Greater New Orleans Broadcasting Assoc. v. U.S. - Oral Argument

Argument of Bruce J. Ennis, Jr.

Chief Justice Rehnquist: We'll hear argument now in Number 98-387, Greater New Orleans Broadcasting Association v. United States.

Mr. Ennis.

Mr. Ennis: Mr. Chief Justice, and may it please the Court:

The Federal scheme at issue here is so riddled with exceptions that it cannot materially advance the Government's asserted interests, and it is insufficiently tailored, because those interests could be advanced more effectively by regulating the underlying conduct.

The asserted interests are helping States that want to protect their residents from exposure to advertising for gambling activities reducing the social costs of gambling, but Federal law now permits advertising promoting Government casinos, Indian casinos, race track and off-track betting to be broadcast from within even States that have not authorized those forms of gambling.

Justice Kennedy: Make the assumption, and it's an assumption I'm sure you would disagree with, that Congress could prohibit advertising for casino gambling, that that's a stable category.

You can tax based on casinos, assume it's a stable category and you could pass a regulation prohibiting all advertising for casino gambling.

Why does the calculus change when Indian casino gambling is exempted?

What's the theoretical and the jurisprudential reason for your objecting to the statute if it has that exemption in it?

Mr. Ennis: Well, first, Justice Kennedy, this statute doesn't even prohibit all advertising for private casinos.

It permits private casinos to broadcast...

Justice Kennedy: This is a hypothetical case.

No casino gambling advertising except for Indian.

Justice Breyer: This is not that case.

Justice Kennedy: Just...

Mr. Ennis: The reason...

Justice Kennedy: I just want to test the reason for the exception.

Mr. Ennis: The reason, Justice Kennedy, is that the Government doesn't assert, and it's certainly not obvious that there is any difference in the social costs between gambling at Government and Indian casinos and gambling at private casinos, particularly when the Federal law allows the Government and Indian casinos to provide the same games operated by the very same private companies.

Chief Justice Rehnquist: But can't the Government weigh on the other side of that equation the fact that casino gambling may be essential to the well-being of Indian tribes as a source of income, whereas it doesn't have to weigh that and say that's very desirable that private casino owners have a similar source of income?

Mr. Ennis: I think not, Chief Justice Rehnquist, for two reasons.

First, here, as in discovery, the fact that there may be social benefits associated with Indian and Government casino gambling has absolutely nothing to do with whether the Federal scheme materially advances the Government's interest in reducing the social costs.

Second, even if there were such benefits, those benefits would not satisfy the Central Hudson test under the fourth prong, because the very same benefits could be obtained by taxing private casinos and giving those revenues to State governments or Indian tribes.

Justice Kennedy: Is there a more basic...

Justice Scalia: Not if you don't have any private casinos in the States where the Indians are located.

I don't know what kind of a scheme you're envisioning.

Mr. Ennis: Well, Justice Scalia, if the private casinos are not in those States, those States are not going to be that concerned about them, but if they are there, they could be taxed by the Federal Government and the proceeds distributed, so the social benefits argument here, as in discovery, isn't sufficient.

In discovery, the Government made a very similar argument.

They argued that it was okay to allow distribution of newspapers but not of commercial handbills because the newspapers had greater benefits, greater social value, and the court rejected...

Justice Kennedy: Is there a more basic First Amendment argument, and that is that Congress cannot grant or withhold the ability to speak based on the identity of the speaker, or are you foreclosed from making that argument because this is a commercial speech case?

Mr. Ennis: Justice Kennedy...

Justice Kennedy: That's what I wanted to explore.

Mr. Ennis: Justice Kennedy, I don't' think we're foreclosed from making that argument because it's a commercial speech case, but I think this case can be decided on much easier and more straightforward grounds, the basic prong three and prong four of Central Hudson.

This...

Justice Scalia: Well, it's not really the identity of the speaker involved here anyway.

They wouldn't allow anybody to advertise gambling on behalf of the private casinos, whether it's the private casinos themselves or just some public interest group that's interested in promoting gambling.

Mr. Ennis: That's correct, Justice Scalia, the ban is a ban on broadcasters, not on the private casinos themselves, but I took Justice Kennedy's question to be that effectively they're banning the private casinos themselves.

Justice Souter: Mr. Ennis, could... I didn't mean to interrupt you, if you're going on with him.

Mr. Ennis: Well...

Justice Souter: I've a question when you're done.

Mr. Ennis: Justice Souter.

Justice Souter: It's a nuts and bolts question.

Would you explain to me what the, just the legal mechanism, the text, the regulation that results in the scheme that you described in the yellow brief in which the private casinos can advertise but there are certain subjects they cannot advertise.

I understand they can't advertise payout ratios.

I guess they can't give photographs of games in progress.

How does that come about?

What's the scheme?

Mr. Ennis: Justice Souter, the answer to that is, is that the statute itself does not prohibit all broadcast advertising even of gambling activities.

It only prohibits broadcast advertising of, quote, games of lot or chance, and the FCC, the implementing agency has interpreted that for more than 12 years as if the advertising does not directly advertise gambling activities, then it's permitted under this Federal scheme.

Now, under that interpretation the FCC has repeatedly ruled that even private casinos can broadcast advertising in every State saying that they are a casino, and that the odds for fun, winning a vacation and Vegas-style excitement are high, but they cannot advertise...

Justice Stevens: It's only if they have the name casino.

Mr. Ennis: Only if they have the name casino, Justice Stevens.

Justice Souter: Yes.

Mr. Ennis: But virtually 98 percent of all casinos have the name casino, and they could easily change their name to come within that requirement.

But what they can't advertise is advertisements showing or depicting the actual, specific games they offer, or their payout percentages.

In that respect they are treated differently from Government and Indian casinos, which can advertise everything.

Justice Souter: So casinos are okay.

Games of chance are not.

Mr. Ennis: Yes, although the FCC itself has acknowledged that even the word casino is itself, quote, promotional of casino games.

Justice Souter: If it's not in quotes, yes.

Justice Kennedy: Yes.

Justice Breyer: Do you know just as a fact, there are about 36 or 37 States that allow casino gambling?

Mr. Ennis: No, Justice Breyer.

