Department of Texas, Veterans of Foreign Wars of the United States v. Texas Lottery Commission
760 F.3d 427
5th Cir.2014Background
- Texas amended its constitution (1980) to permit charitable bingo; the Bingo Act (Tex. Occ. Code §2001.xxx) licenses nonprofits to run bingo provided net proceeds are used for the organization’s charitable purposes.
- The Act bars licensed organizations from using bingo net proceeds to: (1) support/oppose candidates, (2) support/oppose ballot measures, and (3) influence or attempt to influence legislation (Tex. Occ. Code §2001.456(1)-(3)).
- Veterans of Foreign Wars (Dept. of Texas), ADAPT of Texas, and other charities sued the Texas Lottery Commission officials under 42 U.S.C. §1983 seeking declaratory and injunctive relief, challenging subsections (2)–(3) as violating the First Amendment.
- District court granted preliminary injunction and then summary judgment for plaintiffs, holding the restrictions unconstitutional under Citizens United and as unconstitutional conditions; a Fifth Circuit panel reversed, but the en banc court reheard and affirmed the district court.
- The en banc majority held plaintiffs had standing, concluded the Bingo Act creates a licensing/regulatory scheme (not a government subsidy), and that the political-advocacy restrictions impose unconstitutional conditions on core political speech subject to strict scrutiny.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | Charities will be injured if prohibited from using bingo proceeds for political advocacy; injunction would redress injury | Commission: charitable-purpose requirement (unchallenged) independently bars such use, so relief is non-redressive | Plaintiffs have standing; statutory definition of "charitable purpose" can include advocacy consistent with tax-exempt purposes, so relief is redressive |
| Subsidy vs. License | Bingo revenue is private revenue generated by charities; program not a public subsidy | Commission: allowing bingo is a form of state subsidy/benefit enabling the state to condition use of funds | En banc: Bingo scheme is a regulatory/occupational license, not a public subsidy tied to the public fisc |
| Unconstitutional conditions doctrine | Conditioning a license on forfeiture of political speech is prohibited; restrictions directly target political advocacy | Commission: program simply refuses to subsidize lobbying (analogous to tax-exemption cases), so no First Amendment burden requiring heightened scrutiny | Doctrine applies because the State conditioned a governmental benefit (license) on surrender of constitutional speech rights |
| Level of scrutiny / Validity of restrictions | Restrictions are content-based limits on political speech; subject to strict scrutiny and not narrowly tailored | Commission invoked interests (regulating gambling, preventing fraud, promoting charities) and analogies to Rust/Regan/Davenport/Ysursa to support deference | Court: strict scrutiny applies; State failed to show compelling interests or narrow tailoring; provisions facially invalid and permanently enjoined |
Key Cases Cited
- Citizens United v. Federal Election Commission, 558 U.S. 310 (2010) (political-speech burdens are subject to strict scrutiny)
- Rust v. Sullivan, 500 U.S. 173 (1991) (government may condition federal subsidies to exclude certain speech within the subsidized program)
- Regan v. Taxation with Representation of Washington, 461 U.S. 540 (1983) (refusal to subsidize lobbying via tax benefits does not violate First Amendment)
- 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996) (conferral of a license does not permit conditioning that requires surrender of constitutional rights)
- Perry v. Sindermann, 408 U.S. 593 (1972) (unconstitutional-conditions doctrine: government may not deny a benefit to punish exercise of constitutional rights)