An Overview of Bingo Legislation
Bingo regulations in Texas, though relatively simple, can be quite complex. It is a general misconception that bingo is illegal in Texas, yet Texas law provides active support for bingo. Lawmakers actually decided on three occasions to make bingo legal in Texas: in 1981 by allowing counties to authorize bingo games, in 1989 by allowing charities to conduct bingo games, and in 1991 by organizing the Texas Lottery. According to the Bingo Enabling Act and the Texas Constitution, the State of Texas authorizes bingo for the sole purpose of raising funds for nonprofit charitable organizations registered with the State.
Bingo operator units in Texas must hold a license from the county or municipality that has authorized bingo to be played in its jurisdiction. The bingo operator unit may conduct bingo games for charity , giving all net proceeds to the eligible charity or charities performing under contract. Local ordinances govern the bingo facilities. All bingo must be played in facilities licensed by the Texas Bingo Card Commission. Commercial lessor units are prohibited from conducting any bingo other than at licensed facilities. Nonprofit-charitable organizations that are licensed to conduct bingo must keep records of all supplies taken in and out of the licensed facility. That includes the number and cost of bingo cards, drink and food sales, and mint and candy sales. Prizes awarded must also be documented.
The legal number of hours a corporation may conduct bingo games per week is generally between nine and 30. However, a corporation may petition the Texas Railroad Commission to permit it to conduct bingo for additional hours. The legal number of hours a unit may conduct bingo per week is nine, only on Fridays and Saturdays after four o’clock in the afternoon.
Licensing and Permits for Bingo
Licensing Requirements
To engage in a commercial bingo game with a contractor, an individual must possess a Commercial Lessors’ License.
An individual must possess a bingo worker registration certificate from the Texas Lottery Commission in order to work at a charitable bingo occasion.
All association officers and directors of a tax-exempt religious, charitable, or educational organization that is a bingo license holder must possess association credentials.
Any person who is currently serving on the Commission of Licensing and Regulation, the Charitable Bingo Operations Committee, the Commission Inspector, an employee, a staff member, or a commissioner, is prohibited from conducting or participating in charitable bingo or from providing consultation, advice, or other services for hire to any entity or person who conducts or participates in charitable bingo.
Bingo Legal Restrictions
Bingo games are prohibited on the premises of an organization other than the bingo authorized organization during certain hours (9:00 a.m. to 1:00 a.m.). Bingo is also prohibited on January 1st, Easter Sunday, Thanksgiving Day, and Christmas Day. Special provisions are made for legally sanctioned days on which a county fair or rodeo is held.
Where bingo is permitted, an organization may hold only two five-day-a-month sessions of bingo, but the sessions cannot be held on a Saturday or Monday. However, organizations in counties with populations less than 500,000 are allowed to hold three four-day-a-week sessions of bingo. The Department of Human Services specifies what constitutes a session (for example, the first occasion on which a coverall game is played on a game day), and has established mandatory time limits for all sessions and bingo occasions (an organization cannot spend more than 20 minutes on any one game).
Generally, every person who regularly conducts bingo occasions for a single organization is required to be a member of that organization (Department policy). Exception is made for an organization that enters into a service contract with persons other than members for the conduct of bingo occasions; in that case, only the organization’s officers and members may call the games. Section 2001.203 of the Texas Occupations Code, however, would appear to allow each organization to have paid, licensed employees conduct a bingo occasion.
The conduct of bingo is not considered business, and therefore, bingo is not subject to local zoning ordinances (Business & Commerce Code § 2001.211).
Bingo and Charitable Organizations
The Charitable Bingo Operations Division of the Texas Lottery Commission was established to ensure that licensed organizations operate bingo as a charitable gaming activity, rather than for profit. The Texas Legislature has established strict eligibility requirements an organization must meet in order to be considered an eligible organization. Eligibility is limited only to nonprofit, tax-exempt, religious, charitable, educational, or volunteer fire-fighting organizations that have existed for at least three years. In addition, the organization must file and receive approval of corporation documents with the Texas Secretary of State.
The key provisions of the Bingo Enabling Act, Chapter 2001 of the Occupations Code, are:
• All bingo occasions must be organized and conducted by licensed members of the organization.
• An organization may not receive any part of the proceeds derived from more than 10 occasions a calendar year conducted by another organization.
• A person may not direct or manage the conduct of a bingo occasion unless the person is a qualified volunteer member of the organization.
• An organization may not spend or use bingo funds for any purpose other than a charitable purpose.
• A person may not conduct bingo occasions and is not eligible for a license issued under Section 2001.301(a) if the person is a paid employee of the organization or receives, or expects to receive, remuneration or anything of value for managing or conducting a bingo occasion.
