The stakes are escalating for Portland Meadows, as the state's only horse racing track now faces serious punishment from the Oregon Lottery for running what lottery officials say is an illegal poker room.

In a May 16 letter, lottery Director Barry Pack informed track officials that an undercover Oregon State Police detective had gone into the large poker room at the track on April 20, 2017 and witnessed at least six violations of the state and local laws that govern poker.

Pack demanded that Portland Meadows "immediately cease operating in violation of Oregon and city laws."

Earlier this year, the lottery sent a letter to all retailers, notifying them that any violations of the social gaming law governing poker in Oregon could put the lottery retailer's ability to sell lottery products, including video poker, at risk.

Portland Meadows has more video lottery terminals in one location—10—than any other retailer in the state. Last month, the track's plea for legislative approval add 40 more terminals failed to pass.

Portland Meadows has also strongly opposed House Bill 2190, which is still alive in Salem, and would restrict the sponsors of poker games to non-profits. That bill, passed by the House on April, would shut down the poker games Portland Meadows and its competitors run. It is scheduled for a possible work session May 24.

As WW reported in a March cover story, Portland Meadows operates one of the state's biggest poker rooms and like its competitors operates in clear violation of laws that prohibit bets of more than $1; the employment of professional dealers; and the "house" acting as a bank, among other laws.

The city of Portland previously notified Portland Meadows and Final Table, another big operator, that it intended to suspend the club's licenses for two weeks. On May 1, Portland Meadows agreed to pay a $3,000 penalty in lieu of suspension in operate in compliance with all applicable laws.

The lottery letter makes a mockery of that settlement, and is potentially far more consequential than the city's proposed fine: The loss of 10 video poker terminals could cost Portland Meadows hundreds of times that amount.

"If [Portland Meadows] does not comply with this notice," Pack wrote, "the Lottery will exercise its right to terminate its retailer contract with [Portland Meadows]."

The track's owners will now have to decide between video poker and real poker—although if the Senate passes HB 2190, that decision will be moot.