                             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 oftypical 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.


       IRequest Letter at 1 (available at http://www.texasattomeygeneral.gov).
The Honorable Edmund Kuempel - Page 2                   (GA-0804)



                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 contextofthe
constitutional prohibition oflotteries that the characterization ofthe 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 ofthe 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
The Honorable Edmund Kuempel - Page 3                             (GA-0804)



and provides that "[a1person2 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 caunot
conclude that the activity you describe implicates sections 47.02 and 47.03 of the Penal Code.




          'Underthe Penal Code, the tenn '" [p lerson' means an individual, corporation, or association" and thus includes
an entity such as a 50 I (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 ifit is contributed to charity."); Tex. Att'y Gen. Op. No. JC-
0480 (2002) at 4 (defming 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 (detennining 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.
The Honorable Edmund Kuempel - Page 4              (GA-0804)



                                     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
