PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

WV ASSOCIATION OF CLUB 

OWNERS AND FRATERNAL SERVICES,

INCORPORATED,

Plaintiff-Appellee,

v.

JOHN C. MUSGRAVE, in his official

capacity as Director of the State  No. 07-2032

Lottery,

Defendant-Appellant,

and

WEST VIRGINIA LOTTERY

COMMISSION,

Defendant. 

Appeal from the United States District Court

for the Southern District of West Virginia, at Charleston.

Joseph R. Goodwin, Chief District Judge.

(2:07-cv-00122)

Argued: October 29, 2008

Decided: January 13, 2009

Before WILKINSON and DUNCAN, Circuit Judges,

and Richard D. BENNETT, United States District Judge for

the District of Maryland, sitting by designation.
Reversed by published opinion. Judge Wilkinson wrote the

opinion, in which Judge Duncan and Judge Bennett joined.

COUNSEL

ARGUED: Katherine Ann Schultz, OFFICE OF THE

ATTORNEY GENERAL OF WEST VIRGINIA, Charleston,

West Virginia, for Appellant. Terri S. Baur, AMERICAN

CIVIL LIBERTIES UNION OF WEST VIRGINIA, Charleston, West Virginia, for Appellee. ON BRIEF: Darrell V.

McGraw, Jr., Attorney General, Barbara H. Allen, Managing

Deputy Attorney General, OFFICE OF THE ATTORNEY

GENERAL OF WEST VIRGINIA, Charleston, West Virginia, for Appellant. Roger D. Forman, FORMAN &

HUBER, L.C., Charleston, West Virginia, for Appellee.

OPINION

WILKINSON, Circuit Judge:

Plaintiff, the West Virginia Association of Club Owners

and Fraternal Services, Inc., brought this suit on behalf of its

members which include certain clubs, restaurants, convenience stores, and fraternal organizations with alcohol

licenses who are also state-licensed limited video lottery

retailers. Plaintiff sought invalidation of West Virginia’s

restrictions on limited video lottery advertising as a violation

of the First and Fourteenth Amendments of the United States

Constitution. The district court granted plaintiff’s motion for

a preliminary injunction and enjoined enforcement of the

advertising restrictions in all of their applications. 

On the circumstances presented here, we must reverse. The

Supreme Court has cautioned that we not casually invalidate

state legislation on facial grounds, see Washington State

2 WV ASSOCIATION v. MUSGRAVE
Grange v. Washington State Republican Party, ___ U.S. ___,

128 S.Ct. 1184 (2008), for the simple reason that such challenges "often rest on speculation" and "run contrary to the

fundamental principle of judicial restraint." Id. at 1191. In this

particular context, we think that caution is especially advisable. The state has a longstanding and substantial interest in

regulating the implementation and promotion of its own lottery. It has done so by attempting to raise revenues necessary

for education and infrastructure without magnifying the social

maladies often associated with gambling addictions. It is this

interest in a balanced approach to lottery promotion that

would be eviscerated by the wholesale invalidation of West

Virginia’s advertising restrictions. 

I.

A.

West Virginia has a long history of regulating lotteries

within its borders. From the time the state first entered the

Union in 1863, up until 1984, the West Virginia Constitution

banned all lotteries. In 1984, the Constitution was amended to

create a narrow exception to the ban. As amended, Article VI,

§ 36 of the West Virginia Constitution provides: 

"The legislature shall have no power to authorize lotteries . . . for any purpose, and shall pass laws to prohibit the sale of lottery . . . tickets in this State;

except that the legislature may authorize lotteries

which are regulated, controlled, owned and operated

by the State of West Virginia in the manner provided

by general law . . ." 

W. Va. Const. Art. VI, § 36. Soon after the amendment was

ratified, the West Virginia legislature passed the State Lottery

Act, W. Va. Code § 29-22-1 et seq., which created a Lottery

Commission to conduct a state lottery to raise revenue for the

state. Over time, the lottery expanded, but West Virginia

WV ASSOCIATION v. MUSGRAVE 3
courts ensured that all lotteries within the state were authorized, "regulated, controlled, owned, and operated" by the

state in accordance with the West Virginia Constitution. See

Club Ass’n of W. Va., Inc. v. Wise (Club Ass’n I), 156 F.

Supp. 2d 599, 604-09 (S.D.W.Va. 2001). 

This case concerns West Virginia’s limited video lottery.

Video lottery machines were first allowed by the Lottery

Commission at a racetrack that entered into a contract with

the Commission to operate privately owned video lottery

machines. The West Virginia Supreme Court of Appeals

invalidated this video lottery as violating W. Va. Const. Art.

VI, § 36 because it was not specifically authorized by the

state. See W. Va. ex rel. Mountaineer Park, Inc. v. Polan, 438

S.E.2d 308, 318 (W. Va. 1993). In response, the state legislature passed the Racetrack Video Lottery Act (the "RVLA"),

W. Va. Code §§ 29-22A-1 et seq., in 1994 to legalize video

lotteries at racetracks in an effort to save the ailing racing

industry and the jobs and tourism revenues that it provided for

the state. See W. Va. Code § 29-22A-2(e). 

At the same time, thousands of video gaming machines

were being operated illegally in private establishments other

than racetracks. These "gray" machines went largely unregulated because they were only prima facie illegal and consequently it was difficult to enforce the restrictions against

them. According to a government commissioned report, the

number of illegal "gray" machines reached 13,524 by 2001.

To combat the problem of "gray" machines and to capitalize

on video lottery revenues at a time of budgetary pressure,

Governor Robert Wise proposed legalizing, restricting, and

regulating video gaming machines in his 2001 State of the

State Address. He specifically wanted to use video lottery revenues to fund education and infrastructure in West Virginia.

