Is a charity Super Bowl squares game illegal gambling in Texas?

Plain-English summary

A state representative described a charity fundraiser modeled on a familiar office-pool game and asked whether it counts as illegal gambling in Texas. In the setup, a 501(c)(3) host collects donations through a "squares game," a grid in which each square represents a predicted final score of a big sporting event such as the Super Bowl. A donor buys a square and designates a charity. When the event ends, the charity tied to the winning square receives the money collected, and if no one bought the winning square, the funds still go to charity. Crucially, the donors themselves can never win anything, and charities and their principals cannot buy squares, so the pool of donors and the pool of potential winners are kept separate.

The Attorney General concluded the activity, as described, does not violate chapter 47 of the Penal Code. Texas bans gambling under article III, section 47 of the Constitution and chapter 47 of the Penal Code, and charitable bingo and raffles are allowed only through their own authorizing statutes (Occupations Code chapters 2001 and 2002). But the offenses the representative asked about, the gambling offense in section 47.02 and the gambling-promotion offense in section 47.03, both require a "bet," defined as an agreement to win or lose something of value solely or partially by chance. Here, the opinion reasoned, the donor's payment to buy a square is not won or lost by chance: to the extent the donor can be said to "lose" the money, that follows from the choice to participate, not from chance, and more importantly the donor does not stand to win anything at all. Without a bet, the opinion said it could not conclude that sections 47.02 and 47.03 were implicated. It expressly limited the analysis to the activity exactly as described.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule mentioned here.

What the opinion meant for those who asked

Representative Kuempel and the committee (what the opinion held): The opinion concluded that the squares game as described did not involve a bet and therefore did not implicate the gambling and gambling-promotion offenses in Penal Code sections 47.02 and 47.03.

Charities and 501(c)(3) hosts (what the opinion held): The opinion explained that, because the donors could not win and any loss of their payment was by choice rather than chance, the described arrangement lacked the "bet" element the offenses require. It also noted that a charitable purpose does not by itself create a defense, and that bingo and raffles are authorized only under Occupations Code chapters 2001 and 2002.

Anyone designing a similar fundraiser (what the opinion limited): The opinion stressed it considered only the activity exactly as described. A game structured so that participants could win something, or that operated as a raffle or bingo, would raise different questions the opinion did not answer.

Common questions

Is a charity squares game legal in Texas?
The opinion concluded that the specific squares game described, in which donors buy squares but cannot win anything and the pot goes to the winning square's designated charity, did not involve a "bet" and so did not violate the gambling offenses in Penal Code sections 47.02 and 47.03.

Why isn't it a "bet"?
A bet is an agreement to win or lose something of value solely or partially by chance. The opinion reasoned that the donor does not stand to win anything, and any "loss" of the money paid comes from the choice to participate rather than from chance, so the chance element of a bet is missing.

Does giving the money to charity make gambling legal?
Not by itself. The opinion cited prior opinions holding that a charitable purpose matters only to whether conduct fits one of the narrow defenses, and that charitable bingo and raffles are allowed only under Occupations Code chapters 2001 and 2002.

Would the answer change if donors could win prizes?
The opinion did not address that. It limited its analysis to the activity as described, where the donor stands to gain nothing personally.

Background and statutory framework

Article III, section 47 of the Texas Constitution directs the Legislature to prohibit lotteries and gift enterprises, and the Texas Supreme Court has read it to condemn schemes built on the lottery principle of chance even when they are not lotteries. City of Wink v. Griffith Amusement Co., 100 S.W.2d 695, 701 (Tex. 1936). Limited constitutional exceptions allow charitable bingo and raffles and the state lottery, and the Legislature implemented those only through Occupations Code chapters 2001 and 2002. Tex. Const. art. III, § 47(a); Tex. Const. art. III, § 47(b), (d)-(e); Tex. Occ. Code Ann. ch. 2001 (West 2004 & Supp. 2010); Tex. Occ. Code Ann. ch. 2002. Because the request said the squares game was neither bingo nor a raffle, the opinion analyzed it solely under chapter 47 of the Penal Code, enacted under article III, section 47. Owens v. State, 19 S.W.3d 480, 483 (Tex. App.-Amarillo 2000, no pet.).

