Texas City Loses Bid to Recover $721K Seized in Illegal Gambling Investigation

The city of Hitchcock, Texas, cannot sue Galveston County or the sheriff’s office to recover funds equal to about 9% of its annual budget, which authorities allege are tied to illegal gambling, a federal judge has ruled.

Hitchcock sued after Sheriff Jimmy Fullen’s office seized around $721,000 from the city’s general fund bank account on June 24.

The lawsuit argued the seizure “has caused an immediate, severe emergency, threatening the City’s ability to pay for essential services and maintain public safety.”  The city has no available line of credit or rapid financing mechanism to replace the funds, it states.

Constitutional Rights

The city said the money was public funding, not the proceeds of illegal gambling. It argued its Fourth and Fourteenth Amendment Rights were violated because the sheriff’s office lacked probable cause to seize the money and sovereign immunity protects public funds held for governmental functions.

However, U.S. District Judge Jeffery Brown dismissed the case because “one governmental subdivision may not sue another subdivision” under the federal civil rights statute, 42 U.S.C. § 1983.

What’s an Eight-Liner?

Hitchcock has a history of regulating “eight-liner” and amusement gaming machines through city permits.

An eight-liner is a slot-style gaming machine commonly found in Texas game rooms that lets players wager on multiple paylines and win credits redeemable for prizes. Although operators often market them as legal amusement devices, courts have increasingly found that many violate the state’s gambling laws.

Following an investigation by the sheriff’s office into illegal payouts and associated criminal activity, authorities raided multiple locations in the city in February, resulting in dozens of arrests and the confiscation of hundreds of machines.

Mayor Arrested

Among those charged were Hitchcock Mayor Christopher Armacost after authorities found what they claim are illegal gambling machines in a laundromat he owns in the city. Armacost has been charged with felony engaging in organized criminal activity, which he denies.

Undercover deputies who played on Armacost’s machines received 40 and 70 credits on a printed ticket, which they were subsequently able to redeem for cash, according to court records.

In 2022, the Second Court of Appeals in Fort Worth ruled that eight-liners meet the Texas Constitution’s definition of an illegal lottery because they involve the three required elements: chance, consideration, and a prize. The court said it made no difference whether winnings were paid in cash, credits, or merchandise.

There has been long-running tension in Texas over eight-liner game rooms. While some cities have issued permits and regulated the businesses as local amusement establishments, many sheriffs and prosecutors argue that permits cannot legalize conduct prohibited under state gambling laws and have increasingly cracked down on the machines.