Can a charity pay for its bingo workers' health insurance out of bingo money in Texas?

TX AG Opinion GA-0499: Can a bingo charity pay employee health insurance from its bingo account?

Plain-English summary

The chair of the Texas Lottery Commission asked whether Occupations Code section 2001.458(b) bars a licensed authorized organization (a charity licensed to run bingo games) from paying or incurring an expense, in connection with conducting bingo, to provide health insurance or a health benefit for its employees or their dependents. The Bingo Enabling Act puts the conduct of bingo under strict Commission control and is built to make sure bingo proceeds go to authorized charitable purposes. Charities may hire non-member workers (bookkeepers, accountants, cashiers, ushers, callers, and others registered with the Commission) and pay them from the bingo account, but the Act tightly controls what that account can be spent on.

Section 2001.458(a) says no expense may be incurred or paid in connection with conducting bingo except one that is "reasonable or necessary" to conduct bingo, then lists examples like advertising, security, repairs, supplies, prizes, rent, bookkeeping and legal fees, and "fees for callers, cashiers, ushers, janitorial services, and utility supplies and services." Subsection (b) then adds: "The value of health insurance or a health benefit provided by a licensed authorized organization to an employee is not included under Subsection (a)(8)." The chair noted the provision could be read two ways: as forbidding the charity from paying for employee health insurance from the bingo account, or as merely saying such costs are allowable but just not counted among the subsection (a)(8) fees.

The opinion resolved the ambiguity by reading the statute so that subsection (b) does real work. It explained that subsection (a)'s list is inclusive, not exclusive, so unlisted "reasonable or necessary" expenses could otherwise be paid from the bingo account. If subsection (b) only meant that health-insurance costs are not part of the subsection (a)(8) fees, it would accomplish nothing, because such costs might still slip in as a similar reasonable or necessary expense. Reading subsection (b) as an express exclusion gives it effect and fits the Act's strict limits on allowable expenses, which exist to keep bingo proceeds devoted to charitable purposes. The opinion found the language unambiguous and not absurd, so it did not look behind the 1999 codification (citing Fleming Foods, the Texas Supreme Court's rule that an unambiguous codification controls over prior repealed law). It concluded that section 2001.458(b) forbids paying for the value of health insurance or a health benefit for an employee from the bingo account, and that the same bar applies to coverage for an employee's dependents.

Currency note

This opinion was issued in 2007. 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 provisions in chapter 2001 of the Occupations Code, including section 2001.458, have been amended since 2007. Anyone dealing with bingo-account expenses today should check the current statute and Commission rules rather than relying on the 2004 version cited here.

Who this opinion affected (as of 2007)

The Texas Lottery Commission: The opinion confirmed the Commission's authority to treat employee health-insurance costs as expenses that may not be paid from a charity's bingo account under section 2001.458(b).

Charities licensed to conduct bingo: The opinion meant they could not use bingo-account funds to pay for health insurance or health benefits for their employees or those employees' dependents; subsection (b) excluded those costs from the permissible expenses.

Bingo workers: The opinion meant that, while charities could hire and pay registered workers from the bingo account, the value of any health insurance or benefit provided to those workers could not come out of that account.

Common questions

Can a bingo charity pay its workers' health insurance from bingo money?
No. The opinion concluded that section 2001.458(b) prohibits a licensed authorized organization from incurring or paying from its bingo account the cost of health insurance or a health benefit for an employee.

Does the ban also cover the employees' dependents?
Yes. The opinion concluded that health insurance or benefits provided to an employee's dependents are likewise forbidden as a bingo-account expense.

Why couldn't this just be an allowable expense?
The opinion explained that subsection (a)'s list is inclusive, not exclusive, so subsection (b) would have no meaning if it merely said health costs were not part of the (a)(8) fees. Reading it as an express exclusion gives it effect and matches the Act's strict limits on allowable expenses.

Did the AG look at the older pre-2000 version of the statute?
No. The opinion found the current section 2001.458 unambiguous, free of obvious error, and not absurd, so under Fleming Foods it did not consider whether the pre-codified statute meant something different.

Background and statutory framework

The Bingo Enabling Act (Occupations Code chapter 2001) charges the Lottery Commission with strict control over bingo so that it is fairly conducted and proceeds go to authorized purposes. The Commission licenses authorized organizations, may suspend or revoke licenses for noncompliance, and may adopt rules; charities may hire and pay registered non-member workers such as cashiers, ushers, and callers (Tex. Occ. Code Ann. §§ 2001.051(a)-(b), 2001.001, 2001.002(4), (8), 2001.101(a), .411(a), 2001.353(1), 2001.054, 2001.411(c)(5), 2001.4115 (Vernon 2004); 16 Tex. Admin. Code § 402.402(a)-(b) (2006)).

