Department of Texas, Veterans of Foreign Wars of United States v. Texas Lottery Commission

760 F.3d 427 (2014)

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Department of Texas, Veterans of Foreign Wars of United States v. Texas Lottery Commission

United States Court of Appeals for the Fifth Circuit
760 F.3d 427 (2014)

Facts

The Texas Constitution historically prohibited all gambling. However, a 1980 constitutional amendment allowed charitable organizations to raise money by conducting bingo games. The Texas Legislature enacted the Bingo Act to implement the amendment. Under the Bingo Act, organizations with state-issued bingo licenses could use their bingo proceeds only for the organizations’ “charitable purposes,” defined broadly to include activities consistent with the purpose for which the charity had obtained a federal tax exemption or state authorization as a charitable organization. The organizations could not use bingo proceeds to (1) support or oppose candidates for public office, (2) support or oppose ballot measures, or (3) influence or attempt to influence legislation. Various nonprofits licensed to conduct bingo games in Texas (the charities) sued the commissioners and executive officers of the Texas Lottery Commission (collectively, the commission) (defendant) in federal district court, asserting that the Bingo Act’s political-advocacy restrictions violated the charities’ First Amendment rights. The district court agreed and granted permanent injunctive relief preventing enforcement of the political-advocacy restrictions. The Fifth Circuit initially reversed the district court’s decision but then agreed to rehear the case en banc. The commission argued that (1) the charities lacked standing to sue because they had no redressable injury, on the theory that the charities’ use of bingo proceeds for political-advocacy purposes was independently prohibited by the statutory requirement that charitable organizations’ bingo proceeds must be used for the organizations’ charitable purposes, and (2) the Bingo Act created a subsidy for the charities, which meant the state could restrict the use of the funds earned by the charities through the subsidy program.

Rule of Law

Issue

Holding and Reasoning (Stewart, C.J.)

Dissent (Graves, J.)

Dissent (Dennis, J.)

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