Justice Breyer: How many?

Mr. Ennis: There are about 38 States that allow State lotteries.

There are about 12 States that now authorize private casino gaming, and there are... there's casino gaming authorized by Indian tribes in approximately 31 States.

I might...

Justice Breyer: So do the 12 that allow private, are there Indian tribes in each of those, do you know?

Mr. Ennis: I don't know.

There are Indian tribes in many of those States for certain.

We don't know the exact number, but there's... the Government's own lodging indicates that as of 1996 there were 240 separate Indian gaming facilities in this country, and that number is growing rapidly.

Justice Scalia: Mr. Ennis, is casino gaming different from casino gambling?

Mr. Ennis: No.

Justice Scalia: I noticed in your brief you never used the word gambling.

It was always except...

Unidentified Justice: [Laughter]

Justice Scalia: except that you assured us that this law would not reduce compulsive gambling.

I gather there is compulsive gambling and everything else is gaming, is that it?

Unidentified Justice: [Laughter]

Mr. Ennis: No, Justice Scalia.

There's no distinction between gaming and gambling.

Justice Scalia: Well, why don't we use the real word and call it gambling.

Mr. Ennis: I'm happy to use the real word, gambling.

Justice Ginsburg: Mr. Ennis, isn't it the case that in... statutes or regulation they do use the word gaming?

Mr. Ennis: Some statutes use gaming, and some use gambling, but there's no material distinction, and I'm not trying to...

Justice Ginsburg: Because I remember the first time I came across it in a regulation I thought, oh, they're regulating hunting.

Unidentified Justice: [Laughter]

Justice Scalia: I think Congress doesn't really like to authorize gambling, and the Indian Gaming Act has a much better ring to it.

Mr. Ennis: Well, Justice Scalia, that used to be the case, but today Congress not only authorizes an enormous amount of broadcast advertising for gambling activities, but even requires States to permit the gambling itself by Indian tribes.

Federal law not only allows broadcast advertising for Indian casinos in every State, in most States it requires the States to allow the underlying Indian gambling itself.

In fact, Florida is suing the Federal Government right now because of that.

Justice O'Connor: Mr. Ennis, I take it that part of the Government's submission is that the bulk of gambling occurs in private casinos if you view the problem Nationwide, and that the exceptions are only a small part of the overall effect and therefore they say that the limited prohibition of advertising in private casinos does accordingly address the bulk of the problem.

Mr. Ennis: Justice O'Connor, I think that's not quite an accurate description of the Government's position.

As I understand the Government's position, the Government has not asserted a general interest in reducing consumption of gambling or even of all private casino gambling.

The Government doesn't care if the psychologically stable middle class gambler wants to spend his or her money on that form of entertainment.

The Government's concern is with reducing the social costs of gambling, particularly by compulsive gamblers.

Justice O'Connor: Right, but they say that the social costs are really achieved in the private sector, and that's why they have this limited thing.

Mr. Ennis: Well, Justice O'Connor, there is really no reason to believe, and no evidence that compulsive gamblers are more likely to gamble compulsively in private casinos than they are to gamble compulsively in...

Justice O'Connor: Well, I think you miss the point.

They say the bulk of the gambling is in private casinos, so we're hitting the bulk of the problem by this ban.

Justice Scalia: They gave a percentage in their brief, I forget, it was... it was a surprisingly high percentage.

Was it 80 percent is in private casinos?

Mr. Ennis: Well, no, I understand...

Justice Scalia: I thought it was 40 percent.

Mr. Ennis: Now I understand what you're talking about.

The Government cites one study that suggests that private casinos in 1996 may have accounted for 40 percent of all gambling revenues, but if you look...

Justice Scalia: Well, not just casino, but all gambling.

Mr. Ennis: Of all gambling revenues.

Justice Scalia: Which would include State lotteries and everything else.

Mr. Ennis: That's correct, but if you look at that study... it's page 39 of the Christiansen study... the study itself makes clear that casino there was described very broadly, not just the land-based casinos we're talking about, but riverboat cruises, and overseas fantasy boat cruises, all sorts of things.

Moreover, that same study shows that in the previous year...

Justice Stevens: I'm just curious on that point, do you count the, quote, cruises in the Mississippi River and in the Calumet River outside Chicago, are they... which are they?

Are they counted or not in that study?

Mr. Ennis: They are counted.

Every conceivable kind of...

Justice Souter: Some of these cruises, you know, the boats never get 2 feet from the shore.

Mr. Ennis: Every conceivable kind that you could think of...

Justice Stevens: So you would exclude the riverboats on the Mississippi?

Mr. Ennis: No, I'm not trying to exclude them, Justice Stevens.

I'm just trying to point out that that's a very inclusive definition of casino, but the important point is...

Justice Scalia: I don't understand.

Aren't Mississippi riverboat cruise casinos covered by this statute?

Mr. Ennis: Yes, they are.

Justice Scalia: Well then, so why shouldn't they include it.

Justice O'Connor: I don't...

Mr. Ennis: They... I'm not arguing that they should include it, Justice Scalia.

I simply want to point out that same study shows that in the previous year... this is from '95 to '96... there was a 3.3 percent increase in all of that broadly defined private casino gambling, whereas there was a 13.3 percent increase in Indian casino gambling because in 1988 Congress authorized and made Indian casino gambling legal, Indians have now started to build and operate Indian casinos, and rapidly Indian casino gambling is taking over the market.

Justice Kennedy: Suppose private casino gambling, which is the target of the Federal regulation, accounts for 90 percent of the gambling in the United States, hypothetical case.

What would your argument be before us?

Mr. Ennis: Well, my argument would still be the same.

It wouldn't be as dramatic an argument, but it certainly would be the same, because this scheme, since it permits so much other stimulation of gambling activity, cannot materially advance the Government's interests.

We have to look at what the scheme permits, not just the current empirical reality of what's happening under the scheme.

Second, under the fourth prong of Central Hudson, if private casino gambling is such a problem, the Government can easily regulate private casino gambling rather than ban certain kinds of advertising about private casino gambling.

Justice Kennedy: But if we have a 40-percent figure that we're working with hypothetically, it seems to me that that's close enough for the Government's interest to comply with Edge.

