DATE: AUGUST 5, 1997
SUBJECT: ADVERTISEMENT OF INDIAN GAMING CONDUCTED PURSUANT TO THE TRIBAL-STATE COMPACT
REQUESTED BY: CHARLES W. HIPPS, DISTRICT ATTORNEY THIRTIETH PROSECUTORIAL DISTRICT
QUESTION: DOES N.C.G.S. § 14-299 OPERATE TO PROHIBIT BILLBOARD ADVERTISEMENTS OF GAMING OFFERED BY THE EASTERN BAND OF CHEROKEE INDIANS PURSUANT TO THE TRIBAL-STATE COMPACT?
CONCLUSION: NO.
The Eastern Band of Cherokee Indians is advertising games conducted on the tribal reservation pursuant to the Tribal-State Compact ("Compact") of August 11, 1994, between the Eastern Band of Cherokee Indians and the State of North Carolina. The Compact provides that certain gaming may be conducted by the Eastern Band of Cherokee Indians under the Indian Gaming Regulatory Act ("IGRA"). The Compact allows raffles and video games permitted by the laws of the State to be conducted at a single gaming facility on the tribal reservation.
N.C.G.S. § 14-299, entitled, "Property exhibited by gamblers to be seized; disposition of same", provides in pertinent part as follows:
All moneys or other property or thing of value exhibited for the purpose of alluring persons to bet on any game, or used in the conduct of any such game . . . shall be liable to be seized by any court of competent jurisdiction or by any person acting under its warrant.
The clear intent of this statute is to prohibit property from being used for the purpose of enticing persons to gamble illegally.
Advertisements of the games offered pursuant to the Compact do not fall within the proscription of N.C.G.S. § 14-299 inasmuch as the Compact allows the Eastern Band of Cherokee Indians to engage only in gaming (raffles and video games involving the use of skill or dexterity) that is specifically permitted by the laws of the State. Since the Compact itself provides for only the operation of games that are legal under North Carolina law, the use of billboard advertising of such legal games would not qualify as exhibiting property for the purpose of alluring people to gamble illegally.
An interpretation that N.C.G.S. § 14-299 criminalizes the advertisement of legal games conducted pursuant to the Compact would also be inconsistent with the First Amendment of the United States Constitution. "The First Amendment . . . protects commercial speech from unwarranted governmental regulation." Central Hudson Gas and Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 561 (1980). In Central Hudson, the United States Supreme Court articulated a four-part test that applies to First Amendment protection of commercial speech. For commercial speech to come under the protection of the First Amendment, it must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.
Id. at 566.
Since the advertisements at issue here relate to lawful gaming activity and there is no evidence that they are misleading, the first prong of the Central Hudson test is satisfied. The critical analysis therefore becomes whether the State has a substantial interest in restricting billboard advertising of lawful Indian gaming.
The State encounters significant difficulties in asserting such an interest. The Compact itself provides that "the Eastern Band of Cherokee Indians and the State of North Carolina have mutually agreed that the conduct of Class III gaming under the terms and conditions [of the Compact] will benefit the Eastern Band of Cherokee Indians and protect the citizens of the Eastern Band of Cherokee Indians and the State of North Carolina." Furthermore, even the federal statute banning broadcast advertisement of casino gambling, 18 U.S.C. § 1304, contains an exception for casinos operated by Indian tribes pursuant to the terms of IGRA. Specifically, 47
C.F.R. § 73.1211(c)(3) excludes "[a]ny gaming conducted by an Indian Tribe pursuant to the Indian Gaming Regulatory Act" from the coverage of 18 U.S.C. § 1304. This exception permits Indian tribes to advertise both in states which allow casino advertising and in those which forbid it. Thus, the structure of the Compact itself, providing for games authorized by North Carolina law, and the federal exception tending to preempt restrictions on advertising by Indian tribes operating games pursuant to IGRA, seriously undermine an assertion of any substantial governmental interest.
