THE KORPAN DECISION




U.S. Supreme Court 


UNITED STATES v. KORPAN, 354 U.S. 271 (1957) 


354 U.S. 271


UNITED STATES v. KORPAN. 


CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT. 


No. 596. 


Argued April 25, 1957. 


Decided June 17, 1957.





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:


    "so-called `slot' machines which operate by means of insertion of a coin . . 


    . and which, by application [354 U.S. 271, 272] of the element of chance, 


    may deliver, or entitle the person playing . . . the machine to receive 


    cash, premiums, merchandise, or tokens."1 [354 U.S. 271, 273]


The evidence at the trial showed that Korpan maintained on his premises a number 


of coin-operated gambling machines. These machines were played by inserting a 


coin into the machine through a slot. The player was then able to shoot several 


balls onto a playing surface which was interspersed with pockets or holes. If he 


succeeded in getting balls into certain holes he received a varying number of 


free games. He had the option of either playing the free games or of cashing 


them in at a designated rate. By inserting extra coins the player could 


sometimes secure additional balls or increased "odds" (in other words, increase 


the number of free games he could win). The machines were equipped with 


electrical devices which over a period of time controlled the number of free 


games won.


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 House bill places a special tax of $25 per year upon each coin-operated 


    amusement or gaming device maintained for use on any premises.


    "Your committee divides these devices into two categories. Upon so-called 


    pinball or other amusement devices operated by the insertion of a coin or 


    token, the tax is reduced to $10 per year. Upon so-called slot machines, 


    however, the tax is placed at $200 per year."4 (Emphasis added.)


Respondent contends that this report as well as similar language in other parts 


of the legislative history is indicative of an intent on the part of Congress to 


draw a distinction between "one-armed bandits" and other coin-operated gambling 


or amusement machines.5 We interpret this history, however, as demonstrating a 


congressional [354 U.S. 271, 276] purpose to place a heavy tax on all 


"slot-machine" gambling devices, regardless of their particular structure, and a 


substantially smaller tax on machines played purely for amusement which offered 


the player no expectation of receiving "cash, premiums, merchandise, or tokens."


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.


    Reversed.


MR. JUSTICE DOUGLAS dissents from the conclusion that here pin ball machines are 


games of chance within the meaning of the statute.


Footnotes


[Footnote 1] In full the pertinent statutory provisions read as follows: " 4461. 


IMPOSITION OF TAX. "There shall be imposed a special tax to be paid by every 


person who maintains for use or permits the use of, on any place or premises 


occupied by him, a coin-operated amusement or gaming device at the following 


rates: "(1) $10 a year, in the case of a device defined in paragraph (1) of 


section 4462 (a); "(2) $250 a year, in the case of a device defined in paragraph 


(2) of section 4462 (a); and "(3) $10 or $250 a year, as the case may be, for 


each additional device so maintained or the use of which is so permitted. If one 


such device is replaced by another, such other device shall not be considered an 


additional device. " 4462. DEFINITION OF COIN-OPERATED AMUSEMENT OR GAMING 


DEVICE. "(a) In general. "As used in sections 4461 to 4463, inclusive, the term 


`coin-operated amusement or gaming device' means - "(1) any amusement or music 


machine operated by means of the insertion of a coin, token, or similar object, 


and "(2) so-called `slot' machines which operate by means of insertion of a 


coin, token, or similar object and which, by application of the element of 


chance, may deliver, or entitle the person playing or operating the machine to 


receive cash, premiums, merchandise, or tokens. "(b) Exclusion. "The term 


`coin-operated amusement or gaming device' does not include bona fide vending 


machines in which are not incorporated gaming or amusement features. "(c) 1-cent 


vending machine. "For purposes of sections 4461 to 4463, inclusive, a vending 


machine operated by means of the insertion of a 1-cent coin, which, when it 


dispenses a prize, never dispenses a prize of a retail value of, or entitles a 


person to receive a prize of a retail value of, more than 5 cents, and if the 


only prize dispensed is merchandise and not cash or tokens, shall be classified 


under paragraph (1) and not under paragraph (2) of subsection (a)."


[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.


[Footnote 8] 56 Stat. 978-979. [354 U.S. 271, 278]











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