Mr. Ennis: Your Honor, I think that Edge is really quite different in two important respects.

First, the prohibition on lottery advertising in Edge was completely consistent with the quite different federalism interests that the Government there asserted, evenhandedly supporting both lottery and antilottery States, and any ineffectiveness of the restriction was the result of geographical happenstance, that the station happened to be close to the State border, not of the conflicting provisions of the scheme itself.

That's not this case.

Here, the Government is not asserting that kind of federalism interest.

Its scheme overrides the federalism interests of States and forces every State to permit broadcast advertising of Government casinos, Indian casinos, and even promotional advertising of private casinos.

Second, Edge involved broadcasting of an activity that would have been illegal in the State where the broadcast originated, thus arguably did not even come within the protections of the commercial speech doctrine to begin with.

That is not this case.

We're only talking here about advertising of lawful activities.

Justice Scalia: Well... no, no.

They're lawful where they're conducted.

They're not lawful in every State where they're advertised, necessarily.

Mr. Ennis: But, Justice Scalia...

Justice Scalia: I mean, you say most of the States, what...

Mr. Ennis: 12 States have authorized private casino gambling.

It's lawful in those 12 States.

Justice Breyer: Yes, but if 38 have it...

Mr. Ennis: But there cannot be any broadcast advertising within those 12 States.

Justice Scalia: But there are 38 States that haven't, and in those States at least this ban does indeed ban something than is unlawful in those States.

Mr. Ennis: On the second point of my distinction of Edge, in those 38 States, that's correct.

It's not correct in the...

Justice Kennedy: May I ask...

Justice Ginsburg: What happens in States...

Justice Stevens: Mr. Ennis, one question first.

We've been talking so much about the exceptions, is it your assumption that as a predicate for the whole argument that the statute would be constitutional if it had no exceptions?

Mr. Ennis: Not at all, Justice Stevens.

The statute at issue in 44 Liquormart did not have a great many exceptions, and it was found unconstitutional under 44... under the Central Hudson test.

Here's why.

The 44 Liquormart involved a prohibition of price advertising, and this Court found... no member of this Court thought it was axiomatic that eliminating a prohibition on price advertising would materially reduce the consumption of alcohol.

The Government tries to distinguish 44 Liquormart on the ground that case involved a restriction on price advertising, not promotional advertising, but both distinctions are incorrect.

This case does involve a prohibition on price advertising.

Justice Scalia: But there was something else going on in that case.

I mean, I think it had the smell of giving existing, maybe mom and pop stores a monopoly, of protecting against fair competition in order that existing sellers could have high prices and not be fiercely competed against by price-cutters, and there's not that problem here.

I can't think of any other reason that the Government would be enacting this prohibition except genuinely to stop... you know, to stop a rush to the gaming tables.

Mr. Ennis: Well, Justice Scalia, let me respond by saying that I don't know what was in the minds of all the justices in 44 Liquormart, but the opinion does indicated two problems with that statute that are equally present here.

Justice Scalia: What opinion are you talking about?

Mr. Ennis: I'm talking about the plurality opinion and the concurring opinion of Justice O'Connor, particularly Justice O'Connor's concurring opinion makes the point, which the plurality also makes, that even if the restriction in 44 Liquormart would have materially advanced the Government's interests, those interests could be achieved more effectively by regulating the underlying conduct, and therefore the scheme violated the fourth prong of Central Hudson.

That's certainly true here.

Look at the possible regulations of conduct.

The Government could regulate private casino gambling by imposing the same Federal regulations it now imposes and considers adequate for Indian casino gaming, or it could impose betting limits in order to reduce the problem of compulsive betters, absolute limits.

It could prohibit gambling on credit, which would address the compulsive gambler problem.

In fact, the Government could even prohibit private casino gambling entirely.

Justice Kennedy: What would you do if two States legalized marijuana and Congress prohibits the advertising of marijuana in any... by any broadcaster in any State?

Mr. Ennis: Your Honor, I think that prohibitions of marijuana and other things would have to be judged under the same statutory framework of the Central Hudson test.

Whether they would survive or not would depend on precisely what the Government's interests are, how many exceptions there are, whether the Government has tried regulating the underlying conduct in other States and can't effectively do so...

Chief Justice Rehnquist: Who decides what the Government's interests are?

I mean, is it up to the court to decide what the Government's interests are, or can we take the word of the Government as to what its interests are, so long as they're not discriminatory in some way?

Mr. Ennis: Chief Justice Rehnquist, this Court's commercial speech cases make clear that not only can the court take the Government's word, it must take the Government's word precisely, and cannot think up other interests that might be stronger interests.

Here, the Government asserts an interest not in reducing the gambling itself, even casino gambling, but in preventing the social harms caused by compulsive gambling.

Chief Justice Rehnquist: So if the Government in its brief had asserted that broad an interest, the case might come out differently, it depends on what the Government says in its brief?

Mr. Ennis: Unfortunately, Chief Justice Rehnquist, I think it does make a difference in how different cases might come out, depending on the precise interest the Government puts forward.

Chief Justice Rehnquist: Then it's the Solicitor General who decides what the Government's interests are, rather than Congress?

Mr. Ennis: Unless Congress has itself specified an interest, that would be so.

In Coors, this Court said that the Government litigation counsel can even posit an interest that is completely different from the interests that Congress initially posited, but whichever it is, the Court must take the interest as the Government has posited it.

Justice Souter: Well, Mr. Ennis, the Court has got to take the interest within the limits that the Government posits it, but the Court does not have to take the interests uncritically, does it?

For example, if this case were being argued on the question of interest rather than on prongs three and four, wouldn't it be open to the court to assess the... let's say the realistic character of the asserted interest by reference to the very exceptions that you're arguing here?

Wouldn't we, in other words, be free to say, it's not plausible to say that the Government's interest is what it is when it allows all these exceptions and in fact go so far as to promote some of them?

Mr. Ennis: Absolutely, Justice Souter.

Chief Justice Rehnquist: Okay.

Mr. Ennis: I didn't mean to suggest this Court can't review the asserted interest.

It just has to start with whatever the asserted interest is.

