ANTHONY M. FRANK, POSTMASTER GENERAL OF THE UNITED STATES, ET AL.,
APPELLANTS V. MINNESOTA NEWSPAPER ASSOCIATION, INC.

   No. 87-1956

   In the Supreme Court of the United States

   October Term, 1987

   On Appeal from the United States District Court for the District of
Minnesota

   Jurisdictional Statement

                      PARTIES TO THE PROCEEDINGS

   In addition to the parties named in the caption, the United States
Postal Service and the United States of America were named as
defendants in the court below.

            TABLE OF CONTENTS
   Question Presented
   Parties to the Proceedings
   Opinions below
   Jurisdiction
   Constitutional and statutory provisions involved
   Statement:
      A. Historical and statutory background
      B. Proceedings below
   The question is substantial
   Conclusion

                             OPINION BELOW

   The opinion of the district court (App., infra, 1a-20a) is reported
at 677 F. Supp. 1400.

                             JURISDICTION

   The judgment of the district court (App., infra, 21a-22a) was
entered on January 6, 1988.  A notice of appeal (App., infra, 23a-24a)
was filed on January 28, 1988.  On March 17, 1988, Justice Blackmun
entered an order extending the time within which to docket this appeal
to and including May 27, 1988.  The jurisdiction of this Court is
invoked under 28 U.S.C. 1252.

           CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED

   The relevant constitutional and statutory provisions are reprinted
at App., infra, 25a-33a.

                          QUESTION PRESENTED

   Section 1302 para. 5 of Title 18 makes it a crime knowingly to mail
"any newspaper, circular, pamphlet, or publication of any kind"
containing "any advertisement of any lottery, gift enterprise, or
scheme of any kind offering prizes dependent in whole or in part upon
lot or chance," or "any list of prizes drawn or awarded" by means of
any such lottery or similar enterprise.  The question presented is
whether the prize list clause in Section 1302 is facially invalid
under the First Amendment.

                               STATEMENT

   This is an action brought by an association of Minnesota newspapers
challenging, under the First Amendment and the Due Process Clause, the
congressional regulation of the use of the mails in connection with
the promotion of lotteries, 18 U.S.C. 1302 and 1307;  39 U.S.C. 3001
and 3005.  On cross-motions for summary judgment, the district court
held that the statutory ban on mailing lottery advertisements was a
valid regulation of commercial speech.  By contrast, the court held
that an associated prohibition on the mailing of prize lists was
invalid, on the ground that the clause could be used to ban the
mailing of newspapers containing news reports about lotteries.

                A. Historical And Statutory Background

   1. Lotteries have an ancient pedigree.  In England and in colonial
times in this country, lotteries were a popular and respectable
activity.  Beginning in the Jacksonian period, however, the states
began to restrict or prohibit both privately-operated and state-run
lotteries for a variety of reasons, such as "animosity toward
legislatively-created privilege, concern for efficiency in government,
distaste for fraud and corruption, and sympathy for the poor upon whom
the burden of the lottery system was thought to fall." /2/

   A major obstacle to that reform effort was the states' inability to
regulate lotteries that operated across state lines.  The states
lacked authority to prosecute lottery operators who conducted business
in another jurisdiction, or to regulate a lottery operator's use of
the mails to distribute tickets and advertisements.  The states were
forced to attack lotteries within their borders "at the consumer level
-- a difficult, expensive, and unpopular task." /3/ The states
therefore turned to the Post Office and to Congress for assistance.

   2. Congressional restrictions on the use of the postal service in
connection with lotteries date from 1827.  In that year, Congress
prohibited postmasters from serving as lottery agents and from
receiving "lottery schemes, circulars or tickets" free of postage.
Act of Mar. 2, 1827, ch. 61, Section 6, 4 Stat. 238.  Forty-one years
later, Congress made it a crime to deposit in the mails "any letters
or circulars concerning lotteries, so-called gift concerts, or other
similar enterprises offering prizes of any kind on any pretext
whatever." Act of July 27, 1868, ch. 246, Section 13, 15 Stat. 196.
In 1982, Congress passed legislation prohibiting the mailing of
letters or circulars concerning "illegal" lotteries.  Act of June 8,
1872, ch. 335, Section 149, 17 Stat. 302.  That term, however, was
stricken four years later in order to exclude from the mails materials
from all lotteries, including ones chartered by state legislatures.
Act of July 12, 1876 (1876 Act), ch. 186, Section 2, 19 Stat. 90
(codified at Rev. Stat. Section 3894 (2d ed. 1878)).  /4/

   This Court upheld the constitutionality of the 1876 Act in Ex parte
Jackson, 96 U.S. 727 (1878), over the objection that it violated the
First Amendment.  Still, the Act was widely viewed as an ineffective
weapon against lotteries.  Among other inadequacies, /5/ the Attorney
General concluded that the 1876 Act did not apply to newspapers, even
if they contained lottery advertisements.  /6/ Yet newspaper
advertisements were often used to promote lottery sales, since
newspapers enjoyed second-class mailing privileges and therefore were
less expensive to distribute than letters containing lottery
circulars.  /7/

   That shortcoming made the Act particularly ineffective against the
powerful "Louisiana Lottery," the only legal lottery still operating
in 1890 when the predecessor to the statute at issue in this case was
passed.  /8/ The Louisiana Lottery operated nationwide and used the
mails as its principal means of obtaining revenues from the public in
other states, /9/ deriving more than 90% of its revenue from
out-of-state bettors.  /10/ Because the Attorney General had concluded
that the 1876 Act did not apply to newspapers, however, that Act did
not hamper the Louisiana Lottery from soliciting customers through
newspaper advertising.

