At the end of 1998, the fate of gambling advertisement restrictions remained very much undetermined. A congressional ban on Internet gambling advertisement restrictions failed to pass during the last Congress. However, the legislation is likely to be reintroduced during the next session. A split in the circuits has developed over the constitutionality of a federal ban on broadcast advertisements for casino gambling. The Supreme Court is poised to consider the issue.

Kyl Bill

   During the 105th Congress, Sen. Jon Kyl (R-Ariz.) and Rep. Bill McCollum (R-Fla.) introduced bills that would prohibit gambling on the Internet. Sen. Kyl1s bill threatened First Amendment freedoms because it proposed to burden Internet advertising with onerous restrictions. Specifically, Sen. Kyl1s bill would have outlawed "use of the Internet ... to send, receive, or invite information assisting in the placing of a bet or wager." As the Justice Department stated in a letter to Sen. Patrick Leahy (D-Vt.), the bill1s language could also have been read "to prohibit Internet advertising of land-based casinos that are entirely legal or to prohibit the lawful dissemination of gambling-related information." Sen. Kyl agreed to amend his bill to protect First Amendment rights by defining the term "bet or wager" as excluding "participation in a game or contest, otherwise lawful under applicable Federal or State law." Although the Kyl bill failed to pass during the last Congress, Sen. Kyl has vowed to reintroduce his bill during the next session.

   To the best of our knowledge, there are presently no federal enforcement actions against advertising of on-line gambling. If the Kyl bill were to pass during the next Congress, there would no longer be a constitutional right to this kind of advertising because there is no constitutional right to advertise an illegal activity. Currently, there is no movement in Congress to ban advertising of on-line gambling. Sen. Kyl stated on the floor of the Senate that it was not his intent to ban advertising, but only to ban the underlying activity of on-line gambling.

Court Cases

   In Greater New Orleans Broadcasting Association v. United States, 149 F.3d 334 (5th Cir. 1998), petition for cert. filed, 67 U.S.L.W. 3191 (U.S. Sept. 2, 1998) (No. 98-387), the U.S. Court of Appeals for the Fifth Circuit parted company with an earlier Ninth Circuit decision by holding that 18 U.S.C. Section 1304, a federal statute prohibiting the broadcast of radio and television advertisements for casino gambling, was a valid restriction on commercial speech. The statute allows many exceptions to the ban. Promoters of state-run lotteries, fishing contests, not-for-profit lotteries, lotteries conducted as promotional activities, and gambling casinos operated by Native American tribes are free to advertise via radio and television. Section 1304 prohibits radio and television advertisements for casino gambling only in states that do not have casino gambling.

   Greater New Orleans held that the restriction did not violate the First Amendment. Writing the opinion for the majority after remand from the Supreme Court, Judge Edith Jones found that Section 1304 directly advances the government1s substantial interest in stemming the negative social impact of gambling and that Section 1304 is no more extensive than necessary to serve the government1s interest.

   Greater New Orleans conflicts with Valley Broadcasting Company v. United States, 107 F.3d 1328 (9th Cir. 1997), cert. denied, 118 S. Ct. 1050 (1998). This Ninth Circuit decision struck down, on First Amendment grounds, the federal statute upheld in Greater New Orleans. Writing the opinion for a unanimous court, Judge O1Scannlain found that the government1s interests in reducing public participation in commercial lotteries and in protecting states that choose not to permit casino gambling within their borders are substantial. Nonetheless, the court struck down the ban on the ground that the fit between the restriction and the government1s interests was not a reasonable one. As the opinion states, "because Section 1304 permits the advertising of commercial lotteries by not-for-profit organizations, governmental organizations, and Indian Tribes, it is impossible for it materially to discourage public participation in commercial lotteries." Valley Broadcasting, 107 F.3d at 1335.

   A federal district court in New Jersey has sided with the Ninth Circuit in striking down Section 1304. The district court held the government had not produced the required evidentiary support to bolster its claim that Section 1304 achieved its purported goals. Players International, Inc. v. United States, 988 F. Supp. 497, 506 (D.N.J. 1997). The Clinton Administration asked the Supreme Court to grant fast-track review of Players International, but the Supreme Court declined. 67 U.S.L.W. 3337 (U.S. Jan. 11, 1999) (No. 98-721). On Jan. 15, 1999, the Supreme Court granted certiorari in Greater New Orleans.