STATEMENT OF DUDLEY C. RUTTENBERG, GENERAL COUNSEL TO THE COIN MACHINE INSTITUTE, CHICAGO, ILL.

Mr. RUTTENBERG. Yes; I will answer that, sir. My name is Dudley C. Ruttenberg, and I am here in the capacity of attorney for the Coin Machine Institute.

Mr. BECKWORTH. Would you give your address?

Mr. RUTTENBERG. It is 134 North La Salle Street, Chicago.

Within the States themselves a free play has been held to be a thing of value in some States and not a thing of value in others. In most of the States the free-play pinball machines that you have referred to, sir, are legal. In fact, the legislation that came out of California just the other day, and signed by Governor Warren, which is the last word in State slot-machine legislation, expressly provides that pinball machines with the free-play attachment shall not be included in the definition of "illegal slot machine." There are some State supreme courts and a very few State legislatures which have outlawed the free-play device.

However, I believe that the Justice Department, in drafting this bill and this definition, did not include the free-play device for this reason, forgetting about our proposed language: They use the term "anything of value"; and then the question arises as to whether a free play is a thing of value. All of the Federal courts that have decided that issue have said "No; when you win a free play, you do not win anything of value." The highest court that decided that was the Circuit Court of Appeals for the District of Columbia in interpreting the Antigambling Code of the District.

The question arose whether the pinball machine with a free-play attachment, which is used so widely here in the District, was a gambling device, and whether the player won anything when he won the right to replay the machine, and the district court of appeals said, "No; it is nothing of value, as you cannot dispose of it, and it is not property within the law."

I believe the Justice Department when they drafted this did not intend to include the free play.

Mr. BECKWORTH. Do a good many of the machines manufactured by the members of your institute award free plays?

Mr. RUTTENBERG. There are a good many that do, and there are a good many that do not. The pinball machine is the one that uses the free play mostly. There are other types. There was a quizzer machine that asked you questions at the airport the other day.

Mr. HESELTON. Do you happen to have the citation in that circuitcourt case available?

Mr. RUTTENBERG. Yes; I do, sir. The citation of that case is 142 Federal 2d 97, and the name of the case is Washington Coin Machine Association against Callahan.

Mr. HESELTON. Thank you.

Mr. RUTTENBERG. I can give you the other Federal citations if you would like them.

Mr. HESELTON. No. I can locate them.

Mr. WILSON. What is the name of the case?

Mr. RUTTENBERG. Washington Coin Machine Association against Callahan.

Mr. WILSON. That is a District case?

Mr. RUTTENBERG. It is a circuit court of appeals case growing out of the District.

Mr. WILSON. Now, may you resume there? You have made your observations as to the definition as it is presently included in the Senate bill, but my precise question was: Will it be clear from your proposed amendment that an amusement game would not be a gambling device within the terms of the definition?

Mr. RUTTENBERG. If it had a free-play attachment, I believe it would be clear, because the only thing that would cover the free play would be "anything of value," and under the Federal law today it is unanimous that a free play is not anything of value.

Now, this law will be interpreted according to Federal law and not according to State law.

Mr. WILSON. Would you be basing it upon the interpretation of the Federal district and the Federal circuit courts up to date, rather than any State interpretations, within the States where there are States of the Union that have declared it to be a gambling device.

Mr. RUTTENBERG. That is my interpretation.

Mr. WILSON. That would be your only answer as to the clarity of it, because you look into the future, and based on an interpretation of this one circuit case, together with other Federal district cases.

Mr. RUTTENBERG. If a Federal court were to decide the other way, this would mean something else.

Mr. WILSON. And it would probably mean a free game amusement device would be a gambling device.

Mr. RUTTENBERG. If the court said that, yes, sir.

Now, I would like to say this: In addition to the Federal law, this bill as it passed the. Senate was designed to help the States enforce their basic policy against slot machines. Now, as my colleague pointed out, there is one State in the Union where almost any kind of coin-operated or non-coin-operated amusement machine is illegal-North Carolina, where they provide any game, whether coinoperated or not, is a gambling slot machine if it tallies a score, and our little pistol games cannot be operated there. There are a few jurisdictions where the free play is held to be a thing of value, but this year three of those States have changed their interpretation by legislation. We think the trend is in this direction.

