June 3, 1999

Legislative Activity

Gambling Alert

June 3, 1999

A federal panel studying gambling is recommending restrictions on advertising in a draft of its upcoming report to Congress. Most of the attention and recommendations are devoted to advertising by state lotteries.

This report, by the National Gambling Impact Study Commission, is likely to have enormous influence on state and federal regulators and could result in legislative proposals to place restrictions on advertising by state lotteries.

Attached are the provisions of the report pertaining to advertising by lotteries and casinos, including recommendations that states adopt a code of conduct or "best practices" for lottery advertising.

As you know, AAF joined with other advertising and media associations to hire a constitutional scholar who sent an analysis of First Amendment case law to the commission for review. As a result, the commission has refrained from recommending outright bans on advertising but does seek to ban what it refers to as "aggressive advertising strategies." The commission must present its report to Congress by June 18. After that, we expect to see legislative proposals based on these recommendations. Please contact Jeff Perlman or Clark Rector in our Government Affairs office about any legislative or regulatory proposals in your areas. You may contact them at 1-800-999-2231, jperlman@aaf.org or crector@aaf.org.

National Gambling Impact Study Commission Report
Provisions Related to Advertising
Draft - June 3, 1999

Lottery Advertising - Assessment and Recommendations

Assessment

  • Much of the advertising for state lotteries is misleading, even deceptive. State lotteries are exempt from the Federal Trade Commission's truth-in-advertising standards because they are state entities and, in terms of their advertising, can operate in a manner that true commercial businesses cannot.
  • Lottery advertising rarely explains the poor odds of winning, although the FTC requires such statements in commercial sweepstakes games.
  • Lottery advertising messages often exploit themes that conflict with the state's role as protector of the public good. For example, many ads emphasize luck over hard work, instant gratification over prudent investment, and entertainment over savings.
  • Lottery advertising is also manipulative when it encourages playing in order to contribute to state programs earmarked for education or other specific purposes.
  • There is concern that lottery ads target vulnerable populations such as youth and the poor. Some lottery ads show young people playing the lottery, raising justifiable concerns about the role of state governments as promoter and participant in this type of gambling promotion.
  • These concerns have prompted several states to place restrictions on what type of advertising its lottery agency can do. Virginia, Minnesota and Wisconsin ban ads designed to induce people to play. Other states require odds of winning to be displayed or ads to be accurate and not misleading.

Select Recommendations

  • The commission recommends that Congress amend the Federal Truth-in-Advertising laws to include state-sponsored lotteries and Native American gambling.
  • The commission is urging states to adopt model regulations in the form of "best practices" based on standards developed earlier this year by The North American Association of State and Provincial Lotteries (NASPL) and the American Gaming Association. (Those provisions are attached.)
  • The commission recommends all relevant governmental gambling regulatory agencies ban aggressive advertising strategies, particularly those that target youth, or people in poor neighborhoods.
  • The commission recommends that each gambling operation adopt and follow enforceable advertising guidelines. These guidelines should avoid explicit or implicit appeals to vulnerable populations, including youth and low income neighborhoods. Enforcement should include a mechanism for recognizing and addressing citizen complaints that might arise regarding advertisements.
  • The commission recommends states with lotteries reduce their sales dependence on low-income, less educated, minorities, and heavy players in a variety of ways, including limiting advertising and number of sales outlets in low-income areas.
  • The commission suggests that states are best equipped to regulate gambling within their own borders with two exceptions-Tribal and Internet gambling.
  • The commission recommends that states with lotteries create a private citizen oversight board. The board would make data-based policy decisions on such issues as the types of games to offer and marketing strategies to follow.