Can multiple companies get a single group license to manufacture or distribute bingo supplies in Texas?

TX AG Opinion GA-0458: Can a group of companies hold one bingo license?

Plain-English summary

State Senator Eddie Lucio Jr. asked whether the Texas Lottery Commission may issue a "group license" under the Bingo Enabling Act, and if so, whether all the entities in a licensed group have to be under the same ownership and control.

The Bingo Enabling Act (Occupations Code chapter 2001) requires a manufacturer or distributor of bingo equipment or supplies to get a license from the Texas Lottery Commission before operating in Texas. The Act defines both "manufacturer" and "distributor" as a kind of "person," and defines "person" as an "individual, partnership, corporation, or other group." The phrase "or other group" prompted the question: does it allow a license held by a group of multiple legal entities, when no part of the Act spells out a separate group-license category?

The Attorney General answered yes, and did so by deferring to the agency. The Texas Lottery Commission has authority to issue advisory opinions on compliance with the Act, and it had already addressed this question. The Commission said it has used a broad definition of "group" since 1995, treating "group" as any number of entities considered as a unit, and in its license-application instructions it defines "group" as two or more separate legal entities operating in alliance to manufacture bingo supplies. When an agency charged with enforcing a statute construes it, the AG accepts that construction so long as it is reasonable and does not contradict the statute's plain language. The Act does not define "group" and contains nothing conflicting with the Commission's reading, so the AG deferred. The use of "group" in the definition of "person" contemplates multiple legal entities, so the Commission may issue a manufacturer's or distributor's license to a group made up of multiple legal entities, a group license.

On the second question, the AG again deferred to the Commission. The Commission said neither the Act nor the Charitable Bingo Administrative Rules directly require members of a group to be under common ownership, though past approved groups had shown some degree of common ownership, officers, shareholders, or management oversight. In all cases, a group applicant must meet the same eligibility requirements that any person must meet to qualify for a manufacturer's or distributor's license, and the Commission reviews group applications case by case; if there is not enough information to judge eligibility, the Act lets the Commission hold off until the applicant supplies it. So a group applying for a license must meet the Act's and the rules' eligibility requirements, which do not necessarily require common ownership or control of the group.

Currency note

This opinion was issued in 2006. Subsequent statutory amendments, court decisions, or later AG 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, deadline, or remedy mentioned here.

The Bingo Enabling Act (Occupations Code chapter 2001), the Charitable Bingo Administrative Rules, and the Commission's application instructions have changed since 2006. Anyone seeking a bingo manufacturer's or distributor's license today should check the current Act, rules, and Commission guidance.

Who this opinion affected (as of 2006)

Bingo equipment manufacturers and distributors: The opinion confirmed that a group of multiple legal entities could hold a single manufacturer's or distributor's license, not just an individual, partnership, or corporation.

Alliances of separate companies: The opinion explained that group members did not all have to share common ownership or control, but every group applicant had to meet the same eligibility requirements as any other applicant.

The Texas Lottery Commission: The opinion deferred to the Commission's own advisory-opinion construction of "group," reinforcing that a reasonable agency reading consistent with the statute's plain language will be accepted.

Common questions

Can a group of separate companies hold one bingo license?
Yes. The opinion concluded the Bingo Enabling Act lets the Texas Lottery Commission issue a manufacturer's or distributor's license to a group composed of multiple legal entities.

Where does the Act say that?
In the definition of "person," which the opinion noted includes an "individual, partnership, corporation, or other group." The Commission reads "other group" to mean two or more separate legal entities, and the AG deferred to that reasonable reading.

Do all the companies in the group have to share the same owner?
No. The opinion explained that neither the Act nor the bingo rules require common ownership or control, though the group must meet the eligibility requirements that apply to any applicant.

Why did the AG defer to the Commission?
Because, the opinion explained, when an agency charged with enforcing a statute construes it, the AG accepts that construction if it is reasonable and does not contradict the statute's plain language. The Act does not define "group" and nothing conflicts with the Commission's reading.