Justice Ginsburg: Mr. Ennis, do I understand that your argument essentially is, we can take as conceded, or that you demur to... first to the Central Hudson factors that your case rests on the third and fourth, and because you think you have a secure case under those, you don't have to get into what some of the amici urge, that we depart from Central Hudson and elevate commercial speech to a higher notch?

Mr. Ennis: Well, Justice Ginsburg, it is our principal argument that this restriction fails prongs three and four of the Central Hudson test, and that's so plain that the case should and chould be decided on that ground.

But we also argue that this would be an appropriate vehicle to resolve the issue that's been a continuing issue among members of the Court.

In our view, this is an appropriate vehicle for the Court to say unambiguously what it ruled in Virginia Pharmacy Board, and that is that the First Amendment makes for us the choice between paternalistic approaches and opening the channels of communication when we're talking about truthful speech.

Justice Ginsburg: What would that mean, for example, if we were to take that broad a ground for advertising of cigarettes and control of that?

Mr. Ennis: Well, Justice O'Connor, under that approach... excuse me, Justice Ginsburg, under that approach, advertising of cigarettes would be viewed under the same scheme, which it basically be a, this regulation is presumptively unconstitutional, and the Government cannot survive scrutiny unless it meets something equivalent to strict scrutiny.

But there may be compelling justifications for regulating cigarette smoking, and it may be that is the least restrictive way, given the fact that the Government has tried alternative forms of regulating the underlying conduct, and there might be a much more significant underground problem by completely banning cigarette smoking, whereas there's no such underground problem from banning private casinos.

Justice Scalia: Mr. Ennis, why is it that the Government has to go all out, or else not at all?

I mean, in Liquormart, I frankly couldn't see how the Government's scheme was going to do any good at all.

In this case, your argument is quite different.

In this case, your argument is, this, the Government scheme here may protect only 60 percent of the country from gambling, casino gambling advertising.

It will certainly protect those people who are too far away from Government-owned casinos and Indian-owned casinos, but very close to private casinos.

Mr. Ennis: Justice Scalia...

Justice Scalia: And in New Jersey, maybe, so... I don't know.

Are there Indian casinos in New Jersey?

Mr. Ennis: Our argument is different from that.

Our argument is, there's no reason to believe this scheme protects anyone from broadcast advertising for private casinos because in every State Federal law allows private casinos to promote the fact that they are casinos.

Justice Scalia: No, but I...

Mr. Ennis: I'd like to reserve the remainder of my time.

Justice Kennedy: I want you to have your time, but I share Justice Scalia's... in your answer to the marijuana hypothetical you say, well, the Government has to do something else first, and I don't understand it.

Why can't it attack advertising first?

Mr. Ennis: It can't attack advertising first when the basis for the attack is not that the advertising is false or misleading, or overreaching.

That's what this Court basically held in 44 Liquormart.

It must regulate the underlying conduct first, and that's an easy thing to do in this case.

It might be harder in the case of cigarettes.

Justice Scalia: If a State allows prostitution it has to allow advertising of houses of prostitution, is that the position you're espousing?

Mr. Ennis: The question would be whether...

Chief Justice Rehnquist: I think the answer's yes.

Mr. Ennis: The question would be... no, we're not talking about the State.

We're talking about the Federal Government...

Justice Scalia: Well, make it the Federal Government.

Mr. Ennis: and the Federal Government's not authorized...

Justice Scalia: Make it the Federal Government.

Mr. Ennis: The Federal Government... the Federal Government... if the Federal Government wants to authorize prostitution Nation-wide...

Justice Scalia: It has to...

Mr. Ennis: then the Federal Government could not constitutionally restrict advertising for prostitution Nation-wide.

Justice Stevens: I don't see why...

Mr. Ennis: But the Federal Government is certainly not going to take that position, and it doesn't need to.

Thank you.

Argument of Barbara D. Underwood

Chief Justice Rehnquist: Very well, Mr. Ennis.

Ms. Underwood, we'll hear from you.

Mr. Underwood: Private... Mr. Chief Justice, and may it please the Court:

Private casino gambling operations are illegal in 38 States.

Congress supports the policy of those States by prohibiting the casinos that operate legally in the other 12 States from using radio and TV commercials to reach into the homes of people in all 50 States.

Justice Souter: Well, Mr. Ennis says that's not so.

He says they can use those means, but there are just certain details that they can't advertise about.

Do you have a basic dispute about the facts of the way the law is applied.

Mr. Underwood: I'm not sure whether the dispute is about the facts or about the way of characterizing those facts.

The FCC and the statute prohibit broadcast advertising of gambling activities.

When casinos operate also as they claim to do, when institutions operate as hotels and restaurants and nightclubs, the FCC has reasonably taken the position that their advertising of those activities is not covered by the ban.

Now, there are cases that are close to the line, because an enterprise that runs many different sorts of activities and is prohibited from advertising its gambling activities may well try, through its advertising of other activities, to promote...

Justice Stevens: Well, but it isn't even trying, is it?

If the advertising advertises a casino in Las Vegas, which I guess is legal, there isn't any mystery about the fact that's a gambling casino, is it, is there?

Mr. Underwood: Well, it can't actually advertise that it's a casino, although it can avoid that problem by putting the word casino into its name.

Justice Stevens: Which most of them do.

Mr. Underwood: Which many of them do, yes.

The FCC has attempted to draw a line between the advertising of nongambling activities and gambling activities, and that's the way the line has been drawn.

If the word casino is used in connection with too many of these, you know, you have a good chance... too many words connoting chance and luck activities, the FCC has said that in fact constitutes an advertisement for casino gambling, but of course, there are anomalies close to the line.

Justice Stevens: Couldn't one argue that it's somewhat perverse to give free reign to the Las Vegas casinos to advertise the fact that they are casinos, with the implied message that it's gambling, but to prohibit them from giving truthful information about what games are played, what the odds are in their slot machines and all that sort of stuff, which might actually be totally consistent with the Government interest at stake here?

Mr. Underwood: Well, I think this is quite unlike the Liquormart and Coors problem, which is I think the analogy that you are drawing, when advertising is generally allowed and particular items are taken out in order... and the result is to make the market in advertising less accurate, or less honest.

