#141 ©Copyright 1999, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose, Whittier Law School, Costa Mesa, CA.

Can Casinos Now Advertise in New York & California?The United States Supreme Court has ruled that television and radio stations may broadcast commercials for legal casinos in states that have legal casinos.

That this question had to go to the highest court in the land shows that legal gambling is still treated as a morally suspect industry. As further proof: No one knows for sure whether casinos are now free to advertise in any state, or only in those states that have legalized casino gaming.

For decades the Federal Communications Commission (“FCC”) punished broadcasters who showed people gambling. The Golden Nugget pushed the regulators to the limit once by showing people dancing through an empty casino.

Even the word “casino” could not be used, unless it was part of the advertiser’s formal name. Ten years ago I received a call from an advertising company, which had been told that its commercial for the Tropicana Hotel and Country Club in Las Vegas could not be run on a Las Vegas T.V. station. The crime? The ad showed the word “casino” reflected backwards in a pool of water.

I told the lawyer for the T.V. station that the First Amendment had to allow a legal business to advertise in the very state which had made the business legal. The lawyer responded that his job was to protect the station, and that he never fought government regulators. You could hardly blame him. Government agencies can do more than impose fines. They literally have the death penalty, they can kill a station by taking away its multi-million dollar license.

Broadcasters finally took the FCC to court when casino gambling became so big that stations could no longer ignore these lost millions of dollars of revenue. It is now clear that any station broadcasting from New Jersey can run ads for Atlantic City casinos, even if 99% of its audience is in New York. But can New York stations run those same commercials? New York has no casino gambling — or does it?

The state recently signed a compact with the St. Regis Mohawks, allowing the tribe to open a casino with table games and Video Lottery Terminals. New York charities can run Las Vegas Nights with casino table games. New York City licenses casino day-trips-to-nowhere (though the gambling does not start til the ship enters international waters). California presents an even more interesting question. The U.S. Supreme Court decision adds an element of irony to the fight surrounding Indian gaming.

In November 1998 California tribes’ initiative to make their casinos legal, Prop. 5, won a smashing victory at the polls. But the Constitution of California specifically requires the State Legislature to “prohibit casinos of the type currently operating in Nevada and New Jersey.” Nevada casinos successfully argued in the California Supreme Court that Prop. 5 is unconstitutional, because it is attempting to authorize Nevada-style casinos.

But if Nevada-style casinos are not allowed in California, why would Nevada casinos have the right to advertise there? Nevada casinos have to find another way to convince the FCC and courts that the federal prohibition on casinos ads is just as unconstitutional in California as it is in Nevada.

The recent U.S. Supreme Court decision is limited, on its face, to casino ads on T.V. and radio stations in states with commercial casinos. But the reasoning behind the High Court’s decision leaves little doubt that stations in non-casino states should be able to broadcast commercials for casinos anywhere in the country. The U.S. Department of Justice came to the same conclusion. It announced that the federal government would no longer defend the federal ban on casino broadcast ads, even in states without casinos.

The federal law was not limited to American casinos. Canadian casinos may now be able to advertise in the U.S. We will probably see the casinos in Niagara and Windsor, Ontario, buying time on New York and Detroit T.V. The case does not mean that all forms of legal gambling will be able to advertise in whatever manner they wish. The Supreme Court threw out a federal statute used to stifle privately-owned casinos. But, six years ago the Court upheld a different part of the same statute, which barred broadcasts of state lottery ads in states without lotteries.

The prohibition on state lottery ads was based on location. The prohibition on casino ads was based on who owned the casino. The Supreme Court ruled that the complete prohibition of “lottery” (meaning gambling) information from the airwaves in 1934 may have made sense then. But there was no way the federal government could justify the present state of the law.

The first small break came in 1950, when Congress exempted fishing contests from the prohibition on gambling ads. State lotteries won a limited right to advertise in 1975, which was later expanded. Bingo and other charity games were exempted in 1988. But the wall fell apart with the Indian Gaming Regulatory Act (“IGRA”). IGRA explicitly allows all authorized Indian gaming to advertise over radio and T.V. This includes casinos owned by tribes but managed by private companies.

It is unreasonable to argue that the right to advertise — free speech — depends upon who owns the advertiser. In fact, the Court held the federal government can not defend its policy on any grounds, such as trying to discourage compulsive gamblers, since the government is actively promoting tribal casinos. Geographic boundaries still will be upheld. It may be unconstitutional for the federal government to ban only privately-owned casino ads. But it can continue to make it a crime for a station in a state without a lottery to broadcast out-of-state lottery commercials.

States also may have some limited power to regulate or even prohibit gambling ads. A state like Utah can completely prohibit all gambling. It may have the same power over in-state advertisements of out-of-state casinos. But no matter what the law allows, Utah will never be able to keep out radio and T.V. waves from other states carrying casino commercials.

[Professor Rose can be reached at his new Web Site: www.GamblingAndTheLaw.com]

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I. Nelson Rose
Professor of Law, Whittier Law School
WebSite: GamblingAndTheLaw.com
Email: rose@sprintmail.com