1. A coin-operated gambling machine of the "pin-ball" type, the operation of which involves the element of chance, as a result of which the player may become entitled to money, is a "so-called `slot' machine" within the meaning of 26 U.S.C. (Supp. IV) 4462 (a) (2), and is, therefore, subject to the tax of $250 per annum imposed by 26 U.S.C. (Supp. IV) 4461. Pp. 271-277.
2. Section 4462 (a) (2), as here construed, is not unconstitutionally vague. P. 273, n. 2.
237 F.2d 676, reversed.
John F. Davis argued the cause for the United States. With him on the brief were Solicitor General Rankin, Assistant Attorney General Olney, Beatrice Rosenberg and Robert G. Maysack.
Robert A. Sprecher argued the cause for respondent. With him on the brief were Simon Herr and Frank A. Karaba.
MR. JUSTICE BLACK delivered the opinion of the Court.
The respondent, Walter Korpan, was indicted in a Federal District Court in Illinois for willfully failing to pay the $250 per device tax imposed by 26 U.S.C. (Supp. IV) 4461 on any person who maintains for use any gaming device. For purposes of this tax, 26 U.S.C. (Supp. IV) 4462 (a) defines gaming devices as:
The district judge found respondent guilty as charged and fined him $750. The Court of Appeals for the Seventh Circuit reversed, holding that respondent's machines did not come within the definition laid down by 4462 (a) (2). 237 F.2d 676. On the Government's petition we granted certiorari because the case raised important questions in the administration of the revenue laws. 352 U.S. 980 . The issue before us is whether the machines maintained by petitioner were included within the definition given by 4462 (a) (2). 2 For the reasons stated hereafter we believe that they were within that definition and that the judgment of the Court of Appeals setting aside Korpan's conviction on the ground that they were not must be reversed.
It is clear that respondent's machines were operated by the insertion of a coin and that persons playing them could receive cash for any free games won. The machines also involved an element of chance sufficient [354 U.S. 271, 274] to meet the requirements of 4462 (a) (2), although skill may have had some part in playing them successfully. In short, they were "slot-machine" gambling devices.
Respondent argues, however, that when Congress used the phrase "so-called `slot' machines" in 4462 (a) (2) it intended to restrict the scope of that section to those "slot machines" gambling devices colloquially known as "one-armed bandits." He describes the latter as machines in which the insertion of a coin releases a lever or handle which, in turn, when pulled activates a series of spring-driven drums or reels with various insignia painted thereon, usually bells and fruit, and which automatically dispense coins to a player when certain combinations of these insignia are aligned. The Government, on the other hand, takes the position that Congress intended to cover all "slot machines" which come within the specific requirements of 4462 (a) (2). It argues that the qualifying phrase "so-called" was added because (1) the draftsmen were apprehensive that the term "slot-machine" might be a slang expression not accepted as proper English or (2) they wanted to cover every gambling device operated by the insertion of coins through a slot even though the device might go under a label other than "slot machine."
On its face the language of 4462 (a) (2) and related sections does not manifest an intent to limit the application of the otherwise broad terms of 4462 (a) (2) to any particular kind of "slot-machine" gambling device. The phrase "so-called `slot' machine" is, if anything, more consistent with the position advanced by the Government than that taken by Korpan. And the remainder of 4462 (a) (2), as well as 4462 (c), has language which affirmatively suggests that 4462 (a) (2) was designed to include all sorts of coin-operated gambling devices regardless [354 U.S. 271, 275] of their particular structure or the method by which they paid off players.
This interpretation is supported by the relevant legislative history. Apart from the amount of tax imposed, 4462 (a) (2) is substantially the same as its original predecessor, 3267 of the Internal Revenue Code of 1939, as amended, 55 Stat. 722. Senator Clark, the sponsor of the amendment which became 3267, declared during the Senate debates on his amendment that his objective was to impose a heavy tax on "any machine which returns any sort of a premium, and that was the intention of the amendment, and it was the intention of the committee in adopting it." 3 The Senate report which accompanied Clark's amendment stated:
The administrative interpretation of 4462 (a) (2) and its predecessors adds additional strength to this view. In 1942 the Treasury Department published interpretative regulations which included so-called "pin-ball" gambling machines under 4462 (a) (2). 6 This administrative ruling was publicized in the trade paper of the coin-operated machine industry. In both 1942 and 1954 the representatives of that industry complained to Congress about the Treasury's interpretation, which is still in effect, and asked that 4462 (a) (2) be amended so that it expressly excluded "pin-ball" gambling machines. 7 In each instance Congress left the existing provisions of 4462 (a) (2) standing, although, at the request of others in the industry, it did provide an exception for certain penny-operated gambling machines. 8
If the respondent's position were adopted 4462 (a) (2) would be restricted to a peculiar type of gambling device - the so-called "one-armed bandit" - even though ingenuity, a desire to avoid taxes, and technological [354 U.S. 271, 277] progress provide a multitude of new devices which permit substantially the same kind of gambling but only with a different kind of coin-operated machine. We are convinced that Congress had no such purpose and meant only to distinguish between "slot-machines" operated as gambling devices and "slot-machines" which were used exclusively for amusement.
[ Footnote 2 ] Respondent contends that 4462 (a) (2) as interpreted by the District Court is unconstitutionally vague. This contention is without merit.
[ Footnote 3 ] 87 Cong. Rec. 7301.
[ Footnote 4 ] S. Rep. No. 673, 77th Cong., 1st Sess. 21.
[ Footnote 5 ] For the legislative history of what became 3267 see: H. R. Rep. No. 1040, 77th Cong., 1st Sess. 60; H. R. Rep. No. 1203, 77th Cong., 1st Sess. 18; S. Rep. No. 673, 77th Cong., 1st Sess. 21; 87 Cong. Rec. 6476, 7297-7307.
[ Footnote 6 ] 59 Treas. Reg. 323.22, as amended by T. D. 5203, 7 Fed. Reg. 10835, Dec. 22, 1942.
[ Footnote 7 ] See Hearings before the House Committee on Ways and Means on Revenue Revision of 1942, 77th Cong., 2d Sess. 2055-2061, 2682-2688; Hearings before the Senate Committee on Finance on H. R. 7378, 77th Cong., 2d Sess. 1132-1141; Hearings before House Committee on Ways and Means on General Revision of the Internal Revenue Code, 83d Cong., 1st Sess. 2505-2522; Hearings before Senate Committee on Finance on H. R. 8300, 83d Cong., 2d Sess. 1874-1879.