Following the Governor’s suggestion, and after extensive

debate, the legislature passed the Limited Video Lottery Act

(the "LVLA"), W. Va. Code §§ 29-22B-101 et seq., in April

4 WV ASSOCIATION v. MUSGRAVE
2001 during a special session. See Club Ass’n I, 156 F. Supp.

2d at 606-08 (detailing history). 

The LVLA raises revenue for the state. Based on a sliding

scale determined by daily revenues, the LVLA allocates thirty

to fifty percent of gross profits to the Lottery Commission for

distribution to municipalities and the State Excess Lottery

Revenue Fund. See W. Va. Code § 29-22B-1408. The LVLA

also distributes two percent of gross terminal income to the

Lottery Commission for its costs. See W. Va. Code § 29-22B1408(a)(1). A portion of this two percent goes directly to the

compulsive gambling treatment fund created by the state. Id.

In fiscal year 2004, the state received almost $242 million in

revenue from the limited video lottery. 512 F. Supp. 2d at

435.

The LVLA legalizes and regulates the video lottery by providing a licensing scheme for video lottery machines that is

administered by the Lottery Commission. See W. Va. Code

§ 29-22B-402. A brief overview of the LVLA demonstrates

that it closely regulates the video lottery. First, it allows the

Lottery Commission to distribute non-transferable licenses for

only 9,000 terminals for use in restricted access adult-only

facilities, W. Va. Code § 29-22B-1101(a), id. at § 29-22B203(2); it allows individual retailers to have only five video

lottery terminals on their premises, id. at § 29-22B-1101(c);

and it prohibits two retailers from locating in the same building or within 150 feet of each other, id. at § 29-22B-1202.1

The LVLA also requires retailers to provide phone numbers

for state-approved providers of gambling treatment and support services, and to post a sign that reads: "CAUTION: Gambling and playing this machine can be hazardous to your

health, your finances, and your future." Id. at § 29-22B-1112.

Additionally, the Act prohibits retailers from providing access

1There are minor exceptions to these provisions for certain non-profit,

fraternal, and veteran’s organizations. See § 29-22B-1101(c); id. at § 29-

22B-1202(b). 

WV ASSOCIATION v. MUSGRAVE 5
to ATMs and from accepting credit cards or debit cards as

payment for playing the video lottery machine. Id. at § 29-

22B-702(10). Finally, the LVLA prohibits people under

twenty-one years old from playing the video lottery machines

and subjects retailers to civil penalties if they allow underage

participation. Id. at § 29-22B-1602(a) to (b). 

The LVLA also attempts to curb the use of illegal "gray"

video lottery machines by making restrictions on video gambling machines easier to enforce than they previously were.

The LVLA makes unlicensed video gambling machines per se

illegal, subject to seizure, and subject to criminal penalties.

See W. Va. Code § 29-22B-1801; id. at § 29-22B-1703 to

-1705. 

In addition, and similar to the RVLA, the LVLA provides

specific legislative findings that the limited video lottery is a

"lottery" within the meaning of W. Va. Const. Art. VI, § 36

and that the state has constitutional authority to establish a lottery that is "regulated, controlled, owned and operated" by the

state. See W. Va. Code § 29-22B-201. The legislative findings

declare that the state can "control, own and operate a video

lottery by possessing a proprietary interest in the main logic

boards . . . memory chips . . . and software . . . necessary for

the video lottery system to be operated."2Id. at § 29-22B2The legislative findings further provide that (2) the state "may possess

a proprietary interest in video lottery game software, for purposes of this

article, through outright ownership or through an exclusive product license

agreement with a manufacturer whereby (A) the manufacturer retains

copyrighted ownership of the software, (B) the product license granted to

the state is nontransferable, and (C) the agreement authorizes the state to

run the software program, solely for its own use, on the state’s central

equipment unit and electronic video terminals networked to the central

equipment unit;" and (3) the state "can control and regulate a video lottery

if the state (A) restricts licensure to a limited number of video lottery terminals at qualified locations, (B) extends strict and exclusive state regulation to all persons, locations, practices and associations related to the

operation of licensed limited video lottery facilities, and (C) provides

comprehensive law-enforcement supervision of limited video lottery activities." W. Va. Code § 29-22B-202. 

6 WV ASSOCIATION v. MUSGRAVE
202(1). Based on these legislative findings, the West Virginia

Supreme Court of Appeals held that both the RVLA and

LVLA satisfy the state ownership and control requirements of

W. Va. Const. Art. VI, § 36. See West Virginia ex rel. Cities

of Charleston and Huntington v. West Virginia Economic

Development Authority, 588 S.E.2d 655, 670 (W. Va. 2003).

The RVLA and LVLA differ on the important matter at

issue in this case: the LVLA regulates video lottery advertising more strictly than the RVLA does.3

 The LVLA prohibits

the Lottery Commission and limited video lottery retailers

from conducting "video lottery advertising or promotional

activities." See W. Va. Code § 29-22B-702(13); id. at § 29-

22B-404; see also W. Va. Code R. § 179-5-33.2; id. at § 179-

5-33.1 (prohibiting licensed operators from advertising).

Advertising is defined as "a media advertisement, an outdoor

sign, or a sign inside the licensee’s premises that may be seen

from the outside of the premises, that conveys to the average

reader or hearer that limited video lottery gaming is available

at the retail establishment or from the licensed operator." W.