Consequences of Breaching Bingo Regulations
Violating Texas bingo laws can have significant legal consequences, not only for licensed organizations but also for individuals involved in operating a bingo game. A license issued to an organization may be cancelled or suspended if any of its members, officers, directors, employees, or agents violate any provision of the Bingo Enabling Act or an existing rule or order of the Texas Lottery Commission. Staff of the Texas Lottery Commission may also cancel the license if it determines that involuntary termination of the license is in the public interest. Officers of a licensee that participates in or cooperates with a bingo game sponsored by an unlicensed organization or charity are also subject to having their licenses suspended or cancelled. (Tex. Occ. Code §2001.456, §2001.457, §2001.458.) Unless the Commission orders otherwise, suspension of a license is for a period not exceeding 60 days. A person whose license is suspended is prohibited from participating in a bingo game in any capacity. (Tex. Occ. Code §2001.455.) A person who violates a provision of the Bingo Enabling Act or an existing rule or order of the Texas Lottery Commission is subject to administrative penalties. (Tex. Occ. Code §2001.457.) An individual whose license has been suspended and participates in a bingo game commits an offense. A person under a non-suspension status may also have their license cancelled , suspended, or not renewed if the Board finds they participated in a bingo game sponsored by an unlicensed organization or charity. This provision applies not just to individuals who are members of the training pool for licensure, but also to organizations who are in the same position. (Tex. Occ. Code §2001.459.) A license holder is not entitled to a hearing prior to cancellation, if the Board cancels the license under this section because the Board did not receive a response regarding training from the organization or individual. (Tex. Occ. Code §2001.459(c).) A license holder listed in an enforcement action under section 2001.260, prohibition against noncharitable organizations participating in bingo, may be cited for violating the prohibition. (Tex. Occ. Code §2001.460.) This includes officers and directors of an organization. (Tex. Occ. Code §2001.501.) The organization that holds the license may be penalized because of actions by its members, officers, directors, employees or agents. (Tex. Occ. Code §2001.501(a).) An organization that has been fined may appeal to the Board for a stay of enforcement of the order imposing the penalty. (Tex. Occ. Code §2001.505.)
Recent Updates and Modifications to Bingo Laws
Bingo is a game long associated with charitable work across the state of Texas, raising significant funds for countless non-profit organizations to continue their missions. Of course, as with any gaming operation in the State, it is subject to the laws and regulations of the Texas Lottery Commission and its bingo arm, the Charitable Bingo Operations Division ("CBOD"). Not only does CBOD have to balance administering bingo licenses and the rules to govern them, they have to address issues that arise when operators push the envelope or when new forms of gaming appear on the horizon. The last year has been busy for both the Legislature and CBOD in adopting new laws, amending or repealing existing laws covering charitable bingo.
The most significant change, at least for our clients, occurred when the 86th Texas Legislature passed and then Governor Abbot signed into law House Bill 914, the Catch-All Gaming Bill. While the "Catch-All" purports to make changes to several different types of gaming (like a clerical error in the poker statute or administrative rules to follow on the electronic bingo section), Section 12 of the law is an amendment to Section 2001.453 of the Texas Occupations Code, which is the code governing "Bingo Internet Sites." Since the adoption of this charging language in 2013, CBOD has struggled with what the language actually means. That struggle has led to litigation between CBOD and the industry, and a statewide Temporary Injunction Order to prevent CBOD from enforcing "Bingo Internet Sites" against our clients pending the outcome.
With the passing of HB 914, most of the litigation surrounding Bingo Internet Sites came to an end when an Agreed Final Judgment was entered by District Judge Jack Carter in the 67th Judicial District Court in and for Erath County, Texas. Per that Order, HB 914 amended Section 2001.453 to remove the words "for profit." The removal of those two words will now allow charities to run websites and sell raffle tickets online without the threat of prosecution or civil liability from CBOD. However, the Agreed Final Judgment shutting down this saga does not mean that the deadline has expired for CBOD to adopt rules in 6 months. Those rules, once adopted, could still affect our clients on how they may apply the Bingo Internet Site to charitable organizations. Within those 6 months, CBOD plans to conduct a series of public hearings across the state of Texas to take feedback and comments on these new rules.
In addition to that relief, HB 914 did the following: The above changes will allow for greater flexibility upon charities and a less restrictive atmosphere on those who operate and work in the charitable bingo industry. We look forward to seeing how CBOD will implement these changes and for the continued growth of this great industry throughout the next few years.
Texas Bingo Laws vs. Other U.S. States
In the United States, the most notable state bingo laws are those of Texas and Florida, two of the largest bingo gaming states in the nation.
But these laws differ on many levels. For instance, in Florida, local municipalities have the authority to regulate and license charitable organizations. This decentralized approach contrasts with the single-entity and state-monopolized system that Pennsylvania has adopted. On the other hand, Texas’ bingo laws fall somewhere in between.
As far as taxes go, Texas establishes its tax rate on each organization’s gross receipts from bingo and any related receipts on admissions, prizes , and refreshments (IF they were not previously taxed). As we touched on earlier, some municipalities (e.g., Dallas) instituted an additional 1% tax, but there’s no indication that other states have similar provisions.
On the financial reporting side, Texas requires bingo licensees to file an Annual Financial report and Payor Information Report. Other states such as Florida and New Jersey require similar reporting, particularly after accounting for all required Bingo Tax and "related receipts" for the games. Overall, more states continue to adopt simplified lottery-style bingo laws, but under the Texas Bingo Act, the number and variety of charity bingo games continue to grow.