Within chapter 47, section 47.02 defines the gambling offense (making a bet on the result of a game or contest), and section 47.03 defines gambling promotion (for gain, becoming a custodian of anything of value bet). Tex. Penal Code Ann. § 47.02(a)(1) (West 2003); Tex. Penal Code Ann. § 47.03(a)(3). Both require a "bet," which section 47.01(1) defines as an agreement to win or lose something of value solely or partially by chance. Tex. Penal Code Ann. § 47.01(1). Applying that definition, the opinion found no bet: the donor's payment was not won or lost by chance, any loss followed from the decision to participate, and the donor could not win anything. A footnote acknowledged that a 501(c)(3) entity is a "person" who can act "for gain," since gain is no less a gain when contributed to charity, but that did not matter once the bet element was missing. Tex. Penal Code Ann. § 1.07(a)(38) (West Supp. 2010); State v. Amvets Post No. 80, 541 S.W.2d 481, 483 (Tex. Civ. App.-Dallas 1976, no writ); Tex. Att'y Gen. Op. No. JC-0480 (2002); Tex. Att'y Gen. Op. No. GA-0385 (2005). The opinion therefore concluded the described activity did not implicate sections 47.02 and 47.03.

Citations

Constitution and statutes:

• Tex. Const. art. III, § 47(a)
• Tex. Const. art. III, § 47(b), (d)-(e)
• Tex. Occ. Code Ann. ch. 2001 (West 2004 & Supp. 2010)
• Tex. Occ. Code Ann. ch. 2002
• Tex. Penal Code Ann. § 47.02(a)(1) (West 2003)
• Tex. Penal Code Ann. § 47.03(a)(3)
• Tex. Penal Code Ann. § 47.01(1)
• Tex. Penal Code Ann. § 1.07(a)(38) (West Supp. 2010)

Cases and opinions:

• City of Wink v. Griffith Amusement Co., 100 S.W.2d 695, 701 (Tex. 1936)
• Owens v. State, 19 S.W.3d 480, 483 (Tex. App.-Amarillo 2000, no pet.)
• State v. Amvets Post No. 80, 541 S.W.2d 481, 483 (Tex. Civ. App.-Dallas 1976, no writ)
• Tex. Att'y Gen. Op. No. GA-0385 (2005)
• Tex. Att'y Gen. Op. No. JC-0480 (2002)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0804
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2010/ga0804.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

September 30, 2010

The Honorable Edmund Kuempel Opinion No. GA-0804
Chair, Committee on Licensing and
Administrative Procedures Re: Whether a particular activity constitutes an
Texas House of Representatives offense under chapter 47 of the Penal Code, which
Post Office Box 2910 proscribes certain forms of gambling (RQ-0852-GA)
Austin, Texas 78768-2910

Dear Representative Kuempel:

You ask whether a certain activity that you describe "is considered 'gambling' within the scope of Texas law, including the Texas Constitution Article III, Section 47, Texas Penal Code [sections] 47.01-47.10, and Texas Occupations Code [chapters] 2001-2002."[1] You tell us the activity is a "modification of typical games played in office pools, such as squares games and bracket challenges, to be entirely for a charitable purpose." Request Letter at 1. You describe the activity as follows:

The host will set up an independent 501(c)(3) to collect donations to charity. The host entity will either take no revenue from the total donation pool or only revenue sufficient to cover reasonable operational expenses associated with hosting the event in compliance with Internal Revenue Service rules for non-profit and charitable entities. The donations will be taken and distributed by means of a squares game. A squares game is generally understood to be a large grid where each square represents the predicted final score of a major sporting event, such as the Super Bowl. In purchasing a square, the purchaser will designate a charity, which must be a valid non-profit, charitable organization pursuant to the designations of the Internal Revenue Service. At the end of the event, whichever charity has the winning square will win the total money collected for the purchase of the squares. Should no one purchase the winning square, the funds will still go to charity in a method to be determined, but likely an equal division of funds between all potentially winning charities. Those people purchasing squares stand to have no gain from the contest, other than designating the charity to win the award. The purchasing system will not allow charities to purchase squares, nor would it allow the principals of charities to purchase squares. Therefore, the pool of donors and the pool of potential winners will be entirely bifurcated.

Id. at 1-2. We consider only the game activity as you describe it and limit this opinion accordingly. See Tex. Att'y Gen. Op. Nos. GA-0774 (2010) at 1, GA-0670 (2008) at 2, n.2, JC-0521 (2002) at 2, DM-42 (1991) at 1 (limiting analysis to issues discussed in the opinion request letter).

The Texas Constitution, article III, section 47, directs the Legislature to prohibit lotteries and gift enterprises. See TEX. CONST. art. III, § 47(a). The Texas Supreme Court has declared that section 47 was intended to condemn all other schemes, even though they are not lotteries, that involve the lottery principle of chance. City of Wink v. Griffith Amusement Co., 100 S.W.2d 695, 701 (Tex. 1936). Article III, subsections 47(b), (d) & (e) provide limited exceptions from the general prohibition against gambling for charitable organizations to conduct bingo games and raffles and state operated lotteries. See TEX. CONST. art. III, § 47(b), (d)-(e).