Mr. WILSON. May I point out to you section 2 of S. 3557, which, as you know, includes a proposed certification by the Governor of my own particular State or your State. If this becomes law, then the Governor must look to some law, either State or Federal, to hang his hat upon to make that certification.

Mr. RUTTENBERG. That is right, sir.

Mr. WILSON. If he looks to the interpretations of his own State law, then is not there a loophole as to whether or not an amusement device with a free game would be a gambling device or not?

Mr. RUTTENBERG. I believe he would have to look at the Federal definition and reconcile it with his own definition, even though it were a gambling device in his own State; and if it were not included within the scope of the Federal definition, he would not have to certify it, because it was not intended to be covered by the Federal Government as a gambling device.

Mr. WILSON. He would be rather under a dilemma.

Mr. RUTTENBERG. I do not believe there would be a dilemma, sir. First, he must determine from the Federal language what is a gam bling device as defined by the Congress. After he made that determination and that some legal machine in his own State was covered, then he would be required or he would make the certification to the Attorney General's department. That is the way I read it, and I may be wrong, sir.

Mr. BENNETT. On page 2 of the bill, the Senate bill, I call your attention to the language that says at the top of the page:

The provisions of this section shall not apply in the course of unbroken interstate transportation of any gambling device into any State where the use of such device is legal.

Now, most States have antigambling laws; do they not?
Mr. RUTTENBERG. All of them do, except Nevada, I believe.

Mr. BENNETT. So, if a device or if the Attorney General under the terms of this bill says that the device is a gambling device, what can the Governor do?

Mr. RUTTENBERG. You mean the Attorney General of the United States?

Mr. BENNETT. Yes. What can the governor of a State do about it? Mr. RUTTENBERG. If I were a governor, I think I would rely upon the Attorney General's interpretation.

Mr. BENNETT. And if he said under the broad language of this bill that what was commonly regarded as an amusement machine was in fact a gambling device, the Governor of the State would be powerless to make any certification, would he not?

Mr. RUTTENBERG. I think he would. That is why we are particularly anxious to eliminate the amusement machines.

Mr. BENNETT. By specific language.

Mr. RUTTENBERG. Yes.

Mr. WILSON. I still feel that there is a question or a reasonable question as to the probable interpretation of the proposed proviso, when coupled with the proviso in section 2, as to what the Governor could do in certification; and what the courts would do in the way of declaring an amusement machine with a free-game device attached to it as to being a gambling game or not. Do you have any further observations on that particular subject as it relates to this proposed amendment of yours?

Mr. RUTTENBERG. No, sir; I do not.

Mr. ELLSWORTH. As I understand it, your association approves the bill, the Senate bill, if the amendment you suggest is adopted. Is that what your statement intended to say?

Mr. RUTTENBERG. Yes.

Mr. ELLSWORTH. Well, the amendment says that the term shall not be deemed to include, and then lists several types of machines, and then ends up with the words "a device designed for amusement." It seems to me, and I would like to have your interpretation of it, that the language of that amendment merely says that if a manufacturer of any device which might be adapted to gambling or might not, will design his machine for amusement, he is completely exempt from any of the terms or provisions of this bill.

Mr. RUTTENBERG. If he designs his machine that way. However, under the language as it came out of the Senate, even if he were to design his machine for amusement, if it could be adapted by anyone, I imagine, for gambling, as we have established here, I believe, that anything, any mechanical device can be used for gambling, the word is not "and," it is "designed or adapted," so that it would not be enough that he designed his machine scrupulously for amusement, if it could be adapted, it would fall within that classification.

Mr. ELLSWORTH. Providing that it was not, under the language of your amendment, providing it was not designed primarily for

amusement.

Mr. RUTTENBERG. I think that I see your question and let me attempt to answer it a little better. If any of the machines which I have listed here came within the definition above, or in other words, if they were designed for gambling, as Mr. Harris pointed out, a target pistol were to have a pay-off chute on it, and I know of no such game, incidentally, it would not be exempt, and it would come up in the first part of the definition, because it is not enough that a machine be a target machine or a pinball machine or a bowling alley or a toy; I think in addition it has to be designed for amusement.