   After several years of debate, /11/ Congress remedied that
shortcoming by adopting the Anti-Lottery Act of 1890, ch. 908, 26
Stat. 465 (1890 Act), the direct predecessor to the statute at issue
in this case.  In order to deny lotteries the use of the mails to
attract customers, the Act outlawed the mailing of "any newspaper,
circular, pamphlet, or publication of any kind containing any
advertisement of any lottery or gift enterprise of any kind offering
prizes dependent upon lot or chance, or containing any list of prizes
awarded at the drawings of any such lottery or gift enterprise,
whether said list is of any part or all of the drawing." The
constitutionality of the new Act was challenged in In re Rapier, 143
U.S. 110 (1892), and this Court again upheld the statute over a First
Amendment objection.  Although the Louisiana Lottery closed up its
business in that state in 1893, /12/ the lottery set up a new
headquarters in Honduras and used a Florida address for
communications.  /13/ When Congress realized that the Louisiana
Lottery had not yet been finally shut down, it passed the Act of Mar.
2, 1895, ch. 191, 28 Stat. 963, which made it a crime to import or
transport lottery tickets in foreign or interstate commerce.  /14/ The
constitutionality of that Act was also challenged, and this Court once
again upheld it in Champion v. Ames (Lottery Case), 188 U.S. 321
(1903) this time over the claim that the Act exceeded Congress's power
under the Commerce Clause, Art. I, Section 8, Cl. 3.

   3. The prohibition on the mailing of publications containing
lottery advertisements or prize lists enacted as the Anti-Lottery Act
of 1890 survives, with minor amendments not relevant here, /15/ as 18
U.S.C. 1302 para. 5.  In relevant part, that provision makes it a
crime knowingly to mail "(a)ny newspaper, circular, pamphlet, or
publication of any kind" containing "any advertisement of any lottery,
gift enterprise, or scheme of any kind offering prizes dependent in
whole or in part upon lot or chance," or "any list of the prizes drawn
or awarded" by means of any such lottery or similar enterprise.
Section 1302 does not apply, however, in advertisements for a
state-conducted lottery contained in a newspaper published in that
state, or in an adjacent state that also has a state-conducted
lottery.  18 U.S.C. 1307.  /16/

   Under complementary provisions of the Postal Code, any material
that is excluded from the mail under 18 U.S.C. 1302 is deemed to be
"nonmailable" and subject to seizure.  39 U.S.C. 3001.  The Postal
Service may refuse to deliver lottery-related responses for, or permit
the payment of money orders to, a person conducting a lottery.  39
U.S.C. 3005.  After an administrative proceeding, the Postal Service
may return to a sender mail, appropriately marked as in violation of
Section 3005, addressed to any person engaged in a lottery or a scheme
involving fraud or false representations.  39 U.S.C. 3005.  And under
39 U.S.C. 3007, the Postal Service may sue in a federal court and, on
a showing of probable cause, obtain a preliminary injunction detaining
lottery-related incoming mail to a person alleged to be engaged in a
lottery or similar scheme, pending the conclusion of those
administrative proceedings.

                         B. Proceedings Below

   Appellee Minnesota Newspaper Association, Inc., is an organization
of general and special interest newspapers published in Minnesota.
Minnesota law allows non-profit charitable organizations to operate
gaming activities for fund-raising purposes.  App. infra, 1a-2a.
Appellee claimed that its member newspapers distributed a significant
portion of their circulation through the mails and that its members
wanted to publish advertisements and news stories about these
lotteries, but were afraid to do so because of uncertainty about the
meaning of 18 U.S.C. 1302 and 39 U.S.C. 3001 and 3005, and because of
warnings they had received from local postal inspectors to the effect
that they could be prosecuted for mailing such materials.  App.,
infra, 3a.  Appellee therefore brought this action in the United
States District Court for the District of Minnesota, challenging the
constitutionality of those statutes under the First Amendment and the
Due Process Clause.

   On cross-motions for summary judgment, the district court granted
partial summary in favor of each party.  The court said that the
statutes were constitutional insofar as they applied to lottery
advertisements, but that they violated the First Amendment to the
extent that they restricted the mailing of lists of lottery winners.
App., infra, 4a-20a.

   The district court first held that lottery advertisements
(including advertisements containing prize lists) fell squarely within
the definition of "commercial speech," and that the restrictions
imposed by 18 U.S.C. 1302 on mailing such advertisements met the
standards for the regulation of commercial speech set forth by this
Court in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447
U.S. 557 (1980), and Posadas de Puerto Rico Assocs. v. Tourism Co.,
No. 84-1903 (July 1, 1986).  App., infra, 7a-13a.  Although the
advertisements that appellee's member newspapers sought to publish
concerned lawful activity that was not inherently misleading (id. at
8a), the court found that the statutory restrictions were valid
because they advanced two substantial governmental interests:
Congress's interest in preserving the states' power to prohibit or
limit gambling within their borders, and Congress's interest in
restricting the interstate growth of private lotteries and reducing
the threat of organized criminal involvement in gambling activity.
Id. at 8a-11a.  Both interests, the court held, were directly advanced
by Section 1302 in a manner no more extensive than is necessary.
App., infra, 11a-13a.

   The court also concluded that the statute should not be construed
to extend to general news reports or editorial comment concerning
lotteries.  Those materials, the court held, can be distributed
through the mails.  App., infra, 16a.