Background and statutory framework

The Bingo Enabling Act requires manufacturers and distributors to be licensed (Tex. Occ. Code Ann. §§ 2001.201, 2001.206 (Vernon 2004); see generally §§ 2001.001-.657 (Vernon 2004 & Supp. 2006)) and defines "person" to include an "individual, partnership, corporation, or other group" (§ 2001.002(9), (16), (20) (Vernon 2004)). The Commission may issue advisory opinions on compliance (§ 2001.059(a) (Vernon 2004)) and construed "group" to mean multiple legal entities. An agency's reasonable construction of a statute it enforces, not contradicting the plain language, is accepted (Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993); Tex. Att'y Gen. Op. No. GA-0233 (2004)).

A group applicant must meet the same eligibility requirements as any applicant for a manufacturer's or distributor's license (Tex. Occ. Code Ann. §§ 2001.202, 2001.207 (Vernon 2004)), reviewed case by case, and the Commission may decline to act until an applicant supplies sufficient eligibility information (§ 2001.213). Neither the Act nor the bingo rules require common ownership of the group.

Citations

Statutes:

• Tex. Occ. Code Ann. §§ 2001.201, 2001.206, 2001.202, 2001.207, 2001.059(a), 2001.002(9), (16), (20) (Vernon 2004); §§ 2001.001-.657 (Vernon 2004 & Supp. 2006); § 2001.213

Cases and prior opinions:

• Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993)
• Tex. Att'y Gen. Op. No. GA-0233 (2004)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0458
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2006/ga0458.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain - the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

September 18, 2006

The Honorable Eddie Lucio, Jr.
Chair, Committee on International Relations and Trade
Texas State Senate
Post Office Box 12068
Austin, Texas 78711-2068

Opinion No. GA-0458

Re: Whether the Texas Lottery Commission may issue a group license under Texas Occupations Code chapter 2001, the Bingo Enabling Act (RQ-0450-GA)

Dear Senator Lucio:

You ask whether the Texas Lottery Commission may issue a group license under Texas Occupations Code chapter 2001, the Bingo Enabling Act.

As background to your questions, Occupations Code chapter 2001, the Bingo Enabling Act, requires a manufacturer or distributor of bingo equipment or supplies to apply for a license from the Texas Lottery Commission before the manufacturer or distributor can operate in Texas. See TEX. OCC. CODE ANN. §§ 2001.201 ("Manufacturer's License Required"), 2001.206 ("Distributor's License Required") (Vernon 2004); see generally id. §§ 2001.001-.657 (Vernon 2004 & Supp. 2006). Both "distributor" and "manufacturer" are defined in the act as a type of "person." Id. § 2001.002(9), (16) (Vernon 2004). And the act defines "person" as an "individual, partnership, corporation, or other group." Id. § 2001.002(20) (emphasis added). It is the phrase "or other group" that gives rise to your questions. See Request Letter, supra note 1, at 1.

You understand the definition of "person" in section 2001.002(20) to "describe[] the different forms of entity that may qualify as a person for a single license." Id. You give as an example a limited liability company, which "is not specifically mentioned, yet it could be another form of a group just as is a corporation or partnership." Id. But, you inform us, you cannot find a place in the Bingo Enabling Act "that would otherwise make a provision for a group (multiple legal entities) license." Id. Thus, you first ask if section "2001.002(20) provide[s] for a separate category of group licensing?" Id.

This exact question has been posed to the Texas Lottery Commission. The commission is authorized to issue advisory opinions "regarding compliance with [the Bingo Enabling Act] and the rules of the commission," TEX. OCC. CODE ANN. § 2001.059(a) (Vernon 2004), and under that authority the commission answered this question, writing that the commission has used "a broad definition of 'group' since 1995 when it processed its first two applications for licenses from groups other than partnerships or corporations." That is, the Texas Lottery Commission understands "group" to mean "any number of entities (members) considered as a unit." As an example, the commission informs us that in its "Instructions for Texas Application for a License to Manufacture Bingo Supplies, Devices and Equipment" it specifically defines "group" as "two or more separate legal entities that operate in alliance to manufacture bingo supplies, devices, or equipment."