Mr. ELLSWORTH. But your amendment says, "The term shall not be deemed to apply or to include a device designed for amusement.” Now, that is pretty specific, I think. I am not an attorney, but I would say that that was a very specific charge there in the bill. So that a machine that is designed for amusement, even though as we all know amusement machines are adapted to pay off nickels or they can be adapted, at least, if it is designed for amusement, according to the language as I read it, then this bill does not touch it.

Mr. RUTTENBERG. If it is designed for amusement, you mean.
Mr. ELLSWORTH. Yes.

Mr. RUTTENBERG. And you mean if you added my language here? Mr. ELLSWORTH. From your point of view, I think it is a grand amendment, but I am trying now to apply the amendment to the purposes of this bill. As I read it, and this is the question that I would like to direct you to, your amendment specifically excludes from the application of this bill any machine or device designed for

amusement.

Now, then, supposing the one-armed bandit could be adapted for amusement just as a pinball game can be adapted to pay, and as the one-armed bandit at one time was adapted to give a very inferior grade of candy or mints, supposing this bill were passed in this form with your amendment, would it not be possible for any gambling device now manufactured, and frankly a gambling device, to be altered in such a way as to come within the definition as designed for amusement?

Mr. RUTTENBERG. I believe if a slot machine or one-armed bandit were designed for amusement instead of gambling, it would not be a menace, and you gentlemen would not have to deal with it.

Mr. ELLSWORTH. Still, what I am talking about is the one-armed bandit that did pay off, but could be sold and marketed as designed for amusement.

Mr. RUTTENBERG. If it did pay off, I could not see how it could be designed for amusement.

Mr. WILSON. I will make this observation, that it seems to me like your proposed amendment is based on the assumption that there is no amusement in gambling.

Mr. RUTTENBERG. There is a great deal of amusement in gambling, sir. I am using the term "amusement" here, as the Federal Government did in the Revenue Code where is has distinguished between gambling and amusement. It is very simple, and there is not much more language in it than we have here, and they say that amusement devices which are coin-operated, and that is all they say, shall be taxed $10, and gambling devices where you might win something are taxed $100. The Bureau of Internal Revenue, a very efficient agency, has been administering that act for 9 years, and I think everybody in the coin-operated business knows when they are manufacturing, selling, or using a $100 device or a $10 device.

Now, this is a criminal statute and that is why we are asking for clarification, and without it, our people are going to be utterly confused.

Mr. ELLSWORTH. May I say with the language of your amendment, and I certainly do not blame you, you are not only asking for clarification, you are asking for a total exemption which from your point of view is all right. From our point of view I think that we have to look behind it a bit.

Now, pursuing the line of thought I think I agree with you that a one-armed bandit could not be construed as an amusement device. Would it not be possible under the language of your amendment to sell so-called amusement machines, and they are completely exempt under your amendment because they are designed for amusement, and they are frankly sold for that, but they surely could be adapted to gambling since they are mechanical devices. Since they do operate with coins and since I have seen pinball machines that did pay off, would it not be possible that the interest in one-armed bandits as attractive gambling devices might be shifted to machines designed for amusement, which subsequently were adapted for gambling?

Mr. RUTTENBERG. If that were done, it would not come under the exclusion, I believe.

Mr. ELLSWORTH. I am wondering about that. I think it is doubtful. Mr. RUTTENBERG. I think the language can be dressed up so that that could be clarified, and this is only a suggestion, and this was drafted very quickly, and it was just to give the committee an idea of what we think should be done. I think it might be a good idea to add the word "intended" or "calculated," such as Mr. Moorhouse of the Federal Trade Commission used yesterday.

Mr. ELLSWORTH. I want to go into another phase of it.

Mr. BENNETT. Why would it not be simpler and better for everybody concerned to simplify this language, to do what I think mostly everyone wants to do, and that is to eliminate the shipping of gambling devices in interstate commerce, by simply saying that it shall be unlawful to ship in interstate commerce any device that is manufactured for the purpose of being used or intended to be used as a gambling device, period, and exempt from the operations of the statute devices that are manufactured for the purpose of amusement. There you you have a definite cleavage, and you would be attacking the thing that you want to attack and exempting the thing that you want to exempt.