Are Underground Casinos Illegal in the United States?

Question Mark With Legal Illegal Text

Here’s a question for you—are underground casinos illegal? Well, a lot of that depends on where you live… Or does it?

In this post, I examine the legality of underground casinos in various cities and states. It can really vary, so there’s a thing or two that you ought to know about underground casinos and gambling in general.

Keep reading below to learn more about the legality of underground gambling operations.

What Is an Underground Casino?

Before you can say whether an underground casino is legal or not, you need to know exactly what an underground casino is. Basically, an underground casino is any gambling business or establishment that’s circumventing the law by operating discreetly or “underground.”

This might include your local bar. I used to drink at a bar in Dallas that had three slot machines called eight-liners. And that’s what they were called because they each had eight paylines.

Row of Slot Machines

They weren’t supposed to pay out cash. In fact, if you won money on one of the machines, you didn’t get the money immediately. You had to come pick up your money in an envelope from the owner of the bar on Friday. The bartender kept records of who won each week.

I figure that each of those three games earned at least $100 a day, making them quite a bit of money per week in additional revenue. That could be a significant amount of money for any bar, but especially one that’s small.

Real money slot machines, by the way, are illegal in Texas. This makes that bar, by definition, an “underground casino.”

More Examples of Underground Casinos

The most common example of an underground casino in the Dallas area is the underground poker room or cardroom. These operations were commonplace 20 years ago when I started playing serious poker, but they went through a period where they were getting raided by the vice squad. Many of them closed.

I was friendly with a couple of guys who ran underground cardrooms who served some time on probation and had felony convictions after running these businesses. Yes, those underground cardrooms were illegal. In Texas, you’re not allowed to run a gambling business that collects a rake from poker players. And they were definitely doing that.

In a sense, these underground cardrooms weren’t really casinos because they didn’t offer “casino games.”

I always make a distinction between casino games and poker games because casino games are, by definition, banked by the house. Poker games are banked by the other players.

In the eyes of the state of Texas, though, an underground gambling den is illegal regardless of who’s banking the action.

Enforcement increased when the Winstar started getting bigger. I’m not convinced that this was just a coincidence either.

What Is It Like to Gamble in an Underground Casino?

If you’ve watched a lot of casino movies, you might have some idea about fancy high-roller underground casinos where the patrons are well-dressed, and everyone is drinking something expensive and fancy.

You’ll be disappointed at most underground casinos because that’s not what most of them are like at all.

Most of them are more like the bar I talked about earlier in this post. They tend to be dingy, small, and offer low stakes gambling.

Another example of an underground casino is the “game room.” In Texas, every now and then, someone gets the idea to open a game room. It’s a business that’s full of eight-liners, which are just slot machines by another name.

Rounders Movie Poker Game

They try to skirt the law in various ways. I visited one in a small town once where you weren’t allowed to put actual coins or cash in the machines themselves. You had to buy credits on a card that you inserted into the machines for credits. This was an attempt to stay within the law.

The other funny thing about this game room was how the prizes worked. You couldn’t win cash there, just points. You could use those points to buy prizes from the prize table.

I examined the prizes available on the prize table on a couple of visits. I laughed when I saw that one my options was a six-pack of canned cream style corn. I laughed again when I saw a cheap set of gardeners’ tools.

Slot Machines in Gas Stations and Convenience Stores

Depending on the neighborhood, you can often find convenience stores and gas stations with a bank of eight-liners in them. These are also, by definition, underground casinos. They’re just underground casinos that also offer things like snacks, chips, and gasoline.

These seem to have more luck than the game rooms, probably because they have a plausible business outside of their gambling activities.

Also, for the police to arrest you, they have to be able to prove that you’re running an underground gambling business. Presumably some of the businesses offering these gambling games are good at keeping these activities subtle, secret, and well… underground.

Underground Casinos in Gambling Destinations Like Las Vegas

You’re not likely to find underground casinos in gambling destinations like Las Vegas. The businesses offering gambling activities in a town like Vegas have a lot of money and influence. Why would they not use that money and influence to crush small competitors operating outside of the law?

Also, why would anyone want to gamble at your underground casino when they could just as easily visit a legal, above-ground casino with security, drinks, and scantily-clad cocktail waitresses?

Park MGM Las Vegas

I could be wrong, though. Maybe there are underground casinos all over Vegas. Did you know that there are homeless people living in the tunnels underneath the city?

I’ve read about them, but I don’t think they’re doing any gambling down there. It sounds like they lead a hard-scrabble life and are just barely surviving.

Besides, an “underground” casino isn’t literally underground. It’s a figure of speech.

Underground Casinos Have a Cultural Component

Some cultures and subcultures enjoy gambling activities specific to their heritage. For example, a lot of Asian communities enjoy gambling. If you’re visiting a city big enough to have a Chinatown, chances are good that there’s at least one underground casino in that part of town. And that underground casino probably offers games popular with Asian gamblers. Baccarat is popular among Asian gamblers, so are pai gow, sic bo, and pachinko.

Of course, slot machines seem to be ubiquitous in underground casinos everywhere in the country.

Are Tribal Casinos Considered Underground Gambling?

Several years ago, the United States passed a federal law related to allow Native tribe casinos. These tribes have some degree of autonomy from the United States government but, of course, they must still abide by the law.

Such tribes have agreements with their state governments called “compacts,” and these compacts agree to specific rules related to the operation of casinos by these tribes in these states.

These tribal casinos are NOT underground casinos. They’re operating in full view of everyone with the blessing of the state government, although occasionally, you’ll see a state’s government disagree with the legality of a specific casino. That’s rare, though.

What kinds of restrictions do Indian casinos have? It depends on the state, but one of the common restrictions has to do with the type of gaming the casino is allowed to offer. Until recently, Oklahoma casinos could only offer Class II games and no Class III games.

This means the slot machine games operated like a bingo game where all the players were competing with each other in a parimutuel electronic bingo game. It’s seamless for the customers, but the machines have an LED screen with a bingo card on them. The reels are just for show.

Woman in a Native Tribe Casino

Another restriction that’s common with Native American casinos has to do with how random results are generated. Many times, cards are allowed, but dice and spinning wheels are not.

This has led to some interesting innovations from these casinos who want to offer craps and roulette. They figure out ways to generate results using a deck of playing cards, then “translate” those results into a virtual roll of the dice or spin of the wheel. But the outcomes are always based on the cards that got drawn.

Tribal casinos are likely here to stay, but they’re operating on the up and up.

Conclusion

Yes, according to US gambling laws, underground casinos are illegal. That’s the definition of “underground casino.” If they were legal, they would be aboveground casinos.

And no, most of them don’t look anything like the underground casinos you see in movies. They’re a lot less glamorous.

If you’re a business owner, they’re also risky. Vice squads are no fun to deal with when you’re breaking laws. They also offer little in the way of security, and who knows whether they cheat or not.

My suggestion is to stick with legitimate casinos that are licensed and regulated. Stay away from the underground casinos. You can get more out of your gambling buck at online casinos or make a trip out to a state-regulated establishment for some real fun! Underground casinos just don’t offer a lot of upside.