Mr. BECKWORTH. You may do so.

(The list referred to follows:)

MEMBERS OF THE AMERICAN COIN MACHINE MANUFACTURERS ASSOCIATION, 231 S.
LASALLE ST., CHICAGO, ILL.

Bally Manufacturing Co., sales division of Lion Manufacturing Corp., Chicago, Ill.
Bell-O-Matic Corp., sales division of Mills Industries, Inc., Chicago, Ill.
Buckley Manufacturing Co., Chicago, Ill.

H. C. Evans Co., Chicago, Ill.

O. D. Jennings & Co., Chicago, Ill.

J. H. Keeney & Co., Inc., Chicago, Ill.
Universal Industries, Inc., Chicago, Ill.

A. B. T. Manufacturing Corp., Chicago, Ill.

Mills Industries, Inc., Chicago, Ill.

R. C. Walters Manufacturing Co., Kansas City, Mo.
Groetchen Tool & Manufacturing Corp., Chicago, Ill.
Watling Manufacturing Co., Chicago, Ill.

Mr. BECKWORTH. Mr. Jones, about how many slot machines as such are manufactured by these companies annually, as distinguished from the many kinds of machines otherwise?

Mr. JONES. I must confess I cannot give that information. I do not know it. Our association has never been set up to obtain the production figures of the member manufacturers.

Mr. BECKWORTH. How many machines of all kind does your company manufacture annually?

Mr. JONES. Our company manufactures approximately 3,000 of the console-type machine annually. Right now we are manufacturing a shuffle bowling game, and perhaps have a production of 25,000 or 30,000 in the year, we hope; pinball games, we perhaps manufacture an average of around 10,000-10,000 or 12,000-a year. We do not manufacture any of the others.

Mr. BECKWORTH. Ten or twelve thousand pinball machines you manufacture?

Mr. JONES. Yes, sir.

Mr. BECKWORTH. How many pinball machines do you estimate are manufactured annually?

Mr. JONES. I could hardly estimate that, sir.

Mr. BECKWORTH. What does the average pinball machine your company manufactures sell for?

Mr. JONES. The list price of our pinball games is $645. That is the list price. The distributor receives a discount of about 35 percent off of that.

Mr. BECKWORTH. What is the average price of your console machine?

Mr. JONES. Our console machine, the list price is $795.

Mr. BECKWORTH. If I understood your testimony correctly, your company does not manufacture what we call slot machines.

Mr. JONES. Not what is commonly known as a slot machine; no, sir. Mr. BECKWORTH. But it does manufacture machines that pay out money?

Mr. JONES. Yes, sir; the consoles.

Mr. BENNETT. Describe that machine. What is it like?

Mr. JONES. A console machine of the type we manufacture is housed in a wooden cabinet, quite elaborate. It uses the three wheels that are commonly used in the slot machine. It has a scoreboard on the back. Mr. BENNETT. What kind of coin does it take?

Mr. JONES. Nickels, dimes, or quarters; that is, an individual machine will take either a nickel or it will be a quarter machine or a dime machine.

Mr. BENNETT. Do you report the sales of that type of machine to the Government, the Treasury Department, or any Federal agency? Mr. JONES. Yes, sir; in the normal course of our business, we report. Mr. BENNETT. You mean income-tax return?

Mr. JONES. Income tax; yes, sir.

Mr. BENNETT. You do not get a license, a license is not required for the sale of these?

Mr. JONES. No, sir.

Mr. BENNETT. The Treasury Department puts a tax on the user. Mr. JONES. That is correct.

Mr. BENNETT. The passage of this bill, would it put your company out of business?

Mr. JONES. I would not say that it would put us out of business. It would seriously affect us, and of course I am speaking here today not on behalf of my company, but as president of the association, which includes concerns whose production is primarily slot machines. Mr. BENNETT. You could not ship these gambling devices through State lines. You would be pretty well sewed up, if you could not, would you not?

Mr. JONES. Yes, sir.

Mr. BENNETT. Do you represent an association or do you represent some company that makes these machines?

Mr. JONES. I am appearing here as a representative of the association.

Mr. BENNETT. Are you in one of these firms yourself?

Mr. JONES. Yes, sir; I am.

