## Facts

- The Federal Communications Commission (FCC) adopted regulations targeting radio and television “give-away” programs and threatened license denial or nonrenewal for stations that aired them.
- The broadcasters (ABC, NBC, and CBS) aired programs that distributed prizes to home listeners selected wholly or partly by chance, typically conditioned on correctly answering questions or solving problems.
- Contestants were not required to pay money or provide any other tangible item of value to participate; they generally needed only to listen and respond when contacted.
- The FCC asserted that requiring listeners to tune in supplied the necessary “consideration” because it increased the programs’ advertising value, bringing them within 18 U.S.C. § 1304’s prohibition on broadcasting “any lottery, gift enterprise, or similar scheme” involving prizes dependent on chance.
- A three-judge federal district court enjoined enforcement, holding the FCC’s interpretation exceeded § 1304; the FCC directly appealed.

## Issues

1. Whether broadcasts of “give-away” programs with prizes awarded by chance are prohibited by 18 U.S.C. § 1304 when contestants provide no money or other valuable consideration.
2. Whether the FCC may use rulemaking and licensing power to extend § 1304 to cover such programs by treating audience listening as “valuable consideration.”

## Decision

- The Supreme Court affirmed the injunction and held the FCC regulations invalid.
- The Court ruled that “consideration” (a contribution of money or other valuable consideration by contestants) is an essential element of an offense under 18 U.S.C. § 1304.
- The Court rejected the FCC’s theory that the increased advertising value from required listening constitutes the requisite consideration under § 1304.
- Because the programs lacked contestant consideration, they fell outside § 1304’s scope; the FCC therefore exceeded its rulemaking authority by attempting to prohibit them.
- The Court emphasized that § 1304 is penal and must be strictly construed, limiting both judicial and administrative expansions of its reach.

## Legal Principles

- A “lottery, gift enterprise, or similar scheme” under 18 U.S.C. § 1304 requires, at minimum, prizes distributed by chance for consideration supplied by participants.
- Passive listener conduct that merely increases a program’s commercial or advertising value is not “valuable consideration” for purposes of § 1304.
- An agency with enforcement authority over a criminal statute may not broaden the statute’s substantive coverage through regulations; its authority is confined to the statute’s properly construed scope.
- Penal statutes are subject to strict construction, particularly when an administrative interpretation would expand criminal liability.

## Conclusion

The Court held that free broadcast “give-away” programs lacking participant consideration are not lotteries within 18 U.S.C. § 1304, and the FCC could not prohibit such programs through licensing rules that effectively expanded the statute’s reach.


Fed. Commc’ns Comm’n v. Am. Broad. Co., 347 U.S. 284 (1954)