   Notwithstanding its conclusion that the statute does not extend to
news stories and editorial commentary, the district court nevertheless
concluded that the prize list clause was unconstitutional.  App.,
infra, 13a-15a.  The court recognized that a list of prize winners is
an effective promotional device for a lottery, but ruled that such a
list does not amount to commercial speech unless it is found in an
advertisement.  Id. at 13a-14a.  Because Section 1302 independently
prohibits the mailing of advertisements promoting lotteries, the court
concluded that the prize list clause was designed to restrict the
publication of prize lists in noncommercial speech (App., infra, 14a),
and therefore was invalid unless the restriction was narrowly tailored
to serve a compelling governmental interest.  Ibid.  Finding that the
interests promoted by Section 1302 were not compelling, the court held
the prize list was unconstitutional, but could be severed from the
remainder of the statute.  App., infra, 14a-15a, 16a.  The court
acknowledged that its holding was inconsistent with this Court's
decision in In re Rapier, supra, but it concluded that the rationale
of that ruling had been superseded by this Court's more recent First
Amendment decisions.  App., infra, 15a.

   The district court accordingly entered a judgment declaring, inter
alia, that "the restrictions in 18 U.S.C. Section 1302, and its
implementing regulations, on the mailing of lists of prizes awarded
from a lottery are unconstitutional" and permanently enjoined
appellants "from further enforcement of the restrictions on prize
lists." App., infra, 20a;  id. at 21a-22a.  /17/

                      THE QUESTION IS SUBSTANTIAL

   Private organizations sometimes conduct lotteries to raise
revenues.  There is a longstanding federal policy against the use of
the mails to promote such lotteries, whether or not they are legal
under state law.  Thus, it is illegal to import tickets for such
lotteries in foreign commerce, or to distribute such tickets in
interstate commerce or through the mails, 18 U.S.C. 1301 and 1302, or
to distribute through the mails publications that contain
advertisements about such lotteries or lists of the prizes they award.
 18 U.S.C. 1302.  The constitutionality of this regulatory scheme had
been upheld by this Court on three separate occasions:  the Court
twice rejected First Amendment challenges to the predecessor versions
of Section 1302 in Ex parte Jackson, 96 U.S. 727 (1878), and In re
Rapier, 143 U.S. 110 (1892), and rejected a Commerce Clause challenge
to the predecessor to Section 1301 in Champion v. Ames (Lottery Case),
188 U.S. 321 (1903).

   In this case, the district court upheld over a First Amendment
challenge the clause forbidding the distribution through the mails of
publications containing lottery advertisements, but held
unconstitutional the parallel clause in that section prohibiting the
mailing of publications containing lists of prizes awarded by
lotteries.  The district court ruled that the prize list clause was
unconstitutional because it could be used to restrict the distribution
through the mails of news reports about lotteries.  The district
court, however, misinterpreted the prize list clause, which
complements the advertisement clause.  Properly construed, the ban on
the mailing of publications containing lottery prize lists is valid
for the same reasons given by the district court for upholding the ban
on the mailing of publications containing lottery advertisements.

   1. a. The district court noted that Section 1302 contains separate
clauses prohibiting the mailing of lottery advertisements and the
mailing of lists of prizes awarded in a lottery.  The court concluded
that the advertisement clause was directed at commercial speech, and
that the constitutionality of that clause must be examined under the
reduced standard of protection that is appropriate for commercial
speech.  See, e.g., Posadas de Puerto Rico Assocs. v. Tourism Co., No.
84-1903 (July 1, 1986);  Central Hudson Gas & Elec. Corp. v. Public
Serv. Comm'n, 447 U.S. 557 (1980);  Friedman v. Rogers, 440 U.S. 1
(1979);  Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer
Council, 425 U.S. 748 (1976).  But the district court also reasoned
that, because a prize list contained in an advertisement would be
independently covered by the advertisement clause, the prize list
clause must have been designed to apply to something other than
commercial speech.  App., infra, 13a-14a.  Accordingly, the court
concluded that the prize list clause, unlike the advertisement clause,
had to be measured against the higher standard of review appropriate
for noncommercial speech.

   The fatal flaw in the district court's reasoning is its unstated
assumption that commercial speech is exactly coterminous with
advertising, and that a statutory provision directed at a particular
type of speech intended to promote the success of a lottery can be
considered commercial speech only if it is contained in an
advertisement.  But this Court has never equated commercial speech
with advertising.  See Bolger v. Youngs Drug Products Corp., 463 U.S.
60, 66-68 (1983).  Instead, the Court has consistently identified "the
core notion of commercial speech" (id. at 66) as those forms of
expression that do "no more than propose a commercial transaction"
(Pittsburgh Press Co. v. Pittsburgh Comm'n on Human Relations, 413
U.S. 376, 385 (1973)), or that are "related solely to the economic
interests of the speaker and its audience" (Central Hudson, 447 U.S.
at 561).  An advertisement that "communicate(s) information,
expresse(s) opinion, recite(s) grievances, protest(s) claimed abuses,
and (seeks) financial support on behalf of a movement whose existence
and objectives are matters of the highest public interest and concern"
(New York Times Co. v. Sullivan, 376 U.S. 254, 266 (1964)) clearly
would not be regarded as commercial speech.  Equally clearly, certain
types of expression not ordinarily described as advertising but
integrally related to a commercial transaction -- such as a proposed
contract -- would have to be regarded as commercial speech.  The key
elements of commercial speech, therefore, are its subject matter
(whether it relates to an ordinary commercial transaction) and the
relationship of the speaker to the transaction (whether the speaker
has direct financial interest in the transaction or in the promotion
of the transaction), not whether the speech is formally denominated as
"advertising."

   For example, under this Court's decisions a newspaper could publish
news stories or editorials about lotteries, their prizes, or their
participants, and those forms of discourse would clearly not be
regarded as commercial speech.  In our view, moreover, if a newspaper
published a list of winning lottery numbers because it believed that
the list or the numbers themselves were newsworthy, that too should
not be considered as commercial speech, even if the newspaper
published the list because it hoped to increase its circulation and
thereby increase its revenues.  But if the newspaper published a list
of prizes because it expected to receive a share of a lottery's
proceeds, or because it had sponsored the lottery itself, such a list
in our view would amount to commercial speech, because it would be
speech directly related to a commercial transaction in which the
newspaper has a financial interest.  Similarly, if the newspaper were
paid to publish a list of prizes, such a list should be regarded as
commercial speech, because it would be speech about a commercial
transaction that the newspaper had been directly paid to promote.

