AUSTIN (KXAN) — An American Legion Post in southeast Austin has lost a court case involving a sweepstakes game it was operating. In April, a District Court ruled against American Legion Knebel Post 83 claiming its actions was against the law because the operation they were running amounted to an illegal lottery.
In 2014, a KXAN Investigation found computerized sweepstakes video games in bars and VFW posts across Central Texas that law enforcement officials, including the Texas Attorney General, say are illegal because people are paying to play and win money—in essence, gambling. Veterans groups and the companies operating the 8-liner machines claim they are legal because there is no payment necessary to play, and when players do pay, it’s a “donation.”
Despite the recent court ruling, a bar in Pflugerville is still operating what it calls the “Help A Hero Sweepstakes.” We KXAN visited the bar in 2014, the veterans charity benefit was called “Amvets.” To play, our undercover producer had to donate, but it didn’t take long to win cash and collect our winnings.
The attorney who represents American Legion Knebel Post 83 that lost the court case filed by the Texas Alcoholic Beverage Commission says they’re still deciding if they’ll appeal. In the meantime, the VFW has temporarily stopped the games but plans to reintroduce a new game that complies with what the court outlined in its findings.
According to 2015 financial records filed with the Internal Revenue Service, 2015 IRS records show the VFW’s “Support a Veteran” fundraiser raised $7,522,283 that year. The documents state the VFW kept 10 percent of the money raised and the rest went to the operator of the “sweepstakes.”