When did SC Revenue Ruling 91-2 allow free bingo, and could licensed promoters or nonprofit organizations give players free cards?

Plain-English summary

South Carolina Revenue Ruling 91-2 drew a strict line between licensed bingo and genuinely free, unlicensed bingo.

Licensed bingo promoters and licensed nonprofit organizations could not give away cards, offer a free game, or pay any portion of a player's card cost. The historical statute required each player to pay a certain amount for each card.

An unlicensed person could conduct bingo without charging only when players paid no consideration at all, directly or indirectly, and the game was open to the public without restrictions.

Licensed bingo: every player had to pay

The historical Bingo Act allowed certain nonprofit organizations to sponsor bingo and hire promoters. It also strictly regulated card prices, bets, prizes, bank-account disbursements, contracts, reports, and licensing.

Section 12-21-3410 required each player to pay a certain amount for every card. Section 12-21-3420 allowed only one payment per card and required all cards used in a game to sell for equal value.

Reading the provisions together, the ruling concluded that a licensed operation could not use free bingo to avoid the statutory controls. That prohibition covered cards given to all players, early arrivals, winners of another game, or anyone else for any reason.

A licensed promoter or nonprofit also could not contribute toward the player's price—for example, paying part of the amount to avoid making change.

Unlicensed bingo: no consideration or restrictions

The ruling used the traditional lottery elements: prize, chance, and consideration. Without player consideration, the arrangement did not have the third element.

But “free” meant no direct or indirect payment. The ruling listed these as disqualifying requirements:

• buying merchandise;
• paying an admission fee;
• being a member of a retirement community; or
• being a resident of a nursing home.

To conduct bingo without a Commission license under this ruling, the game had to require no consideration and be open to the public without restrictions.

What this means for you

Licensed bingo organizations and promoters

The ruling did not permit promotional free cards, free games, prize cards, early-arrival cards, or operator-funded card discounts.

Community and promotional events

Simply charging no cash was not enough. A purchase, admission, membership, residency, or other access condition could be indirect consideration.

Retirement and nursing facilities

A residents-only social did not fit the ruling's unrestricted-public-access condition, even if residents paid no separate card fee.

Current operators

Verify today's bingo statutes and regulations before conducting a game. This 1991 ruling interpreted historical law and superseded earlier conflicting guidance.

Common questions

Q: Could a licensed nonprofit give players one free bingo card?

A: No. The ruling prohibited licensed nonprofits and promoters from giving free cards for any reason.

Q: Could the operator pay part of a player's card price?

A: No. Licensed operators could not contribute to or pay the card cost in any manner.

Q: Could an unlicensed business run free promotional bingo?

A: Only if there was no direct or indirect consideration and the game was open to the public without restrictions.

Q: Did a required merchandise purchase count as consideration?

A: Yes. The ruling expressly identified a purchase requirement as indirect consideration.

Q: Could a nursing home limit free bingo to residents?

A: Not under the ruling's unlicensed-free-bingo condition, which treated residency restrictions as consideration and required open public access.

Citations and references

• S.C. Constitution art. XVII, § 7 — historical bingo and lottery provision quoted by the ruling
• S.C. Code Ann. § 12-21-3330 — historical bingo and lottery-status provision
• S.C. Code Ann. § 12-21-3410(A)(1) — historical player-payment requirement
• S.C. Code Ann. § 12-21-3420(3), (4), and (13) — historical card-payment and equal-value requirements
• Darlington Theatres, Inc. v. Coker, 190 S.C. 282, 2 S.E.2d 782 (1939)
• Act R287, H3052 (1989) — Bingo Act discussed by the ruling

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR91-2.pdf

Original ruling text

SC REVENUE RULING #91-2

SUBJECT:

Free Bingo Cards

TAX MANAGER:

John P. McCormack

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-21-3330 (Supp. 1989)
S.C. Code Ann. Section 12-21-3410 (Supp. 1989)
S.C. Code Ann. Section 12-21-3420 (Supp. 1989)

AUTHORITY:

S.C. Code Section 12-3-170 (1976)
SC Revenue Procedure #87-3

SCOPE:

A Revenue Ruling is the Commission's official interpretation of how
tax law is to be applied to a specific set of facts. A Revenue Ruling is
public information and remains a permanent document until
superseded by a Regulation or is rescinded by a subsequent Revenue
Ruling.

Questions:
(1)

May bingo cards be given away free by a licensed bingo promoter or licensed nonprofit
organization to the players?

(2)

May persons, who are not licensed by the Commission to play bingo, conduct bingo if the
players are never charged for the cards (i.e.: socials at retirement communities or nursing
homes; promotions by radio stations or grocery stores)?

(3)

May a licensed bingo promoter or licensed nonprofit organization contribute, or pay in
any manner, the costs of bingo cards for the players?

Facts:
South Carolina laws permit certain nonprofit organizations to sponsor bingo games in which
bingo cards are sold to players for a chance to win a prize. The nonprofit organization is also
allowed to hire a promoter to manage or conduct the games.

