Easing the Shoe Where It Pinches: The Lottery Case and the Demise of Dual Federalism JOHN W. COMPTON The decades around the turn of the twentieth century are remembered as the high point of dual federalism—the theory of state-federal relations that regards each level of government as sovereign within its own exclusive regulatory sphere. In the popular mind, the era is associated with Supreme Court decisions that eviscerated significant federal laws on the grounds that Congress had exceeded the scope ofits enumerated powers, or else impinged on powers reserved to the states under the Tenth Amendment. In U.S. v. E. C. Knight, for example, the Court reasoned that Congress’s commerce power could not be used to break up a sugar refining monopoly, since the authority to regulate manufacturing processes belonged exclusive ly to the states.1 Similarly, in Hammer v. Dagenhart, the Court struck down the first federal child labor on the grounds that the measure was not a legitimate regulation of commerce, as Congress had claimed, but rather a surreptitious attempt to invade the state-controlled sphere of labor regulation.2 Manufacturing monopolies and child labor were undoubtedly serious policy problems, but the Court insisted that they would be addressed at the state level or not at all. In the words of Chief Justice Melville Fuller’s opinion for the Knight majority, “acknowl edged evils, however grave and urgent... had better be borne” than “the risk be run” of blurring the boundary between state and federal authority.3 And yet, the Fuller Court upheld at least one federal law that threatened to transform the state-federal relationship in ways argu ably more profound than either the Sherman Antitrust Act or the Keating-Owen child labor law. The law in question was the Lottery Act of 1895, a measure that, under the auspices of the commerce power, criminal ized the interstate transportation of lottery tickets and other lottery-related materials.4 To many observers, both in the 1890s and more recently, the Lottery Act appeared 134 JOURNAL OF SUPREME COURT HISTORY patently at odds with the basic precepts of dual federalism. For starters, there was considerable evidence to suggest that the Framers had not viewed Congress’s power to “regulate” interstate commerce as entailing the power to prohibit such commerce. In addition, it was widely believed that the lottery industry, like the insurance industry, was not “commercial” in nature and therefore not subject to federal regulation under the commerce power.5 Finally, there was the obvious fact that Congress’s primary purpose in enacting the Lottery Act had not been to protect or promote commerce, but rather to regulate public morality—a function that traditionally belonged to the states, and that is not listed among Congress’s Article I powers. But in Champion v. Ames (1903)— popularly known as the Lottery Case—a bare majority of the Court rejected each of these constitutional objections.6 According to Justice John Marshall Harlan’s majority opinion, Congress’s power over interstate commerce was “plenary” in nature. If an interstate traffic in lottery tickets existed, Congress was free to regulate that traffic in any way it saw fit, up to and including outright prohibition. Justice Fuller, writing on behalf of the four dissenters, acknowledged that Congress’s power to “regulate” interstate commerce could in some instances entail the power to prohibit it. And yet he insisted that the prohibitory commerce power extended only to items that were “themselves injurious to the transaction of interstate commerce.” Congress could constitutionally prohibit the interstate transportation ofdiseased cattle, for example, because this protected an important market from a product that might otherwise destroy it.7 But, unless one could show that lottery tickets “communicate[d] bad princi ples by contact,” Fuller wrote in jest, Congress could not prohibit their interstate transportation. Ifthe Court failed to draw this line in the sand—the line between prohibitory Charles F. Champion was indicted in 1899 for attempting to ship Paraguayan lottery tickets from San Antonio to Fresno via the Wells Fargo Express Company. The nation’s express companies, fearing that the Lottery Act represented the first step towards full-scale federal regulation of their industry, quickly...