lation, by influencing the Senate committee to believe that it was the official and authoritative association of this industry.

The only point that I am making is that it is not the official and authoritative association of this industry and certainly not for the manufacturers who are appearing here in opposition to this legislation, quite frankly in defense of their business. Our association includes the larger and older manufacturers.

Mr. WILSON. That is all.

Mr. BECKWORTH. You say there are only 12 manufacturers who belong to your association?

Mr. JONES. There are 12 members of our association; all manufacturers.

Mr. BECKWORTH. Of the pinball machines which are annually manufactured in this country, what percentage would you say that the members of your association manufacture?

Mr. JONES Some members of our association manufacture pinball games; some do not. I do not believe that I could give an exact figure. I would say that perhaps 50 percent of the pinball games manufactured in this country are manufactured by members of our association. I must say that definite figures are very scant in this industry. It has not ever set itself up to determine figures of that kind, but from personal knowledge I would say about 50 percent.

Mr. BECKWORTH. You indicate that 50 percent of the pinball machines might be manufactured by the members of your association, if I understand you correctly.

Mr. JONES. Yes, sir.

Mr. BECKWORTH. What percentage of the total sales made by these 12 manufacturers, in dollars, would be attributable to that 50 percent of the pinball machines manufactured?

Mr. JONES. You say what percentage of the total value? I would say approximately the same percentage; perhaps slightly higher, in the members of the American Coin Machine Manufacturers Association, because we manufacture more expensive games.

Mr. BECKWORTH. If the amendment which was suggested by the Coin Machine Institute were adopted, perhaps some of your companies could remain in business, but their income from sales might be cut as much as 50 percent.

Mr. JONES. That is correct.

Mr. BIEMILLER. Mr. Chairman.
Mr. BECKWORTH. Mr. Biemiller.

Mr. BIEMILLER. You painted a pretty glowing picture of the charitable benefits that develop from the use of these machines by various groups, using slots and other kinds of coin machines, and you paint a rather dire picture and said you thought that many of these charitable institutions and other institutions such as boys' clubs and girls' clubs, and so on, might suffer adversely.

Now, I realize that that argument is frequently put forth; but in my State of Wisconsin we have banned all kinds of gambling; not only slot machines, but bingo and other games. Nothing of that kind is permitted by a religious, fraternal, or any other group.

I have not noticed any great falling off of charitable enterprises on the part of these groups. They are still going ahead.

Mr. JONES. I am speaking, sir, of course, only from general knowledge of the number of these games which are operated in fraternal

and veterans' organizations and the fact that these fraternal and veterans' organizations do support many charitable enterprises. I do not believe that I could, in all honesty, argue that they might not find other means, although it was stated in this room last week that, in the case of the swimming pool that was mentioned, that the only other means to complete that swimming pool was to increase the tax rate of the community.

Mr. BIEMILLER. But certainly we have got to be careful that we do not permit charitable enterprises to be used to cover up the admitted problems of corruption that have developed out of the slot machines in various parts of the country. I think we have had ample evidence that gambling activities which have grown from the coin-operated machines of one sort or another have resulted in the most serious kind of problems that led to the conference Representative Wilson was referring to, recommending this legislation.

I just want to be sure we do not get some false-front set-up here that will blind us to a very real problem in the country today.

Mr. JONES. I assure you that we are not trying to cover up anything and I believe that we have not come in here under false pretenses. We have stated the nature of our business and the nature of our operations.

I should like to call your attention to the fact, however, that it has been stated again and again in this committee that the local authorities can and do enforce the law when that is the temper and demand and requirement of the local people.

Mr. DOLLIVER. Mr. Chairman.

Mr. BECKWORTH. Had you finished?
Mr. WILSON. Yes, sir, Mr. Chairman.
Mr. BECKWORTH. Mr. Dolliver.

Mr. DOLLIVER. Do I understand correctly, sir, that you are not only an officer of this association, in which capacity you appear here, but also that you are a manufacturer, or associated with a manufacturer, of slot machines?

Mr. JONES. Yes, sir; I am vice president of Lion Manufacturing Corp., which manufactures pinball games, bowling games, and the electric type of slot machines that is commonly called a console. Mr. HALE. A what?

Mr. JONES. A console.

