Mr. James A. Cox, Jr., Chair 

Texas Lottery Commission 

Post Office Box 16630 

Austin, Texas 78761-6630 

GREG ABBOTT 

August 14,2007 

Opinion No. GA-0563 

Re: Eligibility for a manufacturer's or distributor's 

license under the Bingo Enabling Act, chapter 

2001 of the Occupations Code (RQ-0573-GA) 

Dear Mr. Cox: 

Under the Bingo Enabling Act, chapter 2001 of the Occupations Code (the "Act"), the Texas 

Lottery Commission (the "Commission") licenses manufacturers and distributors of bingo equipment 

and supplies. See TEX. OCC. CODE ANN. tjtj 2001.201, .206 (Vernon 2004). Under sections 

2001.202 and 2001.207 of the Act, a person holding an "equitable or credit interest" in another 

distributor or manufacturer or an applicant required to name such persons in its application is 

generally ineligible for a manufacturer's or distributor's license. See id. $5 2001.202(8)-(9), 

.207(8)-(9). On behalf of the Commission, you ask whether "a person is ineligible for a bingo 

manufacturer's or distributor's license . . . if an individual required to be named in the license 

application holds a ten percent or more proprietary, equitable, or credit interest in a holding company 

that has a proprietary, equitable, or credit interest in [another] manufacturer or distributor."' We first 

consider the relevant provisions of the Act. 

I. Statutory Background 

The Act generally requires persons involved in the bingo industry, including bingo 

distributors and manufacturer^,^ to be licensed by the Commission. See, e.g., id. $5 200 1.10 1, .15 1, 

.201, .206, .251; see also Tex. Att'y Gen. Op. No. GA-0186 (2004) at 1 (stating that the Act 

generally requires licensing of "all persons . . . involved in any aspect of the bingo industry"). An 

unlicensed manufacturer "may not sell or supply to a person in this state or for use in this state bingo 

'See Letter £tom James A. Cox, Jr., Chair, Texas Lottery Commission, to Honorable Greg Abbott, Attorney 

General of Texas, at 1 (Feb. 23,2007) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us) 

(footnote omitted) [hereinafter Request Letter]. 

'A "distributor" is "a person who obtains . . . bingo equipment or supplies for use in bingo in this state and sells 

or fhmishes the items to another person for use, resale, display, or operation." TEX. OCC. CODE ANN. 4 2001.002(9) 

(Vernon 2004). And a "manufacturer" is, in general, a person who assembles bingo equipment or supplies or who 

converts bingo equipment or items to further promote the sale or use of the same in the state. See id. 3 2001.002(16). 
Mr. James A. Cox, Jr. - Page 2 (GA-0563) 

cards, boards, sheets, pads, or other supplies, or equipment designed to be used in playing bingo, or 

engage in any intrastate activity involving those items." TEX. OCC. CODE ANN. 5 2001.201 (Vernon 

2004). Similarly, an unlicensed distributor "may not sell, distribute, or supply bingo equipment or 

supplies for use in bingo in this state." Id. 5 2001.206. Moreover, a manufacturer is ineligible 

for a distributor's license and a distributor is ineligible for a manufacturer's license. See id. 

$5 2001.202(6), .207(6). 

Sections 200 1.202 (relating to manufacturers) and 200 1.207 (relating to distributors) provide, 

in essentially identical language, that the following persons, among others, are ineligible for 

manufacturers' and distributors' licenses, respectively: 

(8) an owner, officer, director, or shareholder of, or aperson 

holding an equitable or credit interest in, another manufacturer or 

distributor licensed or required to be licensed under this chapter; or 

(9) a person: 

(A) in which aperson described by Subdivision (I), (2), 

(3), (4), (9, (6), (7), or (8) or in which a person married or related in 

the first degree by consanguinity or affinity to one of those persons 

has greater than a 10 percent proprietary, equitable, or credit interest 

or in which one of those persons is active or employed; or 

(B) in whose application for a [manufacturer's or 

distributor's] license a person described by Subdivision (I), (2), (3), 

(4), (9, (6), (7), or (8) is required to be named. 