Va. Code R. § 179-5-2.1. The LVLA further prohibits the use

of "the words ‘video lottery’ in the name of the approved

location, or in any directions or advertising visible from outside the retailer’s establishment." See W. Va. Code § 29-22B702(14); see also W. Va. Code R. § 179-5-33.3. Rules promulgated under the LVLA also prohibit limited video lottery

retailers from using words "commonly associated with gambling" in their names, W. Va. Code R. § 179-5-33.4, and from

using "gambling symbols . . . on any sign or in any directions

or advertising visible from outside the licensed retailer’s

establishment," id. at § 179-5-33.5. The rules do permit retailers to display a 12 inch by 12 inch uniform sign, distributed

by the Lottery Commission, which states "West Virginia Lot3The RVLA provides that a racetrack can advertise its video lottery if

it receives prior written approval of the director of the Lottery Commission. See W. Va. Code § 29-22A-9(f)(12). 

WV ASSOCIATION v. MUSGRAVE 7
tery Products available here." See W. Va. Code R. § 179-5-

33.2. 

B.

The West Virginia Association of Club Owners and Fraternal Services, Inc. filed this suit on behalf of its members on

February 27, 2007, to challenge the limited video lottery

advertising restrictions. Plaintiff filed a complaint seeking

declaratory and injunctive relief, and a motion for a preliminary injunction against the West Virginia State Lottery Commission and John C. Musgrave in his official capacity as

Director of the State Lottery. Plaintiff claims that the restrictions on advertising contained in the LVLA and the Limited

Video Lottery Rules violate plaintiff’s right to free speech

under the First and Fourteenth Amendments of the United

States Constitution and under Article III, § 7 of the West Virginia Constitution.4

 The Lottery Commission was subsequently dismissed from the suit. 

The district court granted plaintiff’s motion for a preliminary injunction. The court held that plaintiff had established

a likelihood of success on the merits of plaintiff’s federal constitutional claims. The court reasoned that it was likely that

the speech being regulated was private speech by limited

video lottery retailers and that the advertising regulations

impermissibly restricted the retailers’ right to engage in commercial speech under Central Hudson Gas & Electric Corp.

v. Public Service Commission of New York, 447 U.S. 557

(1980). The court held that the other preliminary injunction

requirements were met and therefore enjoined the defendant

from enforcing any of its advertising restrictions.5See West

4The district court did not rule on the West Virginia constitutional

claims. 

5The district court opinion only specifically lists "the advertising ban

contained in West Virginia Code § 29-22B-702(13) and (14) and West

Virginia Code of State Rules § 179-5-33.1 to 4" as enjoined. 512 F. Supp.

8 WV ASSOCIATION v. MUSGRAVE
Virginia Ass’n of Club Owners and Fraternal Services, Inc.

v. Musgrave, 512 F. Supp. 2d 424 (S.D.W.Va. 2007). Defendant appeals. A panel of this court granted defendant’s motion

for a stay pending this appeal. See Order, November 26, 2007.

We review the district court’s grant of a preliminary injunction for abuse of discretion. Accordingly, we review factual

findings for clear error and legal conclusions de novo. See

East Tennessee Natural Gas Co. v. Sage, 361 F.3d 808, 828

(4th Cir. 2004). In order to receive a preliminary injunction,

a plaintiff "must establish that he is likely to succeed on the

merits, that he is likely to suffer irreparable harm in the

absence of preliminary relief, that the balance of equities tips

in his favor, and that an injunction is in the public interest."

Winter v. Natural Res. Defense Council, Inc., ___ U.S. ___,

slip op. at 10 (2008). As the district court noted, in the context

of an alleged violation of First Amendment rights, a plaintiff’s

claimed irreparable harm is "inseparably linked" to the likelihood of success on the merits of plaintiff’s First Amendment

claim. 512 F. Supp. 2d at 429. See also Newsom v. Albemarle

County School Bd., 354 F.3d 249, 254-55 (4th Cir. 2003).

Therefore, we focus our review on the merits of plaintiff’s

First Amendment claim. 

II.

West Virginia contends that the speech being regulated—

limited video lottery advertising—is government speech and

2d at 448. However, plaintiff also included W. Va. Code R. § 179-5-33.5

in its complaint and the district court noted that "when I discuss the State’s

limitations on advertising, I am referring to the statutory prohibitions on

advertising in W. Va. Code § 29-22B-702 and the limitations on the

actions of LVL retailers contained in W. Va. Code R. § 179-5-33.1 to -

33.5," id. at 430 n.3, and did not distinguish § 179-5-33.5 in its application

of Central Hudson to the advertising restrictions. We therefore take the

district court to also enjoin W. Va. Code R. § 179-5-33.5, the prohibition

on the use of gambling symbols. 

WV ASSOCIATION v. MUSGRAVE 9
therefore can be restricted by the government free from First

Amendment scrutiny. Plaintiff contends that the speech at

issue is private speech by the limited video lottery retailers

and therefore can only be restricted in accordance with the

First Amendment. The speech at issue does not fit neatly into

either category: it is hybrid speech. As this court recognized

in Planned Parenthood of South Carolina, Inc. v. Rose, 361

F.3d 786 (4th Cir. 2004), some speech is "mixed" speech

because it has aspects of both private speech and government

speech. Id. at 794. To say it is all one or the other is to oversimplify. 

Some aspects of the limited video lottery advertising suggest that it is government speech. First, the government is

conveying a message, which is a prerequisite to a finding of

government speech. By requiring that the lottery only be

advertised through uniform signs and by prohibiting all other

advertisements, the state is conveying a message supporting

measured use of the video lottery. The district court erred

when it rejected this as a message because, in its view, any

message was "mixed at best." 512 F. Supp. 2d at 436. Here,

however, the government is not conveying a mixed or inconsistent message—it is conveying a message of balance. 