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From time to time such nonprofit organizations or promoters may offer free bingo to all players
for a specific game; to the players who arrive to play before a certain time; or as a prize for
winning a game. Also, retirement communities and nursing homes conduct bingo, without
charge, as a social event for their residents.
In addition, licensed bingo operations will from time to time pay a portion of the amount charged
a player in order to avoid slowing sales down by making change for the player.
Discussion:
1 & 2. The first two issues concern whether "free bingo" is permissible under South Carolina
law.
The South Carolina Constitution, Article 17, Section 7, reads:
No lottery shall ever be allowed or be advertised by newspapers, or otherwise, or its
tickets be sold in this State. The game of bingo, when conducted by charitable, religious
or fraternal organizations exempt from federal income taxation or when conducted at
recognized annual State and county fairs, shall not be deemed a lottery prohibited by this
section.
In other words, the game of bingo, under certain circumstances, is a "legal lottery". Now we
must determine what a lottery is.
The South Carolina Supreme Court held in Darlington Theatres, Inc. v. Coker, 190 SC 282, 2
SE2d 782 (1939) "... that to constitute a lottery, or a scheme in the nature of a lottery, it is
essential that three elements be present, to wit: (1) The giving of a prize, (2) by a method of
chance, (3) for a consideration paid by the contestant or participant. The concurrence of the first
and second elements is not sufficient. The element of illegality is introduced only when the third
element is present." Therefore, a lottery requires consideration.
However, Code Section 12-21-3330 further declares that "[t]he game of bingo is not a lottery
when ... the game is conducted in accordance with the provisions of Sections 12-21-3410 and 1221-3420."
Code Section 12-21-3410(A) reads, in part:
The game of bingo must be played in the following manner:
(1)

Bingo is played by more than one player and a caller who is associated with the
house. Each player pays an amount certain for each card to be played during the
course of a game and may purchase the card for a specified number of games. After
the player has purchased a card or cards for a specified number of games, the house
cannot require or accept an additional payment or consideration by the player in
order to complete the specified number of games (emphasis added).

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Code Section 12-21-3420 reads, in part:
In addition to the manner of play prescribed in Section 12-21-3410, the following
procedures apply to the conduct of the game:

(3)

Only one bet or payment is to be paid for each card.

(4)

No bets or payments may be made while a game is in progress, except the sale of
cards for subsequent games.

(13)

All cards used in a game sell for an equal value. (Emphasis added).

Also, the Legislature placed various restrictions on bingo operations in order to further regulate
them. In fact, the title to the Act (R287, H3052 - 1989) specifically states: "... so as to provide for
the regulation of bingo by the Tax Commission..." The statute regulates the amount of prizes,
how the game must be played, how the proceeds are to be handled, and the license application
process. It also requires written contracts between the promoter and the organization and requires
various reports to be filed with the Commission.
"Under the rule of statutory construction of statutes in pari materia, statutes are not to be
considered as isolated fragments of law, but as a whole, or as parts of a great, connected,
homogenous system. Such statutes are considered as if they constituted but one act, so that
sections of one act may be considered as though they were parts of the other act, as far as this
can reasonably be done. Indeed, as a general rule, where legislation dealing with a particular
subject consists of a system of related general provisions indicative of a settled policy, new
enactments of a fragmentary nature on that subject are to be taken as intended to fit into the
existing system and to be carried into effect conformably to it, unless a different purpose is
shown plainly." 73 Am. Jur.2d, Statutes Section 188.
Therefore, in reviewing the statute as a whole, the Legislature placed strict requirements on all
operations which seek to raise revenue through bingo and did not intend for such operations to
circumvent the provisions concerning prize limitations, disbursements of money from the special
checking account, the manner in which the game is played and other provisions by allowing free
bingo. Such provisions provide protection for the players, the nonprofit organization and the
State.
In summary, a nonprofit organization which chooses to raise money through bingo must sell
each card for each game at an amount certain. The Legislature, through Code Sections 12-213310 et. seq., has established a specific manner in which the game of bingo, as a "legal lottery",
must be played and has placed various other restrictions on such operations.

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3. The last issue concerns who can pay for the players' cards.
As previously cited, Code Section 12-21-3410 requires that "[e]ach player pays an amount
certain for each card to be played during the course of a game ..."
Conclusions:
(1)

Bingo cards cannot be given away free by a licensed bingo promoter or a licensed
nonprofit organization to the players.

Note: This conclusion prohibits a licensed bingo promoter or a licensed nonprofit organization
from offering free bingo games or cards to anyone for any reason.
(2)

Persons, who are not licensed by the Commission to play bingo, may conduct bingo if the
players do not pay any consideration (in money or otherwise) whatsoever to play bingo
(e.g., socials at retirement communities or nursing homes; promotions by radio stations or
grocery stores).

Note: Any requirements or restrictions imposed upon the players in order to play bingo, whereby
some consideration has been indirectly paid, constitutes the payment of a consideration to play
the game itself. Such requirements or restriction may include, but are not limited to, a
requirement to purchase merchandise at a store, to pay an admissions fee, to be a member of a
retirement community, or to be a resident of a nursing home. In order to conduct bingo without
being licensed by the Commission, no consideration, direct or indirect, may be required and the
game must be open to the public without restrictions.
(3)

Licensed bingo promoters or licensed nonprofit organizations cannot contribute, or pay in
any manner, the costs of bingo cards for the players.
SOUTH CAROLINA TAX COMMISSION

s/S. Hunter Howard, Jr.
S. Hunter Howard, Jr., Chairman

s/A. Crawford Clarkson, Jr.
A. Crawford Clarkson, Jr., Commissioner

s/T. R. McConnell
T. R. McConnell, Commissioner

Columbia, South Carolina
, 1991
January 16,

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