Id. 5 2001.202(8)-(9) (emphasis added); see id. 5 2001.207(8)-(9) (using essentially the same 

language). Under the Act, a "person" is defined to "mean[] an individual, partnership, corporation, 

or other group." Id. 5 2001.002(20). 

You ask about an applicant required to list in its application an individual who holds ten 

percent or more of an equitable or credit interest in a holding company that in turn has an equitable 

or credit interest in another licensed manufacturer or distributor, but you do not indicate whether the 

applicant is corporate or noncorporate. See Request Letter, supra note 1, at 1 .3 A noncorporate 

applicant must list in its application to the Commission the "name and home address of each owner." 

TEX. OCC. CODE ANN. $5 2001.203(b)(3)(A), .208(3) (Vernon 2004). And a corporate applicant for 

a license must list the name of each person that owns ten percent or more of stock in the applicant 

as well as the name of each officer and director. Id. $5 2001.203(b)(3)(B), .208(4). Because both 

corporate and noncorporate applicants must list individuals with the described relationship to the 

3Yo~ ask about "a proprietary, equitable, or credit" interest. See Request Letter, supra note 1, at 1. We note, 

however, that sections 2001.202(8) and 2001.207(8), which are the relevant provisions here, do not reference 

"proprietary" interest. See TEX. OCC. CODE ANN. §§ 2001.202(8), .207(8) (Vernon 2004). 
Mr. James A. Cox, Jr. - Page 3 (GA-0563) 

applicant, your question is not limited to any particular type of applicant and, on its face, implicates 

sections 2001.202(9)(B) and 2001.207(9)(B), which incorporate sections 2001.202(8) and 

2001.207(8). See id. $5 2001.202(9)(B), .207(9)(B). 

Under sections 200 1.202(9)(B) and 200 1.207(9)(B), an applicant required in its application 

to name a person described by any of the subdivisions (1) through (8) of sections 2001.202 and 

2001.207, respectively, is ineligible for a license. See id. $5 2001.202(9)(B), .207(9)(~).~ "[A] 

person [holding or having] an equitable or credit interest in, another manufacturer or distributor" is 

a person described by subdivision (8) of each of these statute^.^ Id. $5 2001.202(8), .207(8). 

11. Analysis 

Thus, your question requires us to construe sections 2001.202(8) and 2001.207(8) and 

determine whether an individual, solely by virtue of his or her ownership of an equitable or credit 

interest in a holding company, holds an equitable or credit interest in a subsidiary bingo 

manufacturer or distributor company. 

If the statutory language is unambiguous, courts will "generally interpret the statute according 

to its plain meaning." City of Sun Antonio v. City of Boerne, 11 1 S.W.3d 22, 25 (Tex. 2003); see 

also TEX. GOV'T CODE ANN. $ 3 11.01 1(a) (Vernon 2005) ("Words and phrases shall be read in 

context and construed according to the rules of grammar and common usage."). Accordingly, we 

begin with the plain language of sections 2001.202(8) and 2001.207(8). Subdivision (8) of each 

statute renders ineligible for a manufacturer's or distributor's license "an owner, officer, director, 

or shareholder of, or a person [holding or having] an equitable or credit interest in, another 

manufacturer or distributor." TEX. OCC. CODE ANN. $8 2001.202(8), .207(8) (Vernon 2004) 

(emphasis added); see also id. $5 2001.202(9)(B), .207(9)(B) (providing that persons required to 

name persons described by subdivision (8) are ineligible for a license). By their plain language, the 

statutes require the person in question to hold or possess the equitable or credit interest in the other 

manufacturer or distributor. See id. $5 2001.202(8), .207(8). 