For this reason, a similar argument was rejected in Johanns

v. Livestock Marketing Association, 544 U.S. 550 (2005),

where the Court stated: "[t]he beef promotions are perfectly

compatible with the [government dietary] guidelines’ message

of moderate consumption — the ads do not insist that beef is

also What’s for Breakfast, Lunch, and Midnight Snack." Id.

at 561 n.5. Likewise, here the uniform advertisements convey

a message of "moderate consumption" rather than an inducement to overindulgence that might result if advertisers were

given free rein. We also reject plaintiff’s argument that the

state was not conveying a message because defendant conceded in a memorandum to the district court that it "has not

taken any action to promote an anti-gambling position." See

Plaintiff’s Brief at 10-11. The state’s message is not an anti10 WV ASSOCIATION v. MUSGRAVE
gambling message—it is a message of permitting gambling

within bounds.

The state is politically accountable for this message

because it conducts the video lottery program. The fact that

the state is conveying a message for which it is politically

accountable suggests that the speech at issue is government

speech. See, e.g., Board of Regents of the University of Wisconsin System v. Southworth, 529 U.S. 217, 235 (2000)

("When the government speaks, for instance to promote its

own policies or to advance a particular idea, it is, in the end,

accountable to the electorate and the political process for its

advocacy."). This rationale can apply even when the government "use[s] private speakers to transmit specific information

pertaining to its own program." See Rosenberger v. Rector

and Visitors of Univ. of Va., 515 U.S. 819, 833 (1995). 

However, the fact that the government is conveying a message does not automatically qualify that message as government speech. It is also relevant whether the government is

conveying its message by restricting its own speech or by

restricting private speech. On the one hand, the speech being

restricted here is government speech because it falls within

the scope of the video lottery program. That program is one

in which the state has a significant revenue interest, W. Va.

Code at § 29-22B-1408, maintains the central equipment, id.

at § 29-22B-305, has a proprietary interest in the software, id.

at § 29-22B-202, and has been found by the state’s highest

court to satisfy the West Virginia constitutional requirements

of state ownership and control. See West Virginia Economic

Development Authority, 588 S.E.2d at 670. Therefore, in one

sense, all speech by retailers that advertises the video lottery

is within the scope of the video lottery program and the

owner-licensee relationship because it relates directly to the

use of the video lottery. See Garcetti v. Ceballos, 547 U.S.

410, 421-23 (2006) (holding that speech made by government

employee pursuant to official duties is government speech);

Rust v. Sullivan, 500 U.S. 173, 194-200 (1991) (upholding

WV ASSOCIATION v. MUSGRAVE 11
restrictions on speech made within limits of government program). 

The speech being restricted also has attributes of private

speech. It is privately funded, which distinguishes it from the

publicly funded speech at issue in Rust and Garcetti.

6

 Moreover, the retailers are the literal speakers — they would

design the advertisements, they would display the advertisements, and they own the retail outlets as well as the statelicensed video gaming machines. Prior government speech

cases have identified these factors as supporting a finding of

private speech. See Sons of Confederate Veterans, Inc. v.

Commissioner of the Virginia Department of Motor Vehicles,

288 F.3d 610, 618 (4th Cir. 2002) ("the identity of the ‘literal

speaker’" is one of four factors to determine the government

or private nature of speech); Rose, 361 F.3d at 792-93 (same).

These private speech attributes suggest that the government is

not only affirmatively speaking, or even just restricting its

own speech, but instead is trying to convey its message

through private speakers that it did not fund or provide with

a means of communication. For these reasons, we cannot designate the speech at issue as pure government speech. 

In sum, the speech at issue in this case shares some aspects

of government speech and some aspects of private speech. For

that reason, neat categorizations cannot alone resolve the

questions and the parties are wrong to suggest that they can.

But regardless of where the speech may fall on the government/private speech spectrum, a challenge brought to enjoin

large swaths of a comprehensive regulatory scheme is something a court should consider with caution—"[f]acial invalidation is, manifestly, strong medicine," and such challenges are

6This case also differs from Summum v. Pleasant Grove City, 483 F.3d

1044 (10th Cir. 2007), because the tension between the free speech clause

and the establishment clause of the First Amendment is simply absent

here. 

12 WV ASSOCIATION v. MUSGRAVE
disfavored. See National Endowment for the Arts v. Finley,

524 U.S. 569, 580 (1998) (internal quotations omitted).7

III.

Plaintiff asks the court to declare the advertising restrictions "unconstitutional, illegal, and void" under Central Hudson and seeks to enjoin enforcement of each of the statutes

and regulations in all of their potential applications against

plaintiff’s members. See Plaintiff’s Complaint at 5. Plaintiff

asks too much. While one can always quibble over terminology, most of the disadvantages of facial challenges are present

here. Plaintiff did not bring this challenge in the context of a

specific enforcement action and, more critically, its meat-axe

approach has deprived the court of the contextual underpinning that normally informs judicial consideration of statutory

and regulatory applications. 

Instead, plaintiff seeks an unrestricted right to advertise.

Plaintiff therefore asks us to evaluate claims based on speculation and to "formulate a rule of constitutional law broader

than [might be] required by the precise facts to which it is to

be applied." Washington State Grange v. Washington State

Republican Party, ___ U.S. ___, 128 S.Ct. 1184, 1191 (2008)

(quoting Ashwander v. TVA, 297 U.S. 288, 347 (1936)).