This is a situation where what Congress and the FCC has tried to do is eliminate the broadcast advertising market in gambling activities altogether, and the problem that we're talking about arises because enterprises engage in other activities as well and seek to market those activities, and seek to smuggle in their advertising of casino gambling.

Justice Souter: There is one analogy with 44 Liquormart even on your description.

That is, as Justice Stevens pointed out, as long as the word casino is in the title of the establishment that's doing the advertising, everybody knows that it's casino activity which is being advertised, but one of the things that advertiser cannot do, as I understand it, is advertise his payout ratio.

He can't say, you have better odds, because the payout ratio here is such-and-such, than you do in the Indian casino up the road or across the State border, and in that respect there is an analogy to the price advertising in Liquormart.

This is value advertising which is prohibited.

In Liquormart it was price advertising.

Mr. Underwood: The anomaly only arises, as I said, because there is the ability to connote, to evade the prohibition on advertising, the existence of the gambling enterprise.

Justice Souter: Yes, but that's a fact, and we have to deal with it and, I suppose, if the Government were going to be consistent in its own theory the Government would take the position, the FCC would have taken the position that an establishment that has the word casino in its name may not advertise, because it can't advertise without advertising casinos and everything that connotes, but the Government doesn't take that position.

Mr. Underwood: That would be an even more effective way of serving the Government's interest.

It cannot advertise that it has slot machines, games of chance.

It can attempt to connote that, and that's what creates the problem you're discussing.

Justice Souter: Would you respond to one other point that was raised by Justice Scalia, actually, in the question that he put to Mr. Ennis, and he said there's another feature of 44 Liquormart that's not present here, and that is, there was quite clearly there an advertising ban which put the mom and pop shops and so on at a disadvantage.

It interfered with the competition within the market for that kind of liquor.

And isn't something very much like that present here, because in fact the way the scheme works, all noncasino forms of gambling that are authorized by States and charities can say what they want to say, the Indian casinos which are promoted by the Government can apparently say what they want to say, so that the onus falls entirely on the privately owned casinos, and isn't that, in effect, an interference with competition in the gambling market?

Mr. Underwood: No.

It is principally a decision by Congress to... Congress identified a particular problem, the problem of private casino gambling, which is partly a Federal interest because the States have independently, 38 of the States have identified that as a form of gambling.

Justice Souter: Why is the problem in private casinos different from the problem in Indian casinos?

I mean, the only argument that I heard in the Government's brief was, well, the Indian casinos tend to be off in the boondocks somewhere, and people can't get to them easily, and so compulsive gamblers don't resort to them that well.

Well, they may be out in the boondocks, but I don't see that goes to the Government's interest.

I don't see why that suggests that compulsive gambling isn't going on in the casinos that the Government promotes and allows to advertise as readily as those which are subject to restriction.

Mr. Underwood: A more important distinction, Justice Souter, is that the...

Justice Souter: Well, is that... before you get to the more important distinction, how about the one that I was...

Unidentified Justice: [Laughter]

Justice Souter: attacking?

Is my criticism fair?

Mr. Underwood: I don't know that there's any evidence about the different incidence of compulsive gambling at the different casinos.

Congress chose to promote Indian casinos.

It was a... it's a controversial policy.

It was a decision to try and promote the economic development of Indian tribes, which had been... which is and has been quite an intractable problem.

Justice Breyer: Do you know how many of the 12 States there are Indian casinos, say, either in the State or near the State so it might attract a lot of customers?

Is it fair to assume that most of them...

Mr. Underwood: No, it is not fair to assume that most of them... it's very variable.

The 12...

Justice Breyer: Well, there are 240 across the country, or something, so I've been assuming that probably a lot of these are in these States, and if you say it's not so, you'd better...

Mr. Underwood: It's not so to the best of my... it's not so in New Jersey, Indiana, Illinois, Missouri...

Justice O'Connor: In how many States do we find Indian gambling casinos today?

Mr. Underwood: A large number of States have Indian gambling.

Justice Breyer: Well, anyway, the point would be, I guess...

Mr. Underwood: 21.

Justice O'Connor: 21.

Justice Breyer: I mean, this is sort of... I mean, suppose, for example, the Government were to say marshmallows are bad for your health, we don't want anybody advertising them but for the Scouts.

I mean, the object there, I guess, would be to get revenue to the Scouts.

That's a good purpose.

But I mean, is because we'd like money to go to the Indian tribes a justification for stopping them from advertising what is a lawful activity in those States?

I mean, they... the consumers get the advertising.

The consumers read all about it.

Go to the casino, win a million.

Mr. Underwood: There is also with respect to Indians not just that they are a worthy recipient of economic... of charity, but... or of economic development, but that they are... they have a special relationship to the Federal Government, like the States themselves...

Justice Scalia: But the...

Mr. Underwood: as sovereigns, whose choices are... yes.

Justice Breyer: Yes, of course, that's true, but my point would be, is it a justification to stop the advertising of a lawful activity where in fact the people in the State will get the message, go gamble, so your only justification is, you'd like the money to go to a group that's a very worthy group.

Mr. Underwood: Well, it's not the only justification, Justice Breyer.

In fact, private casino gambling, we've been talking about numbers here, it represents 40 percent of the total gambling market.

It represents more than 70 percent of the casino gambling market.

That is to say, the Indian tribe gambling is, and the charitable gambling, and the State gambling, is a very small part of the market, and Congress...

Justice Ginsburg: Well...

Justice Kennedy: Ms. Underwood...

but if we could just stay with Justice Breyer's question for 1 minute, is it permissible for Congress to favor a particular interest, a particular segment of the population, a particular group by its speech statutes?

I mean, of course Congress can give subventions to Indian tribes in many ways and support their gambling.

Can it use speech as an element of political largesse?

Can it use speech as a reward to one group and not to another?

Isn't that what Mr. Ennis is arguing here that Congress can't do, or am I missing the theory?

Mr. Underwood: Well, that would be one of the things he's arguing here, and I wouldn't want to assent to that proposition as a general matter.

The distinction that's being drawn here, though, is between governmental entities on the one hand and private enterprise on the other.