Occupations Code chapters 2001 and 2002, adopted under the limited exceptions in article III, section 47, provide the exclusive means by which a charitable organization can secure donations through an activity that constitutes gambling. See TEX. OCC. CODE ANN. ch. 2001 (West 2004 & Supp. 2010) (Bingo Enabling Act), ch. 2002 (Charitable Raffle Enabling Act); see also TEX. CONST. art. III, § 47(b), (d); cf. Tex. Att'y Gen. Op. Nos. GA-0385 (2005) at 4 ("The fact that the conduct is for a charitable purpose is pertinent only to whether it may fall within one of the narrowly drawn defenses to chapter 47 gambling offenses."), JC-0482 (2002) at 4 (concluding in the context of the constitutional prohibition of lotteries that the characterization of the payment of money as a donation does not remove the element of consideration), JC-0480 (2002) at 1, 9 (stating that conduct not expressly authorized by either the Bingo Enabling Act or the Charitable Raffle Enabling Act would not fall within the defenses to gambling offenses in section 47.09, Penal Code). Because you affirmatively tell us that the squares game you describe is neither a raffle nor bingo encompassed by those two chapters, we analyze the game you describe under only chapter 47, Penal Code. Request Letter at 2 (stating that "this activity is neither a raffle nor bingo per" the Occupations Code).

In accordance with article III, section 47 of the Texas Constitution, the Legislature prohibits a variety of gambling-related activities through chapter 47 of the Penal Code. See TEX. CONST. art. III, § 47 ("The Legislature shall pass laws prohibiting lotteries and gift enterprises ...."); Owens v. State, 19 S.W.3d 480, 483 (Tex. App.-Amarillo 2000, no pet.) (recognizing Legislature's adoption of chapter 47 pursuant to article III, section 47). Within chapter 47, sections 47.02 and 47.03 are potentially applicable to the game you describe. Section 47.02 defines the offense of gambling and provides that a person commits the offense if the person "makes a bet on the partial or final result of a game or contest or on the performance of a participant in a game or contest[.]" TEX. PENAL CODE ANN. § 47.02(a)(1) (West 2003). Section 47.03 defines the offense of gambling promotion and provides that "[a] person[2] commits an offense if he intentionally or knowingly ... for gain, becomes a custodian of anything of value bet or offered to be bet." Id. § 47.03(a)(3) (footnote added).

Sections 47.02 and 47.03 both require that there be a bet. See id. §§ 47.02(a)(1), .03(a)(3) (West 2003). A bet is "an agreement to win or lose something of value solely or partially by chance." Id. § 47.01(1). We thus consider whether the game about which you ask involves a "bet." As you describe the activity, the participant pays an amount of money to the host entity to purchase a square. Though there may be an agreement between the host entity and the participant that involves something of value, i.e., the amount to purchase the square, the agreement does not involve the thing of value being won or lost solely or partially by chance. To the extent the participant can be said to have "lost" the amount of money paid to participate in the event, the loss is not determined by chance but instead is determined by the participant's decision to participate. Moreover, irrespective of any element of chance, as you describe the activity, the participant does not stand to win anything. Accordingly, we do not believe the activity involves a bet. Absent a bet, we cannot conclude that the activity you describe implicates sections 47.02 and 47.03 of the Penal Code.

SUMMARY

A participant paying an amount of money to purchase a square in the game activity you describe does not make a bet under chapter 47 of the Texas Penal Code. Absent a bet, we cannot conclude that the activity you describe implicates sections 47.02 and 47.03 of the Penal Code.

Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

DAVID J. SCHENCK
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee

[1] Request Letter at 1 (available at http://www.texasattorneygeneral.gov).

[2] Under the Penal Code, the term "[p]erson" means "an individual, corporation, or association" and thus includes an entity such as a 501(c)(3) organization. TEX. PENAL CODE ANN. § 1.07(a)(38) (West Supp. 2010). The phrase "for gain" has been construed to include donations to a charity. See State v. Amvets Post No. 80, 541 S.W.2d 481, 483 (Tex. Civ. App.-Dallas 1976, no writ) ("Even if all the proceeds were contributed to charity, the game would still be an enterprise undertaken 'for gain.' A gain is no less a gain if it is contributed to charity."); Tex. Att'y Gen. Op. No. JC-0480 (2002) at 4 (defining phrase "for gain" to mean for "profit" or an "excess of receipts over expenditures" (citation omitted)); see also Tex. Att'y Gen. Op. No. GA-0385 (2005) at 2 (determining under section 47.03 that a nonprofit organization is "a person" who acts "for gain"). Under section 47.03, the 501(c)(3) host entity you describe is a person who acts for gain.