In a ruling criticizing the government's claim that it needs to protect people from the evils of gambling, the Supreme Court yesterday struck down a federal law restricting broadcast advertising by casinos.

The unanimous decision immediately allows television and radio advertising of blackjack, slot machines, and other casino games in states where such gambling is permitted, and it could ultimately lead to casino commercials in other states as well. More broadly, the decision strengthens First Amendment protections for commercial speech and reveals the court's skepticism of government policies intended to keep truthful, but potentially harmful, advertising from the public.

Advertisers, broadcasters and gambling officials predicted a flurry of new casino advertising, emphasizing previously banned details of the games themselves, as well as jackpot sizes and pay-out ratios.

Yesterday's ruling came against a backdrop of ongoing controversy over how far government can go to discourage habits such as gambling, drinking or smoking by preventing product advertising. While much of the court's opinion was couched in the particulars of federal gambling law, its skepticism of government's interest in keeping people in the dark will likely influence future court rulings on vice-related advertising.

Writing for the court, Justice John Paul Stevens acknowledged that compulsive gambling exacts huge costs on society and that advertising can increase people's appetite for the game tables. But he said "the [advertiser] and the audience, not the government, should be left to assess the value of accurate and nonmisleading information about lawful conduct."

Stevens emphasized that while the federal government said it was trying to discourage gambling, Congress had written numerous exceptions into the advertising ban--including exemptions for Indian-run casinos and state lotteries--so that the law hardly reflected a coherent national policy against gambling that could justify restricting casinos' free speech.

"The court is saying that it is not legitimate to let some activity like gambling flourish . . . but then treat people like they are too stupid to be told anything about it," said Nory Miller, a District lawyer who represented the Greater New Orleans Broadcasting Association, which had challenged the law that prevented casinos in Louisiana and Mississippi from advertising on the air.

A spokesman for the Federal Communications Commission said the commission was studying the decision and had no immediate response.

The ban on casino advertising traces to a sweeping 1930s prohibition on all gambling ads. But in recent decades, as Congress was creating exemptions to the ban, the Supreme Court has been steadily increasing protections for commercial speech. Under the justices' current test, government can regulate advertising only if its asserted interest is "substantial," if the regulation advances that interest and if the regulation is no more extensive than necessary to serve that interest.

Three years ago, the justices ruled that a Rhode Island prohibition on the advertisement of retail liquor prices violated the First Amendment. But in that case, the justices splintered in their reasoning, leaving a maze of possible interpretations for lower courts making ad-related rulings.

Yesterday, however, seven other justices joined Stevens's opinion in Greater New Orleans Broadcasting Association v. United States, finding unconstitutional the federal law that had prohibited the broadcasting of advertisements for "any lottery, gift enterprise, or similar scheme." Chief Justice William H. Rehnquist joined Stevens's opinion but wrote separately to observe that a law without so many exemptions might well pass constitutional muster.

Only Justice Clarence Thomas declined to sign Stevens's opinion. Although he concurred with its ultimate judgment on the case in question, he went further, arguing in a separate opinion that any statute that tries to keep consumers "ignorant in order to manipulate their choices in the marketplace" should automatically be considered unlawful.

In the past, casinos have been allowed to advertise their businesses without references to gambling (or even the word "casino"), emphasizing instead the luxurious accommodations or size of the buffet. Gambling officials said the ruling is likely to lead to a shift in the kind of radio and television ads aired. In addition to showing contented customers on the casino floor, new ads may disclose information about pay-out ratios and game details--information that Stevens said could actually help the public by fostering price competition.

Casino gambling is legal in 10 states (Colorado, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey and South Dakota), and Michigan will begin allowing it this fall, according to Frank J. Fahrenkopf Jr. of the American Gaming Association.

John G. Roberts, lawyer for the organization, predicted yesterday that the high court's rationale seeking uniformity would support casino broadcast advertising in other states, especially those that allow tribal gambling but not private commercial gambling.

The Court Yesterday . . .

Unanimously struck down a federal law that banned television and radio advertising of commercial casino gambling.

Said it would decide the constitutionality of a federal law that permits public schools to lend library books, computers and other instructional materials to religious schools.

Ruled 5 to 4 that the Equal Employment Opportunity Commission has the power to award compensatory damages against other agencies in bias cases. (Details, Page A31)

"Whatever its character in 1934 when [the law] was adopted, the federal policy of discouraging gambling in general, and casino gambling in particular, is now decidedly eqvivocal."

-- Justice John Paul Stevens

on the government's broadcast ban