ASHLAND — A state agency's ruling that a poker club's activities violated state law led to the shutdown of the gaming business.

ASHLAND — A state agency's ruling that a poker club's activities violated state law led to the shutdown of the gaming business.

The Oregon Department of Justice's Charitable Gaming Unit said that some membership dues and fees charged by The Downtown Poker Club were outside the rules established for social gaming clubs. Following that ruling, the Ashland Elk's Lodge, which owns the building on Will Dodge Way, declined to renew the poker club's lease.

The club was funded by each member paying nightly table fees of $20, which were collected by taking a small percentage of each pot played, also known as the "rake." Any money collected in excess of $20 per player was placed in a player's fund to be redistributed among the players through parties and refreshments.

Because the club was not making a profit from these fees, and only paying for rent, expenses and improvements, Russell Bjerke, co-owner of the Downtown Poker Club, had previously said he felt the practice was legal.

The state disagreed.

"The DOJ investigator said that the club was in violation of the Monte Carlo rules because they were a social gaming club and were taking income from the game," said Detective Bon Stewart of the Ashland Police Department, who accompanied a state investigator to the club.

The poker club met the city of Ashland's requirement as a "charitable, fraternal or religious organization," and was allowed to host social games such as poker. However, the owners' practice of charging nightly fees to play in the games meant that the card games were a source of income, which is a violation of the state's charitable gaming laws for non-profit organizations.

Pending further investigation, the club could face fines from the state of Oregon. No decision has yet been made by the Justice Department.

After closing in April, the owners of the club reportedly attempted to reformulate their business plan so it would meet the law's guidelines, but were stymied when they tried to renew their lease in May.

The Downtown Poker Club rented its space from the Elk's Lodge, which is upstairs from the club and owns the building.

Fred Hatfield, chairman of the lodge's board of trustees, said that in addition to the problems with the state, the poker club had failed to build a rest room for its players as it had promised.

Before the club could reopen, the Elk's board of trustees reviewed what would essentially be a new business and opted not to renew the lease.

The Elk's Lodge hosts poker games in its facilities and was also investigated because of concerns that the dealers were paid for their services at the lodge, according to the Department of Justice. Those concerns proved to be unfounded.

"The dealers have never been paid," said Judy Corallo, a dealer at the Elk's poker tournaments.

Hatfield said dealers receive compensation only through tips from the players.

"The investigator initially told me that the dealers 'could not profit in any manner,'" said Hatfield. "I simply asked him how I could control what players do with their money. He said that as long as we give the players all of the money in the prize pool, then what those players do with the money after it has been given to them is their business."

The weekly and monthly games that take place at the Elk's Lodge have been deemed legal and will continue.

According to the city of Ashland, the Downtown Poker Club was renamed The Private Club and purchased a business license in April. The current owners have declined to comment on their plans.