Congress has decided to permit Indian tribes, which are sovereigns and which are in need of economic development both, to engage in an activity which it has otherwise chosen to discourage both...

Justice Scalia: May I ask...

Justice Stevens: I suppose...

on your distinction between governmental and private on these, supposing we had a State statute instead of a Federal statute, and a State wanted to prohibit advertising of privately owned casinos but allow advertising of its own casinos... say Illinois had operated such a casino and they wouldn't allow advertising... would a state statute prohibiting all advertising, newspaper, handbills and everything, a private casino's protecting its own... be constitutional in your view?

Mr. Underwood: Well, there would be a... I'm not sure that it would.

You're now interjecting a ban on all advertising...

Justice Scalia: Right.

Mr. Underwood: and I would like to point out that this is a limited prohibition.

It doesn't prohibit all advertising.

It prohibits the most intrusive kind.

It prohibits radio and TV advertising, and that is narrowly tailored to these interests, to the interests of the State...

Justice Stevens: But it allows newspaper, magazine and all the other kinds of advertising without any limitation.

Is that not right?

Mr. Underwood: No.

Related statutes here prohibit interstate transportation and mailing of advertisements.

What's left open to the private casinos is to advertise by billboards and handbills and circulars and local newspaper supplements and matters that don't travel...

Justice Stevens: Go through the mails, I see.

Justice Scalia: Ms. Underwood, is it the case that all Indian casinos are remote?

Mr. Underwood: No.

It's the case that most of them are.

Well, I'm not sure of the answer to that.

Justice O'Connor: Certainly in my home State of Arizona the casinos are right there in the largest urban center of the State, are they not?

Mr. Underwood: Yes, but I would like to...

Justice Scalia: See, if they had been remote, I was going to ask you whether you've noted any difference in the class of customers at Las Vegas and Atlantic City.

I mean, I don't know that buses of elderly people from...

Unidentified Justice: [Laughter]

Justice Scalia: retirement homes travel out to Las Vegas, and they certainly do to Atlantic City, and that might have been a justification, but if you think the Indians are in Atlantic City as well, then I guess we can't use that, can we?

Mr. Underwood: There is no Indian gambling in New Jersey, if that was...

Justice Stevens: No, but there is some in Connecticut.

Unidentified Justice: [Laughter]

Justice Breyer: I mean, don't they take buses up to Connecticut?

I mean, is it any further from northern New Jersey to go to Atlantic City than it is to get on the bus, and they go across Long Island, take the ferry, go to the big casino that I think there's near... isn't there one near New London somewhere?

Mr. Underwood: I think it would be surprising if Congress could not decide to promote a limited amount of casino gambling for the benefit of Indian tribes, and that decision barred it from otherwise pursuing its two substantial State interests here, that is to say, furthering the policies of those States, and there are numerous States that have no Indian gambling and no private casino gambling.

Justice Ginsburg: What I... as I read the statute, the statute itself doesn't refer to casinos.

You said Congress was concerned with casinos, but the statute doesn't even refer to casinos.

Mr. Underwood: Well, there's an interesting... the hole in the middle of the donut can be found in the legislative history.

What happened in 1988 was that Congress was told that private... that charities and local fire departments who wanted to hold raffles, and car dealers and travel agencies who wanted to hold the occasional raffle, were being hurt by their inability to use local radio and TV.

The first bill to solve that problem was to lift the ban on broadcast advertising for all lawful gambling, the House refused to pass that bill, and what it did was, it added an amendment expressly prohibiting broadcast advertising by private casinos, and it defined them as the profit businesses that engage in roulette, black jack, it listed slot machines and so forth.

That's the definition that Congress... that the House chose.

It went to the Senate, and the Senate flipped the statute to have hat everyone agrees is the same effect, but instead of having just a ban for private casinos, what it has is a general ban and a list of exceptions for everything except private casinos, but it's understood by all here that has precisely the same effect, that in 1988 Congress did target private casino gambling as the object of this broadcast ban.

Chief Justice Rehnquist: Ms. Underwood, am I right in thinking that if a State wishes to ban gambling entirely, then no Indian casino can be set up in that State?

Mr. Underwood: That's correct.

The authority of the Indians to gamble depends on a compact.

The obligation to negotiate for a compact depends on the State's permitting some forms of gambling.

However...

Justice Ginsburg: But that form of gambling could include charitable organizations that have gambling as fundraisers.

Mr. Underwood: That's correct, and have occasional gambling and therefore do not pose nearly the same sort of hazards as the standing operations that private casino gambling is.

On the broadcast advertising point, because this Court has previously recognized that broadcast, the broadcast medium poses especial problems...

Justice Scalia: Excuse me, before you get off that last point, don't you find that poses sort of a problem for Congress?

I mean, Congress could have met the problem it was concerned with by simply not requiring States, in order to keep out Indian gambling, in order to, you know, to prevent bingo games, but Congress says unless you go after bingo games... what about, you know, Monday night poker?

Is that... do you have to ban that too in order to keep out casinos?

Mr. Underwood: I'm not familiar with the details.

Justice Breyer: Well, that's pretty extreme.

Justice Scalia: I mean...

Mr. Underwood: What the Indians said...

Justice Scalia: if Congress is really concerned about casino gambling, I mean, to put such a strict limitation on the States, the only way you can keep it out of your State is to ban all forms of games of chance...

Mr. Underwood: It's not Monday night poker.

In fact, the statute... the Indian gaming statute divides gaming into three categories, and it's... the class 3 gambling, which encompasses casino gambling, it also encompasses, though, the occasional casino night as well as the standing casino, and that's where this has it.

Chief Justice Rehnquist: I see.

Justice Ginsburg: Okay.

What else besides casinos are in that class 3?

Mr. Underwood: It's slot machines.

It's...

Justice Scalia: But not bingo, and you're saying it's just roulette wheels, and...

Mr. Underwood: Roulette wheels, yes.

Bingo is class 2 gaming.

Chief Justice Rehnquist: I would think so.

How about race tracks?

Mr. Underwood: That's separately regulated altogether.

That's not...

Chief Justice Rehnquist: Not in any of these classes.

Mr. Underwood: That's correct.