This undermining does not overlook the fact that the State of North Carolina strictly regulates and suppresses gambling activity. The harms associated with illegal gambling are real, and the State’s interest in the health, safety, and welfare of its citizens does constitute a substantial government interest. Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, 478 U.S. 328 (1986). However, the State may not ban commercial speech simply because the State may constitutionally prohibit the underlying activity. 44 Liquormart, Inc. v. Rhode Island, 517 U.S. ___, 116 S.Ct. 1495, 134 L.Ed.2d 711 (1996).
In Liquormart, the Supreme Court unanimously struck down two Rhode Island statutes which banned advertisements of retail liquor prices anywhere other than at the place of sale. "As is evident, any conclusion that elimination of the ban would significantly increase alcohol consumption would require us to engage in the sort of ‘speculation or conjecture’ that is an unacceptable means of demonstrating that a restriction on commercial speech directly advances the State’s asserted interest." Id. at ___, 116 S.Ct. at 1510, 134 L.Ed.2d at 730, quoting Edenfield
v. Fane, 507 U.S. 761, 770 (1993). Based on this same reasoning, it is improper to speculate that the commercial speech prohibitions inherent in N.C.G.S. § 14-299 reduce any alleged harms of casino gaming. This conclusion therefore follows: N.C.G.S. § 14-299 may not restrict commercial speech which advertises Indian gaming.
This conclusion does not conflict with United States v. Edge Broadcasting Co., 509 U.S. 418 (1993), which upheld against First Amendment challenge the validity of 18 U.S.C. § 1304 to the extent that it prohibited broadcast advertising of state lotteries in states that did not allow lotteries but permitted advertising in states where lotteries were authorized. The Liquormart Court states the distinction: "The statute was designed to regulate advertising about an activity that had been deemed illegal in the jurisdiction in which the broadcaster was located. . . . Here, by contrast, the commercial speech ban targets information about entirely lawful behavior." Liquormart, 517 U.S. at ___, 116 S.Ct. at 1511, 134 L.Ed.2d at 731. So it is here, where the commercial speech ban in question targets lawful Indian gaming.
The distinction is also apparent in applying the Central Hudson test. In Edge Broadcasting, the Court stated the question as whether the "regulation’s general application to . . . all other radio and television stations in North Carolina and countrywide" directly advances the governmental interest of "balancing the interests of lottery and nonlottery States." Edge Broadcasting, 509 U.S. at 427-28. In finding a direct advancement of this governmental interest, the Court ruled that even as applied to Edge only, the regulation was not ineffective, because by keeping lottery ads off Edge’s station, 127,000 people, eleven percent of all radio listeners in the nine North Carolina counties the station reached, were not exposed to lottery advertisements. This result gave more than speculative support to North Carolina’s anti-lottery policy; there was a reasonable "fit between the restriction and the government interest" in protecting state choice on gambling issues. Id. at 429.
There is no such "fit" as applied to Indian gaming in North Carolina. Pursuant to IGRA, the State and the Eastern Band of Cherokee Indians have mutually agreed in the Compact to the terms by which Class III gaming is allowed on the tribal reservation. Consequently, the government interest in Edge Broadcasting of protecting state choice is nonexistent, as the State has made the choice in favor of limited Indian gaming. Any assertion that an advertising ban on the Class III gaming allowed by the Compact directly and materially advances the government interest in discouraging participation in commercial gambling is the exact speculation and conjecture held unacceptable in Liquormart. The logical conclusion which follows from Edge Broadcasting and Liquormart is to allow lawful and nonmisleading Indian gaming advertisements in this State where Indian gaming is legal. Accordingly, North Carolina statutes may not operate to prohibit advertising of lawful gaming offered by the Eastern Band of Cherokee Indians pursuant to the Tribal-State Compact.
MICHAEL F. EASLEY Attorney General
William N. Farrell, Jr.
Senior Deputy Attorney General
David F. Hoke Assistant Attorney General