High court to re-examine commercial speech with gambling-ads case

Wednesday, January 20, 1999

The Supreme Court's continuing interest in the issue of commercial speech is on display again with its decision to take up a challenge to a federal law that bans broadcast advertising for gambling casinos.

The court agreed Jan. 15 to consider Greater New Orleans Broadcasting Association v. U.S., a case that could foreshadow an even more hotly contested commercial-speech issue: the regulation of tobacco advertising.

“We're pleased the court has taken the case, and we think it will advance the cause of commercial speech,” says P. Cameron DeVore, a Seattle lawyer who is a leading advocate on behalf of commercial-speech interests. “With tobacco waiting in the wings, though, I would not expect the court to go too far.”

In general, the Supreme Court has given ever-greater recognition to the free-speech rights of commercial speakers or advertisers in recent years, subjecting restrictions on that speech to increasing scrutiny.

In the 1996 case of 44 Liquormart v. Rhode Island, the court struck down a state law that prohibited advertising of liquor prices, and in the 1995 case of Rubin v. Coors Brewing Co., the court tossed out a federal law that regulated the advertising of alcohol strength on beer labels. Both laws had been justified by the government as beneficial regulations aimed at preventing price and “strength” wars that could lead to over-consumption of alcohol. In both cases, the court found those rationales did not outweigh the interest of the public in accurate information about legal products.

In the new case before the court, the Clinton administration and the Federal Communications Commission are defending a 65-year-old law that forbids “any advertisement of any lottery, gift enterprise, or similar scheme offering prizes dependent in whole or in part upon lot or chance.”

The law is justified, the government says, as a way “to reduce demand for gambling, particularly gambling fueled by compulsive addiction.”

But the broadcasters who challenge the law say that justification is severely weakened by the fact that advertising is permitted for state-run lotteries, Indian-casino gambling and gambling sponsored by nonprofit groups for charitable purposes.

Congress carved out exceptions from the ban on advertising for each of these enterprises, allowing gambling to flourish, the broadcasters say.

“Gaming in all of its forms, along with government-sanctioned broadcasts promoting it, is now part of mainstream America,” says Metairie, La., lawyer Ashton Hardy.

Hardy notes that 37 states and the District of Columbia run lotteries, and Indian-run casino gaming operates in 33 states. Private, non-Indian gambling is allowed in 22 states.

“The ban is but a wisp of what Congress originally signed into law,” says Hardy.

Even the ban on private casino advertising over the air now has exceptions. The 9th U.S. Circuit Court of Appeals, which covers nine western states, struck down the ban as unconstitutional, and the Supreme Court refused to consider an appeal. As a result, the FCC has not enforced the ban in those states since 1997. In addition, a federal judge in New Jersey struck down the ban in 1997, so broadcast ads are allowed in that state as well. In all, Hardy estimates, radio and television stations exempt from the ban reach 23% of Americans.

With this patchwork of enforcement as a backdrop, Supreme Court review of the New Orleans case appeared inevitable. The appeals court in that case, the 5th U.S. Circuit Court of Appeals, was the only court to uphold the government ban.

In its ruling, the 5th Circuit said that even in light of the 44 Liquormart ruling, the law directly advanced legitimate government interest and did not violate the First Amendment.

Acknowledging the exceptions to the ban, the court said, “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 other activities often have dramatically different geographic scope.”

The 5th Circuit also said that unlike the Rhode Island ad ban, which was total, the federal gambling ad ban is more focused, because it “targets the powerful sensory appeal of gambling conveyed by television and radio.”

Even though the Supreme Court's precedents appear to doom the federal law at issue here, the case could be a vehicle for the justices to clarify 44 Liquormart, a decision that produced four separate opinions from the justices, each one giving a somewhat different level of protection to commercial speech. Those opinions indicated that the high court is not entirely satisfied with the long-standing test for commercial-speech regulation that it first enunciated in the Central Hudson Gas and Electric Corp. v. Public Service Commission decision of 1980.

That ruling applied a four-part test to any government regulation of commercial speech, asking: whether the speech concerns a lawful activity and is not misleading; whether the government interest is substantial; whether the regulation directly advances that interest; and whether it is no more extensive than necessary.

Justices John Paul Stevens, joined by Anthony Kennedy and Ruth Bader Ginsburg indicated in 44 Liquormart that they would scrap the Central Hudson test in favor of a more rigorous standard that would allow for less regulation. Justice Clarence Thomas advocated an even tougher standard, while Justices Sandra Day O'Connor, Chief Justice William Rehnquist, David Souter and Stephen Breyer and to some extent Antonin Scalia declined to abandon the Central Hudson test.

Another precedent that will be a factor in the new case is the Supreme Court's 1986 decision in Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, which upheld a restriction on casino advertising in Puerto Rico. Even though that decision has been superseded by more recent commercial-speech cases, it has never been explicitly overruled.

On the tobacco advertising issue, the Clinton administration was expected this week to file a petition with the Supreme Court seeking to revive proposed Food and Drug Administration tobacco regulations, which include severe restrictions on advertising that were challenged on First Amendment grounds. The 4th U.S. Circuit Court of Appeals last year ruled that the FDA did not have authority to regulate tobacco, a decision which left the First Amendment arguments unresolved.

Tony Mauro covers the Supreme Court for USA TODAY and is a legal correspondent for the First Amendment Center.