Mr. BENNETT. What is the name of your firm?

Mr. JONES. Lion Manufacturing Corp.

Mr. BENNETT. Where is it located?

Mr. JONES. In Chicago.

Mr. BENNETT. Is that the firm that makes these devices you were just talking about?

Mr. JONES. We make consoles. We also make pinball games, and the new shuffle bowling type of game, and we have made vending machines.

Mr. BENNETT. Would you care to state how much of your business is done interstate, outside of the State of Illinois?

Mr. JONES. I do not have figures on that, sir. I would say that perhaps 75 to 80 percent is outside of the State of Illinois.

I must go on record that that is a guess of the best of my estimate. 1 was not prepared for that question, and I do not have an exact statistical answer.

Mr. BENNETT. I was just asking for an approximate figure.

Would you think that same figure would generally apply to other manufacturers of similar devices?

Mr. JONES. I should think approximately.

Mr. BENNETT. The prohibition of shipping one of those gambling devices in commerce then would destroy 75 percent of your business? Mr. JONES. To the extent that any products would be defined as coming within the definition of this law, yes, sir.

Mr. BENNETT. There is no question about your machine being a gambling device, is there?

Mr. JONES. No question at all, sir.

Mr. O'HARA. Does your company manufacture any type of machines, such as these candy or peanut or other vending types of machines?

Mr. JONES. My particular company does not. Some members of our association do.

Mr. O'HARA. Is it true that many of the parts which you manufacture for your machine would be interchangable in regular candy or other types of vending machines?

Mr. JONES. Yes, sir; where the one manufacturer manufactures gaming and also vending machines, there would be parts interchangeable. There were parts when we manufactured up until recently a coin operated Coca-Cola vendor. Many of our parts were interchangeable. They were parts that were normally used in games.

Mr. O'HARA. Mr. Bennett asked you with reference to your part of the business out of Illinois, the place of manufacture; you were speaking of your own company, as I understood it; is that correct?

Mr. JONES. I was speaking of my own company, and hazarding a guess at the proportion that would be about the same.

Mr. O'HARA. From the other members of your association?

Mr. JONES. Yes, sir.

Mr. O'HARA. That is all I have.

Mr. BECKWORTH. How many dealers does your company have, Mr. Jones?

Mr. JONES. We have approximately 50 wholesale distributors, who are wholesale dealers, who sell this equipment rather than operate it. Mr. BECKWORTH. Is your company one of the largest companies in this group?

Mr. JONES. Yes, sir; we are.

Mr. BECKWORTH. Are you the largest company?

Mr. JONES. I would not say that we are. At the present time our production probably exceeds that of some of the others. Mills, however, is a large company.

Mr. BECKWORTH. Mills is a large company.

Mr. JONES. Yes. As I say, we do not know exact sales figures of our competitors who are members of the association, but my company is at least very close to being the largest company.

Mr. BECKWORTH. You mentioned you have 50 dealers throughout the country. Are those dealers in the main in any one section or two sections of the country, or are they well distributed all over the United States?

Mr. JONES. They are distributed all over the United States.

Mr. BECKWORTH. Would you have more dealers in those States where the legality is not questioned than in those States where the legality is questioned?

Mr. JONES. We have distributors in every State, or at least distributors who deal in every State.

Mr. BECKWORTH. Do you have any requirements which are made of your dealers as to whom they can sell or cannot sell?

Mr. JONES. No, sir; we do not. These dealers normally handle all types of coin-operated equipment. They are selected on the basis of their business ability.

Mr. BECKWORTH. Your contract with your dealers generally does not limit their right or opportunity to sell to whom they desire. Mr. JONES. That is correct.

Mr. BECKWORTH. Is that true of the members of your association in general?

Mr. JONES. I believe it is; yes, sir.

Mr. BECKWORTH. Any other questions?

Mr. WILSON. Mr. Chairman, I would like to ask some questions. I would like to ask Mr. Jones this: You said that this type of machine that your own company manufactured is called a console?

Mr. JONES. Yes, sir.

Mr. WILSON. What are the gadgets or the mechanisms in that electrically operated machine that makes it different from the mechanically operated machine?