   The district court was therefore in error in concluding that a
statute that regulates something other than advertising cannot be
regarded as a regulation of commercial speech.  The prize list clause
of Section 1302 can and should be construed to apply only to a form of
commercial speech -- i.e., the publication of lists of lottery prizes
by one who has a direct financial interest in a lottery or in its
promotion -- and not to other forms of discourse about lotteries, such
as editorials or news stories.  So construed, that clause is a lawful
restriction on commercial speech promoting lotteries.

   b. This construction of Section 1302 is supported by the language
of the statute.  As the district court recognized (App., infra, 16a),
Section 1302 does not list news reports among the items to which the
statute applies, and its structure shows that it was not designed to
exclude from the mails documentaries, news stories, or editorials
about lotteries.  It applies to "(a)ny newspaper, circular, pamphlet,
or publication of any kind," and therefore is sufficiently broad to
include various promotional materials that contain nothing resembling
a news story.  /18/ The all-inclusive scope of the statute suggests
that the prize list clause was not designed to zero in on news reports
or editorials about lotteries.  The most likely reason Congress
included a separate prize list clause was to ensure that the Act would
apply to circulars or other promotional materials distributed by the
sponsor of a lottery that would not be regarded as either an
advertisement or a legitimate news story.  /19/

   Moreover, the fact that Section 1302 lists lottery advertisements
and prize lists in tandem strongly suggests that these clauses should
be read in a complementary manner.  See, e.g., Third Nat'l Bank v.
Impac Ltd., 432 U.S. 312, 322 (1977);  Jarecki v. G.D. Searle & Co.,
367 U.S. 303, 307 (1961);  Virginia v. Tennessee, 148 U.S. 503, 519
(1893).  /20/ Lotteries, like other forms of gambling, often use prize
lists for the same purpose as advertisements:  in order to attract
participants.  By identifying the prizes that will be (or have been)
awarded in a lottery, a prize list can promote future sales of lottery
tickets.  A prize list can also serve as a device for notifying
winners, a function essential to the conduct of a lottery.  The prize
list clause should therefore be read as applying to the same conduct
as the advertisement clause, i.e., to the use of the mails to promote
a lottery by one who has a direct financial interest either in the
lottery or in its promotion.

   c. To be sure, if read expansively and without regard for the
purpose Congress had in mind when it enacted the Anti-Lottery Act of
1890, the text of the prize list clause could be read to apply to
editorial comment, documentaries, or other forms of discourse about
lotteries, their participants, and their winnings.  That construction
of the statute would raise the type of serious First Amendment
questions discussed by the district court.  That court concluded that
Section 1302 does not apply to those forms of discourse, however, and
we agree with that ruling.

   Congress did not adopt the Anti-Lottery Act of 1890 in order to
deprive newspapers of the use of the mails for publishing news
commentary about lotteries.  /21/ Rather, newspapers were listed in
the Act because they were a relatively inexpensive way for a lottery
to distribute advertisements and because the Attorney General had
concluded that the existing law did not cover newspapers that
published lottery advertisements.  Congress therefore exercised its
power under the Postal Clause, Art. I, Section 8, Cl. 7, in order to
deprive lotteries of the use of the mails to conduct or promote their
games.  In fact, by 1890 the Louisiana Lottery was the only lottery
still operating legally, and it derived more than 90% of its revenue
from out-of-state bettors.  It was the target of the Anti-Lottery Act
of 1890, not newspapers.  /22/ Congress concluded that the only
effective way to suppress the Louisiana Lottery -- to "cut (it) down
to a mere local gambling establishment, answerable to the police
powers of the local government" (21 Cong. Rec. 8717 (1890) (Rep.
Hitt)) -- was to exclude from the mails newspapers and the other
publications that contained its advertisements and related promotional
materials and thereby deny the lottery access to its primary source of
income.

   The references in Section 1302 to "any advertisement of any
lottery" and to "any list of the prizes drawn or awarded by means of
any such lottery" should be interpreted in light of this overriding
purpose.  The materials that were the focus of Congress's concern were
what would today clearly be called commercial speech.  Interpreting
Section 1302 to apply only to commercial speech is thus not "plainly
contrary to the intent of Congress" (DeBartolo Corp. v. Florida Gulf
Coast Building & Constr. Trades Council, No. 86-1461 (Apr. 20, 1988),
slip op. 6), and avoids the constitutional issues raised by the
district court's interpretation of the Act.  Ibid.; NLRB v. Catholic
Bishop, 440 U.S. 490, 499-501 (1979);  United States v. 12 200-Ft.
Reels of Super 8MM. Film, 413 U.S. 123, 130 n.7 (1973).  /23/ The
prize list clause, like the advertisement clause, should be read as a
restriction on commercial speech.

