## Facts

- Puerto Rico legalized certain casino gambling in licensed establishments to support tourism, while restricting casinos from advertising their facilities to Puerto Rico’s resident public.
- Tourism Company regulations barred casino advertising directed at Puerto Rico residents but allowed limited advertising outside Puerto Rico aimed mainly at tourists.
- Posadas, a licensed casino operator, used promotional activities the Tourism Company deemed resident-directed local advertising; the Tourism Company imposed fines.
- Posadas sued for declaratory relief, alleging the statute and regulations were unconstitutional on their face and as applied under the First Amendment (commercial speech), equal protection, and due process.
- The Puerto Rico Superior Court held the restrictions were unconstitutionally applied to Posadas’s past conduct, adopted a narrowing construction (barring resident-soliciting local ads but allowing tourist-directed local ads that might incidentally reach residents), and upheld the law and regulations as facially valid.
- The Puerto Rico Supreme Court summarily dismissed the appeal as not presenting a substantial constitutional question.
- Posadas appealed to the U.S. Supreme Court under 28 U.S.C. § 1258(2).

## Issues

1. Whether the U.S. Supreme Court had jurisdiction under 28 U.S.C. § 1258(2) to review the Puerto Rico Supreme Court’s summary dismissal upholding the statute.
2. Whether, under the First Amendment’s protection of commercial speech, Puerto Rico could prohibit casino advertising directed at residents while allowing casino gambling and tourist-directed advertising.
3. Whether the statute and regulations violated due process or equal protection.

## Decision

- The Court held it had jurisdiction because the federal claims were properly raised and the case involved a judgment upholding a Puerto Rico statute against federal constitutional challenge.
- Applying the Superior Court’s narrowing construction, the Court affirmed the facial validity of the advertising restrictions under the First Amendment.
- The Court concluded Puerto Rico had a substantial interest in protecting residents’ health, safety, and welfare by reducing demand for casino gambling among residents.
- The Court found the advertising restriction directly advanced that interest and was not more extensive than necessary, reasoning that Puerto Rico could have prohibited resident gambling entirely and could therefore adopt a narrower advertising restriction.
- The Court rejected the due process and equal protection challenges as lacking merit.

## Legal Principles

- Restrictions on truthful, nonmisleading commercial speech are evaluated under the four-part Central Hudson test: lawful/nonmisleading speech, substantial governmental interest, direct advancement, and reasonable fit.
- A government may regulate advertising of a legal but socially disfavored activity to reduce resident demand when it reasonably concludes advertising stimulates that demand.
- In assessing fit under Central Hudson, the Court permitted reliance on the government’s ability to ban the underlying activity as supporting the permissibility of a lesser advertising restriction.
- Differentiating between residents and tourists in regulating casino advertising, and treating gambling-related advertising differently from other advertising, does not violate equal protection if supported by a rational policy judgment.
- Regulation of gambling as a matter of public welfare is generally sustained against substantive due process attack when rationally related to asserted public interests.

## Conclusion

The Court affirmed Puerto Rico’s facial restriction on casino advertising directed at residents, holding that, as narrowed by the local court, it satisfied Central Hudson review for commercial speech and did not violate due process or equal protection, while separately confirming jurisdiction to review the Puerto Rico judgment under § 1258(2).


Posadas de P.R. Assocs. v. Tourism Co. of P.R., 478 U.S. 328 (1986)