Mr. DOLLIVER. Now, I am not going to pursue a line of questions which you might find expedient not to answer on account of some alleged trade secrets; but I have often had a very great intriguing interest in the mechanical operation of these slot machines. You put a coin in the proper place and you pull a handle, and generally nothing comes out.

Mr. JONES. That seems to be a highly publicized opinion, sir.
Mr. DOLLIVER. Well, am I right or wrong about that?

Mr. JONES. I must say that I believe you are wrong.

• Mr. DOLLIVER. All right, to pursue that a little further: In these slot machines, is there a method of tightening them up so that the payoff will be less, or loosening them up so that the payoff will be more; or is that fixed at the factory?

Mr. JONES. There is no method in the manufacture of the machine; there is no provision for adjusting the pay-out of the slot machine.

Mr. HARRIS. Will the gentleman yield?

Mr. DOLLIVER. I will yield.

Mr. HARRIS. Are you telling this committee that the regular onearmed bandit, the so-called slot machine, does not have an adjustment in the back of it that you can adjust the pay where it will be more liberal or less liberal?

Mr. JONES. Yes, sir; as manufactured, no slot machine has any such adjustment.

Mr. HARRIS. Well, now, is there any possibility that in the course of their transportation, where they are finally set up for public use or amusement, if you may call it that, for such a device to be included? Mr. JONES. It is possible that the operator of such a device may tamper with the device, just as he may tamper with any merchandise, or any merchandise may be adulterated.

Mr. HARRIS. Can he tamper with it to such an extent that it may be more liberal in payment or more restrictive as to payments? Mr. JONES. I suppose that he could, sir.

Mr. HARRIS. Does the manufacturer of the machine, in itself, permit that then?

Mr. JONES. There is nothing in the design of the machine as manufactured that permits that.

Mr. HARRIS. Well, how can the operator then manipulate it so as to do that?

Mr. JONES. I frankly do not know. I never operated a machine. I know the mechanism as they leave our factory.

Mr. HARRIS. That is a rather unusual statement, I am sure. That is a rather unsual statement for anybody to make before this committee. You have never manipulated the machines and you say that there is nothing in the design that will permit that, and yet, when they are set upon the counter, we know that the operators may do it. I do not understand that statement at all.

Mr. JONES. I said I supposed he may do it, just as practically anyone in the world can tamper with or adulterate their merchandise; just as a tavern keeper might adulterate his whisky or just as a filling station operator might adulterate his gasoline; but as to that, certainly the manufacturers of that merchandise are not providing means whereby they can be adulterated.

Mr. HARRIS. I am sorry to take up your time, Mr. Dolliver.

Mr. DOLLIVER. I want to pursue this a little further. I am accepting your statement now, Mr. Jones, at its face value, that when the coin-operated slot machine leaves your manufacturing plant that it is set as to the amount of pay-off; is that correct?

Mr. JONES. That is correct. It returns to the player from 75 percent to 90 percent of the income into the machine.

Mr. DOLLIVER. I did not get that. Will you please repeat that? Mr. JONES. The average design of the average slot machine is designed to return to the player from 75 to 90 percent of the income into the machine.

Mr. DOLLIVER. In other words there is a take of the institution that harbors the machine of anywhere from 10 to 25 percent; is that what you are saying?

Mr. JONES. That is correct, sir; and I submit

Mr. DOLLIVER. All right. Is that strictly on a mechanical basis; that is, do you say that if you pull the handle so many hundreds of times, you get back 75 percent; is that the theory behind it?

Mr. JONES. That is correct. The reels of the slot machine spin freely and stop in accordance with the laws of chance.

Mr. DOLLIVER. So we will say that if a man puts in $10 and only 75 percent is paid off by the machine he ought to get back $7.50, if he plays long enough; is that right?

Mr. JONES. By the same token, if he replays-
Mr. DOLLIVER. If he replays what he wins.
Mr. JONES. He eventually will lose.

Mr. DOLLIVER. He eventually will lose?
Mr. JONES. He eventually will lose.

Mr. DOLLIVER. In other words, if he plays long enough he will lose everything that he has put into it?

Mr. JONES. We submit, sir, that 25 percent, 10 to 25 percent is certainly not an exorbitant charge for the amusement, for a person who is playing for amusement, and it can be demonstrated mathematically and by actual stock machines that these machines do return this percentage to the player.