Justice Stevens: There's no ban on advertising for race tracks, is there?

Mr. Underwood: Ban on advertising for the race tracks.

No.

Justice Ginsburg: Or jai alai, or dog races?

Mr. Underwood: Those activities have been taken... actually, have been for a long time regarded as not games of chance because there's said to be some skill involved in assessing the...

[Laughter]

Justice Scalia: Well, you can only lose, what, 12 times a night, as opposed...

Unidentified Justice: [Laughter]

Justice Scalia: As opposed to roulette.

Mr. Underwood: Well, I think that's an important distinction.

Both the harm to compulsive or pathological gamblers, the appeal to them, and the devastating social costs that are afflicted are incident to the continuous play feature of...

Justice Stevens: Well, of course they're worse, but it is also a serious problem in lotteries, isn't it?

There are a lot of compulsive people who gamble with the lotteries.

Mr. Underwood: That has been a problem with lotteries.

It is not... Congress was entitled, as the States themselves decided that it wasn't the same order of problem as private casino gambling with slot machines.

Justice Kennedy: Mr. Ennis argued, I think it's a fair characterization of his argument, that Congress has to attack the root of the problem before it prohibits speech.

If that's a fair characterization of his argument, is there authority for or against that proposition in our cases?

Mr. Underwood: Well, some justices, some opinions have said so.

I don't believe the Court has so held, and I would say that Edge is the best authority for the proposition that, particularly where the different choices of different States are involved and are to be respected, Congress is peculiarly unable to attack the problem by a Nation-wide regulations... it would, for instance, ban private casinos or regulate it... when one of its objectives is in fact to permit the States, the minority States to make a different choice.

But its effort is to protect the choice of the 38 States that prohibit this activity as well as to pursue its own overarching concern about the social costs of gambling, and Edge did not require Congress to seek some other way of serving that objective before passing the statute that it passed there, which is related to this one, but involves different treatment of State lottery advertising as distinguished from private casino gambling.

Justice Scalia: I suppose if the rule were expanded to prohibit casinos from even saying their name, or to prohibit casinos from advertising their entertainment... although I guess what they say is, Las Vegas-type entertainment.

That gets the message across.

But if it were expanded that way to be more effective, as Mr. Ennis would like, I suppose you'd be up here defending against a different attack, namely that the prohibition was overbroad, broader than was necessary to achieve the objective that the Government desired.

Mr. Underwood: Well, that's correct.

The statute is... has consistently been attacked in this litigation from both directions on the ground that it's too broad to be constitutional, or too narrow to be constitutional, and...

Justice Ginsburg: Ms. Underwood, would you just explain the linkage between the Government's purpose, to get a handle on the addictive gambler, and this prohibition, because do we... it seemed to me that this prohibition is effective against the casual gambler, the person who's going to be entertained, but the true drunk is going to find the bottle, and if the bottle is there, whether it's the Indian reservation or whatever, so I don't see the connection between this kind of prohibition of some advertising but not other, and the addict.

Mr. Underwood: Well, that involves a lot of assumptions.

I mean, any attempt to deal with this problem involves some assumptions about human behavior.

If broadcast advertising is intrusive, which seems to be... and reaches very widely, if it... it has a particular ability to stimulate demand, to remind people that this is what they want to do, to induce in them the desire to do it, to create, to help create the addiction, then it's a reasonable way of attacking the problem.

A TV commercial...

Justice Ginsburg: So you're saying luring the newcomer, the one that is not yet addicted but may be.

Mr. Underwood: Yes.

A TV commercial showing a slot machine pouring out money with lots of people rejoicing and saying they don't have to work any more is a lot more seductive...

Chief Justice Rehnquist: Well, TV commercials reach a much broader kind of audience than newspaper advertisements just because many fewer people read newspapers than watch TV, isn't that so?

Mr. Underwood: That's so, yes, and, of course, broadcast advertising, which has this broad interstate reach, is completely beyond the regulatory power of the States, so to the extent this is an effort in cooperative federalism, the Federal Government has attacked this problem where it has the unique authority, without intruding excessively on the choices of the States that have made a different choice.

There is no reason to interpret the Constitution to require Congress to outlaw this controversial practice altogether rather than seeking to keep it off the airways and to reduce demand, and especially to reduce demand among those impulse buyers who respond to broadcast advertising.

Justice Scalia: Senator Kennedy suggests that maybe you cannot favor one minority group... I'm sorry, Justice Kennedy.

Unidentified Justice: [Laughter]

Justice Scalia: I have a lifetime job.

Unidentified Justice: [Laughter]

Justice Scalia: It's a long time ago.

I... he suggests that maybe you can't favor a minority group by restricting speech, and that is in a way what's going on here, exempting them from a prohibition otherwise, namely the State... Indian, Indian casinos.

Is that proposition correct?

I'm trying to think of any other area where one minority is permitted to speak and others aren't.

Mr. Underwood: Well, it seems to me the question should be no different from the question whether Congress could decide to outlaw private casino gambling altogether but permit Indian tribes to engage in it.

Justice Souter: Well, I don't know why the question should be no different.

I mean, speech is different.

Mr. Underwood: Yes, but this is commercial speech.

This is speech that is very close to an act.

This is like an offer to sell services, and...

Justice Souter: But your argument is commercial speech is not different from nonspeech Commerce Clause regulation, and that's... that clearly is not so.

Mr. Underwood: No, I'm not... I didn't mean to argue that.

What I meant to argue is that it has something in common with.

The reason it doesn't have... the reason it has been treated by this Court as a separate category is that it partakes of some of the qualities of...

Justice Breyer: Is there some record evidence in this case or in the companion, the other cases that would suggest that if you're in a State with nearby Indian casinos, and gambling is legal, and you're hit with a number of advertisements, come to our Indian casino but not come to our private casino, that makes some difference in respect to compulsive gamblers?

I mean, why doesn't Indian casino gambling advertising have precisely the same effect...

Mr. Underwood: Even if...

Justice Breyer: as private casino advertising in respect to the compulsive gambler rationale?

Mr. Underwood: It may.

It may, but...

