Betting & Gaming Alert Express Yourself (Or Not): The Ongoing Saga

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Betting & Gaming Alert
March 2010
Authors:
John P. Krill, Jr.
[email protected]
+1.717.231.4505
Linda J. Shorey
Express Yourself (Or Not): The Ongoing Saga
of Pennsylvania’s Gaming-Related
Restrictions on Campaign Contributions
Introduction
[email protected]
+1.717.231.4510
Marsha A. Sajer
[email protected]
+1.717.231.5849
Anthony R. Holtzman
[email protected]
+1.717.231.4570
K&L Gates includes lawyers practicing out
of 36 offices located in North America,
Europe, Asia and the Middle East, and
represents numerous GLOBAL 500,
FORTUNE 100, and FTSE 100
corporations, in addition to growth and
middle market companies, entrepreneurs,
capital market participants and public
sector entities. For more information,
visit www.klgates.com.
In DePaul v. Commonwealth, 600 Pa. 573, 969 A.2d 536 (2009), the Pennsylvania
Supreme Court held unconstitutional, and enjoined the enforcement of, a provision
of the Pennsylvania Race Horse Development and Gaming Act (“Gaming Act”) that
restricted campaign contributions by certain individuals and entities in the gaming
industry. In response, the Pennsylvania General Assembly, in Act 1 of 2010 (signed
into law on January 7, 2010), addressed the Court’s decision by enacting
amendments to the Gaming Act that altered its statements of purpose. In this Alert,
we discuss the DePaul decision, the amendments made by Act 1, and the potential
impact of the U.S. Supreme Court’s recent decision in Citizens United v. Federal
Election Commission, 130 S.Ct. 876 (2010).
The DePaul Decision
Petitioner DePaul, part-owner of an entity with a Pennsylvania slot machine license,
asked the Pennsylvania Supreme Court to declare Section 1513 of the Gaming Act
unconstitutional.1 Section 1513(a) prohibited persons who hold or have applied for
gaming licenses2 in Pennsylvania or another jurisdiction “from contributing any
money or in-kind contribution to a candidate for nomination or election to any public
office in this Commonwealth, or to any political party committee or other political
committee in this Commonwealth or to any group, committee or association
organized in support of a candidate, political party committee or other political
committee in this Commonwealth.” 4 Pa.C.S. §1513(a). Petitioner alleged that this
provision violated, among other things, Article I, Section 7 of the Pennsylvania
Constitution, which protects free speech: “The free communication of thoughts and
opinions is one of the invaluable rights of man, and every citizen may freely speak,
write and print on any subject, being responsible for the abuse of that liberty.” PA.
CONST. art. I, §7.
The Pennsylvania Supreme Court agreed that campaign contributions are a protected
form of political expression and association under Article I, Section 7. It also said
that “Article I, Section 7 provides broader protections of expression than the related
1
The Gaming Act, 4 Pa.C.S. §1904, gives the Pennsylvania Supreme Court original and
exclusive jurisdiction over actions challenging its constitutionality. See John P. Krill, Jr. and Linda J.
Shorey, The Gaming Act: Pennsylvania Supreme Court Jurisdiction I, K&L Update (Dec. 2004).
2
The persons affected by the campaign contribution ban included: (1) persons holding or
having applied for slot machine licenses, horse or harness racing licenses, or manufacturer or
supplier licenses; (2) affiliates, intermediaries, subsidiaries, and holding companies of persons in any
of the first two categories; (3) principals or key employees of persons in any of the first three
categories; or (4) any such persons or entities holding a gaming license in another jurisdiction. See 4
Pa.C.S. §1513(a). In this context, the term “person” includes corporations, foundations, associations,
and other forms of legal business entities. 4 Pa.C.S. §1103.
Betting & Gaming Alert
First Amendment guarantee in a number of different
contexts,” and that, “when protected expression is at
issue, strict scrutiny is the appropriate measure of a
governmental restriction.” DePaul, 600 Pa. at 589,
969 A.2d at 546. The Court then analyzed whether
Section 1513(a) satisfied the strict scrutiny test – i.e.,
whether it served a compelling governmental
interest and was narrowly tailored to do so – and
concluded it did not.
The Court noted that an express objective of the
General Assembly was “to prevent the actual or
appearance of corruption that may result from large
campaign contributions.” 4 Pa.C.S. §1102(11)
(2009) (emphasis added). The Court determined
that Section 1513(a)’s restrictions on campaign
contributions by certain persons associated with the
gaming industry served the compelling
governmental interest “in avoiding the appearance of
corruption in the oversight of the gaming industry.”
