Posadas De Puerto Rico Associates v. Tourism Co. of Puerto Rico

The casino adequately presented its federal First Amendment, due process, and equal protection claims throughout the proceedings. Its complaint, correspondence with the Tourism Company, and appeal to the Puerto Rico Supreme Court all expressly invoked federal constitutional protections.

Puerto Rico law allowed an appeal where a case involved a substantial federal constitutional question. Thus, when the Puerto Rico Supreme Court dismissed the appeal because it lacked such a question, it effectively resolved the constitutional claims on the merits in favor of the statute and regulations.

The casino’s notice of appeal was filed six minutes after the relevant deadline, but the Puerto Rico Supreme Court did not dismiss on timeliness grounds. Because Puerto Rico treated that filing requirement as nonjurisdictional and could waive it, the late filing did not defeat the U.S. Supreme Court’s jurisdiction.

The Superior Court construed the law to prohibit only casino advertising directed at Puerto Rico residents, not advertising aimed at tourists that might incidentally reach residents. It also permitted certain uses of a hotel trade name and casino promotion within hotel premises.

As with a state court’s authoritative construction of state law, the Supreme Court accepted the Puerto Rico court’s construction as controlling. Puerto Rico’s Commonwealth status did not justify a different rule, particularly because local courts should have the primary role in determining the scope of their own legislation.

The Court therefore considered only the facial validity of the statute and regulations as narrowed, while leaving undisturbed the lower court’s conclusion that the Tourism Company’s prior, sweeping enforcement had been arbitrary and unconstitutional.

Casino advertising proposed a lawful transaction and was not inherently misleading, so it received commercial-speech protection. The Court therefore applied Central Hudson’s remaining requirements: a substantial government interest, direct advancement of that interest, and a restriction no more extensive than necessary.

Puerto Rico had a substantial interest in protecting the health, safety, and welfare of its residents by reducing demand for casino gambling. The legislature could reasonably believe that excessive local casino gambling could contribute to moral disruption, crime, prostitution, corruption, and organized-crime infiltration.

The advertising ban directly advanced that interest because the legislature could reasonably conclude that advertising stimulates demand. The casino’s decision to litigate the restriction itself supported the commonsense inference that advertising would increase patronage.

The fact that Puerto Rico allowed advertising for horse racing, cockfighting, lotteries, and other traditional gambling did not make the casino-advertising restriction ineffective. The legislature could distinguish casino gambling from forms of gambling it regarded as more traditional and less risky for Puerto Rican residents.

The restriction was no more extensive than necessary because the narrowing construction preserved advertising directed to tourists and reached only advertisements intended to induce Puerto Rico residents to gamble. The First Amendment did not require Puerto Rico to choose counteradvertising or another less speech-restrictive approach if the legislature reasonably concluded that a targeted advertising ban would be more effective.

The Court distinguished cases involving advertisements for abortion services and contraceptives. In those cases, the underlying conduct was constitutionally protected and could not have been prohibited by the government; casino gambling, by contrast, was an activity Puerto Rico could prohibit entirely.

The Court reasoned that a government with power to ban a harmful product or activity generally also has power to adopt the intermediate approach of allowing it but restricting promotional advertising. Otherwise, a legislature might be driven to total prohibition rather than permitted to pursue a narrower regulatory response.

The Court characterized the casino’s claimed right to advertise as potentially Pyrrhic: a ruling requiring advertising access could induce Puerto Rico to eliminate resident casino gambling entirely. The First Amendment did not compel that result.

Although the bare statutory terms could be read broadly, the Court evaluated them alongside the Puerto Rico Superior Court’s limiting construction. That construction confined the prohibition to advertising intended to attract Puerto Rico residents to casino gambling and gave concrete examples of permitted and prohibited advertising.

Read in that context, the law did not leave casino operators without constitutionally adequate guidance about the conduct it covered. The Court therefore rejected the facial due process vagueness challenge.

The Court also concluded that the same fit between means and ends that satisfied commercial-speech review was sufficient under rational-basis equal protection review. Puerto Rico could treat casino gambling differently from more traditional local forms of gambling.