NEW ORLEANS (CN) - Texas' ban on charities spending bingo money on political advocacy is an unconstitutional violation of free speech, the 5th Circuit ruled Monday.
Several charities - including the Veterans of Foreign Wars, The Institute for Disability Access, several Redmen tribes, several Elks Lodges and Amvets Post 52 - sued the Texas Lottery Commission in 2011 in Austin Federal Court. They claimed the Texas Bingo Enabling Act violates their First Amendment rights.
The law creates an exception to the state's gambling ban by letting qualified charities hold bingo games to raise money for charitable causes, but forbids them from using the money on political activities such as lobbying and campaigning for or against ballot measures.
The trial judge granted the charities' motion for summary judgment and issued a permanent injunction blocking enforcement of the ban.
In October 2012, a three-judge panel of the 5th Circuit reversed
, finding the ban constitutional.
One year later, the full New Orleans-based appeals court vacated the opinion in order to hear the case en banc.
In a 12-3 decision, the court affirmed the trial court's injunction against the ban on Monday.
Writing for the majority, Judge Carl E. Stewart disagreed with the commission's argument that the ban falls within the government's power to subsidize some activities to the exclusion of others, that it can attach conditions to the allocation of public funds.
Stewart wrote the bingo program in Texas is different "simply because no public monies or 'spending' by the state are involved."
"The commission's interpretation contorts the definition of 'subsidy,'" the 20-page opinion states. "The licensing scheme in the Bingo Act does not fall into even a broad interpretation of these examples of 'grants ... made by the government.' There is no direct or indirect receipt of funds from the public fisc. The only 'grant' here is the legislative authority to conduct what would be illegal otherwise - bingo games."
Stewart dismissed arguments that the ban does not target political speech as "dubious, at best."
Citing the Supreme Court ruling in Citizens United v. Federal Election Commission
, Stewart said strict scrutiny applies as a result of the facial restrictions on charities' speech, requiring the commission demonstrate that the ban serves a compelling interest and is narrowly tailored to satisfy that interest.
"The commission fails to identify a compelling state interest," the opinion states. "It raises three rationales in support of the challenged provisions: 1) regulating gambling, including reducing the size of the gambling industry in Texas; 2) combating fraud by ensuring that bingo proceeds are only used in support of charities, not lobbyists; and 3) promoting charities - that is, ensuring charities do not forgo spending their bingo revenue on their charitable purpose by squandering those funds on political advocacy. Notably, as the charities and the district court stated, the commission never attempts to characterize these interests as compelling. Indeed, the commission never purports to justify the challenged provisions under strict scrutiny review. Rather, the commission merely contends that the rationales are substantial state interests."
The court cannot see how Texas' interest in regulating gambling, combating fraud or promoting charities is furthered by the ban, Stewart wrote.
The Texas Lottery Commission did not immediately respond to a request for comment Monday evening.