But the person in question here-the individual required to be named by the applicant for a 

license--does not hold the equitable or credit interest in the other manufacturer or distributor. See 

4Such an applicant may also be ineligible for a license under sections 200 1.202(9)(A) and 200 1.207(9)(A). See 

TEX. OCC. CODEANN. $5 200 1.202(9)(A), .207(9)(A) (Vernon 2004). We do not consider these provisions because you 

do not describe the individual's relationship to the applicant. Moreover, your concern here is with the meaning of 

sections 2001.202(8) and 2001.207(8). See Request Letter, supra note 1, at 1-2. 

'You ask about an individual holding ten percent or more of an equitable or credit interest in a holding company 

that holds an equitable or credit interest in a manufacturer or distributor. See id. We note, however, that neither section 

200 1.202(8) nor section 200 1.207(8) of the Act limits its application to a person holding a certain percentage of equitable 

or credit interest in another manufacturer or distributor; it applies to a person holding any percentage of such interest. 

See TEX. OCC. CODE ANN. $5 200 1.202(8)(B), .207(8)(B) (Vernon 2004); cJ: Tex. Att'y Gen. Op. No. GA-0186 (2004) 

at 4 (stating that neither section 2001.202(8) nor section 2001.207(8) requires any particular percentage of ownership 

of shares). 
Mr. James A. Cox, Jr. - Page 4 (GA-0563) 

Request Letter, supra note 1, at 1-2. Instead, you tell us that the holding company holds such 

equitable or credit interest. See id. The Act does not reference or define a "holding company," but 

we understand you to refer to a company that owns "securities by which it is possible to control or 

substantially to influence the policies and management of one or more operating companies in a 

particular field of enterpri~e."~ N. Am. Co. v. S. E. C., 327 U.S. 686, 701 (1946). 

While a holding company may control the subsidiary company, the holding company and the 

subsidiary are distinct and separate legal entities. See CNOOC Se. Asia Ltd. v. Paladin Res. 

(SUNDA) Ltd., 222 S.W.3d 889,898 (Tex. App.-Dallas 2007, no pet. h.); Docudata Records Mgmt. 

Servs., Inc. v. Wieser, 966 S.W.2d 192,197 (Tex. App.-Houston [1 st Dist.] 1998, pet. denied); see 

also I & JC Corp. v. Helen of Troy L.P., 164 S.W.3d 877, 889-90 (Tex. App.-El Paso 2005, pet. 

denied) (discussing general distinction between a parent company and its subsidiary and when they 

may be "fused" for the purposes of a legal proceeding). The distinction between a holding company 

and its subsidiary will not generally be disregarded because "disregard of the 'legal fiction of 

corporate entity' is 'an exception to the general rule which forbids disregarding corporate 

existence."' Lucas v. Tex. Indus., Inc., 696 S.W.2d 372,374 (Tex. 1984) (quoting First Nut 'I Bank 

in Canyon v. Gamble, 132 S.W.2d 100,103 (Tex. 1939)). Texas courts will not "because of stock 

ownership or interlocking directorship disregard the separate legal identities of corporations, unless 

such relationship is used to defeat public convenience, justify wrongs, such as violation of the antitrust laws, protect fraud, or defend crime." I & JC Corp., 164 S.W.3d at 889 (quoting Bell Oil & 

Gas Co. v. Allied Chem. Corp., 43 1 S.W.2d 336, 339 (Tex. 1968)); see also Town Hall EstatesWhitney, Inc. v. Winters, 220 S.W.3d 76, 86 (Tex. App.-Waco 2007, no pet.) ("There must be 

something more than mere unity of financial interest, ownership and control for a court to treat the 

subsidiary as the alter ego of the parent and make the parent liable for the subsidiary's tort."). 