DePaul, 600 Pa. at 600, 969 A.2d at 552. But the
Court agreed with Petitioner that Section 1513(a)
was not narrowly tailored to serve this interest
because “it entirely deprives an individual involved
in the gaming industry of [a] form of political
association and expression, irrespective of whether a
large contribution is at issue – and even where there
is no connection between a candidate and the
gaming industry.” Id. The Court reasoned that “[a]
statute that limited the size of contributions, rather
than absolutely prohibiting any contributions, would
be more narrowly drawn to accomplish the stated
goal. Banning all contributions is not a narrowly
drawn means of furthering a policy of negating the
corrupting effect and appearance of large
contributions.” Id. at 600, 696 A.2d at 553
(emphasis in original).
The Court, treating the Petitioner’s challenge as
facial (and not as-applied), held that Section 1513(a)
violated Article I, Section 7 of the Pennsylvania
Constitution, determined that subsection (a) was not
severable from the remainder of Section 1513, and
enjoined the enforcement of Section 1513 in its
entirety. Id. at 601-02 & n.18, 696 A.2d at 553-54
& n.18.
Act 1 of 2010
In Act 1, the General Assembly sought to reinstate
the ban on campaign contributions by certain
persons in the gaming industry. It revised the
legislative purposes underlying the Act; it did not
expressly reinstate or mention the ban. Act 1
deleted the word “large” from the purpose of the
Gaming Act that was stated to be to “prevent the
actual or appearance of corruption that may result
from large campaign contributions.” 4 Pa.C.S.
§1102(11) (2009) (emphasis added). In its place,
the General Assembly inserted the following in the
statement of legislative intent:
•
A statement that “[t]he General Assembly has a
compelling interest in protecting the integrity of
both the electoral process and the legislative
process by preventing corruption and the
appearance of corruption which may arise
through permitting any type of political
campaign contributions by certain persons
involved in the gaming industry and regulated
under [the Gaming Act].” 4 Pa.C.S.
§1102(10.1).
•
A statement that “[b]anning all types of political
campaign contributions by certain persons
subject to [the Gaming Act] is necessary to
prevent corruption and the appearance of
corruption that may arise when political
campaign contributions and gaming regulated
under [the Gaming Act] are intermingled.” 4
Pa.C.S. §1102(10.2).
Act 1 contained no provision reenacting the
contribution restrictions imposed by Section
1513(a) prior to DePaul or imposing similar
restrictions.
It is unclear whether Act 1 causes Section 1513(a)
to spring back to life (i.e., be “revived”) just
because the Gaming Act’s statement of legislative
intent was changed to make it consistent with
Section 1513(a)’s original ban on campaign
contributions.
The Pennsylvania Constitution, in Article III,
Section 6, provides that “[n]o law shall be revived,
amended, or the provisions thereof extended or
conferred, by reference to its title only, but so much
thereof as is revived, amended, extended or
conferred shall be re-enacted and published at
length.” PA. CONST. art. III, §6; see also
Commonwealth v. Hallberg, 374 Pa. 554, 559, 97
A.2d 849, 851 (1953) (“The object of the
Constitutional provision…is obvious, namely, to
March 2010
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Betting & Gaming Alert
enable both the legislators themselves and all
persons interested in the legislation to see exactly
the changes made between the existing law and the
re-enactment, without the necessity of referring to
the former for comparison.”).
On the other hand, Section 1513 might not need to
be revived by statute in order to be effective again.
It might be argued that because the DePaul Court
merely enjoined the statute’s enforcement and the
General Assembly did not subsequently repeal it, the
Pennsylvania Attorney General may be able to ask
the Pennsylvania Supreme Court to dissolve the
injunction (and render Section 1513 enforceable
again) on grounds that, in light of the General
Assembly’s newly enacted statements of intent,
Section 1513 is now constitutional.
In Citizens United, issued only two weeks after the
enactment of Act 1, the U.S. Supreme Court struck
down a federal statutory prohibition on independent
corporate campaign expenditures as violative of the
First Amendment to the United States Constitution.
The Pennsylvania General Assembly, therefore, did
not have the opportunity to consider whether
contribution restrictions imposed on corporate
gaming entities would pass muster under the First
Amendment. Although Article I, Section 7 of the
Pennsylvania Constitution can be, and often is,
more protective of expressive conduct that the First
Amendment, the protected areas of the two
provisions may not prove to be concentric circles.
See DePaul. It is conceivable that, if parallel cases
went up the appellate ladder, the Pennsylvania
Supreme Court might approve a restriction on
expression that the U.S. Supreme Court would not.
Impact of Citizens United
Even if the Pennsylvania Supreme Court were to
find that Section 1513 is again enforceable, it is not
clear that the ban would pass constitutional muster
under the U.S. Supreme Court’s recent decision in
Citizens United v. Federal Election Commission,
130 S.Ct. 876, (2010), if applied to any gaming or
racing corporations.
Conclusion
The Pennsylvania General Assembly’s response to
the DePaul decision may lead to another case in the
Pennsylvania Supreme Court. If so, the Court will
likely need to analyze both the form of the response,
i.e., the insertion of a statement of purpose in a
statute, and, in light of Citizens United, the
substance of the ban on political contributions by
gaming interests.
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March 2010
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