Why Is It Legal to Advertise for Gambling But Not Cigarettes?
I cannot tell you how many ads I’ve been served by various interested firms since sports betting became legal in New York State this year. Caesar’s Sportsbook has J.B. Smoove and Halle Berry encouraging me to gamble. FanDuel and DraftKings, pioneers of mobile-app sports betting, have constant promotional campaigns offering free money for my first bet. All of these massive marketing budgets have, as their north star and balance-sheet justification, one principle: it’s worth spending a big chunk of change to get a big chunk of people addicted to gambling on your platform. The House might not be a physical building on the Vegas strip, but it still always wins.
I tend to think most of our many human vices ought to be legal. Prohibition has not proven to be particularly effective, and neither have the incredibly expensive campaigns to enforce these laws. Plus, there’s the more elemental question of whether the government, in our system, has the authority to stop you doing things to yourself that may negatively affect others only indirectly.
However, advertising for addictive products does seem, at the very least, a bit uncouth. The prospect of some 19-year-old kid getting enticed by some free bets and then drifting towards the deep end is not a pleasant one. My late great uncle Frank liked going to the track. Sometimes his wife and kids would have money for things they needed. Sometimes they wouldn’t. Still, this is the United States of America, where the First Amendment does not just apply to individual citizens. There’s also a concept here of commercial free speech, with a notable exception: advertising for cigarettes is illegal.
Why is Joe Camel out of bounds, then, but ads for booze and gambling are above-board? I asked Rebecca Tushnet, the Frank Stanton Professor of the First Amendment at Harvard Law School—who specializes in, among other things, advertising law—what the deal is here. As it turns out, it’s a particularly American cocktail of strident free-speech principles, waxing and waning puritanical attitudes, and corporate power. Our conversation has been edited for length and clarity.
Esquire: What is the legal regime around advertising for addictive products?
Rebecca Tushnet: So the basic regime in the United States distinguishes fairly sharply between deceiving consumers and trying to change their preferences, like how much they think it's worth to have the excitement of gambling, or the feeling that you get when you smoke a cigarette. So regulation has mostly focused, pretty substantially, on whether there's anything deceptive, even in the sin category. Attempts to increase consumption are generally okay, the thinking being that the government has the choice to ban the underlying activity entirely. If it has decided to allow the activity, then it's truthful commercial speech to say, "Hey, you should try this."
Addiction obviously complicates things, but U.S. law has not in general been particularly sensitive to that, except with respect to children who are not considered fully capable of making decisions. You can't target minors, that’s illegal. But if the activity is legal for 21-year-olds, you can target 21-year-olds. Various types of alcohol and tobacco regulations have been struck down on First Amendment grounds. Warning labels have been approved, but if the government isn't going to go ahead and clamp down on the activity itself, then it’s legal activity and you just have to avoid deceptiveness.
The argument that people tend to make is that it's basically deceptive to advertise an addictive product, because people don't understand that even if they think they're not going to become addicted, the chances are bad for them. And that turned out to be a hard argument to make, because American law is very oriented towards the individual, and individuals’ own faith in themselves. Most of American law is directed at saying, "Okay, the regulator can let you know the truth." And the underlying logic, basically, is the government shouldn't use speech regulations to do things that it could do if it were willing to actually regulate. For example, they could have not allowed online gambling in New York, or they could have restricted entry in some way to make sure people aren't losing sums of money that they can't afford. But if they're not doing that, they can't, as a second-best measure, try and control the advertising.
ESQ: But it’s illegal to advertise for cigarettes on TV, right?
RT: Part of what's particularly interesting about the cigarette regime is that its regulation has evolved over basically the 50 years in which commercial speech regulation was also evolving. So I would say there were regulations that the industry agreed to decades back that they wouldn't agree to today, because they would say quite correctly, "If we go to court over this, you can pass this law, but the courts are going to strike it down. So don't bother." They would be right about most of that. So a lot of the more stringent stuff persists by industry agreements, but the courts have also struck down some of the regulations that Congress tried and that the FDA tried. When Congress tried to restrict where cigarette ads could be put, that didn't actually go so well.
Esquire: Was there a reason TV ads were banned first and then billboards like Joe Camel? Or was that just another symptom of cigarette companies gradually accepting more restrictions because they wanted to stay in business?
RT: Part of this is that a bunch of the cigarette legal regime was emerging at the same time that the so-called Fairness Doctrine was. So one reason for cigarette companies to accept restrictions on television ads was they thought it was better to say, "Don't run public education campaigns against us." Eventually, that breaks down.