Subchapter J controls the disposition of bingo proceeds. A charity must keep a bingo checking account and a bingo savings account, deposit bingo funds (less cash prizes) in the bingo account, and may draw checks only for permitted purposes, including reasonable bona fide expenses permitted under section 2001.458, disbursements to charitable purposes, or transfers to savings pending charitable disbursement; charities must disburse at least 35% of adjusted gross receipts quarterly to charitable purposes and may not use proceeds for political purposes (Tex. Occ. Code Ann. §§ 2001.451(a)-(b), 2001.453(a), 2001.002(7), .454, .454(a), .457(a), 2001.456, 2001.459(a)(7) (Vernon 2004)).

Section 2001.458(a) limits bingo-account expenses to those reasonable or necessary to conduct bingo and gives an inclusive list of examples, while subsection (b) excepts the value of employee health insurance or a health benefit from the subsection (a)(8) personnel fees. The opinion read "include" as a term of enlargement, so the (a) list is not exclusive, which is why subsection (b) must be read as a genuine exclusion to have effect; reading it otherwise would leave it meaningless. Because the statute was unambiguous and not absurd, the opinion applied its plain language without consulting the pre-codified statute (Tex. Occ. Code Ann. §§ 2001.458, 2001.458(a)-(b) (Vernon 2004); Tex. Gov't Code Ann. §§ 311.005(13), 311.021(2), (4) (Vernon 2005); Act of May 13, 1999, 76th Leg., R.S., ch. 388, §§ 1, 7, 1999 Tex. Gen. Laws 1431, 2319-59, 2440; Fleming Foods of Tex. v. Rylander, 6 S.W.3d 278, 283-86 (Tex. 1999); Jackson Law Office v. Chappell, 37 S.W.3d 15, 25-26 (Tex. App.-Tyler 2000, pet. denied); County of Harris v. Eaton, 573 S.W.2d 177, 178-79 (Tex. 1978); Tex. Att'y Gen. Op. No. JC-0410 (2001)).

Citations

Statutes and rules:

• Tex. Occ. Code Ann. §§ 2001.001, 2001.002(4), (7), (8), 2001.051(a)-(b), 2001.054, 2001.101(a), 2001.353(1), 2001.411(a), (c)(5), 2001.4115, 2001.451(a)-(b), 2001.453(a), 2001.454, 2001.454(a), 2001.456, 2001.457(a), 2001.458, 2001.458(a)-(b), 2001.459(a)(7) (Vernon 2004)
• 16 Tex. Admin. Code § 402.402(a)-(b) (2006)
• Tex. Gov't Code Ann. §§ 311.005(13), 311.021(2), (4) (Vernon 2005)
• Act of May 13, 1999, 76th Leg., R.S., ch. 388, §§ 1, 7, 1999 Tex. Gen. Laws 1431, 2319-59, 2440

Cases:

• Fleming Foods of Tex. v. Rylander, 6 S.W.3d 278, 283-86 (Tex. 1999)
• Jackson Law Office v. Chappell, 37 S.W.3d 15, 25-26 (Tex. App.-Tyler 2000, pet. denied)
• County of Harris v. Eaton, 573 S.W.2d 177, 178-79 (Tex. 1978)

Attorney General opinion referenced:

• Tex. Att'y Gen. Op. No. JC-0410 (2001)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0499
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2007/ga0499.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

January 12, 2007

Mr. C. Tom Clowe, Jr., Chair
Texas Lottery Commission
Post Office Box 16630
Austin, Texas 78761-6630

Opinion No. GA-0499

Re: Whether Occupations Code section 2001.458(b) prohibits a licensed authorized organization from paying or incurring an expense in connection with the conduct of bingo to provide health care insurance or a health benefit for its employees or their dependents (RQ-0499-GA)

Dear Mr. Clowe:

As chair of the Texas Lottery Commission (the "Commission"), you ask whether Occupations Code section 2001.458(b) prohibits a licensed authorized organization from paying or incurring an expense in connection with the conduct of bingo to provide health care insurance or a health benefit for its employees or their dependents.[1]

The Bingo Enabling Act (the "Act"), Occupations Code chapter 2001, charges the Commission with administering the Act and requires the Commission to "exercise strict control and close supervision over all bingo conducted in this state so that bingo is fairly conducted and the proceeds derived from bingo are used for an authorized purpose." TEX. OCC. CODE ANN. § 2001.051(a)-(b) (Vernon 2004); see id. § 2001.001; see also id. § 2001.002(4), (8) (defining the terms "bingo" and "commission"). The Act thus authorizes the Commission to issue to eligible authorized organizations licenses to conduct bingo and prohibits persons "other than a bona fide member of a licensed authorized organization" from conducting, promoting, administering, or assisting in conducting, promoting, or administering bingo. Id. §§ 2001.101(a), .411(a). The Commission may suspend or revoke a license to conduct bingo for failure to comply with the Act or a Commission rule. See id. § 2001.353(1); see also id. § 2001.054 (authorizing the Commission to "adopt rules to enforce and administer" the Act).

