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the Communications Act forbidding the radio broadcasting of advertisements or information concerning lotteries (18 U. S. C. 1304, formerly 47 U. S. C. 316). More recently, on the subject of gambling generally, Congress in the act of April 27, 1948 (Public Law 500, 80th Cong., 62 Stat. 200), now 18 U. S. C. 1081-1083 (Public Law 72, 81st Cong., approved May 24, 1949, sec. 23), made unlawful the operation of gambling ships in American waters or of American vessels as gambling ships.

The Committee on Interstate and Foreign Commerce in the Senate reported this measure favorably 8 days after its introduction in the Senate. Seven days thereafter the Senate, also recognizing and realizing the importance of the subject matter and the effectiveness of the approach adopted by the measure, passed it. It is also gratifying to note that governing officials and law-enforcement officers throughout the country have strongly endorsed this legislation. Accordingly, I urgently solicit prompt consideration of the bill and an early favorable report.

Sincerely yours,

J. HOWARD MCGRATH,
Attorney General.

THE SECRETARY OF COMMERCE,
Washington, May 25, 1950.

Hon. ROBERT CROSSER,

Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D. C.

DEAR MR. CHAIRMAN: This is in reply to your communication of January 13, 1950, in which the Committee requests the report of this Department on H. R. 6736, a bill to prohibit the transportation or receipt of gambling devices in interstate and foreign commerce, and for other purposes.

This bill would make it unlawful knowingly to transport or cause to be transported in interstate and foreign commerce any machine, apparatus, mechanical device, or any parts thereof, designed or adapted to the playing of any game of chance for money or other thing of value or to receive, possess, or dispose of any article transported in violation of the bill knowing the same to have been so transported.

If the committee finds that the evils sought to be overcome warrant action by the Federal Government such as is proposed by H. R. 6736, the Department of Commerce would interpose no objection to its enactment. We would, however, like to call to the attention of the committee certain matters which we believe should be taken into consideration in its deliberations on this proposed legislation.

The Department is submitting a report to your committee on S. 3357, an act apparently with objectives similar to the bill in question. The Senate act defines a gambling device as "any machine or mechanical device, or parts thereof, designed or adapted for gambling or any use by which the user as a result of the application of any element of chance may became entitled to receive, directly or indirectly, anything of value." Although even the definition of "gambling device" found therein might be subject to a somewhat broad interpretation, it is believed that it is a somewhat more precise definition than that found in H. R. 6736. It is suggested in our report on the Senate act that consideration should be given to the Internal Revenue's definition in connection with "coin operating devices," which distinguishes between "gambling devices" and "amusement devices". Such would, it is believed, be in accord with the apparent objectives of the bill to prevent commerce only in mechanical devices used in commercial gambling. It is believed also that the Congress will wish to give attention in its consideration of this bill to the question of its effect on States and their subdivisions where the operation of slot machines and other gambling devices is legal under the laws of such States and subdivisions thereof.

Subject to the above observations, the Department would not, as stated above, object to the enactment of legislation along the lines proposed by H. R. 6736. We have not obtained the views of the Bureau of the Budget with respect to the transmission of this report.

Sincerely yours,

THOMAS C. BLAISDELL, Jr.,
Acting Secretary of Commerce.

DEPARTMENT OF JUSTICE,

OFFICE OF THE ASSISTANT TO THE ATTORNEY GENERAL,
Washington, April 26, 1950.

Hon. ROBERT CROSSER,

Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D. C.

MY DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice relative to the bill (H. R. 6736) to prohibit the transportation or receipt of gambling devices in interstate and foreign commerce, and for other purposes.

This bill would provide: "That whoever shall knowingly transport or cause to be transported in interstate and foreign commerce any machine, apparatus, mechanical device, or any parts thereof, designed or adapted for the playing of any game of chance for money or other thing of value, or whoever shall receive, possess, or dispose of any article which has been transported in violation of this Act, knowing the same to have been transported, shall be guilty of a felony and upon conviction thereof shall be subject to a fine of not more than $5,000 or imprisonment for not more than two years, or both fine and imprisonment."

The term "interstate and foreign commerce" is defined in the measure to mean "commerce between any State, District, Territory or possession of the United States and any place outside of the State, District, Territory, or possession." The purpose of H. R. 6736 appears to be identical with that of S. 3357, recently passed by the Senate and presently with your committee for consideration and action. The latter measure was transmitted to the Congress by the Attorney General following an exhaustive study by the Conference on Organized Crime of the most efficient way to effect the desired purpose. It is much more detailed in its approach to the gambling problem, provides procedures to implement the prohibitive provisions thereof, and has the endorsement of various Government officials and law-enforcement officers throughout the country.

Accordingly, the Department of Justice urges prompt, favorable consideration of S. 3357 in place of H. R. 6736.

The Director of the Bureau of the Budget has advised that there is no objection to the submission of this report. Yours sincerely,

PEYTON FORD,

The Assistant to the Attorney General.

