Department of Texas, Veterans of Foreign Wars of the United States v. Texas Lottery Commission
727 F.3d 415
5th Cir.2013Background
- Texas Constitution (1980 amendment) permits certain nonprofits to conduct charitable bingo if proceeds are spent in Texas for the organization’s "charitable purposes."
- Texas Bingo Enabling Act creates a licensing scheme and defines "charitable purpose," and explicitly prohibits using bingo proceeds to support/oppose ballot measures or to lobby (Tex. Occ. Code §§ 2001.454, .456).
- Thirteen licensed charities (lead plaintiffs VFW and ADAPT) sued under § 1983 contending §§ 2001.456(2)-(3) facially violate the First Amendment by restricting political advocacy funded by bingo proceeds; they sought injunctive and declaratory relief.
- District court granted preliminary and then permanent injunctions, relying on Citizens United and strict-scrutiny analysis; Texas Lottery Commission appealed.
- Fifth Circuit majority reversed: held the bingo program is a government subsidy (despite being implemented by licensing), so prohibiting use of subsidized funds for political advocacy is a permissible choice not amounting to a penalty on speech; charities have standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / redressability | Charities: injunction permitting use of bingo proceeds for advocacy will redress injury (bingo funds are substantial revenue). | Commission: even if §2001.456 is enjoined, charitable-purpose requirement (§2001.454) independently forbids political use, so relief is speculative. | Charities have Article III standing; §2001.454's statutory definition of "charitable purpose" is broad and does not independently foreclose political advocacy in all cases. |
| Do §2001.456(2)-(3) penalize speech (unconstitutional conditions)? | Charities: restrictions condition participation in bingo program on surrendering political speech; invoke Citizens United and unconstitutional-conditions doctrine; strict scrutiny required. | Commission: program is a state subsidy; government may choose not to subsidize political speech (Rust, Regan); prohibitions apply only to subsidized funds and do not bar advocacy generally. | Majority: restrictions are permissible conditions on a government subsidy and do not penalize speech; unlike Citizens United, this is a subsidy context limiting funded activity. |
| Nature of the benefit: subsidy vs. regulatory license | Charities (dissent): bingo license is regulatory, not a public subsidy; no public funds or tax expenditure involved, so strict scrutiny/unconstitutional-conditions applies. | Commission: constitutional amendment and statute create a limited subsidy allowing charities to generate revenue free of competition; the license-based access to extra revenue functions as a subsidy. | Majority: treats the charitable bingo program as a state subsidy (substantive exception to ban on gambling) so subsidy cases govern; dissent disagrees. |
| Speaker-based discrimination / breadth of restriction | Charities: statutes discriminate by speaker (nonprofit bingo charities) and are underinclusive (other gambling operators may freely advocate), undermining asserted interests. | Commission: decision not to subsidize certain speech does not equal viewpoint or speaker penalty; differential treatment of subsidy recipients permissible. | Majority: rejects speaker-identity challenge, viewing restriction as subsidy's permissible limits; dissent emphasizes Citizens United and underinclusiveness concerns. |
Key Cases Cited
- Citizens United v. Federal Election Comm'n, 558 U.S. 310 (2010) (political-speech restrictions on corporations analyzed under strict scrutiny; government may not suppress political speech based on speaker identity)
- Rust v. Sullivan, 500 U.S. 173 (1991) (government may condition use of program funds by excluding certain speech within funded program without violating First Amendment)
- Regan v. Taxation With Representation of Wash., 461 U.S. 540 (1983) (tax exemptions and deductibility treated as subsidies; government may decline to subsidize lobbying)
- Perry v. Sindermann, 408 U.S. 593 (1972) (unconstitutional-conditions doctrine: government may not deny a benefit based on exercise of constitutional rights)
- Rumsfeld v. Forum for Academic & Institutional Rights, Inc., 547 U.S. 47 (2006) (reaffirming unconstitutional-conditions doctrine in subsidy/benefit contexts)
- United States v. Salerno, 481 U.S. 739 (1987) (facial-challenge standard: challenger must show no set of circumstances in which statute is valid)
- American Library Ass'n v. FCC, 539 U.S. 194 (2003) (refusal to fund protected activity, without more, is not equivalent to imposing a penalty on that activity)