   2. When read in the manner suggested above, the prize list clause
in Section 1302 is valid for the same reasons given by the district
court for upholding the advertisement clause in the same section:  the
prize list clause, like the advertisement clause, applies to a form of
commercial speech, and the statutory scheme satisfies the standards
for the regulation of commercial speech set forth in Central Hudson
and Posadas.  /24/

   Section 1302 reasonably advances several legitimate governmental
interests.  The statute applies to both legal and illegal lotteries.
Horner v. United States, 147 U.S. 449, 456, 466 (1893).  To the extent
that it reaches lotteries that are illegal under federal or state law,
the statute is clearly valid, because the government may regulate or
ban entirely speech proposing an illegal transaction.  Hoffman Estates
v. The Flipside, Hoffman Estates, Inc., 455 U.S. 489, 496 (1982);
Central Hudson, 447 U.S. at 563-564;  Pittsburgh Press, 413 U.S. at
388.  Section 1302 also may be constitutionally applied to
advertisements and associated promotional material about lawful
gambling activities.  As the district court explained in connection
with the advertisement restrictions, Section 1302 safeguards the
policies of those states that have prohibited lotteries.  /25/
Moreover, by restricting the growth of private lotteries, Section 1302
reduces the threat of organized criminal involvement in gambling
activities.  App., infra, 8a-11a.  The statute therefore advances
principles of federalism and protects the welfare of the citizens of
those states that have declared that private lotteries are against
public policy.  Both goals are legitimate interests for Congress to
advance through federal law.  See South Carolina v. Baker, No. 94,
Orig. (Apr. 20, 1988), slip op, 5-7;  Posadas de Puerto Rico Assocs.
v. Tourism Co., slip op. 11-12;  Garcia v. San Antonio Metropolitan
Transit Auth., 469 U.S. 528, 550-554 (1985).  The mailing restrictions
directly promote those interests, because the states lack authority to
regulate the mails.  App., infra, 12a.  Finally, the mailing
restrictions are not unduly burdensome.  Publications, including
newspapers, are not forbidden from publishing commercial lottery
advertisements or lists of lottery prizes;  they simply may not use
the mails if they do so.

   This Court's recent decision in Posadas de Puerto Rico Assocs. v.
Tourism Co., supra, also supports the constitutionality of Section
1302.  In that case, this Court upheld over a First Amendment
challenge regulations limiting the commercial advertising of casino
gambling to nonresidents of Puerto Rico, even though casino and other
gambling activities were legal in that jurisdiction.  The Court found
that Puerto Rico had a legitimate interest in restricting commercial
gambling advertising in order to safeguard the moral well-being of its
citizens, and to prevent both corruption and the infiltration of
organized crime.  Slip op. 11-12.  Moreover, the Court ruled that
restricting commercial advertising was a reasonable means of advancing
those interests, because the government could reasonably believe that
commercial casino advertising would enhance the demand for casino
gambling.  Id. at 12.  The regulations were also tailored to Puerto
Rico's interest in protecting the welfare of its citizens.  Id. at
14-15.  Finally, the Court held that, because Puerto Rico could ban
gambling altogether, Puerto Rico could instead take the less
restrictive step of restricting commercial advertising about that
activity.  Id. at 16.

   The same analysis is appropriate here.  Participating in a lottery,
like any other form of gambling, is not a constitutionally protected
activity.  The federal government and the states can prohibit that
activity entirely.  E.g., Posadas, slip op. 16;  Champion v. Ames
(Lottery Case), 188 U.S. at 356-358;  In re Rapier, 143 U.S. at 134;
Stone v. Mississippi, 101 U.S. 814, 821 (1879).  For much of our
history, the states did just that.  Section 1302 therefore reasonably
and directly promotes the type of interests that this Court found
legitimate in Posadas.  The district court's decision to invalidate
the prize list clause in its entirety erroneously denies Congress the
authority to bar from the mails a narrow category of commercial speech
that plays a direct and integral role in the conduct of an activity
that Congress and the states are entitled to discourage or suppress.

   3. The district court's permanent injunction against further
enforcement of the prize list clause also conflicts with this Court's
decisions in Ex parte Jackson, supra, and In re Rapier, supra.  In Ex
parte Jackson, the Court held that a person could be prosecuted under
the Act of July 12, 1876, for depositing in the mails a letter
containing a circular offering prizes in a lottery.  In so ruling, the
Court rejected a claim that the Act violated the First Amendment,
holding that "the object of Congress has not been to interfere with
the freedom of the press, or with any other rights of the people;  but
to refuse its facilities for the distribution of matter deemed
injurious to the public morals." 96 U.S. at 736.  Similarly, the Court
upheld the Anti-Lottery Act of 1890 over a First Amendment claim in In
re Rapier, supra.  In that case, two defendants were convicted for
sending through the mails a newspaper containing an advertisement and
a circular about the Louisiana Lottery.  Relying on Ex parte Jackson,
supra, the Court rejected the claim that the Act violated the First
Amendment, concluding that "(t)he circulation of newspapers is not
prohibited, but the government declines itself to become an agent in
the circulation of printed matter which it regards as injurious to the
people." In re Rapier, 143 U.S. at 134.  Accord Horner v. United
States (No. 1), 143 U.S. 207, 213 (1892);  Horner v. United States
(No. 2), 143 U.S. 570, 578 (1892) (relying on In re Rapier).  The
district court's ruling directly conflicts with this Court's decisions
in the Rapier and Jackson cases.  In fact, the district court
acknowledged that its ruling was inconsistent with Rapier.  App.,
infra, 15a.