Because the holding company is a separate legal entity from its subsidiary manufacturer or 

distributor, the individual in question does not hold, as a matter of law, an equitable or credit interest 

in the subsidiary manufacturer or distributor by virtue of his or her equitable or credit interest in the 

holding company. It is possible, however, that a holding company and its subsidiary might, in 

particular circumstances, be treated as a single entity and an equitable or credit interest in a holding 

company determined to be an equitable or credit interest in the subsidiary company. CJ: I & JC 

Corp., 164 S.W.3d at 889 (stating general rule that separate corporate identities will not be 

disregarded by Texas courts unless the relationship is used to defeat public convenience, justify 

wrongs, protect fraud, or defend crime). However, that determination would be a fact-sensitive 

inquiry made by a court with the appropriate jurisdiction over the particular legal proceedings. See 

id. 

6See, e.g., TEX. BUS. ORGS. CODE ANN. Ij 10.005(a)(2) (Vernon 2006) ("'Holding company' means a domestic 

entity that, fkom its organization until a merger takes effect, was at all times a direct or indirect wholly owned subsidiary 

ofthe merging domestic entity and the ownership or membership interests of which are issued to the members or owners 

of the merging domestic entity in the merger."); TEX. FIN. CODE ANN. § 91.002(16) (Vernon Supp. 2006) ("'Holding 

company' means a company that directly or indirectly controls a savings bank or controls another company that directly 

or indirectly controls a savings bank."); TEX. INS. CODE ANN. 5 823.002(5) (Vernon 2006) ("'Holding company' means 

a person who directly or indirectly controls an insurer."). 
Mr. James A. Cox, Jr. - Page 5 (GA-0563) 

Your letter suggests that the terms "equitable or credit interest" in sections 2001.202(8) and 

2001.207(8) may reach the "interest" that the individual in question has or may have-through the 

holding company-in the separate subsidiary manufacturer or distributor. See Request Letter, supra 

note 1, at 2 ("Does this sort of relationship [among the applicant, the individual, the holding 

company, and the subsidiary manufacturer or distributor] create an "equitable, proprietary or credit 

interest?"). The Act does not define "equitable interest" or "credit interest." And we have found no 

other statutory or judicial decisions defining such terms in this or a similar context. But read in the 

context of sections 200 1.202(8) and 200 1.207(8), "equitable interest" appears to contemplate some 

type of beneficial interest in another bingo manufacturer or distributor. See TEX. OCC. CODE ANN. 

2001.202(8), .207(8) (Vernon 2004); see also TEX. GOV'T CODE ANN. 5 31 1.01 1(a) (Vernon 

2005) ("Words and phrases shall be read in context and construed according to the rules of grammar 

and common usage."); Monsanto Co. v. Cornerstones Mun. Util. Dist., 865 S.W.2d 937,939 (Tex. 

1993) ("When the legislature has failed to define a word or term, courts will apply its ordinary 

meaning.").7 And "credit interest," read in the statutory and commercial context here, appears to 

refer broadly to any right or claim to repayment for money loaned or advanced to another 

manufacturer or distributor regardless of the profitability of that entity or ~enture.~ Read in context, 

the term "equitable or credit interest" does not encompass, as a matter of law, the individual's 

"interest," if any, in the subsidiary manufacturer or distributor. 

The individual here holds some type of beneficial interest in or has a right or claim to be 

repaid moneys from the holding company rather than from the subsidiary manufacturer or distributor 

company. Again, because the holding company is a separate legal entity from its subsidiary bingo 

manufacturer or distributor, the individual does not possess, as a matter of law, a beneficial interest 

in the subsidiary or a monetary claim against the subsidiary solely by virtue of his or her interest in 

the holding company. It is entirely possible that in particular circumstances, such an individual may 

possess or be deemed to possess a beneficial interestg in the subsidiary manufacturer or distributor 

notwithstanding its legal separation from the holding company. But, that determination must be 

made by the Commission or a court based on the particular factual circumstances. 

We recognize that a holding company might be used as a device to circumvent the Act's 

ownership and interest restrictions in its licensing requirements. But, like a court, this office cannot 

disregard the plain language of the statute or insert words into the statute to foreclose that possibility. 