Justice Breyer: Well, once it does, then you're really back to the only justification being that it's better to have the money go to the Indians than it is to have it go to private people, and that's why it seems to me to the same, it's better to have the money go to the Boy Scouts than it is to have it go to the grocery stores...

Mr. Underwood: Well, except that the...

Justice Breyer: and that's bothering me.

Mr. Underwood: The Indians I think stand on a different footing of this discussion from grocery stores or Boy Scouts.

Justice Breyer: Of course, in respect to economic regulation the answer would be all the things you mentioned, but this is speech regulation, and it is at least have to be proportionate.

Mr. Underwood: Well, it...

Justice Breyer: So proportionality in respect to the restriction, well, is this a justification in... on that kind of a test?

Mr. Underwood: Well, it is a restriction, a speech restriction that follows a conduct restriction.

That is to say, just as those States which conduct lotteries may advertise them, so may those Indian tribes which conduct lotteries may advertise them, and Congress was entitled to distinguish those activities of...

Justice Ginsburg: And of course...

Justice O'Connor: And maybe that...

aren't some of the Indian gambling casinos in fact being operated by private casino interests such as Harrah's, or something like that, that just pay over a percentage to the tribe?

Isn't that the situation?

Mr. Underwood: Yes, that is the situation in some cases.

Justice Scalia: But the money goes to the tribe.

Mr. Underwood: Yes it does.

Justice Scalia: Maybe the answer to Justice Kennedy's question is that a minority is not being favored in allowing them to say things which others cannot say.

As I understand this law, nobody can advertise private casinos, right?

Mr. Underwood: That's correct, and that...

Justice Scalia: I'm not allowed to, Indians aren't allowed to, nobody is allowed to advertise private casinos.

Mr. Underwood: That's correct.

Justice Scalia: And everybody is allowed to advertise Indian casinos.

If the private casinos want to help out the Indians...

Unidentified Justice: [Laughter]

Justice Stevens: they can advertise Indian casinos, right?

Mr. Underwood: That's right, and that's why this is really...

Justice Scalia: It's a substantive restriction...

Mr. Underwood: a substantive...

Justice Scalia: rather than a speech...

Justice Souter: And rich and poor can sleep under the bridges.

Mr. Underwood: That's true.

[Laughter]

Justice Breyer: Nobody can advertise marshmallows.

Anybody can advertise Boy Scout marshmallows.

Mr. Underwood: Well, the question there would be whether that...

[Laughter]

distinction is permissible or not.

Justice Scalia: But it's a question of whether the substantive distinction is permissible.

It's not that you're allowing some people to say things which other people can't say.

Mr. Underwood: That's correct.

There's nothing inconsistent about the fact that Congress permits churches, civic groups, and fire departments to use the airwaves to promote the bingo games and raffles they use for fundraising.

That simply doesn't pose the same kind of problem that the standing private casino poses.

Justice Stevens: Let me ask you one last question, if you're... you've just about run out of your argument.

Supposing a State prohibits the sale of liquor on Sundays.

Could it prohibit advertising of the fact that a neighboring State has liquor stores open on Sundays?

Mr. Underwood: Could the State do that?

Justice Stevens: Say Illinois prohibits the sale of liquor on Sunday, but Indiana does not, could Illinois prohibit Indiana advertise... from advertising in the Chicago radio stations and Chicago newspapers that their stores are open?

Mr. Underwood: I think probably not, particularly if you're talking about all advertising, but if there were wide variation among the States on this issue and Congress chose to enforce that variation through a ban on broadcast advertising that left newspapers and other methods open, I think it could do that.

Rebuttal of Bruce J. Ennis, Jr.

Chief Justice Rehnquist: Thank you, Ms. Underwood.

Mr. Ennis, you have 3 minutes remaining.

Mr. Ennis: Mr. Chief Justice, I hope I have time to make three brief points.

The first is in response to a question raised by Justice Ginsburg, and that is that the word casino clearly signals to compulsive gamblers and noncompulsive gamblers alike that gambling activity takes place.

This is remarkably like the Coors case in which the Federal scheme prohibited the hosting of alcohol content on labels but permitted...

Justice Stevens: Yes, but Mr. Ennis, you're not going to convince me that you'd like the statute better if it did not allow the use of the word casino.

Mr. Ennis: Not that I'd like it better, Justice Stevens, but that...

Justice Breyer: Would it be okay?

Justice Scalia: Would it be constitutional if they didn't allow them to use the word casino...

Mr. Ennis: No, for other reasons, but because...

Justice Scalia: There's no way out of this box.

Mr. Ennis: But because this...

[Laughter]

Not under this scheme.

Because in Coors the Court said, allowing the use of malt liquor signals high alcohol content, and that means it cannot materially advance the Government's interest, that's equally true with respect to the word casino.

Second, many... many Indian casinos, and a growing number, are located close to population centers.

Harrah's operates an Indian casino in North Carolina, the Edge state, which it advertises is within a day's drive of half the population of this country.

Foxwoods, in Connecticut, is within 2 hours from both New York City and Boston, closer than Atlantic City.

There are at least 22 Indian casinos near Sacramento, 13 near Phoenix, 6 near Portland, Oregon, and growing every day.

Third, this scheme cannot be justified on the basis of the special characteristics of broadcast because the scheme permits broadcast advertising in every State of Government casinos, Indian casinos, and even private casinos when they say, I'm a casino.

Furthermore, this scheme does prohibit print advertising that uses U.S. mails, and Congress clearly didn't think that broadcast was worse than print, because violations of the print advertising ban, you go to jail for 2 years for each offense, violation of the broadcast ban, you go to jail for 1 year for each offense.

Justice Scalia: Mr. Ennis, how many States have Government casinos?

Mr. Ennis: Four, as of this moment, Justice Scalia, but that's a very recent trend, just in the last year or so, and that's growing as well.

Justice Scalia, let me also point out, your off-track betting, this scheme permits broadcast advertising not just for race track betting but for off-track simulcast betting, so that people can gamble every day, day-long, and broadcast advertising is unlimited.

Finally, I just want to answer one question that was asked, and that is, in both Coors and 44 Liquormart this Court ruled that the availability of nonspeech regulations meant that the scheme could not pass the Central Hudson test.

That's this case.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Ennis.

The case is submitted.