   Moreover, in cases decided after Jackson and Rapier that involved
schemes to defraud the public, the Court has upheld the
constitutionality of two related statutes that also date from the era
of the Anti-Lottery Act of 1890:  39 U.S.C. 3005 and 3007, which
authorize the Postal Service to initiate administrative and judicial
proceedings in order to intercept reply mail induced by a fraudulent
scheme.  Public Clearing House v. Coyne, 194 U.S. 497, 505-516 (1904)
(relying on In re Rapier);  Donaldson v. Read Magazine, 333 U.S. 178,
189-191 (1948) (relying on Coyne);  Lynch v. Blound, 404 U.S. 1007
(1972), aff'g 330 F. Supp. 689 (S.D.N.Y. 1971) (three-judge court) (39
U.S.C. 3005);  Outpost Dev. Corp. v. United States, 414 U.S. 1105,
aff'g 369 F. Supp. 399 (C.D. Cal. 1973) (three-judge court) (39 U.S.C.
3005, 3007).  The Third, Fifth, and Ninth Circuits have also upheld
the constitutionality of this enforcement mechanism.  United States
Postal Service v. Athena Products, Ltd., 654 F.2d 362 (5th Cir. Unit B
1981), cert. denied, 456 U.S. 915 (1982) (both sections);  United
States Postal Service v. Beamish, 466 F.2d 804, 806-807 (3d Cir. 1972)
(Section 3007);  Hollywood House Int'l, Inc. v. Klassen, 508 F.2d 1276
(9th Cir. 1974) (Section 3005).  See also Original Cosmetics Products,
Inc. v. Strachan, 459 F. Supp. 496 (S.D.N.Y. 1978), aff'd, 603 F.2d
214 (2d Cir.) (Table), cert. denied, 444 U.S. 915 (1979) (Section
3005).  As the Fifth Circuit explained in 1981, the Court's recent
commercial speech decisions do not undermine validity of these
statutory provisions.  United States Postal Service v. Athena
Products, Ltd., 654 F.2d at 366-368.  /26/ Sections 3005 and 3007 also
apply to lotteries, and, for the reasons discussed above, the
application of those statutes to commercial speech does not violate
the First Amendment.

   Given this extensive contrary authority, the district court's
judgment invalidating in its entirety the prize list clause clearly
presents a substantial federal question that should be resolved by
this Court.

                              CONCLUSION

   Probable jurisdiction should be noted.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   JOHN R. BOLTON

      Assistant Attorney General

   THOMAS W. MERRILL

      Deputy Solicitor General

   PAUL J. LARKIN, JR.

      Assistant to the Solicitor General

   ANTHONY J. STEINMEYER

   IRENE SOLET

      Attorneys

   MAY 1988

   /1/ See generally J. Ezell, Fortune's Merry Wheel 1-59 (1960);  A.
Spofford, Lotteries in American History, S. Misc. Doc. No. 57, 52d
Cong., 2d Sess. 174-195 (1893);  National Inst. of L. Enforcement &
Crim. Just., LEAA, U.S. Dep't of Justice, The Development of the Law
of Gambling:  1776-1976, at 500-519 (1977) (hereinafter The
Development of the Law of Gambling);  Blakey & Kurland, The
Development of the Federal Law of Gambling, 63 Cornell L. Rev. 923
(1978).

   /2/ Blakey & Kurland, supra, 63 Cornell L. Rev. at 927.  The
dominant Nineteenth Century view was that lotteries were harmful to
society.  See, e.g., Champion v. Ames (Lottery Case), 118 U.S. 321,
356-358 (1903);  Stone v. Mississippi, 101 U.S. 814, 818 (1879);
Phalen v. Virginia, 49 U.S. (8 How.) 163, 168 (1850).

   /3/ Blakey & Kurland, supra, 63 Cornell L. Rev. at 931.

   /4/ See Horner v. United States, 147 U.S. 449, 456, 466 (1893);  4
Cong. Rec. 3656 (1876) (Rep. Cannon);  Lottery Circulars, 15 Op. Att'y
Gen. 203, 203-204 (1877).

   /5/ One shortcoming in the Act was that the Postmaster General
lacked the authority to seize letters that he suspected of containing
lottery advertisements.  Lotteries, 16 Op. Att'y Gen. 5 (1878).

   /6/ Lotteries -- Non-Mailable Matter, 18 Op. Att'y Gen. 306, 309
(1885).  The Attorney General concluded that a newspaper did not
become a "circular" by publishing an advertisement.  Id. at 309.

   /7/ See 21 Cong. Rec. 8714 (1890) (Rep. Evans).

   /8/ Exclusion of Lotteries from Postal Facilities, 17 Op. Att'y
Gen. 77, 77 (1881) (emphasis in original) (the Louisiana Lottery "is
the only lottery conducted under the sanction of law in the United
States");  see 21 Cong. Rec. 8714-8717 (1890) (summary of state laws
prohibiting lotteries);  H.R. Rep. 2678, 49th Cong., 1st Sess. 2-3
(1886) (same);  S. Rep. 11, 49th Cong. 1st Sess. 1-11 (1886) (same);
H.R. Rep. 787, 50th Cong., 1st Sess. Pt. 2, at 1-2 (Views of the
Minority) (1888).

   /9/ Use of the Mails for Lottery Purposes, H.R. Exec. Doc. 22, 46th
Cong., 2d Sess. 16 (1880) (Letter from the Postmaster-General Key to
the House of Representatives) ("(t)he lottery company most extensively
using the mails for the transmission of its circulars, tickets, & c.,
is the Louisiana State Lottery");  id. at 27-28 (Letter from New York
City Post Office General Superintendent Forrester to New York City
Postmaster James (Oct. 14, 1879));  id. at 28-29 (Letter from New
Orleans Postmaster McMillen to Assistant Attorney General Freeman,
Post Office Dep't (Nov. 4, 1879));  Letter from New Orleans Postmaster
McMillen to Postmaster-General Key (Nov. 12, 1879));  J. Richardson, A
Compilation of the Messages and Papers of the Presidents 1789-1897,
H.R. Misc. Doc. 210, 53d Cong., 2d Sess. Pt. 9, at 80-81 (Special
Message to Congress from President Harrison (July 29, 1890) (noting
that it would be "practically impossible" for lotteries to survive if
the mails were closed to them);  21 Cong. Rec. 8706 (1890);  id. at
8711 (statement of Rep. Wilkinson);  id. at 8717 (statement of Rep.
Hitt);  id. at 8721 (statement of Rep. Price);  J. Ezell, supra, at
251;  The Development of the Law of Gambling 673-677;  Blakey &
Kurland, supra, 63 Cornell L. Rev. at 935-936.