In the event that a state administrative agency has construed a statute that it is charged with enforcing, as in the instant case, we will accept that construction, so long as the construction is reasonable and does not contradict the statute's plain language. Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993); Tex. Att'y Gen. Op. No. GA-0233 (2004) at 4. Again, we note that the Texas Lottery Commission has construed this particular aspect of the Bingo Enabling Act under its authority to issue advisory opinions. We have also reviewed the Bingo Enabling Act and have found that it does not define "group"; neither does it contain a provision that conflicts with the Texas Lottery Commission's construction. See TEX. OCC. CODE ANN. §§ 2001.001-.657 (Vernon 2004 & Supp. 2006). And so we defer to the commission's construction because it is reasonable and does not contradict the statute's plain language. Section 2001.002(20)'s use of "group" in the definition of "person" contemplates multiple legal entities. Thus, in answer to your first question, the Bingo Enabling Act permits the Texas Lottery Commission to issue a manufacturer's or distributor's license to a group that is composed of multiple legal entities--a group license.

You next ask, contingent on the conclusion that the Bingo Enabling Act authorizes a group license, whether "all the various entities contained in or part of the licensed group have to be under the same ownership and control?" Request Letter, supra note 1, at 2. That is, you ask "whether [the] group license must all be under the same ownership (wholly owned and controlled)?" Id. Again, this exact question has been asked of the Texas Lottery Commission, which has answered it.

The commission writes that "neither the Bingo Enabling Act nor the Charitable Bingo Administrative Rules directly address whether or not the members of a group must be under common ownership and control." But the commission notes that "[p]revious applications submitted by groups and approved for a manufacturer's license have reflected some form or degree of common ownership, common officers, shareholders and/or management oversight."

We also note, consistent with the commission's answer to this question, that in all cases, a group applicant must meet the eligibility requirements that a person must meet to minimally qualify for a distributor's license. See TEX. OCC. CODE ANN. § 2001.207 (Vernon 2004); see also id. § 2001.202 ("Eligibility for Manufacturer's License") (outlining in near-identical language the requirements a person must meet to minimally qualify for a manufacturer's license). The commission, moreover, advises that its "Charitable Bingo Operations Division reviews license applications submitted by groups on a case-by-case basis to determine whether the group complies with licensing requirements." And if there is not sufficient information for the commission to determine an applicant's eligibility, the Bingo Enabling Act authorizes the commission not "to take action on the application until the applicant provides the required information." Id. § 2001.213.

We find no conflict with the commission's reasonable construction of the Bingo Enabling Act here, and so we again defer to its construction. Thus, in answer to your second question, a person comprising a group of entities that applies for a manufacturer's or distributor's license must meet the eligibility requirements established by the act and commission rules, which do not necessarily require common ownership or control of the group.

SUMMARY

Occupations Code chapter 2001, The Bingo Enabling Act, permits the Texas Lottery Commission to issue a manufacturer's or distributor's license to a group that is composed of multiple legal entities. A person comprising a group of entities that applies for a manufacturer's or distributor's license must meet the eligibility requirements established by the act and commission rules, which do not necessarily require common ownership and control of the group.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Daniel C. Bradford
Assistant Attorney General, Opinion Committee

Footnotes

1. See Letter from Honorable Eddie Lucio, Jr., Chair, Committee on International Relations and Trade, Texas State Senate, to Honorable Greg Abbott, Attorney General of Texas, at 1 (Feb. 15, 2006) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].

2. See Texas Lottery Commission Request for Bingo Advisory Opinion RQ 2006-0113-0007 by Steve Hieronymus, available at http://www.txlottery.org/bingo/bingoviewOpinionRequest.cfm?RequestID=64 ("Does [section] 2001.002(20) provide for a separate category of licensing, specifically a group license?") (last visited Sept. 8, 2006).

3. Bingo Advisory Opinion No. BAO 2006-0113-0007, available at http://www.txlottery.org/bingo/BingoListOpinion.cfm (answering RQ 2006-0113-0007) (last visited Sept. 8, 2006).

4. Id.; Texas Lottery Commission, Instructions for "Texas Application for a License to Manufacture Bingo Supplies, Devices and Equipment" (last revised Sept. 1999), available at http://www.txlottery.org/bingo/pdfs/1743-a.pdf (last visited Sept. 8, 2006).

5. See Texas Lottery Commission Request for Bingo Advisory Opinion RQ 2006-0113-0007 by Steve Hieronymus, available at http://www.txlottery.org/bingo/bingoviewOpinionRequest.cfm?RequestID=64 (last visited Sept. 8, 2006).

6. See Bingo Advisory Opinion No. BAO 2006-0113-0007, available at http://www.txlottery.org/bingo/BingoListOpinion.cfm (last visited Sept. 8, 2006).

7. Id.

8. Id.