Despite plaintiff’s claim that it seeks a limited right to engage

in truthful advertising, see Plaintiff’s Brief at 1, plaintiff

asked the district court to "enjoin[ ] the Director from enforcing the state’s ban on advertising and promotions against

plaintiff’s members," without restriction. See Plaintiff’s Complaint at 5. And the district court granted a blanket injunction

7Our analysis would have been better served if West Virginia, instead

of relying solely on its argument regarding government speech, had

appealed the district court’s ruling that West Virginia’s restrictions on

advertising did not pass the intermediate scrutiny test articulated in Central Hudson. We are, however, compelled to discuss the Central Hudson

standard because the hybrid nature of the speech presented necessarily

calls it into play. 

WV ASSOCIATION v. MUSGRAVE 13
preventing defendant from enforcing any of the advertising

prohibitions. See 512 F. Supp. 2d at 448. Plaintiff was thereby

permitted to take a whack at the state’s comprehensive regulatory scheme and disembody it in one fell swoop. But the

Supreme Court recently reminded in Washington State

Grange, that "facial challenges threaten to short circuit the

democratic process by preventing laws embodying the will of

the people from being implemented in a manner consistent

with the Constitution. We must keep in mind that ‘[a] ruling

of unconstitutionality frustrates the intent of the elected representatives of the people.’" 128 S.Ct. at 1191 (quoting Ayotte

v. Planned Parenthood of Northern New Eng., 546 U.S. 320,

329 (2006)). 

We thus think the course of prudence lies in avoiding

wholesale interference with a program at the core of state

expertise and interest. Whether a particular regulation or

application is in some sense infirm is not something we need

to ask. This is a question for the future. For as the Court said,

"[a]s-applied challenges are the basic building blocks of constitutional adjudication," see Gonzales v. Carhart, 127 S.Ct.

1610, 1639 (2007) (quoting Fallon, As-Applied and Facial

Challenges and Third-Party Standing, 113 Harv. L. Rev.

1321, 1328 (2000)), and "[a]lthough passing on the validity of

a law wholesale may be efficient in the abstract, any gain is

often offset by losing the lessons taught by the particular," see

Sabri v. United States, 541 U.S. 600, 608-09 (2004). For these

reasons, we hesitate to throw out rules and statutory prohibitions that are carefully threaded throughout a comprehensive

state regulatory scheme. 

This general perspective — recognizing the inadvisability

of dispatching regulatory regimes wholesale — makes application of the Supreme Court’s analysis in Central Hudson

Gas & Electric Corp. v. Public Service Commission of New

York, 447 U.S. 557 (1980), more straightforward. Our analysis is limited to the narrow category of cases where the challenged regulations only restrict promotion of a government14 WV ASSOCIATION v. MUSGRAVE
created product. The speech at issue lies at the intersection of

government speech, which is unprotected by the First Amendment, and private commercial speech, which is deserving of

a real but still "lesser protection" under the First Amendment.

See Johanns, 544 U.S. at 553; Central Hudson, 447 U.S. at

563. The regulations do not inhibit the ability of people to

engage in political speech about government programs—

everyone is still free to debate the merits and demerits of the

lottery to a fare-thee-well. The regulations also do not prevent

private entities from advertising purely private products; the

context therefore differs from the Central Hudson line of

cases. In this case, the state’s interest is higher because the

state has an ownership interest, not just a regulatory interest,

in the video lottery. We continue to use Central Hudson as a

guide, but we note that in this narrow circumstance the government speech aspects of the commercial speech at issue

provide additional weight in favor of upholding the state’s

regulations that is simply not present in other commercial

speech cases.

We recognize of course the importance of commercial

speech—it "not only serves the economic interest of the

speaker, but also assists consumers and furthers the societal

interest in the fullest possible dissemination of information."

Central Hudson, 447 U.S. at 561-62. Given the important

informational value of commercial speech, the Court has

articulated a four-part intermediate scrutiny test to determine

the constitutionality of restrictions on commercial speech: (1)

to receive any First Amendment protection, commercial

speech "must concern lawful activity and not be misleading;"

(2) the government must assert a "substantial" government

interest to justify its regulation; (3) the regulation must "directly advance[ ] the governmental interest asserted;" and (4)

the regulation must not be "more extensive than is necessary

to serve that interest." Id. at 566. The Court later explained,

"[t]he four parts of the Central Hudson test are not entirely

discrete. All are important and, to a certain extent, interrelated: Each raises a relevant question that may not be disposiWV ASSOCIATION v. MUSGRAVE 15
tive to the First Amendment inquiry, but the answer to which

may inform a judgment concerning the other three." Greater

New Orleans Broadcasting Ass’n, Inc. v. United States, 527

U.S. 173, 183-84 (1999).

A.

First, the speech at issue in this case — limited video lottery advertising — concerns a lawful activity and we shall

assume that it is not misleading. The speech relates to the

video lottery which was legalized by the LVLA in 2001. See

W. Va. Code §§ 29-22B-101 et seq. We assume that the

speech is not misleading because, as the district court found,

the speech is not inherently misleading, defendant has not

provided evidence that the speech is actually misleading, and

there is no evidence that the advertising restrictions were

enacted to prevent the dissemination of misleading information. 512 F. Supp. 2d at 440-41. However, the fact that we are

required to make this assumption is a drawback to facial

invalidation. We have no idea whether the advertisements will

be misleading. Plaintiff asks us to rely on speculation about

the informational value of potential advertisements to enjoin

enforcement of the restrictions against all advertisements. To

rely on such speculation would not be prudent and so we

again proceed with caution.

B.