A licensed authorized organization is implicitly authorized to hire individuals who are not members of the organization to work as "a bookkeeper, an accountant, a cashier, an usher, or a caller." Id. § 2001.411(c)(5); see also id. § 2001.4115 (authorizing "[t]wo or more licensed authorized organizations" that conduct bingo at the same location to "jointly hire bingo employees"). The Commission's rules recognize that a licensed authorized organization may employ persons in certain positions (operator, manager, cashier, usher, caller, and salesperson) and permit an organization to hire only persons who have registered with the Commission. See 16 TEX. ADMIN. CODE § 402.402(b) (2006) (Texas Lottery Commission, Registry of Bingo Workers); see also id. § 402.402(a) (defining terms).

Chapter 2001, subchapter J provides in detail for the disposition of bingo proceeds. Cf. TEX. OCC. CODE ANN. ch. 2001, subch. I-1 (Vernon 2004) (providing for accounting by two or more licensed authorized organizations that conduct bingo at the same location and join together to share revenues and authorized expenses). Under section 2001.451(a), a licensed authorized organization must establish and maintain a regular checking account, denoted the "bingo account," and an interest-bearing savings account, denoted the "bingo savings account." Id. § 2001.451(a). The organization must deposit in the bingo account all funds derived from the conduct of bingo, "less the amount awarded as cash prizes." Id. § 2001.451(b). Section 2001.453 restricts a licensed authorized organization's use of funds in the bingo account:

(a) A licensed authorized organization may draw a check on its bingo account only for:

(1) the payment of necessary and reasonable bona fide expenses, including compensation of personnel, as permitted under Section 2001.458 incurred and paid in connection with the conduct of bingo;

(2) the disbursement of net proceeds derived from the conduct of bingo to charitable purposes; or

(3) the transfer of net proceeds derived from the conduct of bingo to the organization's bingo savings account pending a disbursement to a charitable purpose.

Id. § 2001.453(a); see also id. §§ 2001.002(7), .454, .457(a) (defining "charitable purposes" and requiring a licensed authorized organization quarterly to disburse at least 35% of adjusted gross receipts for charitable purposes); cf. id. § 2001.456 (prohibiting the use of proceeds for political purposes). Section 2001.458, which is particularly at issue in your request, sets out permissible expenses that a licensed authorized organization may incur and pay:

(a) An item of expense may not be incurred or paid in connection with the conduct of bingo except an expense that is reasonable or necessary to conduct bingo, including an expense for:

(1) advertising . . .;

(2) security;

(3) repairs to premises and equipment;

(4) bingo supplies and equipment;

(5) prizes;

(6) stated rental or mortgage and insurance expenses;

(7) bookkeeping, legal, or accounting services related to bingo;

(8) fees for callers, cashiers, ushers, janitorial services, and utility supplies and services;

(9) license fees;

(10) attending a [required] bingo seminar or convention . . . ; and

(11) debit card transaction fees.

(b) The value of health insurance or a health benefit provided by a licensed authorized organization to an employee is not included under Subsection (a)(8).

Id. § 2001.458 (emphasis added); cf. id. § 2001.4115 (authorizing organizations who jointly hire employees to pay a share of the employees' "compensation and other employment-related costs"). Finally, section 2001.459(a)(7) requires a licensed authorized organization to pay from its bingo account "fees for callers, cashiers, and ushers." Id. § 2001.459(a)(7).

You suggest that section 2001.458(b) may be read in two ways: On the one hand, subsection (b) "appears to prohibit a licensed authorized organization from paying or incurring an expense . . . for providing dependent health care insurance or a health benefit for its employees," but on the other hand, subsection (b) "can also be interpreted to mean that such an expense is allowable but distinct from the subsection (8) expenses to which it refers." Request Letter, supra note 1, at 1. In your view, the ambiguity may have arisen as the result of the 1999 codification of the Bingo Enabling Act, including section 2001.458(b), which the Legislature intended to be nonsubstantive. See id. at 2; see also TEX. OCC. CODE ANN. § 2001.001 (Vernon 2004) (titling the Act); Act of May 13, 1999, 76th Leg., R.S., ch. 388, §§ 1, 7, 1999 Tex. Gen. Laws 1431, 2319-59, 2440 (adopting the Occupations Code and indicating that the codification was nonsubstantive).