   /10/ 21 Cong. Rec. 8706 (1890) (statement of Rep. Moore that the
Louisiana lottery derived 93% of its income from out-of-state
bettors);  J. Ezell, supra, at 251.

   /11/ See S. Rep. 233, 48th Cong., 1st Sess. (1884);  id. at 12-15
(Views of the Minority);  H.R. Rep. 826, 48th Cong., 1st Sess. (1884);
 S. Rep. 11, 49th Cong., 1st Sess. (1886);  H.R. Rep. 2678, 49th
Cong., 1st Sess. (1886);  id. at 4-6 (Views of the Minority);  H.R.
Rep. 787, 50th Cong., 1st Sess. (1888);  id. Pt. 2, at 1-4 (Views of
the Minority);  S. Rep. 1579, 51st Cong., 1st Sess. (1890);  id. at
1-4 (reprinting House Report);  see generally J. Ezell, supra, at
251-263;  The Development of the Law of Gambling, 513-518;  Blakey &
Kurland, supra, 63 Cornell L. Rev. at 937-940.

   /12/ Some contemporary commentators have concluded that the
Anti-Lottery Act of 1890 was instrumental in bringing about the demise
of the Louisiana Lottery.  J. Ezell, supra, at 263-264;  Blakey &
Kurland, supra, 63 Cornell L. Rev. at 940.

   /13/ J. Ezell, supra, at 267-268.

   /14/ Id. at 268-269.

   /15/ Act of Mar. 2, 1895, ch. 191, 28 Stat. 963;  Act of Mar. 4,
1909, ch. 321, Section 213, 35 Stat. 1129-1130;  Act of June 25, 1948,
ch. 645, Section 1302, 62 Stat. 762;  Act of Oct. 31, 1951, ch. 655,
Section 29, 65 Stat. 721;  Act of Sept. 13, 1961, Pub. L. No. 87-218,
Section 2, 75 Stat. 492.

   /16/ Related provisions of Title 18 include:  Section 1301, which
prohibits the importation or interstate transportation of lottery
tickets, advertisements, or lists of prizes;  Section 1303, which
prohibits any Postal Service officer or employee from acting as a
lottery agent;  Section 1304, which prohibits broadcasters from
broadcasting lottery advertisements;  Section 1305, which creates a
special exemption for fishing contests;  and Section 1306, which
prohibits financial institutions from selling lottery tickets for
state-operated lotteries.

   /17/ The court also rejected appellee's equal protection challenge
to the advertising restriction of 18 U.S.C. 1302, on the ground that
the distinctions complained of were rationally related to legitimate
governmental interests.  App., infra, 17a-19a.  Finally, the court
ruled that 39 U.S.C. 3001 and 3005 could not be applied to restrict
the mailing of newspapers containing prize lists in news reports.
App., infra, 19a.

   /18/ The text of the Anti-Lottery Act of 1890 made the same point.
As adopted, the first clause of that Act applied to any "letter,
postal-card, or circular concerning any lottery" and any "list of the
drawings at any lottery." The second clause referred to "any
newspaper, circular, pamphlet, or publication of any kind containing
any advertisement of any lottery * * * or containing any list of
prizes awarded at the drawings of any such lottery." Section 1, 26
Stat. 465 (Rev. Stat. Section 3894 (Supp. 2d ed. 1874 (1891)).  That
section included prize lists that were found in all types of mailed
matter, including the types of promotional materials that would be
generally distributed by the sponsors of a lottery, or that would be
sent to an individual in response to an inquiry about a lottery's
prizes.

   /19/ Some lottery sponsors may not have included a list of their
prizes in every circular.  For example, in 1880 the Postmaster General
reported that the National Banking Company issued bonds on the
drawings of the Louisiana, Havana, and Kentucky lotteries, and that
one of its circulars said:  "Circulars containing lists of securities
dealt in, with full and explicit information, sent free." Use of the
Mails for Lottery Purposes, H.R. Exec. Doc. 22, supra, at 9.

   /20/ "The maxim noscitur a sociis, that a word is known by the
company it keeps, while not an inescapable rule, is often wisely
applied where a word is capable of many meanings in order to avoid the
giving of unintended breadth to the Acts of congress." Jarecki v. G.D.
Searle & Co., 367 U.S. at 307.  This maxim stated a "familiar" rule
that was "applicable to all written instruments" in 1893.  Virginia v.
Tennessee, 148 U.S. at 519.  It is therefore reasonable to assume that
Congress was aware of that rule when Congress adopted the Anti-Lottery
Act of 1890 and to interpret Section 1302 with that rule in mind.

   /21/ There was considerable debate in Congress on the question
whether the Anti-Lottery Act of 1890 would violate the First
Amendment.  Supporters of the Act argued that it was constitutional
under this Court's decision in Ex parte Jackson, supra.  See S. Rep.
233, 48th Cong., 1st Sess. 1 (1884);  S. Rep. 11, 49th Cong., 1st
Sess. 12 (1886);  H.R. Rep. 2678, 49th Cong., 1st Sess. 1 (1886);
H.R. Rep. 787, supra, Pt. 2, at 2-4 (Views of the Minority);  21 Cong.
Rec. 8710 (1890) (Rep. Caldwell);  id. at 8712 (Rep. Wilkinson).
Opponents of the bill argued that Ex parte Jackson did not sanction
the exclusion of newspapers from the mails, and that, if enacted, the
Act would serve as a precedent for the exclusion from the mails of
other types of commentary that future Congresses would find
detrimental to the public.  See S. Rep. 233, supra, at 13-15 (Views of
the Minority);  H.R. Rep. 826, 48th Cong., 1st Sess. 2-4 (1884);  H.R.
Rep. 2678, supra, at 4-6 (Views of the Minority);  H.R. Rep. 787,
supra, at 1.  The Fifty-First Congress ultimately concluded that it
was lawful to exclude newspapers containing lottery advertising from
the mails.  As Representative Wilkinson explained (21 Cong. Rec. 8712
(1890)):

         It is said also that this is a blow to the freedom of the
      press, which, with freedom of speech, Congress is forbidden by
      the first amendment to the Constitution to make any abridgement
      of.

