Federal court upholds law banning broadcast of casino gaming ads

Friday, August 7, 1998

A three-judge panel of the 5th U.S. Circuit Court of Appeals has ruled for the second time that a federal law banning the broadcast of casino gaming ads is constitutional.

Federal law prohibits broadcast of “any advertisement of or any information concerning any lottery, gift enterprise, or similar scheme, offering prizes depending in whole or in part upon lot or on chance …”

A group of broadcasters, led by Greater New Orleans Broadcasting Association, challenged the law on First Amendment grounds, arguing it violated broadcasters' commercial free-speech rights.

However, in 1995 the 5th Circuit voted 2-1 in Greater New Orleans Broadcasting Association v. U.S. that the law was constitutional. The broadcasters then appealed to the U.S. Supreme Court.

In the meantime, the high court decided 44 Liquormart, Inc. v. Rhode Island, a case which strengthened First Amendment protection for commercial speech.

The Supreme Court then remanded the case, sending it back down to the 5th Circuit, which was ordered to re-evaluate by applying the principles of 44 Liquormart.

Some commercial speech observers believed the 5th Circuit would change its opinion in light of 44 Liquormart. That opinion was reinforced after the 9th U.S. Circuit Court of Appeals ruled in Valley Broadcasting Co. v. U.S. that the casino ad ban violated the First Amendment.

Since 44 Liquormart, courts have been required to carefully scrutinize restrictions on commercial speech, making sure they directly and materially advance the governmental interest without burdening more speech than necessary. The Supreme Court stated in 44 Liquormart that “the First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.”

One reason the 9th Circuit struck down the federal law in the Valley Broadcasting case was that, while the federal law banned broadcast ads by privately owned casinos, it allowed similar advertising by state-run lotteries and Indian-owned casinos. The 9th Circuit reasoned that these exceptions proved that the law did not directly and materially advance a governmental interest in reducing gambling.

However, the 5th Circuit last week again decided 2-1 that the law was constitutional. According to the majority, the federal law does directly advance the government's substantial interest in reducing gambling.

In an opinion written by Judge Edith Jones, the court noted that: “The government may legitimately distinguish among certain kinds of gambling for advertising purposes, determining that the social impact of activities such as state-run lotteries, Indian and charitable gambling include social benefits as well as costs and that these activities often have dramatically different geographic scope.”

Jones wrote that the law is not a “blanket ban on advertising,” but “is more analogous to a time, place and manner restriction.” She said that “other media” — such as newspapers, billboards and magazines — remain available.

Judge Politz dissented as he did in the 1995 opinion, writing that the Supreme Court's decision in 44 Liquormart “only strengthens my convictions.”

“The numerous exceptions and inconsistencies contained in the publication ban abundantly undermine and are adverse to the asserted governmental interests, precluding the material advancement” of the law, he wrote.

Ashton Hardy, attorney for the challenging broadcasters, said: “We believe the decision by the 5th Circuit is wrong and that the 9th Circuit was correct. The U.S. Supreme Court's decision in 44 Liquormart makes it clear that restrictions on commercial speech are to be given more careful scrutiny than the 5th Circuit gave.

“We believe the ban on this commercial speech is unconstitutional, and we will seek relief from the U.S. Supreme Court,” Hardy said. “The split in the circuits should assure us that the Supreme Court will grant certiorari [accept the case] and act in order to resolve the clear conflict between the 9th and 5th Circuits.”

Will Mancino, spokesman for the Department of Justice, said: “The Department of Justice is pleased with the court's decision and will continue to defend the constitutionality of the statute.”

Richard Kaplar, editor of The Commercial Speech Digest, disagreed with the decision. He said:The Supreme Court remanded this case for a reason: 44 Liquormart. But it seems the Fifth Circuit has gone to great lengths to doubt, diminish, or just ignore the teachings of that decision.”

First Amendment attorney and commercial speech expert Dan Troy agreed, saying that the court “misapplied” part of the commercial speech analysis mandated by 44 Liquormart.

“The majority opinion allows the suppression of speech to accomplish a goal that could by accomplished by other means,” Troy added.

Both Kaplar and Troy said the issue could very well be decided by the U.S. Supreme Court.

“The Greater New Orleans cloud could have a silver lining if this split with

the 9th Circuit propels casino advertising back to the Supreme Court,” Kaplar said.

“This case highlights the need for the Supreme Court to clarify its commercial speech jurisprudence,” Troy said. “This is the kind of case the Supreme Court will take for two reasons: first, the Court likes to take cases in which there are splits in the circuits and secondly, this case has a sexy First Amendment issue with important implications.”