CARTER LAKE - Organizers of a poker tournament that the state says is illegal may be headed for a high-stakes showdown with regulators.

The Chez Paree, a business in this western Iowa town, hosted three days of gambling last weekend, and said the 10-week Texas Hold 'Em tournament would continue this weekend. Up to 200 players are expected.

The state Department of Inspections and Appeals warned the business that such gambling is illegal, but the Chez Paree is gambling that it will not be prosecuted.

That's because Pottawattamie County Attorney Matt Wilber, who would prosecute any case, has told organizers he thinks what they are doing is legal.

Wilber interprets Iowa code to read that such a poker tournament is legal under Iowa law - not as gambling but as a winner-take-all-contest. Wilber said he does not condone such an event, but believes it would be a waste of taxpayer money to fight it.

The state argues that the law does not authorize any form of casino gambling. Iowa code, it says, permits only "cribbage, bridge, chess, checkers, dominoes, pinochle and similar contests, leagues or tournaments.

Last weekend, a state inspector shut down a hot dog stand at the facility and fined Chez Paree building owner Fred "Butch" Levell $100 for operating the food stand without a license.

"Why are they harrassing us?" asked Chez Paree's attorney, David Richter.

DIA spokesman David Werning said his office is treating the organizers as all the others who have inquired about holding tournaments.

"We give them the information it is illegal and that is usually the end of it," he said.

Werning said the agency isn't bluffing, saying the case has been referred to the Department of Criminal Investigations and the Attorney General's Office.

DCI Agent Julie Hamilton said her office continues to monitor the situation but said any action would come from the Pottawattamie County Attorney's Office.

Chief Deputy County Attorney John Jacobmeier said his office has no plans to intervene.

"We are sticking to our position that it is not illegal," he said.