[Under the FCC’s Fairness Doctrine, broadcasters were required to present multiple viewpoints on controversial issues. Tushnet says this had more of an intangible impact—“it was in the air”—than a specific impact on the legal regime around cigarettes. The doctrine was rescinded in 1987, but public-service ads about the dangers of cigarettes also became commonplace over time.]
RT: I think, along with the First Amendment regime being very different, you can expect that their lawyers were giving them different advice in 1965 than in 2020.
And also, once you’re big—like, Philip Morris had some mixed incentives. If it's hard to advertise, it's actually much harder for startups to break in. If you think about it, what are the cigarette brands that exist? Are they any different than the cigarette brands from 1970? And restrictions on advertising are one reason for that.
ESQ: It's a barrier to entry now that the big cigarette firms like. Because they don't have to compete with newcomers.
RT: I mean, if they got to write the laws from the start, I'm sure they would say, "No restrictions on advertising.” But it's definitely something that has its compensation.
ESQ: Another wrinkle to this for me is prescription drugs. I obviously see pharmaceutical ads all over the place, but I've never seen an ad for Oxycontin. Is that also a business decision?
RT: Definitely. They are doing a ton of marketing, but they're marketing to doctors, because it's a controlled substance and it turns out actually once the doctors have it, it sells itself.
ESQ: In the future, do you expect to see advertising law move closer to the model we’re seeing around gambling in New York right now, or towards the regime around cigarettes?
RT: Because of the history of cigarettes, I don't see it moving there. Although, all it takes is some market upstart with a chip on a shoulder. It’s also harder because the substance of cigarettes is now so regulated, you actually need FDA approval for your new cigarette product. So, unless you had a real product benefit to offer that you could substantiate, advertising is probably not worth it all that much. You did see an explosion of advertising for vape products, right? So go back four years, Juul is everywhere. And any time you get a new market category, one thing that happens is a ton of deceptive advertising. It doesn't help that we're now in the age of influencers. If you're selling through influencers, you're going to throw off a bunch of deceptive advertising, because they're going to say a bunch of deceptive stuff.
So that brought down big regulatory hammers that are purely on deception grounds. And also, the FDA has decided, "Okay, you're going to have to substantiate claims that you make about vaping being better." And that's actually very hard to do at this point. So deception regulation often gives you a thumb handle on a new form of bad behavior. And that's what I foresee, is continued fights over what counts as deceptive. Established industries tend to get used to advertising in ways that are comfortable to them. Again, if you ask them to completely write the rules, Big Pharma would probably say, "Yeah, don't constrain us on advertising at all." But they can totally live with the regime we have.
ESQ: On the influencer element, it raises the question of whether an advertising ban would even work in this environment anyway. Cigarettes have always been in movies and made people look cool, but is anything different in the age of influencer marketing?
RT: So I will say, the closer you get to control, the more likely that the regulator is going to attribute the stuff to you. So if you tell an influencer, "Promote our product" and don't tell them, "Don't lie," and they lie, certainly the FTC is going to say, "That's on you." If they lie, you probably have to terminate [the relationship] and you may have to correct the record. There is a little bit of ability to evade regulations because that is inevitably leakier than stuff that comes [from an advertising firm]. But the regulators are not stupid. If you're basically trying to claim-wash, the regulator is not going to be super convinced by that.
ESQ: From a legal standpoint, are companies essentially contracting their advertising through an influencer? Do they bear the same responsibility as they would hiring a marketing firm?
RT: It really depends. If they’re paying somebody to post content, then yes. That’s just another kind of advertiser, you've just given them more control. But you've assumed the risks of giving them more control. On the other hand, it can get trickier. So, if you're talking to a reporter like this and the reporter has the choice of what to report, then that's a little harder. But again, if you're saying things that are false, the regulators are still going to come after you.
ESQ: So it’s sort of about the incentive structure of the person. In theory, the journalist has a different incentive structure than the influencer that you're paying.
RT: Yeah, and courts have struggled with this. The FTC has taken the pretty strong position that if you're paying somebody to produce content, that's on you. And you made the decision not to supervise them. That is a decision.
ESQ: What’s the core takeaway going forward?
RT: It's probably the case that the regulators can only go after deceptiveness. But there is ground for debate over what counts as deceptive, including presenting something as a lot of fun without talking about addiction and losses.
ESQ: So the legal battles will be fought over how much, when saying cigarettes are cool or gambling is awesome, you also have to mention that they could destroy your life.
RT: Right. Other countries have freedom of speech, but what they don't have is commercial freedom of speech. And so they just decide whether they're going to allow it or not.
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