Mr. DOLLIVER. Of course, you can call it an amusement device, but I find it is a little hard to understand. I would not find it amusing to pull a handle 25 times and lose $2.50 out of every $10 that I put into it.

Mr. JONES. Many people find it very amusing, because they do win. Mr. DOLLIVER. Well, you have just said that ultimately a man will lose at least 25 percent and sometimes lose everything he puts in there; is that not true?

Mr. JONES. The point is that the machine returns from 75 percent to 90 percent to the player. He is paying then, over a period of time, he is paying from 25 percent-from 10 percent to 25 percent-a charge, you might say, admission charge, for the fun of playing that machine. Mr. DOLLIVER. Over a long period of time, he cannot win, can he? Mr. JONES. Well, certainly not, otherwise businessmen would not investment their money in equipment of this kind any more than a man would invest his money in a motion-picture theater and as the people came out of the show give back their admission price.

Mr. DOLLIVER. Now, to allude again to the line of questions indulged in by my colleague, Mr. Harris. You do not mean to tell this committee that adjustments are not made on slot machines to tighten them up or to loosen them up, so far as their pay-off is concerned, do you?

Mr. JONES. I do not know that as a matter of fact, either way, sir. Mr. DOLLIVER. All you are saying then is that the manufacturers manufacture the machine in such a way or have them set so as to pay 75 to 90 percent, and that is as much as you want to say at this time. Mr. JONES. And I submit that the more liberal, the more generous the machine is, the more frequently it returns coins to the player, the greater net profit it will earn for the operator, so that it simply would be poor business to reduce the return to the player, because it is a known fact, for example, in Nevada, where these machines are legal and where they are the greatest money makers, the clubs normally operate the machines at 90 to 95 percent, in the full knowledge that, the more

generous the machine is, the more fun people get from it and the more they play it.

Mr. HESELTON. You are the vice president of this company. In what capacity, in the manufacture or sales?

Mr. JONES. I have to do with both the manufacture and the sales, sir. My primary job is, you might say, public relations. I have to do with the design of the machines, that is, their physical appearance, and I am very familiar with the engineering of the machines, and I handle the advertising and public relations. I usually refer to myself as the vice president in charge of loose ends.

Mr. HESELTON. How long have you been with the company?
Mr. JONES. Eighteen years, sir.

Mr. HESELTON. You mean to say that you have never seen the inside of the machine that has been adjusted after it left the plant?

Mr. JONES. I have never seen the inside of a slot machine on location or in any place outside of our plant.

Mr. HESELTON. It is just a step further, and I realize it is hearsay, but have you not discussed the question of whether or not one of your machines could be adjusted with any of your employees who were engaged in the actual manufacture of these machines?

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

Mr. BIEMILLER. You have just made two statements, one that the machines pay back from 75 to 80 percent, and the other that in Nevada they pay back from 90 to 95 percent. Now, somewhere there must be adjustments if you have that variation.

Mr. JONES. The machines are built to pay certain returns to the player, and they may be built, as machines are built for Nevada, they are built at the factory to pay this high return. Some machines are built to pay 85 percent to the player, some are built to pay as low as 75 percent, and the Nevada machines that pay 95 percent do not pay 95 percent because they have been adjusted to pay that, they have been so built, by the number of symbols involved in the operation of the machine-so are built at a factory to make that pay-out. I did not want to give the impression that the machines paid more or less because of adjustments that were built into the machine.

Mr. BIEMILLER. I would like to observe, and again I will grant you it is hearsay in line with the questions asked by the gentleman from Massachusetts and the observation made by him, that various fraternal veterans' groups in Wisconsin, who up until the time we outlawed slot machines in our State were rather brutally frank in discussing the fact that they were told by the manufacturers how to make adjustments on their machines so that they could have some regulation as to the pay-out, what it would be from time to time, and certainly it has been common knowledge in the northern part of Wisconsin where the gamblers operated, that machines were from time to time regulated in terms of pay-offs.

I think it is rather a broad statement to make here to say that these machines cannot be regulated in any way in terms of their pay-off. Mr. JONES. I did not say that they could not be, sir.

Mr. BIEMILLER. I am wondering, what would you think of a provision to put on top of a slot machine a statement as to the percentage of pay-off that was being made?

Mr. JONES. I think it would be a very excellent idea, and it was proposed in Florida.