Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 63-39

1963-1 C.B. 262

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

Coin-activated bowling machines which do not conform generally to the dimensions of `regulation' bowling alleys and which otherwise are not substantially similar to `regulation' alleys are not `bowling alleys' for purposes of the occupational tax imposed under section 4471 of the Internal Revenue Code of 1954. However, such machines are `coin-operated amusement or gaming devices' for purposes of the occupational tax imposed under section 4461 of the Code.

Full Text

Rev. Rul. 63-39

Advice has been requested concerning the applicability of the occupational taxes imposed by section 4471 and section 4461 of the Internal Revenue Code of 1954 with respect to certain `bowling machines' described below.

These portable machines vary in length but do not approach the length of a regulation bowling alley. They have automatic pinsetting and scoring features and are operated according to regulation bowling scoring rules, utilizing balls four and one-half inches in diameter and pins 12 inches in height. The machines are constructed so as to have elevated playing surfaces.

The players deposit a coin in a coin box which entitles them to play two games, accommodating one to six persons per game. The coin does not actually operate the machine but only activates the register that shows the number of games that are paid for by the players. The players or attendants must press a button to reset the score and activate the game.

The machine has no features which provide for free games, and it is not equipped with reels, digit lights, etc., for use in awarding prizes. However, on occasion prizes and awards are given to players who attain high scores.

Specifically, advice is requested whether the bowling machine described above is (a) a `bowling alley' within the meaning of section 4471 of the Code, or (b) a `coin-operated amusement or gaming device' within the meaning of section 4461 of the Code.

Section 4471 of the Code imposes a special tax to be paid by every person who operates a bowling alley, billiard room, or pool room, at the rate of $20 a year for each bowling alley, billiard table, or pool table.

An individual bowling alley for purposes of section 4471 of the Code is not limited to `regulation' bowling alleys. It contemplates alleys which are suitable for use in the conventional game of bowling. A `conventional game' is one which embodies the essential characteristics of the `regulation' game although not necessarily following the exact requirements of the latter. `Suitable for use' is meant to imply substantial similarity in appearance, structure, and use to `regulation' bowling alleys. `Regulation ten pin' bowling alleys are 60 feet in length and 41 inches in width and have permanent alley beds over which the playing surface is laid. `Regulation duck pin' bowling alleys sometimes vary slightly in the width of the playing surface and the depth of the gutters, but otherwise are similar to the ten pin bowling alleys.

The dimensions of the bowling machines in the instant case do not conform generally to the dimensions of the `regulation' bowling alleys, nor is their use substantially similar since they are elevated thereby preventing the conventional approach for bowling the ball. Cf. Revenue Ruling 62-19, C.B. 1962-1, 211. Accordingly, it is held that they are not `bowling alleys' within the meaning of section 4471 of the Code. Therefore, the special tax imposed under that section on the operation of `bowling alleys' is not applicable.

Section 4461 of the Code imposes 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.' This tax is imposed at the rate of ten dollars a year in the case of a device defined in section 4462(a)(1) and $250 a year in the case of a device defined in section 4462(a)(2).

The definition in section 4462(a)(1) includes an amusement machine operated by means of the insertion of a coin, token, or similar object, but not including any device defined in section 4462(a)(2), as well as any similar machine which is operated without the insertion of a coin, token, or similar object.

The definition in section 4462(a)(2) includes a machine 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.

Where awards or prizes are offered contingent on the successful operation of a coin-operated amusement or gaming device, the device is considered as being of the type defined under section 4462(a)(2) of the Code, if the successful operation is dependent on the application of the element of chance. See  Revenue Ruling 57-395, C.B. 1957-2, 781.

In the instant case, the successful operation of the device, and any consequent right to an award or prize, depends upon the skill of the player. Accordingly, it is held that the above described bowling machine is an amusement device rather than a gaming device within the meaning of section 4461(a) of the Code. Therefore, a person who maintains for use, or permits the use of, the device on any place or premises occupied by him, is subject to the special tax of ten dollars per year imposed under section 4461(a)(1) of the Code.