DAN MORALES

ATTORNEY GENERAL 

### QWice of tip 2Wmwp @merat %tate offEQexa$ November 27.1991 Ms.Jeannene Fox Opinion No. DM-62 Acting Administrator Texas Alcoholic Beverage Commission Re: Collection of fees for small stakes P. 0. Box 13127 bingo (RQ-219) Austin, Texas 787113127 Dear Ms.Fox: You have requested our opinion on several questions regarding the collection offees for certain games ofsmall stakes bingo. You indicate that

[i]n addition to bingo games played on hard cards and disposable paper cards, bingo players also play instant bingo.
. . . Most of the winners on instant bingo cards are S.50 or $1.00winners. Bingo is regulated by article 179d.V.T.C.S. A recent legislative enactment added section 19bto the statute to provide for the imposition offees onbingo games. That provision states:

Sec. 19b. (a) An authorized organization licensed to conduct bingo shall collect a fee from each person who wins a prize in a bingo game.

(b) The fee imposed by this section is three percent ofthe amount or value ofthe prize.

(c) A licensed authorized organization shah .report and remit the fee imposed by this section at the same time and in the same manner as the gross receipts taxunder Section 20 of this Act. Acts lk1,72d Leg., 1stC.S.,ch.5,s 11.031,Vernon’s Sess.LawServ. at 184.

p. 312Ms.Jeannene Fox-Page 2 (DM-62)

You first ask whether “instant bingo” constitutes a bingo game for purposes ofarticle 179d. “Bingo”or “game”isdefined in section 2(2) thereof as

a specitic game ofchance, commonly known asbingo or lotto, in which prizes are awarded on the basis ofdesignated numbers or symbols on a card conforming to munbers or symbols selected at random. Whether a particular game described as “instant bingo”f&Us within the definition in section 2(2) requires the resolution offactual &es that cannot be addressed in the opinion process.1 We need not address any specific game, however, since the question you raise about taxes isrelevant to anybingo game with small stakes. You also askwhether the Alcoholic Beverage Commission may wai\rethe fee on bingo prizes of $1.00 or less. You state that organizations that conduct small stakes games complain that the cost of hiring additional workers to collect the fee from small stakes bingo winners would be in excess of what it would cost the organizations to pay the prize fee themselves and would bring the state avery small amount ofrevenue. A number ofprior opinions hold that a waiver offees that an administrative body is required to collect constitutes a suspension of laws, in contravention of article I, section 28, of the Texas Constitution. In Attorney General Opinion O4631 (1942), for example, the State Board of Hairdressers and Cosmetologists sought to waive the required payment oflicense renewal fees for those individuals who were called into military service. In Attorney General Opinion O-6444 (1945), the State Board of Barber Examiners asked whether it might exempt registered barbers from payment of renewal fees during their tenure in the armed forces. In Attorney General Opinion O-6754 (1946), a county clerk sought permission to waive the $1.00marriage license fee for members ofthe armed forces. In each case, the attorney, general replied that the official was without authority to waive the particular fee because of article I, section 28. Likewise, we are here compelled to conclude, regardless ofthe amount ofrevenue obtained from the imposition offees

‘A resolution ofthisqucstioo would alsorquire UJ

toexplore themeaning

of “bingo”as that termwas udersmodbythevoters

atthetime**of**theadoption oftheprovision

ofarticle 19 section 47, ofthe nzcmstitution

authorizing biio games.

p. 313Ms.Jeamrene Fox -Page 3 (DM-62)

on winnings in games of bingo, that the Alcoholic Beverage Commission is not empowered towaive or exempt the fee imposed on anyprize. &ally, you ask whether the organization that conducts the bingo game may itselfpay the fee. The answer to this question, theoretically, is “no,”as the following example will demonstrate. Suppose a bingo player wins $100.00. The statute assess& the fee on the rotalprire, and, ifthe organization paid the fee on $100.00, the total prixe would be $103.00,thus necessitating the collection of an additional 9 cents. In other words, when the fee is paid by the organization, the amount ofthe fee must be added to the value ofthe prize, which, in turn, generates an additional fee to be paid. However, for small prizes, such as those about which you inquire, this problem is avoided. We use as an example a bingo prize worth 50 cents. The total value of such a prize could be transformed into a prize of 52 cents without generating any additional fee. In this example, the winner receives 50 cents and the state 2 cents. Likewise, a prize of one dollar could be transformed into a prize of $1.03,with $1.00going to the individual and 3 cents to the state. This procedure works with small amounts because the fee on prizes of 50 cents is the same as the fee on prizes of 52 cents, and the fee imposed on prizes of $1.00is the same as the fee imposed on prizes of $1.03. Thus, adding the fee to the amount paid to the winner does not increase the amount offee owed on the rotalprire. With sufficiently large prizes, however, the principle breaks downl Thus, in answer to your third question, it is our opinion that while the organization may not itself literally pay the fee on prizes of 50 cents and $1.00,it may slightly alter the amount of the prizes awarded to achieve substantially the same result. 

### SUMMARY The Alcoholic Beverage Commission may not waive the three percent fee for small prizes awarded in games of bingo. Although the organization conducting the bingo game may not itselfpay the fee, it may achieve substantially the same result for

%‘ith a three percent fee, the principle breaks down at a point behveen $5.00and S6.00. The fcconaSSM)prizcisthesameasafeeonaprizeof~.15,butthefeeona56.00prizcisnotthesame a6afcconaprizcofS6.18.

p. 314Ms.Jeannene Fox -Page 4 (DM-62)

small prizes by slightly altering the face amount of the prize awarded.

DAN MORALES Attorney General ofTexas WILL PRYOR First Assistant Attorney General MARY KELLER Deputy Assistant Attorney General JUDGE ZOIUE STEAKLEY (Ret) Special Assistant Attorney General RENEAHICKS Special Assistant Attorney General MADELEINE B.JOHNSON Chair, Opinion Committee Prepared by Rick Gilpin Assistant Attorney General

p. 315