TREASURY DEPARTMENT,
Washington, May 8, 1950.

Hon. ROBERT CROSSER,

Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D. C.

MY DEAR MR. CHAIRMAN: Further reference is made to your letter of January 13, 1950, requesting the views of the Treasury Department on H. R. 6736 (81st Cong., 2d sess.), entitled "A bill to prohibit the transportation or receipt of gambling devices in interstate and foreign commerce, and for other purposes." In this connection the Department also desires to present its views on S. 3357 (81st Cong., 2d sess.), a bill having a similar purpose which was passed by the Senate on April 19, 1950, and which is now pending before your committee.

H. R. 6736 would make it a criminal offense knowingly to transport in interstate or foreign commerce any gambling machine or device, and would prohibit the receipt, possession, or disposition of any such device with knowledge that it was transported unlawfully. S. 3357 would prohibit the transportation in interstate or foreign commerce of any gambling device, or the possession or disposition of any gambling device so transported, subject to an exception with respect to transportation into any State in which the use of such gambling devices is legal.

The Department is concerned primarily with section 3 of S. 3357, which would require every manufacturer of, or dealer in, gambling devices annually to register with the collector of internal revenue for his district. The section further provides that every such manufacturer and dealer shall file with the collector of internal revenue for his district an inventory and record of all sales and deliveries of gambling devices as of the close of the preceding calendar month, and that such monthly record shall identify each article and contain the name and address of the carrier. The section makes it unlawful for a manufacturer or

dealer to sell, deliver, or ship any gambling device which is not so marked and numbered for identification or to manufacture, recondition, repair, sell, deliver, or ship any such device without having registered with the collector of internal revenue or without having filed with the collector the required inventories and records of sales and deliveries.

The requirements for registration of manufacturers and dealers and periodic filing by them of information, as provided in section 3 described above, are for the purpose of assisting in the enforcement of the criminal sanctions of the bill. They are not related to the collection of the revenues which is the historic and exclusive function of the Bureau of Internal Revenue, the tax-collecting agency of the Federal Government. It would seem more desirable that those duties of gathering information be vested in the agency which is also charged with responsibility for enforcement of the proposed legislation. For example, the Department of Justice, upon whom the enforcement function under the bill would devolve, possesses the facilities for undertaking appropriate investigations, through its field personnel, and otherwise administering and enforcing the provisions of the proposed legislation. In the opinion of the Department, such a centralization of the functions would be more effective in dealing with many serious problems which may arise in the administration and enforcement of S. 3357.

It may be that collectors of internal revenue were designated to receive such reports and information because of the fact that an annual license tax is now imposed upon persons who maintain for use coin-operated gambling devices. It should be borne in mind, however, that the tax is imposed upon the person who permits the use of such devices on his premises and not upon the manufacturer or dealer, and that the gambling devices, subject to existing tax provisions, represent only a small part of the devices which would be included in the proposed legislation.

For the foregoing reasons, the Department believes that the amendment of section 3 to cover the problem above outlined would enhance the objectives of the bill.

Due to the expeditious nature of this report, the Department has not been advised by the Bureau of the Budget as to whether the proposed legislation is in accord with the program of the President.

Very truly yours,

E. H. FOLEY, Jr., Acting Secretary of the Treasury.

Mr. BECKWORTH. Mr. Preston, you may proceed.

STATEMENT OF HON. PRINCE H. PRESTON, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. PRESTON. Mr. Chairman, may I inquire how the Chair would prefer that I proceed? Would you have enough time for me to read a prepared statement?

Mr. BECKWORTH. You may proceed as you desire to proceed, Mr. Preston.

Mr. PRESTON. I have a statement that is not too lengthy and, if I may, I would like to read it.

Mr. HARRIS. Mr. Chairman, before our colleague gets started, may I inquire if the Department of Justice has made a report on H. R. 6736, introduced by our colleague, Mr. Preston?

Mr. BECKWORTH. The Department of Justice made a report on S. 3357. I do not believe I find here a report from the Department of Justice on the bill introduced by our colleague, H. R. 6736.

The CLERK. That report has not come in.

Mr. HARRIS. I should like to ask that if and when that report is received that it be included at this point in the record along with the report on S. 3357.

Mr. BECKWORTH. Without objection that will be done.

The Chair may observe, since we are considering the two bills, it would be well to get a report from the interested agencies concerning H. R. 6736, just as we have concerning S. 3357.

Mr. PRESTON. Mr. Chairman, in that connection, I would like to say that I think the reason the Department of Justice has not reported on H. R. 6736 is that the bills have a common intent and the preparation of a similar bill was in process by the Department of Justice, and I am, of course, appearing in support of both bills.

Mr. LINEHAN. Mr. Chairman, may I inquire what particular reports have been submitted on the Senate bill?

Mr. BECKWORTH. The Department of Justice has submitted a report on the Senate bill and I believe that is the only report which has come in connection with the Senate bill.

