Dossier D.C.: Gambling Fever

Despite FCC Objections, Casino Advertisers Won A Victory In Court
If you think the cigarette settlements signal the end of the war on vice advertising, think again. The public outcry over tobacco ads may subside in 1998, as advertisers make further concessions. But there is another vice ready to grab the spotlight: gambling.
Indeed, the national debate on gambling is even more intriguing than the tobacco controversy. Consider the quandary: Advocates insist that gambling has helped beleaguered Native American tribes boost their self-image, sense of community and medical care. Opponents counter that gambling is a serious addiction that plagues the working poor, noting that ads target those who are most vulnerable.
Even state-run lottery ads, which are exempt from the federal truth-in-advertising regulations, have been known to obfuscate the average Joe’s chances of winning the jackpot.
As with all suspect vices, the government has historically tried to curb the potential calamities of legal gambling by curtailing its advertising. For instance, a statute enforced by the Federal Communications Commission allows commercial casinos to advertise their restaurant and entertainment venues-not their churches of chance.
The only exception is Nevada, where a federal appeals court recently ruled the FCC statute unconstitutional. Yet no one took Valley Broadcasting v. the U.S. seriously. Nevada has always been a world onto itself, where casino compounds use more electric power than most Third World countries-until now. The government has asked the Supreme Court to review the 9th Circuit’s ruling in this case.
The reason? In December, gambling advertising advocates won a significant federal victory. Ruling in Players International v. the U.S. and the FCC, U.S. District Judge Joseph Rodriguez handed casino advertisers the holiday gift they wanted: the right to advertise their gambling facilities on television and radio.
In Players International, Players casino, headquartered in Atlantic City, N.J., and boasting casinos in Louisiana, Mississippi and Illinois, contended that the statute governing casino gambling ads was unconstitutional, unduly restrictive and arbitrary. Why? Players cited some heavy-hitting exemptions to the law.
For instance, Native American tribes, church bingo nights and state-run lotteries are all permitted to advertise gambling. Players insisted that such legal exceptions put them at a distinct disadvantage in the marketplace.
Despite the FCC’s argument citing the legal and social history of problems associated with gambling, which are compelling, the court granted the plaintiffs summary judgment-in short, the right to advertise.
“This is clearly a major victory and a major signal to those who are betting the odds that the courts will not step in and assert First Amendment rights in controversial areas,” says Dan Jaffe, senior vice president at the Association of National Advertisers. “Those who are trying to restrict alcohol, tobacco and gambling advertising should take a long, hard look at this case.”
“We filed this case right after the Liquor Mart decision,” says Players attorney Steve Persky, former general counsel for the casino operator. Persky is referring to the landmark 1996 U.S. Supreme Court decision in which the court ruled that legal vice products had a right to advertise. (In that landmark case, a chain of liquor stores was allowed to advertise competitive prices against other stores.)
“The high court’s decision in Liquor Mart completely undercuts the validity of the ban on casino gambling. In our view,” adds Persky, “the statute is dead.”
The government, however, isn’t ready to fold its hand. One court ruling does not kill a statute. At best, it chips away at its standing. Officials close to the process say the FCC has yet to decide how to proceed if Players goes ahead and begins to broadcast commercials.
The FCC said in a statement that it does not intend to maintain the statute in casino-rich New Jersey, where the U.S. District Court ruled that the Players case has jurisdiction.
“After consultation with the Department of Justice,” the statement says, “the Commission has decided, consistent with a similar case in the 9th Circuit, Valley Broadcasting v. U.S., that it will not enforce the ban. This policy of non-enforcement applies to any such broadcasts which air from Dec. 16, 1997, the date of the district court’s decision, unless and until such time as that decision is overturned or otherwise altered or stayed.”
Ironically, there are no Players casinos in New Jersey. In addition, the FCC nonenforcement policy there is tricky. There is only one TV station in New Jersey; the stations that broadcast to the N.Y.-N.J. metro area, home to thousands of potential casinogoers, are in New York and Pennsylvania, where the ban is still in force.
Unwilling to lose its competitive edge, Players hopes to adopt a new strategy. Persky says the company wants to find a radio or TV station that will run its ads outside New Jersey as soon as possible. The legal team is also contemplating returning to Judge Rodriguez to see whether he can clarify the legitimacy of the FCC’s response.
No one can predict how many court victories it will take before the FCC reviews the enforcement of the statute governing casino advertising. Like similar First Amendment battles regarding commercial speech, the issue may be decided on a state-by-state basis.
Many in the advertising community openly wonder whether the statute is fair. Should casinos be penalized when other forms of gambling advertise free of legal restraint? Can the federal government separate its obligation to the states and Native Americans from its moral position on a controversial activity?
These and other questions are the onus of President Clinton’s new Gambling Commission, a body that has just been thrust into the heat of battle. The commission, made up of a few casino executives, grassroots gambling foes and a handful of people devoid of an agenda, was created to review the impact of the proliferation of gambling.
It made its first stop in Atlantic City Jan. 20 and 21 to study the social and economic repercussions of gambling on a community.
The casinos will be rolling out the red- carpet treatment, although not everyone on the commission will be testing the arms on the slot machines. Rest assured, the site was chosen with care. Atlantic City, a gambling mecca, seems an ideal place to begin the commission’s odyssey.
The controversy that surrounds advertising gambling will continue. Remember: For every former welfare recipient employed by MGM Grand, there is a hard-luck story of a compulsive gambler. For every casino boomtown, there is a community torn apart and restaurants and businesses cannibalized by a casino. For every story of a responsibly run state lottery, statistics show that states without lotteries often spend more on education than those with them.
Then there is the legacy of infamous lottery ads, such as the one that ran in New York: “We won’t stop until everyone’s a millionaire.”
Today, both advertisers and gambling casinos have a vested interest in creating campaigns that promote gambling as a pleasant leisure activity.