Insights

A recently filed legislative proposal could open up a new avenue for political fundraising in Texas: raffles. If the law passes, candidate and political committees could beef up their accounts by raffling off items, including alcoholic beverages.

One of the most overlooked – or ignored – laws in Texas is the Charitable Raffle Enabling Act, which is tucked away in Chapter 2002 of the Occupations Code. The law allows a very limited set of “qualified organizations” to conduct raffles; these include charitable nonprofits, certain religious organizations, volunteer fire departments, and volunteer emergency medical service groups. To be a qualified “nonprofit organization,” an entity cannot “participate or intervene in any political on behalf of any candidate for public office in any manner, including by publishing or distributing statements or making campaign contributions.”

Moreover, a qualified entity is limited to two raffles per year, and the raffle tickets must have statutorily mandated language on them. Raffles may not be conducted on a statewide basis. Finally, all proceeds from a raffle must be spent on a “charitable purpose” – meaning that proceeds must be spent on activities designed to enhance religious or educational advancement, relieve people from disease or suffering, assist in the development of “worthy and useful citizens,” foster “devotion to the principles on which this nation was founded,” and enhance “loyalty to [the] government.” A local prosecutor or the attorney general may enjoin an illegal raffle.

These restrictions, however, could be significantly altered with the passage of Senate Bill 1974. Though the proposal does not alter the Charitable Raffle Enabling Act, it modifies the Alcoholic Beverage Code by allowing political committees and candidates to secure a temporary raffle permit from the Texas Alcoholic Beverage Committee (TABC).

If passed, the bill would add a new chapter that specifically authorizes a political committee or candidate to conduct a raffle to generate political funds. A person subject to the reporting requirements of the Texas Election Code’s Title 15 could, in exchange for a $500 fee, receive a temporary raffle permit from the TABC. The candidate or committee could, after notifying the regional TABC office, conduct a raffle that includes donated alcohol as a raffle prize. Proceeds of the auction would be deposited in the entity’s account and presumably reported in accordance with the state’s campaign finance laws.

Although corporate contributions remain illegal in Texas, a company organized as a partnership or LLC could conceivably be able to contribute alcoholic beverages to a candidate’s campaign, which could then auction or raffle off the beverages and pocket the proceeds for political purposes.

Also, while a political campaign would remain outside raffle law’s definition of a “qualified organization,” the new bill would presumably preempt that existing limitation. Senate Bill 1974, which has yet to receive a public hearing, can be read here.