The Interstate Commerce Commission submitted a report in connection with H. R. 6736 last January. The Federal Trade Commission in February submitted a report in connection with H. R. 6736. Those are the only reports we have.

You may proceed, Mr. Preston.

Mr. PRESTON. Mr. Chairman and members of the committee, I am informed that the committee has under consideration H. R. 6736, of which I am author, and S. 3357, both of which deal with the same general subject matter of interstate shipment of gambling devices. Your timely action in turning your attention to this subject during these extremely busy days in Congress emphasizes the importance of this hearing, and agencies and citizens supporting law reform in this field will become much encouraged by your interest.

Before commenting on the merits of the two bills before the committee, both of which have my approval, I beg the indulgence of the committee to give a brief history of the slot-machine racket and its far-reaching operations. In relating this history I will offer some proof of its fantastic take in dollars annually.

It is hoped that the startling facts I have assembled over a 2-year period will establish to your satisfaction the need for the enactment of one of these measures. There is certainly not the least reservation in my mind about the acute importance of taking congressional action to strike at this cancerous situation. State sentiment has reached the peak it reached in 1890 and in 1895 when the national policy against lotteries had been formed in the States by their laws and constitutions, and Congress was asked to enact Federal laws to close the loopholes in interstate and foreign commerce in aid of that policy.

The first slot machine was invented by one Charles Fey in San Francisco in 1895. It was improved in 1906 by Stephen Mills, and a company in Chicago bearing his name is the largest manufacturer of those machines today. The popularity of this gambling device resulted in the establishment of 10 large concerns engaged in the manufacture of slot machines and all of them are located in Illinois.

With the rapid spread of this 5-cent-to-$1-type of gambling, law enforcement agencies sought the enactment of measures to ban them. They soon realized that the one-armed bandit was paying the way for many other criminal enterprises. It was the quickest means by which a hoodlum could get into business. A second-hand machine could be bought for less than $100 and would pay for itself in a week to 10 days. Every State in the Union has wrestled with this problem and I think it can be safely said that it still remains one of the most serious problems confronting State governments.

Thinking that legalization would put the problem under legal control, several States tried this method. Florida made them legal by licensing them in 1935, but the next session of the legislature in 1937 repealed the law. Legitimate business felt the drain of dollars away to the slot machines. Louisiana, during Governor Huey Long's regime, legalized them, but economic distress and racketeering caused them soon to be banned again.

Idaho passed a legalizing act in 1947 on a local-option basis, but in 1949 the cities of Twin Falls, Boise, Nampa, and Rupert revoked all licenses, and on January 4, 1949, Gov. C. A. Robins asked the legislature to repeal the law, stating that "The State of Idaho cannot gamble itself into prosperity." The city commission of Twin Falls, Idaho, stated in their report that licensing slot machines resulted in an increase of armed robberies, and that relief agencies had growing rolls. Businessmen in this city reported an increase in overdue accounts.

The State of Nevada has legalized gambling of all types. Washington and Montana permit slot machines in private clubs, and Maryland legalized machines in two counties. Elsewhere in the United States they are illegal, but yet they operate in every State in the Union.

The best crime authorities in America have contended that this lawdefying situation exists because of the sinister and subtle operation of a vast syndicate from coast to coast.

The second progress report of the California Crime Study Commission on organized crime states on page 38:

Somewhere near the top of the slot-machine racket is Eddie Vogel, of Illinois, a member of the Capone syndicate of Chicago. Vogel was originally given the slot-machine concession of Cook County, Ill., by Al Capone himself. Since that time Vogel's control of the slot-machine racket has spread to many other States. Associated with Vogel is George (Babe) Toffenelli, a racketeer from Blue Island, Ill. It has been reliably reported to the commission that in the summer of 1947 Toffenelli attempted to purchase a string of slot machines and juke boxes in the San Joaquin Valley, valued at $195,000, by offering that amount in cash. It is claimed that this offer was refused. But, again, it illustrates the interest of the Eastern hoodlums in the lush profits in the rackets in California.

This crime report on conditions in California is indeed a very enlightening discussion on the slot-machine racket and I commend it to the committee for study in connection with this legislation. This report describes a convention of coin-machine operators held in Chicago in January 1949, with representatives from every State in this country and from 16 foreign countries. Undercover agents for the Crime Commission reported interesting discoveries which lead them to report that:

From these extraordinarily frank discussions of corruption, the commission's investigators ascertained that it is the common practice of slot-machine operators throughout the country to pay 10 to 20 percent of their gross profit for protection and graft, although the method of payment varies according to local circumstances. If the gross "take" of the national slot-machine racket is in the neighborhood of $2,000,000,000 annually, as it probably is, it is evident that 20 percent of this amount, or $400,000,000, is being spent annually by the slot-machine racketeers for bribery and corruption of public executive officers, and that additional large amounts are being spent on a corps of lobbyists and a legal and public relations staff.

On page 59 the following paragraph is also found:

It is perhaps worth noting that actual investigations in the field tend to corroborate the statement that approximately 20 percent of the gross profit is paid

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