The 5th U.S. Circuit Court of Appeals recently upheld a lower court ruling and agreed that a 30-year old law, a provision of the Texas Bingo Enabling Act, violated free speech rights of nonprofits that hold bingo licenses. Now charitable bingo operators can use proceeds from their games to lobby Texas lawmakers on gambling and other issues. The decision, released late Monday, upholds a lower court ruling.
The case involved a 2010 lawsuit against the Texas Lottery Commission, filed by more than 10 nonprofits including Elks lodges and Veterans of Foreign Wars posts and Elks lodges. The suit argued for-profit gambling operations were allowed to use revenues “to influence the political process,” but nonprofit groups were not allowed to do that. As a result, the suit said, the provision “skews the process in favor of for-profit businesses,” so when legislators consider any gambling-related issues, “the playing field will be heavily tilted in favor of for-profit gambling.”
Anatole Barnstone, an attorney for the charitable groups, said, “We’re thrilled and delighted that the 5th Circuit recognized that small, little charities have the same free speech rights as big corporations. The narrow result is each charity now is free to use bingo money to pursue a legislative agenda. It’s the broader thing that’s more important. Now the law is clear the government can’t tell you as a license holder you can’t use your revenue for speech.”
Barnstone said the ruling affects about 1,100 charities that hold bingo licenses, but “maybe a few dozen” actually are involved in lobbying or political advocacy.
The Texas Attorney General’s office, which argued the case for the lottery commissioners, could appeal the case to the U.S. Supreme Court.
The eyes of Texas also are upon the lottery commission, which will hold a public meeting Monday, August 11 in Austin about a proposal to allow new software that would be added to existing card minders–small devices that “mind” electronic versions of players’ paper cards—so players could buy more bingo games electronically during the game. It’s a big deal for Texas charities that have received more than $1 billion in bingo revenue since lawmakers approved state-regulated charitable bingo in 1981.
Attorney Stephen Fenoglio, representing Texas charities that benefit from bingo, said, “We think it’s very important. It digitizes everything. That makes is so much more simple. This will make it easier for the player, the regulator and the charity conducting bingo.”
Lawmakers have made changes to the games over the years. In 1994 pull-tab tickets were allowed, and 1996 card-minding devices were approved for sale. The current debate seeks commissioners’ approval to allow a rule change that would let charities set up accounts for bingo players that they could use to buy bingo products such as games via a prepaid account.
If approved by commissioners as soon as this week, it still would take six months before the new technology could be available in Texas bingo halls, Fenoglio said.
Meanwhile, the topic of historical race wagering garnered more than 13,000 comments from the public, reported the Fort Worth Telegram August 5, but the Texas Racing Commission announced Aug. 12 it needs time to study the matter.
“Don’t over read it either way that it’s not coming up this month,” Racing Commission Chairman Robert Schmidt said. “We are trying to do our due diligence and be as open and transparent as possible.”
Historical race wagering is executed on machines that look like video lottery terminals where bets are pooled and results are based on previous races of dogs and horses. The machines are legal in Arkansas, Kentucky, Wyoming and Oregon.
The commission must act before the end of the year, or the proposal for the race wagering machines will expire.
Proponents feel the state needs historical race wagering to compete with tracks in other states that draw larger crowds because they also have casinos.
“The ultimate success or failure of this measure may actually predict the success or failure of our entire industry,” Texas Thoroughbred Association Executive Director Mary Ruyle said. “We remain hopeful the Texas Racing Commission will consider parimutuel wagering on historical racing before the end of this year,” she added.
In Kentucky, historical race wagering, or instant racing as it is also called, brought in over $30 million in wagers between two tracks in just one month.
Rep. Dan Flynn asked Attorney General Greg Abbott to research whether the racing commission is authorized to legalize the machines. Those opposed claim the machines look a lot like slot machines and mirror casino-style gambling.
State lawmakers are also having their doubts because the TRC’s approval could be unconstitutional. Expanded gambling measures are decided by the Legislature, not the racing commission, but TRC officials are adamant changing the rules isn’t the same thing as a gambling expansion.
Robert Elrod, the commission’s public information officer, said the decision to further study instant racing isn’t indicative either way.
“We appreciate the thousands of comments submitted on both sides of the issue and they will be invaluable to the commissioners as they deliberate. The commission could take action on the rules at a later date, but it has the option to delay action until as late as December 27,” Elrod said.
“If the commission takes no action by December. 27, the proposed rules will automatically expire by operation of law,” he said.
