High Court Trims Ban on Gaming Ad Broadcasts

The Supreme Court on Monday knocked down much of a 65-year-old federal ban on the broadcast of advertisements for gambling, saying that the 1st Amendment generally protects “truthful speech about lawful conduct.”

And these days, unlike in 1934 when the ban became law, gambling in some form is legal in most of the nation.

If a product is legal, “the speaker and the audience, not the government, should be left to assess the value of accurate and nonmisleading information” about it, said Justice John Paul Stevens for the court.

The Clinton administration had supported the ban, arguing before the court that a limit on free speech was justified by the “devastating social costs” of gambling and a need to shield about 3 million compulsive gamblers from opportunities to indulge their habit.

But Stevens disagreed, saying that the ban was “so pierced by exemptions and inconsistencies that the government cannot hope to exonerate it.” In a similar case, the justices three years ago unanimously struck down laws in Rhode Island and nine other states that prohibited the advertising of beer and liquor prices. The court concluded that there is no 1st Amendment exception for “vice products.”

Despite these broad pronouncements on the public value of advertising, the court ruled narrowly in Monday’s gambling case, leaving lawyers, advertisers and broadcasters uncertain about the scope of the 9-0 decision.

Broadcasters in the New Orleans area have the right to carry ads promoting gambling in private casinos in Louisiana “where such gambling is legal,” the court said. This frees radio and television broadcasters in 10 other states, including Nevada and New Jersey, to advertise casino gambling because private casinos operate lawfully in those jurisdictions.

These broadcast ads may spill over into other states. For example, stations in Reno would be free to carry ads promoting casino gambling, even if the promotions were directed to viewers on the California side of the border.

Some Find Ruling Unclear

But what about broadcasters based in California or New York, states where casino gambling is illegal?

“The short answer is, we don’t know,” said P. Cameron DeVore, a Seattle lawyer who represents the National Assn. of Broadcasters. On the one hand, he noted, the court’s opinion thoroughly undercuts the rationale for the ban on broadcast ads for gambling.

Congress has passed special exemptions to allow the advertising of state lotteries and Indian casinos, Stevens pointed out. Because there is no national policy against gambling, the nation cannot enforce a ban on advertising of the product, he said.

Washington attorney John Roberts, who represents the American Gaming Assn., said that the logic of the opinion suggests casino gambling can be advertised everywhere. “That’s how I read it,” he said. If so, broadcasters in Los Angeles would be free to advertise gambling at casinos in Las Vegas.

But the court stopped short of striking down the law entirely, DeVore noted, and the Federal Communications Commission has continued to defend the prohibition. “We’ll just have to wait and see what the FCC does,” he said.

On Monday, FCC officials were not saying what they would do. “The most we can say now is that we are studying the opinion and have no immediate comment,” said David Fiske, an FCC spokesman.

Broadcast ads for cigarettes remain illegal and that prohibition has not been challenged in this decade. No federal law forbids the broadcast of ads for alcohol, although the makers of distilled spirits had agreed for many years to forego broadcast advertisements. Several liquor makers in the last year paid for broadcast ads on local stations, and it remains unclear whether others will follow their lead.

In the early years of this century, the government had a zero-tolerance approach toward the promotion of gambling. In 1903, the Supreme Court called lotteries a “widespread pestilence” and it upheld a federal law that made it a crime to send lottery tickets through the mail or to promote such gambling across state lines.

A lottery is especially troublesome, the court opined, because it “enters every dwelling, it reaches every class. It preys upon the hard earning of the poor and it plunders the ignorant and the simple.” When Congress wrote the first federal Communications Act in 1934, it prohibited licensed broadcasters from carrying “any advertisements of or information concerning any lottery, gift enterprise or similar scheme.”

Slow Erosion of Law

However, the once-solid barrier began to crumble, slowly at first. In 1950, Congress allowed nonprofit groups to advertise bingo and fishing contests where money prizes were awarded. By the 1970s, states were rushing to authorize their own lotteries. Soon, Indians on reservations won the authority to conduct gambling enterprises. In each instance, Congress approved special exemptions allowing broadcast advertisers to promote those forms of gambling.

In recent years, the FCC has struggled to preserve the rule while allowing ever more exceptions. For example, broadcasters have been allowed to carry ads for hotels affiliated with casinos and to promote “Vegas-style excitement,” which viewers know means there is gambling on the premises. Broadcasters are forbidden to promote “casinos,” however, except when casino is part of the establishment’s proper name.

Two years ago, the 9th Circuit Court of Appeals in San Francisco, ruling in a Nevada case, concluded that the entire broadcast ban was unconstitutional. In response, the FCC said that it would not enforce the rule on the West Coast.

Monday’s high court ruling (Greater New Orleans Broadcast Assn. vs. United States, 98-387), does not go so far, but lawyers who worked on the case predicted that the entire prohibition will fall soon.