The Lawletter Vol 39 No 8
Tim Snider, Senior Attorney, National Legal Research Group
We live in an increasingly politicized and polarized country. With elections occurring at least every other year and political activity ongoing, the states are struggling to contain or define the limits of political advocacy. Texas, like most states, licenses nonprofit charitable organizations to conduct games of chance, such as bingo, for fund-raising purposes. The net proceeds of those games, however, must be devoted exclusively to the charitable purposes for which the entity has qualified as a tax-exempt, charitable organization. The Texas Bingo Enabling Act ("the Act") provides, in pertinent part, that
the net proceeds derived from bingo and any rental of premises are dedicated to the charitable purposes of the organization only if directed to a cause, deed, or activity that is consistent with the federal tax exemption the organization obtained under 26 U.S.C. § 501 and under which the organization qualifies as a nonprofit organization as defined by Section 2001.002.
Tex. Occ. Code Ann. § 2001.454(b).
Certain tax-qualified charitable organizations in Texas, licensed to conduct bingo games, used the proceeds of the games for purposes of advocating political causes and positions, specifically to lobby in support of, or in opposition to, certain ballot initiatives. The Texas Lottery Commission ("the Commission"), which is tasked with administering and enforcing the Act, entered an enforcement order prohibiting the organizations from using the proceeds for those purposes, concluding that doing so violated the Act. The organizations brought suit, alleging that the Commission's action amounted to an unconstitutional limitation on free speech. The district court, relying heavily on Citizens United v. FEC, 558 U.S. 310 (2010), agreed with the plaintiffs.