Second, the government has a substantial interest in conducting a lottery program that raises revenue for the state but

remains moderate in nature and balanced in its essence. The

state’s asserted interest is to advance the purposes of the

LVLA. As the district court noted, "[t]he avowed purpose of

[the LVLA] was to establish a single state owned and regulated video lottery thus allowing the State to collect revenue

therefrom, control the operators of the machines, and stem the

proliferation of gambling in the State." 512 F. Supp. 2d at 427

(quoting Club Ass’n v. Wise, 293 F.3d 723, 724 (4th Cir.

16 WV ASSOCIATION v. MUSGRAVE
2002)); see also West Virginia Economic Development

Authority, 588 S.E.2d at 667. 

The history of the LVLA supports this purpose. In 2001,

Governor Wise initially proposed legalizing the video lottery

in order to "reduce, restrict, and regulate" the over 13,000 illegal "gray" machines available in private establishments and to

generate revenue to finance education and infrastructure projects in West Virginia. See Club Ass’n I, 156 F. Supp. 2d at

607 (quoting Governor Wise). By legalizing a limited video

lottery, the state sought to bring video gambling out into the

open so that it could better enforce regulations that prevent

the social ills associated with gambling while not relinquishing its revenue-generating benefits. 

The district court erred in considering the state interests as

distinct purposes when in fact they are an interrelated whole.

512 F. Supp. 2d at 442. When considered in its entirety, the

LVLA has the perfectly coherent goal of creating a lottery

that raises revenue without preying on the vulnerabilities of

the impecunious and those prone to gambling addictions. 

The state’s interest in conducting the lottery also falls

squarely within the state’s historic interest in regulating gambling pursuant to the state police power. It is well recognized

that regulating gambling is at the core of the state’s residual

powers as a sovereign in our constitutional scheme. In the

commercial speech context specifically, the Court has consistently recognized that governments have a substantial interest

in reducing the negative effects of gambling. See Greater New

Orleans Broadcasting, 527 U.S. at 185 ("reducing the social

costs associated with ‘gambling’ or ‘casino gambling’" is a

substantial interest); Posadas de Puerto Rico Associates v.

Tourism Co. of P.R., 478 U.S. 328, 341 (1986) (reducing

demand for casino gambling in order to prevent harmful

effects on the health, safety, and welfare of citizens is a substantial interest). 

WV ASSOCIATION v. MUSGRAVE 17
It matters, therefore, that West Virginia has decided to permit only lotteries that are "regulated, controlled, owned and

operated by the State of West Virginia in the manner provided

by general law." W. Va. Const. Art. VI, § 36; see also West

Virginia Economic Development Authority, 588 S.E.2d at

670. The state constitutional mandate reflects the state’s conclusion that a purely private lottery driven by profit would not

be beneficial, but a state-run lottery that balances the positive

and negative effects of gambling would be. The LVLA thus

aims to raise revenue, but not at all costs. Instead, West Virginia seeks quite legitimately to have the best of both worlds

by limiting the scope of the lottery through a licensing scheme

that includes the various advertising regulations at issue here.

It is this balance that plaintiff seeks to upset by eliminating

a crucial part of the program. To be sure, a broad-brush invalidation of the advertising rules might stimulate more enticing

signage and hence raise more revenue, but it would literally

destroy the balance at the heart of the state-created program.

The consequences of facial invalidation of West Virginia’s

advertising restrictions would thus be staggering. Other states

have lotteries similar to West Virginia’s—they too seek to

raise revenue, but not to an extent that causes gambling to

proliferate in a manner that exacerbates serious social problems. 

C.

Third, the advertising restrictions must "directly and materially advance[ ] the asserted governmental interest." Greater

New Orleans Broadcasting, 527 U.S. at 188. "‘This burden is

not satisfied by mere speculation or conjecture; rather, a governmental body seeking to sustain a restriction on commercial

speech must demonstrate that the harms it recites are real and

that its restriction will in fact alleviate them to a material

degree.’" Id. (quoting Edenfield v. Fane, 507 U.S. 761, 770-

71 (1993)). The Court later explained: "We do not, however,

require that ‘empirical data come . . . accompanied by a sur18 WV ASSOCIATION v. MUSGRAVE
feit of background information . . . . [W]e have permitted litigants to justify speech restrictions by reference to studies and

anecdotes pertaining to different locales altogether, or even,

in a case applying strict scrutiny, to justify restrictions based

solely on history, consensus, and ‘simple common sense.”"

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 555 (2001)

(internal citations omitted). Accordingly, we do not simply

defer to defendant’s contention because it is a legislative

judgment. See Anheuser-Busch v. Schmoke (Anheuser-Busch

II), 101 F.3d 325, 327 n.1 (4th Cir. 1996). Instead, we independently evaluate defendant’s assertion that the advertising

restrictions advance the state’s interest, and we rely on the

valid sources of history, consensus, and common sense. 

Much of what was said in the preceding section pertains to

this prong of the inquiry as well. In many interrelated ways,

the advertising restrictions serve the state’s interest in conducting its video lottery in a manner that raises revenue but

avoids amplifying the social ills associated with gambling.

The advertising restrictions prevent retailers from having

names, signs, and advertisements that might prey on those

prone to gambling addiction. The restrictions also limit the

spread of the private establishment video lottery and reduce

demand for it. 

In contrast, an unlimited right to advertise video lotteries

poses the risk of spreading the negative effects of lotteries

throughout the state. This potential expansion is why the state

treats the racetrack video lottery differently from the private

establishment video lottery. Compare W. Va. Code § 29-22A9(f)(12) (allowing government approved advertisements for

the racetrack video lottery) and id. at § 29-22B-702(13) (prohibiting advertisements for the private establishment video

lottery). Racetracks are limited in number and location. They

are inherently linked to gambling; indeed that explains the

presence of many of the patrons there. The history of the

RVLA and LVLA suggests that the state had different purposes in mind when it legalized the two video lotteries. The

WV ASSOCIATION v. MUSGRAVE 19
RVLA was enacted to preserve the racetrack industry and the

jobs and state tourism revenue that go along with it. See id.

at § 29-22A-2(e). In contrast, the LVLA was enacted to get

control of the thousands of illegal "gray" machines throughout

the state and to raise revenue in a more tempered way. The

comprehensive scheme for lottery advertising in West Virginia reflects the differences in the types of lotteries involved.