'See MERRIAM-WEBSTER'S COLLEGIATEDICTIONARY 423 (1 1 th ed. 2005) (defining "equitable" in the sense of 

"existing or valid in equity as distinguished from law"); BLACK'S LAW DICTIONARY 816 (7th ed. 1999) (defining 

"equitable interest" as "[aln interest held by virtue of an equitable title or claimed on equitable grounds, such as the 

interest held by a trust beneficiary"). 

'See MERRIAM-WEBSTER'S COLLEGIATE DICTIONARY 294 (1 lth ed. 2005) (defming "creditor" as "one to whom 

a debt is owed"); WEBSTER'S NEW WORLD FINANCE AND INVESTMENT DICTIONARY 83,85 (2003) (defining "credit" as 

"[alny money lent through bonds or loans" that "must be paid back or the borrower risks defaulting," and a "creditor" 

as "[aln entity that has a monetary claim against a debtor"); see also Bauer v. Comm 'r of Internal Revenue, 748 F.2d 

1365, 1367 (distinguishing between shareholder and creditor). 

'See supra note 8. 
Mr. James A. Cox, Jr. - Page 6 (GA-0563) 

See R.R. Comm 'n of Tex. v. Miller, 434 S.W.2d 670,672 (Tex. 1968) (stating that because courts 

are not the law-making body, they are not responsible for omissions in legislation but only for 

interpreting the statute as written, quoting Simmons v. Amim, 22 S. W. 66,70 (Tex. 1920)); see also 

McIntyre v. Ramirez, 109 S.W.3d 741,748 (Tex. 2003) (stating that a court's role is not to secondguess the Legislature's policy choices informing a statute or to weigh the effectiveness of their 

results). It is the Legislature's responsibility to impose restrictions, if any, in the statutory language 

that it deems necessary or desirable. See Holmes v. Morales, 924 S.W.2d 920,925 (Tex. 1996); see 

also Seay v. Hall, 677 S. W.2d 19,25 (Tex. 1984) ("[Ilt would be an usurpation of our powers to add 

language to a law where the legislature has refrained."). 

Nor can this office disregard the separate legal identities of a holding company and its 

subsidiary manufacturer or distributor to avert that possibility. First, this office cannot ignore or 

overrule judicial decisions generally recognizing the distinction between a holding company and its 

subsidiary. See supra pp. 3-4; see also Tex. Att'y Gen. Op. No. JC-0507 (2002) at 8 ("[Tlhe Office 

of the Attorney General cannot overrule a judicial decision."). Second, while courts have the 

authority to disregard separate corporate identities in particular instances when necessary for the 

public convenience or to prevent violations of the law, they do so sparingly and after a fact-intensive 

analysis. Cf I & JC Corp., 164 S.W.3d at 889. 

111. Conclusion 

In response to your question, we conclude that an applicant that must list in its application 

an individual who holds ten percent or more of an equitable or credit interest in a holding company 

that, in turn, holds an equitable or credit interest in another subsidiary bingo manufacturer or 

distributor company, is not ineligible as a matter of law for a distributor's or manufacturer's license 

under the Act. 
Mr. James A. Cox, Jr. - Page 7 

SUMMARY 

Under the Bingo Enabling Act, chapter 2001 of the 

Occupations Code, an applicant required to list in its application an 

individual who holds ten percent or more of an equitable or credit 

interest in a holding company that, in turn, holds an equitable or 

credit interest in another subsidiary manufacturer or distributor 

company, is not ineligible as a matter of law for a distributor's or 

manufacturer's license. Because the holding company and its 

subsidiary are treated as separate and distinct legal entities under 

Texas law, the individual does not hold, as a matter of law, an 

equitable or credit interest in the subsidiary bingo manufacturer or 

distributor by virtue of his or her equitable or credit interest in the 

holding company. 

KENT C. SULLIVAN 

First Assistant Attorney General 

NANCY S. FULLER 

Chair, Opinion Committee 

Sheela Rai 

Assistant Attorney General, Opinion Committee