United States v. Korpan

Background

Walter Korpan operated several coin-operated pinball-style machines in Illinois and was indicted for willfully failing to pay a $250-per-device tax that the law imposes on certain "slot" machines. A federal trial judge found him guilty and fined him $750. The Court of Appeals reversed, saying the machines were not covered by the statute. The Government asked the Supreme Court to decide whether these pinball-like devices fall within the tax law’s definition of "slot" machines. The statute distinguishes amusement or music machines taxed $10 from slot machines taxed $250 per year.

Reasoning

The key question was whether the phrase "so-called 'slot' machines" in the statute covers pinball-style devices. The Court examined the statutory language, legislative history, and administrative practice. It found Korpan’s machines were coin-operated, involved an element of chance, and allowed players to cash in free games, so they fit the statute even if some skill could affect play. The Court cited Senator Clark’s statement that the tax targeted any machine returning a premium, a Senate report separating pinball and slot taxes, and Treasury regulations from 1942 that treated pinball as taxable; industry complaints did not lead Congress to change the law except for a limited penny-machine exception.

Real world impact

The decision means operators of pinball-style gambling machines are subject to the higher $250 annual tax and may face liability for unpaid taxes and fines. Machines used purely for amusement without an expectation of cash or prizes remain in the lower $10 category. Because Congress left the statutory language and Treasury interpretation largely intact, many modern coin-operated gambling devices that return cash or prizes will likely be treated as taxable "slot" machines.

Dissents or concurrances

Justice Douglas dissented, arguing that pinball machines are not games of chance within the meaning of the statute and therefore should not be taxed as "slot" machines.