In so doing, it directly serves the state’s interest in a modulated approach to the area of gambling.8

The advertising restrictions also serve the state’s interest by

reducing demand for the video lottery in private establishments. Of course this makes perfect sense. If advertising did

not increase demand, commercial establishments would be

loathe to pay for it. This very linkage between advertising and

demand led the Court to recognize that in some instances a

reduction in advertising could directly advance the government’s interest in reducing demand for a product. See Lorillard Tobacco, 533 U.S. at 557, 561 (holding that advertising

restriction on tobacco products advances government interest

and collecting cases "acknowledg[ing] the theory that product

advertising stimulates demand for products, while suppressed

advertising may have the opposite effect"). This is one such

instance. Here the state’s interest would be difficult if not

impossible to achieve without some reduction in demand —

indeed the promotions restrictions are precisely designed to

keep demand at a level that raises revenue, but does not magnify the more negative effects of increased gambling. 

8The West Virginia Code of State Rules also provides: "Nothing contained in this section prohibits the advertising on radio and television of

scratch off ‘instant’ lottery games, online numbers games such as powerball, racetrack video lottery games or new lottery games other than limited

video lottery games." W. Va. Code R. § 179-5-33.6. Racetrack gambling

is treated differently than the video lottery for the reasons discussed, and

the qualitative difference is apparent between video lottery games and

other games such as powerball and instant scratch-off lottery games. 

20 WV ASSOCIATION v. MUSGRAVE
To be sure, the linkage between advertising and demand is

not enough to save a restriction of commercial speech in

every instance. The Court has struck down restrictions in

cases where the program is irrational, see Greater New Orleans Broadcasting, 527 U.S. at 190; Rubin v. Coors Brewing

Co., 514 U.S. 476, 488 (1995), or where there is specific evidence that goes against the claimed linkage, see 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 506 & n.17 (1996)

(Stevens, J., concurring); Edenfield, 507 U.S. at 771-73. But

these infirmities are not present in this case. Here, the state

has enacted a comprehensive licensing scheme to conduct a

state-created program. Moreover, facial invalidation of an

array of regulations is bound to implicate the linkage between

advertising and demand to the greatest possible extent —

even to the point of raising demand to a degree that would

damage the balance that underlies the program. 

Given the ways that the restrictions advance the state’s

interest, we cannot say that the link between the advertising

restrictions and the state’s interest fails because it is "mere

speculation or conjecture." See Edenfield, 507 U.S. at 770. To

the contrary, the link is supported by "history, consensus, and

‘simple common sense.’" See Lorillard Tobacco, 533 U.S. at

555 (internal citations omitted). Invalidation of the large

range of regulations that plaintiff challenges is not only subversive of the state’s interest but of the means that directly

and substantially advance that interest. In other words, the

breadth of the invalidation here dismembers the state’s lottery

program from stem to stern. 

D.

Finally, the restrictions must not be more extensive than

necessary. While the restrictions do not need to be the "least

restrictive means conceivable," they do need to have a "reasonable" fit with the government’s interest — a fit "that represents not necessarily the single best disposition but one whose

scope is in proportion to the interest served." Greater New

WV ASSOCIATION v. MUSGRAVE 21
Orleans Broadcasting, 527 U.S. at 188 (quoting Board of

Trustees of State University of New York v. Fox, 492 U.S.

469, 480 (1989)). Accordingly, the government must consider

alternatives to regulating speech to achieve its ends. In this

regard, any commercial speech restrictions must be "a necessary as opposed to merely convenient means of achieving [the

government’s] interests. . . . regulating speech must be a last

— not first — resort." Thompson v. Western States Medical

Center, 535 U.S. 357, 373 (2002). The scope of the restriction

is permissible, however, if the government "‘carefully calculated’ the costs and benefits associated with the burden on

speech imposed by its prohibition." Greater New Orleans

Broadcasting, 527 U.S. at 188 (quoting Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 417, (1993)); Lorillard

Tobacco, 533 U.S. at 561. 

We do not believe the fourth prong of the Central Hudson

inquiry requires these regulations to be struck as facially

infirm. The Court’s case in Greater New Orleans Broadcasting is instructive. There, the Court held that a federal prohibition on broadcast advertisements of private casino gambling

was unconstitutional as applied to radio and television stations

located in Louisiana where private casino gambling was legal.

527 U.S. at 176. The Court reasoned that the prohibition

failed the Central Hudson test because, among other things,

Congress’s failure to directly regulate private casinos through

"practical and nonspeech-related forms of regulation" undermined the government’s asserted justifications for the advertising prohibition. Greater New Orleans Broadcasting, 527

U.S. at 192. Just as in Coors Brewing, the government did not

enact obvious conduct regulations "which could advance the

asserted interests ‘in a manner less intrusive to [petitioners’]

First Amendment rights.’" Id. at 193 (quoting Coors Brewing,

514 U.S. at 490-91). See also Thompson, 535 U.S. at 372-73

(striking down restriction where "there is no hint that the

Government even considered" directly regulating conduct to

achieve its interest).

