Can North Carolina's anti-gambling property-seizure law be used to ban billboards advertising the legal Indian casino games at the Eastern Band of Cherokee reservation?
Plain-English summary
District Attorney Charles W. Hipps of the 30th Prosecutorial District (which covers the western NC counties including the Cherokee reservation) asked the AG whether he could use N.C.G.S. § 14-299, NC's general anti-gambling property-seizure statute, to prohibit billboard advertising of the legal Indian casino games operated by the Eastern Band of Cherokee Indians under the 1994 Tribal-State Compact.
The AG (Michael F. Easley signing, William N. Farrell Jr. as Senior Deputy and David F. Hoke as Assistant) said no.
The structure of the analysis:
The statute's text and purpose. N.C.G.S. § 14-299 authorizes seizure of "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…." The statute targets property used to entice illegal gambling. The AG reads it as not reaching property used to entice legal gambling.
Whether the Cherokee gaming is legal. Yes. The Tribal-State Compact between the Eastern Band of Cherokee Indians and the State of North Carolina, dated August 11, 1994, permits the tribe to conduct Class III gaming on the reservation under the federal Indian Gaming Regulatory Act (IGRA). The Compact specifically allows raffles and video games involving skill or dexterity, the same types of games legal under NC law generally. So the gaming itself is legal under both federal and state law.
The First Amendment. Because the underlying gaming is legal, the AG turns to the First Amendment commercial-speech analysis from Central Hudson Gas & Electric. The four-part Central Hudson test for permissible regulation of commercial speech requires:
- The speech concerns lawful activity and is not misleading.
- The asserted government interest is substantial.
- The regulation directly advances that interest.
- The regulation is no more extensive than necessary.
Cherokee gaming advertising clears the first prong easily: it concerns lawful gaming and is not alleged to be misleading. The harder prongs are two and three: does NC have a substantial interest in restricting these ads, and would the restriction directly advance the interest?
The AG concludes the answer is no on both. The state's own Compact agreement says Class III gaming benefits both the tribe and the state's citizens. The federal statute prohibiting casino-gambling broadcast advertising (18 U.S.C. § 1304) carves out Indian gaming conducted under IGRA (47 C.F.R. § 73.1211(c)(3)), so federal policy permits Indian gaming ads even in non-gambling states. Together these undermine any claim of substantial state interest.
The AG also distinguishes Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, 478 U.S. 328 (1986), which had upheld a restriction on advertising of legal casino gambling. The 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996), decision substantially narrowed Posadas: "the State may not ban commercial speech simply because the State may constitutionally prohibit the underlying activity." The AG reads Liquormart as foreclosing the broader anti-gambling-advertising rationale.
And the AG distinguishes United States v. Edge Broadcasting Co., 509 U.S. 418 (1993), which had upheld 18 U.S.C. § 1304 as applied to a radio station in a non-lottery state broadcasting ads for a neighboring state's lottery. Edge Broadcasting relied on the state's interest in protecting its anti-lottery policy. That interest does not exist here: NC has affirmatively chosen, via the Compact, to permit limited Cherokee gaming. The state cannot then assert an interest in suppressing speech about the very activity it has authorized.
Conclusion. N.C.G.S. § 14-299 may not be applied to restrict billboard advertising of lawful Cherokee gaming. DA Hipps cannot use the property-seizure statute against billboard companies hosting Cherokee casino ads.
Currency note
This opinion was issued in 1997. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Tribal-State Compact has been amended several times since 1994. The Cherokee casino operations have expanded substantially. The First Amendment commercial-speech doctrine has continued to develop in cases like Sorrell v. IMS Health (2011) and others. Federal IGRA regulations have been updated. Anyone facing a current question about Cherokee gaming advertising should consult current state and federal law and current Compact terms.
Background and statutory framework
The Tribal-State Compact between the Eastern Band of Cherokee Indians and North Carolina was negotiated and signed in 1994 under the federal Indian Gaming Regulatory Act of 1988 (IGRA). IGRA classifies tribal gaming into three categories. Class I is traditional and social games; Class II is bingo and certain card games; Class III is casino-style games (slot machines, table games, etc.). Class III gaming requires a compact between the tribe and the state.
The 1994 NC-Cherokee Compact authorized Class III gaming on the Cherokee reservation in the form of raffles and video games involving skill or dexterity (a category that includes video poker and similar games where the player's choices affect outcomes). The Cherokee opened the Harrah's Cherokee Casino in 1997, around the time of this opinion. The casino has grown into one of the largest gaming operations in the Southeast and is a major economic driver for the tribe and western NC counties.
The First Amendment commercial-speech doctrine sits in a constantly contested area. Posadas and 44 Liquormart represent opposing poles. Posadas (1986) gave broad deference to legislatures regulating advertising of vice products (gambling, alcohol). 44 Liquormart (1996) sharply curtailed that deference, requiring real evidence that the restriction directly advances the asserted interest. The AG's analysis correctly identifies the post-Liquormart framework as the controlling one.
The opinion is doctrinally careful. It does not say that NC could not regulate gambling advertising under any circumstances. It says that the specific application proposed (banning billboards for legal Cherokee gaming) fails Central Hudson because NC's own actions (signing the Compact, permitting the gaming) undermine the substantial-state-interest prong. A state that simultaneously authorizes an activity and prohibits ads about it has no coherent interest to advance.
The opinion is also a useful illustration of how IGRA preempts state regulation of tribal gaming even at the advertising margin. Once the state has authorized Class III gaming through a Compact, the state's leverage over the operations (including marketing) is limited. The federal exception at 47 C.F.R. § 73.1211(c)(3) further reinforces this preemption by permitting Indian gaming broadcast ads even in states that prohibit casino-style gaming generally.
Common questions
Can NC ban advertising of illegal gambling?
Generally yes, under the first prong of Central Hudson. Commercial speech about illegal activity is not protected and can be prohibited. NC can also restrict deceptive or fraudulent gambling advertising. The opinion's holding is narrow: it applies to advertising of legal gambling under a state-authorized Compact.
Could the legislature have written a statute that does ban Cherokee casino billboards?
Probably not, after 44 Liquormart. A specific statute targeting only Indian gaming ads would face the same First Amendment problem: it would restrict speech about legal activity without any coherent substantial state interest. The state cannot authorize the underlying activity and then prohibit speech about it.
Does the Compact itself address advertising?
The opinion notes that the Compact emphasizes the agreed benefit of Class III gaming to both parties. It does not appear to include specific advertising terms. Some tribal-state compacts in other states do address advertising; the NC-Cherokee Compact apparently does not.
Could a NC city or county ban casino billboards locally?
The same First Amendment analysis applies. A local ordinance targeting Cherokee casino billboards would face the same constitutional problem. Localities have broader power to regulate outdoor advertising generally (size, location, lighting) as part of land-use regulation, but content-based restrictions on legal-gaming ads would face the same Central Hudson scrutiny.
Source
- Landing page: https://ncdoj.gov/opinions/advertisement-of-indian-gaming-conducted-pursuant-to-the-tribal-state-compact/
Citations
- N.C.G.S. § 14-299
- Indian Gaming Regulatory Act (IGRA), 25 U.S.C. § 2701 et seq.
- 18 U.S.C. § 1304
- 47 C.F.R. § 73.1211(c)(3)
- Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980)
- Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, 478 U.S. 328 (1986)
- 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 116 S.Ct. 1495, 134 L.Ed.2d 711 (1996)
- Edenfield v. Fane, 507 U.S. 761 (1993)
- United States v. Edge Broadcasting Co., 509 U.S. 418 (1993)
Original opinion text
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