## Facts

- Texas regulates charitable bingo through the Bingo Enabling Act, which permits qualifying nonprofits to conduct bingo as a fundraising activity under a state license administered by the Texas Lottery Commission.
- The Act requires that net bingo proceeds be used only for the organization’s statutorily defined “charitable purpose” and prohibits using those proceeds for certain political advocacy, including lobbying and supporting or opposing ballot measures.
- Several licensed nonprofit bingo operators wanted to use some bingo proceeds for lobbying and ballot-measure advocacy consistent with their broader missions.
- The nonprofits brought a § 1983 suit alleging the political-advocacy restrictions on bingo proceeds violated the First Amendment.
- The district court granted summary judgment for the nonprofits and permanently enjoined enforcement of the challenged provisions.
- After an earlier Fifth Circuit judgment upholding the restrictions was vacated and remanded for reconsideration in light of Agency for Int’l Development v. Alliance for Open Society Int’l, Inc., the Fifth Circuit reconsidered whether the restrictions were unconstitutional conditions.

## Issues

1. Whether Texas’s prohibition on using state-authorized bingo proceeds for lobbying and ballot-measure advocacy is an unconstitutional condition that violates the First Amendment.
2. Whether the restrictions merely define the scope of a state-conferred subsidy (permissible) or instead penalize or coerce speech outside the subsidized program (impermissible under unconstitutional-conditions doctrine, as discussed in AOSI).

## Decision

- The Fifth Circuit reversed the district court’s summary judgment and permanent injunction and upheld the challenged restrictions.
- The court held Texas’s charitable bingo scheme functions as a government-created subsidy/benefit, and the State may condition participation by limiting how bingo proceeds may be spent.
- The court distinguished AOSI because Texas did not require recipients to adopt, affirm, or express a government-favored viewpoint as their own.
- The court concluded the Act does not penalize speech outside the program because organizations remain free to engage in lobbying and ballot-measure advocacy using non-bingo funds.

## Legal Principles

- Government may define the contours of a subsidy and restrict use of subsidized funds to further program purposes, without funding alternative activities, consistent with Regan v. Taxation with Representation and Rust v. Sullivan.
- A funding condition becomes unconstitutional when it reaches beyond program limits to regulate recipients’ speech outside the program or compels the recipient to affirm the government’s policy position, as in AOSI.
- A restriction that limits only the use of funds generated by a state-created benefit, while leaving recipients free to speak with other funds, generally does not constitute a First Amendment penalty on speech outside the subsidized program.

## Conclusion

The Fifth Circuit held that Texas may condition participation in its charitable bingo licensing scheme by prohibiting use of bingo proceeds for lobbying and ballot-measure advocacy, because the limits define the scope of a state-created subsidy and do not compel or penalize recipients’ speech outside the program.


Dep’t of Tex., Veterans of Foreign Wars of U.S. v. Tex. Lottery Comm’n, 760 F.3d 427 (5th Cir. 2014)