United States v. Daniel Davis, 2012 U.S. App. LEXIS 15875

Davis and Clark were convicted of conspiracy to conduct an illegal gambling business, illegal gambling, and money laundering in connection with sweepstakes at three Texas Internet cafés; the Government conceded money laundering convictions were unsupported, which the court reversed, while other convictions were affirmed.
§1955 criminalizes operating, financing, or owning an illegal gambling business that violates state law, involves multiple participants, and runs for a period or revenue threshold; the defendants argued their conduct did not violate Texas state law.
The superseding indictment tied the charges to three Texas statutes: gambling promotion, keeping a gambling place, and possessing gambling devices or paraphernalia; a conviction requires showing a gambling device or a lottery, and the presence of consideration.
Sweepstakes mechanics: customers acquired entries by purchasing Internet time, in person, or by mail; winners were predetermined by computer software; winnings could be cashed out or used to buy more Internet time.
Evidence at trial showed customers retained large remaining Internet time and police observed patrons primarily engaged in playing the sweepstakes rather than using other Internet services, supporting an inference of a gambling-focused operation.
During trial, the district court refused to allow a mistake-of-law defense; after trial, the jury found convictions on multiple counts; Davis and Clark appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was there legally sufficient consideration for the sweepstakes?	Davis and Clark contend no valid consideration existed beyond fair market Internet time.	Davis and Clark argue the record shows no consideration for playing the sweepstakes.	Yes; evidence shows consideration beyond merely free play, supporting illegal gambling convictions.
Did the district court err in not allowing a mistake-of-law defense?	Davis and Clark claim Texas-law mistake-of-law defenses should apply in this hybrid federal/state regime.	Davis and Clark rely on § 8.03 to justify the defense based on official statements or interpretations.	No; § 8.03(b) requires official statements or written interpretations, which were not reasonably relied upon.
Are the money laundering convictions supported by sufficient evidence and should they be reversed?	Goverment would argue the money laundering counts were properly supported.	The Government concedes no sufficient evidence for money laundering.	Reversed; money laundering convictions are unsupported.
If the defense relies on Texas law, was the reliance reasonable given the record?	Davis claims reliance on opinions and statutes to justify conduct.	Clark relies on a single Texas case; both rely on Texas official interpretations.	Unreasonable reliance; district court did not err in excluding the defense.

Ratzlaf v. United States, 510 U.S. 135 (1994) (ignorance of law not a defense; mistake of law only for specific intent crimes)
Hawes v. United States, 529 F.2d 472 (5th Cir. 1976) (no specific intent requirement for § 1955)
Dadi v. United States, 235 F.3d 945 (5th Cir. 2000) (same mens rea required as underlying offense for conspiracy)
Sariles v. United States, 645 F.3d 315 (5th Cir. 2011) (mistake-of-law defense de novo review; entrapment by estoppel context)
Brice v. State, 242 S.W.2d 433 (Tex. Crim. App. 1951) (consideration in lotteries; charity-type drawings not violative absent favoritism)
Jester v. State, 64 S.W.3d 553 (Tex. App.—Texarkana 2001) (consideration can be broader than direct money; device/plan intended to induce play)