Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 68-53

1968-1 C.B. 510

IRS Headnote

A coin-operated gaming device, with three coin-drop chutes and payoff cups, actuated by a single mechanism that operates one to three payer-positions independently of each other is taxable as three gaming devices, notwithstanding the fact that it is operated by a single mechanism.

Full Text

Rev. Rul. 68-53

Advice has been requested whether a certain coin-operated gaming device is considered to be a single or multiple unit machine for purposes of the occupational tax imposed by section 4461 of the Internal Revenue Code of 1954.

The device is an electronically operated blackjack game. There are three player-positions each with a simulated 52-card display actuated by lamps. Each player position has a coin-drop chute and a payoff cup. Play is initiated by inserting a coin or coins into the acceptor at any of the player-positions. The sequence of the game is that of the regular `blackjack' or `21' game. Two simulated cards are `dealt' to the dealer and to each payer-position. Each player retains the cards dealt, or he can draw additional cards. If a player draws more than a total score of 21 he loses and his position is locked out of play. At the completion of the game a single electronic assembly determines the dealer's total and compares it with each player-position total. If the dealer is closer to a total of 21 than a player the assembly unit retains the coins and locks out that losing player-position. If a player is closer than the dealer to a total of 21 the assembly unit signals a payoff to that winning player-position.

Section 4461 of the Code imposes a tax of $250 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 gaming device, and $250 per year for each additional derive so maintained or the use of which is so permitted.

Revenue Ruling 56-139, C.B. 1956-1, 533, holds that a coin-operated gaming device with two separate mechanisms that operate independently of each other after they are activated by a single lever is taxable as two units.  Revenue Ruling 57-184, C.B. 1957-1, 421, involves a coin-operated gaming device with multiple coin-drop chutes and payoff cups. It is operated by a single mechanism, activated by a single handle and all players win or lose as a single result. This device is taxable as a single unit.

The electronic blackjack game in question has a single mechanism that operates three player-positions as separate and distinct units. The player in each player-position plays a separate game against the machine and he wins or loss regardless of the wins or losses of the other players.

It is accordingly held that the electronic blackjack machine is taxable as three coin-operated gaming devices regardless of the fact that it is operated by a single or central mechanism. Therefore, three $250 gaming device stamps are required with respect to the maintenance for use of this machine.