Mr. JONES. First of all, it is electrically operated. It has an electrical scoring board in the back which on a chance basis establishes the prizes. There are many variations, but in general that is the difference, that it has an illuminated electric display on the back, a sign in the back, and is electrically operated, and is more ornate in its appearance, more suitable for clubs, for instance.

Mr. WILSON. What are the controls in that type of electric machine that regulate the amount of pay-off? What are controls in that type of electrically operated machine that control the amount of pay-off? You said you manufactured it to pay off 75, and in another instance as high as 90 percent, and another instance going into Nevada up as high as 95 percent. What is that control?

Mr. JONES. In that respect I was speaking of slot machines.
Mr. WILSON. All right.

Mr. JONES. And I stated that they are manufactured in that way. I believe it was Mr. Dolliver who asked the question I understood to be asked of my company, and I explained that those machines could be operated for 75 to 80 percent. That is a matter of adjustment in the advancement of the rewards quantities.

Mr. WILSON. Just tell the committee, if you will, please, what it is that you adjust in one instrument to make it pay off 75 percent, and another instrument to pay off 85 percent? You said you were in the engineering end of it.

Mr. JONES. I am not in the engineering. It is a simple electrical connection whereby the advancement of the reward denominations that flash on the back will advance at such a rate that they will pay out approximately 70 percent or will advance it at a more rapid rate to pay out up to 85 percent.

Mr. WILSON. It is an adjustment then from what you said.

Mr. JONES. Speaking of those machines; yes, sir.

Mr. WILSON. I am trying to speak of those machines.

Mr. JONES. Yes, sir.

Mr. WILSON. Let us keep on speaking of those machines. I understood from you this morning to say that they were not manufactured so that that adjustment could be changed.

Mr. JONES. Í did not intend to say that, sir. I was speaking at the time in answer to Mr. Harris' question, and speaking for the slot

machine members of this association. I was speaking in regard to what is commonly known as the slot machine.

In answer to Mr. Dolliver's question, which I understood to refer to consoles, because he referred to the company that I work for, I thought that I made it clear that those machines could be operated between 70 and 85 percent, and I tried to make it equally clear that there was no way that they could be adjusted to pay out, as has been stated, practically nothing, or lower than the minimum reward.

Mr. WILSON. You still say that there is no way to adjust those machines so it can pay out practically nothing, say 2 percent, as against 98 percent for the house?

Mr. JONES. Yes, sir, I say that.

Mr. WILSON. What is the simple adjustment that I as an operator might take one of your slot machines and adjust it after I get it in my State of Oklahoma, where it is illegal, and make some adjustment, what is that adjustment I need to make?

Mr. JONES. I do not know of any simple adjustment on a slot machine, sir, that can do that.

Mr. WILSON. How about on your electrically operated console?
Mr. JONES. There is a simple adjustment on those machines.
Mr. WILSON. What is that adjustment?

Mr. JONES. It is a simple electric connection changing a connection to cause the circuit to flow one way or another.

Mr. WILSON. It is a simple process?

Mr. JONES. Yes, sir, but I might submit we are still talking about a range, a liberal generous range between 70 and 85 percent. The question was raised about adjusting machines so that they do not pay out anything or practically nothing, and that is not possible.

Mr. WILSON. That is physically impossible with either slot machine or your electrically operated console?

Mr. JONES. I think it would be physically possible to not reward anything, but I say it is not in the manufacture and design of the machine to provide any means of a simple adjustment of the machines. Mr. WILSON. Have you had personal experience with the operation of the machine in any type of place like a tavern?

Mr. JONES. No, sir, I have not.

Mr. WILSON. Or a store that might be using it contrary to State law?

Mr. JONES. No, sir.

Mr. WILSON. You have never seen that in operation?

Mr. JONES. I have seen it in operation.

Mr. WILSON. Have you seen them changed after they arrived at destination?

Mr. JONES. No, sir. My only experience with machines on location has been as a customer.

Mr. WILSON. I asked you some questions this morning about your association. Your own company, it is affiliated with other companies on a parent-subsidary basis, or what is it?

Mr. JONES. I did not get the question.

Mr. WILSON. Is your company associated with these other companies on a parent-subsidiary basis, or how are they associated together?

Mr. JONES. The membership of that association are independent companies.