Texas Man Admits Illegal Gambling, Theft of $2.1M in Tech from US Army

Posted on: March 23, 2022, 03:51h. 

Last updated on: March 23, 2022, 05:12h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

A Corpus Christi, Texas man who pleaded guilty this week to operating two illegal gambling establishments has another problem. He also admitted to conspiring to steal $2.1 million dollars worth of sensitive military equipment from the US Army.

Nathan Nichols
Nathan Nichols, above, has admitted receiving $2.1 million in sensitive, high-tech equipment allegedly stolen from the US Army. (Image: 3 News)

This included laser range finders, thermal scopes, night vision scopes, night vision goggles, and laser-aiming devices, according to the DOJ.

From March 2018 to August 2019, Nathan Nichols, 46, operated illegal sweepstakes machines at two businesses he owned in Corpus Christi, Theo’s Bar and Lady Luck.

According to the feds, both properties offered sweepstakes games that fell foul of Texas law. Customers at the venues accessed the games via computers and monitors rather than casino-style equipment.

“The games are software-based and function as traditional slot-machine games, or ‘8-liners.’ However, the action of the slot-machine reels are [sic] simulated on a computer screen rather than on mechanical reels. Those playing the machines place bets before each spin and receive winnings in cash,” the DOJ said.

Robbing Ft. Hood

When federal investigators searched Nichols’ home in July 2021, they found a hoard of technical equipment which they claim was stolen from the US Army installation at Ft. Hood a month earlier.

According to an August 2020 report by 3 News, they also seized several million dollars, gold bars, and multiple vehicles, including a Lamborghini, from Nichols and his business partners.

The 46-year-old was in contact with an individual who they claim was responsible for the theft, according to prosecutors. Nichols requested images of the equipment before agreeing to buy it for resale and listed it on eBay once he had obtained the items.

As part of his plea deal, Nichols agreed to forfeit $2,185,218.73 in proceeds from his crimes. He faces up to five years in prison for each count of conducting an illegal gambling business and conspiring to steal government property.

Sentencing has been scheduled for June 21 before US District Judge Nelva Gomez Ramos in Houston.

Are 8-Liners Legal in Texas?

Sweepstakes machines are known as 8-liners because of their eight paylines. They are nominally legal in Texas if they offer tickets that can be redeemed for merchandise as prizes.

That’s because cash prizes are illegal under Texas gambling law. To comply with local gaming regulations, prizes must have a wholesale value of no more than $5, or ten times the cost to play the game.

This is based on a 1993 Texas Supreme Court known as the “fuzzy animal exception,” which clarified that amusement games that awarded low-value prizes, like soft toys or tickets were legal.

Essentially, sweepstakes machines eliminate the stake to bypass local gaming laws. Instead, players are awarded time on the machines for “free” with the purchase of a product.

But some businesses push the boundaries of the law, which has resulted in frequent police raids.

Nichol’s customers placed bets before each spin and received winnings in cash, making them illegal, according to prosecutors.