Local NewsStatewide NewsTexas Comptroller Announces ‘Sexually Oriented Business’ Investigation into Dallas Bar That Hosted Drag Event for Children

State code and a recent court ruling makes the prospect of levying the retroactive tax murkier than might be initially thought.
August 9, 2022
The state is investigating the tax status of a Dallas bar that hosted a “Drag the Kids to Pride” event in June, which featured drag queens parading in front of children who handed them dollar bills.

“Like many Texas parents, I was disturbed by the recent images showing children participating in a drag show in the Dallas area, including one image of a child placing money in a performer’s undergarment,” Texas Comptroller Glenn Hegar said in a statement. “Though my office does not typically comment on ongoing investigations, the recent public discussion surrounding this specific entity demands a response.”

“My office had already begun the process of investigating this specific event, as well as working to determine if the establishment is liable for the Sexually Oriented Business Fee (SOBF) under Chapter 102 of the Business Code. This process follows an established procedure used when an entity may be subject to the SOBF.”

The event at Mr. Misster, a Dallas gay bar that opened in 2019, featured drag queens dancing in front of and with children — with a sign in the background reading “It’s not gonna lick itself.”

It drew protestors at the time. Texas legislators called for a crackdown on the operation, citing a previously passed law that prohibits children from entry into sexually oriented businesses and stating their intention to file legislation to ban drag shows in the presence of minors.

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Last week, calls for fines against the business grew with a focus on a state law that requires a $5 tax per entrant for sexually oriented businesses registered with the state — including from state Rep. Bryan Slaton (R-Royse City).

Hegar’s statement asserted the investigation predated the calls from Slaton and those published by Texas Scorecard.

Children are already prohibited under code from sexually oriented businesses. If the state deems the bar to fit that definition, it will have been in violation.

In code, a sexually oriented business is defined as “a nightclub, bar, restaurant, or similar commercial enterprise that: provides for an audience of two or more individuals live nude entertainment or live nude performances; and authorizes on-premises consumption of alcoholic beverages, regardless of whether the consumption of alcoholic beverages is under a license or permit issued under the Alcoholic Beverage Code.”

“Nude” in code is defined as “clothed in a manner that leaves uncovered or visible through less than fully opaque clothing any portion of the breasts below the top of the areola of the breasts, if the person is female, or any portion of the genitals or buttocks.”

But due to a 2021 court ruling, what constitutes “clothed” is opaque.

After Texas passed the sexually oriented business fee, strip clubs and other nude dancing establishments “modified their practices to require that dancers wear shorts and opaque latex over their breasts,” the court opinion reads. The latex was most often latex spray paint.

Those establishments became known as “latex clubs.”

In 2016, Comptroller Hegar issued a rule that expanded the definition of “nude” to latex-covered appendages, which was then challenged in court by the Texas Entertainment Association (TEA).

The Fifth Circuit Court of Appeals struck down that extended definition, and thus the extended fee, as too broad of an interpretation on the grounds that it violated the First Amendment.

It also struck down the retroactive provision of the rule as a violation of due process.

The other wrinkle to the legal question over the meaning of “nude” is that drag queens are, by definition, men dressed as women — including with fake breasts. The code specifically ties “females” to “breasts,” and so it is unclear how that applies to this instance.

All that is moot if the dancers showed their genitals or buttocks, which based on videos and images from the event is at least up for debate.

Slaton, who’s promised to file the drag show minor ban, applauded the investigation, saying, “When it comes to protecting children from grotesque content, Texans deserve elected officials who will stand up for our children’s innocence.”

“Any business that allows kids to attend an event of a sexual nature should be held accountable, and I am proud of Glenn Hegar for taking steps in that direction. Like many Texans, I am eagerly awaiting the results of his investigation. In the meantime, I will continue working toward passing legislation to ensure children are never again subjected to these events.”

While the legislature may put to bed all these questions about the current construction of state law and what it allows, they do not reconvene until January. Until then, the comptroller is faced with conducting a regulatory investigation with code that both leaves a lot up for interpretation and has been restricted by a previous court decision.

Mr. Misster did not return an inquiry by the time of publishing.


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Brad Johnson

Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.

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