Paul Soglin, who is running against Cieslewicz again in 2011, was opposed to the 2004 referendum and still is opposed to a Madison Ho-Chunk casino.
“The referendum should be honored,” he says, adding that the state has done a poor job both in collecting enough money from the tribes and protecting players from excessive takes by the house.
Still, the tribe makes a case for the money generated, the jobs created and the opportunities gaming has brought tribal members. The Ho-Chunk Nation makes quarterly payments to its 7,200 tribal members and provides college tuition for its young people.
The Madison gaming hall employs 245 workers and offers a benefit package that marketing director Dave Abangan says rivals any in town. These employees also pay local taxes and shop in local stores, he notes.
The facility has proven an excellent neighbor and has staff that works in partnership with the city, say Madison Police.
“During my tenure here, I have not had one report come across my desk regarding a problem at Dejope,” says Madison police spokesman Joel DeSpain.
In addition to the payments for city services, Ho-Chunk Gaming Madison has also contributed more than $1.5 million to area organizations and events. Recipients include Second Harvest Food Bank, Salvation Army of Dane County, Madison Children’s Museum and Society of St. Vincent de Paul.
The gaming facility — which allows smoking in many areas but not in the new poker room — was remodeled in 2006 with the addition of electronic bingo games. No alcohol is served but there is a restaurant along with live music twice a month.
The name of the gaming hall was officially changed a year ago as part of a rebranding initiative. All six gaming facilities run by the Ho-Chunk now go by their location: Ho-Chunk Wisconsin Dells, etc.
Laustrup, who once served on the Wisconsin Council on Problem Gambling, is bullish on the facility despite the legal challenge, lack of liquor license and mixed history.
There is room, she says, for more outdoor concerts like last year’s show featuring Bret Michaels. The parking lot holds 650 vehicles and was more than half full on two separate weekday afternoons in January.
“I’m doing what I can to get more people out here,” says Laustrup, who got her start in the gaming business in 1993 and has managed the Madison site since 2005.
Laustrup says there are other Class 2 games that could be offered but there’s no more space in the current building. The Ho-Chunk had previously talked about real estate development on the site and hasn’t given up on the concept.
“Our plans to expand, including a hotel, are still in our minds,” says Laustrup. “However, we are cautiously approaching that dream because of the current recession affecting all businesses across America. It will happen when the time is right and with it will come more job opportunities for our community.”
Such dreams aside, city officials share the state’s opinion that poker at Ho-Chunk Madison violates terms of the compact — not to mention the voters’ opinion as expressed in the 2004 referendum.
“We are aware of the dispute,” says city attorney Mike May. “It’s being followed by my office, the mayor’s office and Captain Snyder of the Madison Police.”
State attorney McClure is hoping the issue will be reviewed by an independent arbitrator in the next few months. In the past, the state has used L.A.-based attorney and retired judge William Norris, who specializes in Indian gaming issues.
Laustrup is hoping that decision will clear the air and allow Ho-Chunk to move forward.
“What I’m offering is legal poker,” she says. “If you think it’s not being played illegally all over town, you’re burying your head in the sand.”
But until the court rules otherwise, players like Rosemeyer can still test their poker skills on the electronic tables at Ho-Chunk Madison.
“Once word gets out and school gets going again, I think this place is going to be very popular,” says Rosemeyer.
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