In a 1999 decision captioned Fleming Foods of Texas v. Rylander the Texas Supreme Court considered the possibility that a nonsubstantive codification actually had revised a statute's substance. See Fleming Foods of Tex. v. Rylander, 6 S.W.3d 278, 283-86 (Tex. 1999). The court in Fleming Foods addressed an apparently inadvertent omission of significant language from a nonsubstantive codification of the Tax Code. See id. at 283. According to Fleming Foods, when a specific provision of a purportedly nonsubstantive codification is "direct, unambiguous, and cannot be reconciled with prior law," the codification, "rather than the prior, repealed statute," must be effectuated. Id. at 286. On the other hand, if a provision in the codification is ambiguous, a court will examine the predecessor law to determine the statute's meaning. See id. at 287.

Section 2001.458 is not ambiguous. Subsection (a) strictly limits a licensed authorized organization to incur or pay only those expenses that are "reasonable or necessary to conduct bingo." TEX. OCC. CODE ANN. § 2001.458(a) (Vernon 2004). Subsection (a) then specifically lists items that are included within those reasonable or necessary expenses. See id. The list is inclusive, not exclusive, and thus subsection (a) does not prohibit the incursion or payment of unlisted expenses that are "reasonable or necessary." Id.; see also TEX. GOV'T CODE ANN. § 311.005(13) (Vernon 2005) (defining the term "include" as a "term[] of enlargement and not of limitation or exclusive enumeration"). But see Jackson Law Office v. Chappell, 37 S.W.3d 15, 25-26 (Tex. App.-Tyler 2000, pet. denied) (stating that a statutory list following the term "includes" or "including" is "for purposes of illustration"); Tex. Att'y Gen. Op. No. JC-0410 (2001) at 3 (applying the doctrine of ejusdem generis to limit the items within an illustrative list signaled by the term "include"); cf. County of Harris v. Eaton, 573 S.W.2d 177, 178-79 (Tex. 1978) (construing the phrase "such as" in a statute listing "special defects such as . . ." in light of the ejusdem generis doctrine to "include those defects of the same kind or class as the ones expressly mentioned").

In this case, however, the Legislature has determined that employees' health insurance costs are not reasonable or necessary expenses related to the conduct of bingo that a licensed authorized organization may incur or pay from its bingo account, and subsection (b)'s plain language effectuates that intent. See TEX. OCC. CODE ANN. § 2001.458(b) (Vernon 2004). Subsection (b) expressly excepts from subsection (a)(8)'s list of permissible fees "[t]he value of health insurance or a health benefit provided . . . to an employee." Id. If, as you say, this means simply that the costs of health insurance and benefits may not be included in the fees listed in subsection (a)(8) but may be "allowable," then subsection (b) has no meaning: Without subsection (b), health insurance and benefits might be allowable as a reasonable or necessary cost that is similar to the expenses expressly listed. Request Letter, supra note 1, at 1; cf. TEX. GOV'T CODE ANN. § 311.021(2), (4) (Vernon 2005) (stating that in enacting a statute the Legislature intends the entire statute to be effective and to achieve a result that is feasible of execution). And you make no argument that classifying health insurance and benefits expenses as fees within subsection (a)(8) or as some other type of reasonable or necessary expense is significant for purposes of paying the expenses.

We find no obvious error in section 2001.458's unambiguous language, nor do we find that construing section 2001.458 consistently with its plain language leads to an absurd result. Rather, section 2001.458(b) is entirely consistent with the Act's strict regulation of allowable expenses to ensure that bingo-derived proceeds are generally "devote[d] to" the licensed authorized organization's charitable purposes. TEX. OCC. CODE ANN. § 2001.454(a) (Vernon 2004). Because we have found that the language of the current statute is unambiguous, has no obvious error, and does not produce an absurd result, we may not consider whether the pre-codified statute had a different meaning. See Fleming Foods of Tex., 6 S.W.3d at 286.

Consequently, we conclude, consistently with the language the Legislature has chosen, that section 2001.458(b) forbids the incursion or payment of expenses from a bingo account for "[t]he value of health insurance or a health benefit provided . . . to an employee." TEX. OCC. CODE ANN. § 2001.458(b) (Vernon 2004). Health insurance or benefits provided to an employee's dependents are likewise forbidden.

SUMMARY

Occupations Code section 2001.458(b) prohibits an authorized organization licensed to conduct bingo games from incurring or paying from a bingo account the costs of health insurance or benefits for the organization's employees or their dependents.

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

Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee

Footnotes

[1] See Letter from C. Tom Clowe, Jr., Chair, Texas Lottery Commission, to Honorable Greg Abbott, Attorney General of Texas, at 2 (June 6, 2006) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].