22 WV ASSOCIATION v. MUSGRAVE
Here, by contrast, West Virginia directly regulates the conduct of video lottery retailers in many ways. The LVLA

restricts the total number of video lottery terminals. See W.

Va. Code § 29-22B-1101. It restricts the number of terminals

that any one retailer can have. Id. And it restricts how close

together video lottery retailers can locate. Id. at § 29-22B1202. It prohibits people under twenty-one years old from

playing the video lottery. Id. at § 29-22B-1602. It also prohibits retailers from providing access to an ATM and from

accepting credit or debit cards. Id. at § 29-22B-702(10). 

The state has taken advantage of virtually all of the nonspeech alternatives suggested in other cases. See Greater New

Orleans Broadcasting, 527 U.S. at 192 (suggesting "a prohibition or supervision of gambling on credit; limitations on the

use of cash machines on casino premises; controls on admissions; pot or betting limits; location restrictions; and licensing

requirements—that could more directly and effectively alleviate some of the social costs of casino gambling"). The state

has even gone beyond conducting an educational campaign as

suggested in 44 Liquormart, 517 U.S. at 507 (Stevens, J., concurring), by requiring that retailers display a caution sign

directly on the video lottery machines. See W. Va. Code § 29-

22B-1112. The LVLA also requires retailers to provide consumers with information about gambling treatment and support services, id., and it provides funding for a compulsive

gambling treatment fund, id. at § 29-22B-1408(a)(1). 

The state has thus not only considered, but has implemented regulations that are alternatives to regulations on

speech. But the state concluded, and we independently agree,

that its objectives would be compromised if advertising for

the video lottery contradicted, rather than supplemented, its

conduct restrictions and educational initiatives. At least West

Virginia might permissibly reason that its conduct restrictions

and education initiatives might be undermined by flashing

neon lights for video lotteries on the premises of retail establishments or other advertisements scratching too aggressively

WV ASSOCIATION v. MUSGRAVE 23
the itch to "get rich." In the lottery context, the means are proportionately tailored to the state’s plain objectives if they

complement non-speech alternatives in a fashion that produces a coherent and comprehensive regulatory program. 

The scope of the regulations is permissible because the

state "carefully calculated" the costs and benefits of the regulations at issue. At the outset we noted that the government

interest is stronger here, and the private interest is weaker,

than in typical commercial speech cases because the state partially owns the lottery. The retailers therefore have less of an

interest in "conveying truthful information about their products" than in the typical case because it is not entirely their

product. See Lorillard Tobacco, 533 U.S. at 564. The augmented strength of the government’s interest and the diminished strength of the retailers’ interest weighs in favor of

finding that the scope of the regulations does not "unduly

impinge" on their rights, id. at 565, and is "in proportion to

the interest served." See Greater New Orleans Broadcasting,

527 U.S. at 188 (quoting Fox, 492 U.S. at 480).

The fact that the state carefully considered the scope of its

regulations is evidenced by the specific regulations the state

enacted. The state prohibits retailers from video lottery advertising, W. Va. Code § 29-22B-702(13) and W. Va. Code R.

§ 179-5-33.2, and from using the words "video lottery" in

their names, W. Va. Code § 29-22B-702(14) and W. Va.

Code R. § 179-5-33.3, but permits retailers to display a uniform sign indicating that West Virginia lottery products are

available, W. Va. Code R. § 179-5-33.2. This achieves the

state’s goal of balance: it informs consumers that lottery products are available, but it does not prey on vulnerable populations. The state also prohibits retailers from using "words

commonly associated with gambling" in their names, id. at

§ 179-5-33.4, and from using "gambling symbols including

but not limited to playing cards, roulette wheels, slot

machines or dice" in advertising visible from outside of the

retailer’s establishment, id. at § 179-5-33.5. These restrictions

24 WV ASSOCIATION v. MUSGRAVE
complement the state’s restrictions on video lottery games

themselves, which prohibit casino gambling themed games.

See W. Va. Code § 29-22B-332(7). 

Plaintiff seeks to have all of these restrictions throughout

the program declared unconstitutional, but they are not susceptible to such sweeping rejection, for the scope of the regulations represents a comprehensive and "carefully calculated"

effort by the state to achieve its interest in conducting a moderate video lottery without unduly restricting speech. The danger of getting too deep into the fourth Central Hudson prong

of tailoring is that it enmeshes federal courts in a wealth of

subsidiary lottery issues, which have historically been left to

the state legislatures and agencies that create and implement

these programs. Eventually, we would be asked to approve or

disapprove very specific forms of advertising: colors and

designs; sizes and location of signs and billboards; mediums

of communication that are permissible and those that are not.

Soon, we would become a quasi-lottery board ourselves. Such

a searching inquiry is beyond our proper role as judges and

would go against the Court’s direction that "[t]he Government

is not required [under Central Hudson] to employ the least

restrictive means conceivable." Greater New Orleans Broadcasting, 527 U.S. at 188. 

What we have before us at this time is an order enjoining

each and every one of West Virginia’s video lottery promotional regulations and, conversely, conveying on the plaintiffs

an unrestricted right to advertise. The context of this case suggests the need for prudence, caution, and a respect for the

entirety of the effort upon which the state of West Virginia

has embarked. The effect of the preliminary injunction is to

unwind the lottery program which relies on a public/private

partnership and interrelated complementary features to

achieve the objectives of revenue production, educational and

infrastructure improvement, and promotion of the public welfare that lie at the heart of a state’s role in our constitutional

order. Because the preliminary injunction before us now is

WV ASSOCIATION v. MUSGRAVE 25
inconsistent with these aims, it must be vacated and the judgment of the district court reversed.

REVERSED

26 WV ASSOCIATION v. MUSGRAVE