Many commercial-speech battles occur when the government seeks to regulate the advertising of harmful or “vice” products or activities such as tobacco, alcohol or gambling. Many states forbid gambling, while others permit it in the form of a lottery or casino gaming. In order to lessen the negative effects of gambling, some government officials have prohibited or restricted gambling advertisements even in jurisdictions where certain forms of gambling are legal.

Regulators emphasize the debilitating effects of gambling, the tragedies of life that often befall compulsive gamblers. They cite studies showing that gambling causes serious harmful effects on health, safety and public welfare.

But commercial-speech advocates counter that a central tenet of the U.S. Supreme Court’s recent First Amendment jurisprudence is that the First Amendment requires that people decide for themselves what is good and bad. The Court has established that generally the speaker and the audience, rather than the government, should assess the value of speech.

Historically, the government retained the power to ban many types of gambling. Because the Supreme Court did not afford commercial speech substantial First Amendment protection until the mid 1970s, government officials also had virtually unchecked power to prohibit gambling advertisements.

Even after the Court had given commercial speech some protection, including in the areas of pharmacy and attorney ads, a majority of the Court refused to extend protection to gambling ads.

Posadas: no haven for gambling ads
In 1986 the U.S. Supreme Court upheld a Puerto Rico law prohibiting the advertising of casino gaming to Puerto Rican residents in Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico.

Even though Puerto Rico allowed casinos to advertise to prospective tourists, the government decided that it knew what was best for its own citizens. A regulation provided: “Advertisements of the casinos in Puerto Rico are prohibited in the local publicity media addressed to inviting the residents of Puerto Rico to visit the casinos.”

The Court supported the restriction on casino gaming ads to residents of Puerto Rico by a narrow 5-4 vote. “In our view, the greater power to completely ban casino gambling necessarily includes the lesser power to ban advertising,” Justice William Rehnquist wrote for the court. The reasoning went like this: Because the activity of casino gambling could be banned, surely the state could ban advertising of the activity.

Several justices dissented. In colorful language, Justice John Paul Stevens concluded: “The First Amendment surely does not permit Puerto Rico’s frank discrimination among publications, audiences, and words. Nor should sanctions for speech be as unpredictable and haphazardous as the roll of dice in a casino.”

Court abandons reasoning of Posadas
Many free-speech advocates also criticized the reasoning of the Posadas majority. Law professor Phillip Kurland called the ruling “strange” and “pitiful.”

Ten years after Posadas, the Supreme Court rejected much of its reasoning in a liquor-ad case, 44 Liquormart, Inc. v. Rhode Island, Inc. In 44 Liquormart (1996), the Court struck down blanket bans on the advertising of liquor prices. Relying on Posadas, the state of Rhode Island argued that the ad restrictions were valid in part because alcoholic beverages are “vice” products.

Justice Stevens rejected the “vice” exception, writing that "the scope of any ‘vice’ exception to the protection afforded by the First Amendment would be difficult, if not impossible, to define. Almost any product that poses some threat to public health or public morals might reasonably be characterized by a state legislature as relating to ‘vice activity.’”

The Court in 44 Liquormart also rejected the Posadas argument that courts should defer to state legislatures when dealing with ads for products that could conceivably be banned. “[W]e are now persuaded that Posadas erroneously performed the First Amendment analysis,” the opinion said.

“Instead, in keeping with our prior holdings, we conclude that a state legislature does not have the broad discretion to suppress truthful, nonmisleading information for paternalistic purposes that the Posadas majority was willing to tolerate,” the Court wrote.

The high court also rejected the argument in Posadas that the greater power to ban an activity necessarily includes the lesser power to ban advertising about it. It said: “The text of the First Amendment makes clear that the Constitution presumes that attempts to regulate speech are more dangerous than attempts to regulate conduct.”

Restriction on gambling ads struck down
It was only a matter of time after 44 Liquormart that the Supreme Court would strike down a restriction on gambling ads. The case that brought the issue of gambling ads back to the Supreme Court was Greater New Orleans Broadcasting Association, Inc. v. United States (1999).

The case concerned the constitutionality of a federal law that prohibited radio and television broadcasters from accepting advertising from privately operated casino gambling regardless of the station or casino’s location. The statute (18 USC Sect. 1304) prohibited radio and television broadcasting about “any advertisement of or information concerning any lottery, gift enterprise, or similar scheme.”

In 1993, the U.S. Supreme Court had rejected a challenge to the statute filed by a North Carolina broadcaster who wanted to advertise about the Virginia Lottery. The Court upheld the statute in U.S. v. Edge Broadcasting in large part because lotteries were illegal in North Carolina. The statute furthered Congress’ intent, reasoned the Court, of “supporting North Carolina’s laws against gambling.”

However, in Greater New Orleans, the broadcasters were located in Louisiana and Mississippi, states that allowed casino gambling. The government argued that it could still prohibit these broadcasters from airing gambling ads because their signals reached Texas and Arkansas — states that do not allow casino gaming. The government further asserted that its regulation was needed to reduce the social costs of gambling and to assist states that restricted gambling. Building on its decision in 44 Liquormart granting commercial speech more protection, the Supreme Court unanimously ruled in favor of the broadcasters.

The Court noted that the federal government allowed the broadcast of ads for state-owned lotteries when the broadcaster is licensed in a state that allows a lottery and allows the broadcast of Native American-owned casino gaming.

The Court in Greater New Orleans said the law was “so pierced by exemptions and inconsistencies that the Government cannot hope to exonerate it.” The government still had many ways to regulate the negative effects of gambling without restricting speech, the Court added. These included “a prohibition or supervision of gambling on credit, limitations on the use of cash machines on casino premises; controls on admissions; pot or betting limits; location restrictions; and licensing requirements.”

The Court emphasized that "the speaker and the audience, not the Government, should be left to assess the value of accurate and nonmisleading information about lawful conduct.”

Many people believe that gambling should be outlawed. But, if gambling is allowed, then the First Amendment sharply limits the power of government to restrict advertising about a lawful product.

Former Supreme Court Justice Harry Blackmun perhaps said it best in In Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc. (1976): “It is precisely this kind of choice, between the dangers of suppressing information, and the dangers of its misuse if it is freely available, that the First Amendment makes for us.”