         Sir, if this is a blow against the freedom of the press it is
      such a blow as the State of New York has struck where lottery
      advertisements are forbidden in the newspapers.  It is such a
      blow as other States in this Union have struck who have done
      likewise, but I have never yet heard it has there been
      considered a blow at the freedom of the press.  The freedom of
      the press, as I understand it, consists in the right of the
      editors of the newspapers to freely express their views on
      public questions without let or hinderance by those in
      authority.  It means to forbid that censorship of the press once
      so prevalent in European countries and still common in those
      countries, but this matter of advertisements seems to me to be a
      different affair.  I hold in my hand as good a paper, as well
      supplied with news, as interesting as paper to read, perhaps, as
      any in the United States, a paper which is published in a State
      where lottery advertisements are forbidden and where no
      newspaper dares to print one, and it seems to thrive and prosper
      and makes no complaint that its rights have been interfered
      with.

   /22/ That is clear from the numerous references to the Louisiana
Lottery during the consideration of the Anti-Lottery Act of 1890.  See
Message from the President of the United States, S. Exec. Doc. 196,
51st Cong., 1st Sess. 1 (1890);  21 Cong. Rec. 8699 (1890) (Rep.
Hopkins);  id. at 8705 (Rep. Moore);  id. at 8707 (Rep. Hopkins);  id.
at 8707-8708 (Rep. Rogers);  id. at 8708 (Rep. Hill);  id. at
8711-8713 (Rep. Wilkinson);  id. at 8713 (Rep. Evans);  id. at 8719
(Rep. Hansbrough);  ibid. (Rep. Blount).

   /23/ In the 12 200-Ft. Reels of Film case, for example, the Court
said (413 U.S. at 130 n.7) that it would construe the term "obscene"
in the federal laws prohibiting the importation of obscene material in
a manner consistent with the definition of obscenity adopted in Miller
v. California, 413 U.S. 15 (1973).  A similar analysis is appropriate
here.

   /24/ The United States District Court for the District of Columbia
also recently upheld the constitutionality of the advertisement clause
in Section 1302 over a similar First Amendment objection.  Aimes
Publications, Inc. v. United States Postal Service, No. 86-1434
(D.D.C. Feb. 23, 1988), appeal pending (D.C. Cir.).

   /25/ Of course, the prohibition adversely affects the policies of
those states that have authorized private lotteries.  See The Lottery
Advertising Clarification Act:  Hearings on H.R. 1568 Before the
Subcomm. on Administrative Laws and Governmental Regulations of the
House Comm. on the Judiciary, 100th Cong., 1st Sess. 13-14, 20-22
(1987) (testimony of Deputy Assistant Attorney General Kmiec).  When
the Anti-Lottery Act was enacted in 1890, however, that matter was of
little or no concern, because the Louisiana Lottery was then the only
legal lottery still operating in the United States, and more than 90%
of its income came from out-of-state.  See pages 4-5, supra.

   The House of Representatives is presently considering H.R. 3146,
100th Cong., 2d Sess. (1988), known as the Lottery Advertising
Clarification Act of 1988, which would expand the exemption in 18
U.S.C. 1307 to include materials promoting a lottery that is
"authorized or not otherwise prohibited by law in the State in which
it is conducted." H.R. Rep. 100-557, 100th Cong., 2d Sess. Pt 1, at 1
(1988);  see 134 Cong. Rec. H3073-H3079, H3102-H3103 (daily ed. May
10, 1988).

   /26/ The decision below is also inconsistent with the decisions of
the Second and Third Circuits with respect to the constitutionality of
18 U.S.C. 1304, which prohibits broadcasting information about
lotteries.  The Second Circuit in New York State Broadcasters Ass'n v.
United States, 414 F.2d 990 (1969), cert. denied, 396 U.S. 1061
(1970), upheld the constitutionality of the statute as applied to
information directly promoting a state-conducted lottery.  Although
the Third Circuit in New Jersey State Lottery Comm'n v. United States,
491 F.2d 219 (1974) (en banc), dismissed as moot, 420 U.S. 371 (1975),
held that Section 1304 would be unconstitutional if it were applied to
prohibit the broadcasting of a winning lottery number in a lawful
state-conducted lottery, the court held that the statute could
constitutionally be applied to compensated broadcasts, and possibly to
some uncompensated promotional advertisements beyond the context of
broadcast journalism.  491 F.2d at 224.  This Court granted certiorari
to review the Third Circuit's decision, but later ordered the case
dismissed as moot after Congress enacted 18 U.S.C. 1307, which exempts
state-run lotteries from Section 1304.  United States v. New Jersey
State Lottery Comm'n, 420 U.S. 371 (1975).

   The district court's ruling in this case invalidating the prize
list clause in Section 1302 goes well beyond the decisions of the
Second and Third Circuits.  The district court determined that the
prize list clause in Section 1302 is invalid because it applies to
such lists reported in news stories, but the judgment entered by the
district court invalidated the prize list clause in its entirety.
App., infra, 21a-22a.  Under the district court's judgment, the
Postmaster could not apply the prize list clause to any type of
publication, including circulars prepared and disseminated by the
sponsors of an illegal numbers racket.  Both the Second and Third
Circuit decisions noted above, however, would uphold Section 1302 if
it was applied in that manner.  The decision below therefore is also
inconsistent with the decisions of the Second and Third Circuits in
the lottery broadcasting cases.

   APPENDIX