PRICE DANIEL ,\TT”RYEY GF.NERAL *%rrcaTlN 11. -rExan January 23, 1950
Ron. Robert S. Calvert Opinion NO.v-986. Comptroller of Public Acoounts Austin, Texas Re: Whether “owner.” of coin-operated eleotric scoFcboard is subject to ocoupatlon tax lmposed on ‘owners” of certain oofn-operated Dear Sir: machinese

Youhave requested the opinion of this oSSlce aato whether the occupation tax imposed onthe “owner” of coin-operated vending maohines by Articles 7047a-2 to 7047a-18, v.c.s., would be applLcsble to owners of coinoperated electric scoreboards used in connection wLth shuffleboard games. Fromthe file sttached to your FOquest wehave gathered the following Sects with regard to such scoreboards.

TheRegal Electric Scoreboard is advertised as havLngthe following features: “Wall mounting type - Hardwoodcebinet

. e - - 4 color silk stzeen panel- D

. a Ace lO$ coin chute - Full Anti-Cheat Protection - Large easily read figures e e V-All At aPrice WhichWill Be MoreTZlanCowered ByIncreased Returns FromYour ShuSSleboard*” OraQre of shuSSleboard games am queried thus:

‘%hy spend so muahof your time keeping tracks of ths play, and %ncome, Sromyour shuffleboard? ARegal scoring unit will act as an automatic collecting device andsave you unlimited

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. time anatrouble

. . e eltiinate misunderstandings over numberof gamesplayed- e
. q It will definitely increase your incorae Sromyour shuffleboard e’ The manufacturers of these machfnes contend that ther are not coin-opereted amusemeE& devices inasmuchas they are not gamesanddo not oontrol the playing of shuffleboati but merely register the scores end supply the servloe of collection for the merchant in whose eatablfshment shuffleboard is being played.Eon. Robert S. Calvert, pege 2 (v-986)

Artlale 7047a-3 provides thet “Rvery ‘Owner’ as that term is hemfnebove defined, who.owns, controls,

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. or whopermits to be exhibited or displayed

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. eny ‘coin-opereted machines ’ as that term is defined herein, shall peg e
. . an annual occupation tex.”

Article 7047a-4 exempts from the tax levied by the Act “gas meters, pay telephones, pay toilets, andcigarette vending mechines whioh are nowsubject to an occupation 

### orgross receipts tex and ‘service coinoperated machines ’ as that term is defined, a
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Article 7047a-2(c) provides .as Sollows:

“(c) Theterm ‘aoln-opereted machine’ as used herein shall meenend include every meohtne or device of anykind or character which Is operated by or with coins, or metal slugs, tokens or checks, ‘merohandise or music coin-operated machines’ and fskfll or pleasure coin-operated machines ’ as those terms ere hereinafter defined, shall be included in such terms.” Thestatutory definition of a “merchandise or music coin-operated machine” is clearly not applicable to the electric scoreboards here being consIderad.

Sections (e) and (I) of Article 7047e-2 reed as Sollowsa

“(e) The term ‘skill or pleesure oolnoperated machines ’ as used herein shell meen and Inelude every coin-operated machine of anyLind OFoharaoter whatsoever, whensuch aaohine 

### ormachines dispense or are used 

### or are capable of being used or opereted for amusement

### orpleasure 

### orwhensrrahmachines are operated 

### forthe purpose of dispensing or affording skill or pleasure, or SOPany other purpose other than the dispensing or vending of ‘merohendise or muslo ’ 

### or ‘service ’ exclusively, as those terms are defined herein. The SollowIng are expressly lneluded within seid terms marble maohines, marble table machines, marble shooting maahines, minleture race track machines, miniature football machines, mlnature golf machines, miniature bowling maohines, andallHon. Robert S. Calvert, page 3 (v-986)

other coin-operated machines which dispense or afford skill or pleasure. Provided that 

### everymachine or device of anykind or character which dispenses or vends merchandise, commodities OF confections or plays music in connection with or in addition to such games or dispensing OSskill or pleasure shall be considered as skill or pleasure machines andtaxed at the higher rate fixed for such machines. "(S) The teno 'service coin-operated machines' shall meanand include pay toilets, peg telephones andall other machines or devices which dispense service only andnot merchandise, music, skill or pleasure." IS the scoreboards do not comewithin the statutory definition of "service coin-operated machines" they must automatically be classified as "skill or pleasure coin-operated machines", andthe "otiner" thereof will therefore be liable for the occupation tax imposed by these articles.

HouseBill 223, Acts 44th Leg., R.S. 1935, ch. 354, p.905, which attempted to impose an occupation tax on the "owner" of coin-operated vending machines, was held invalid in Sheppard v. Giebel, 110S.W.2d 166 (Tex. Civ.App.1937) o This Aot, which wewill hereinafter refer to as the original Act, was deolered unconstitutional in toto by reason of the ambiguity of those provisions providing for payment of the tax. Other provisions of the statute were disoussed by the oourt in the course of the opinion andbecause the exemption provisions of the original Act andthe exemption provisions of our present statute are very similar, wewill be guided by the court's construction thereof.

The original Act provided, in psrt, as Sollowsn "Sec. 4. Gas meters, pay telephones, cigarette vending maohines, pay tolleta installed andused for sanitary purposes, and all maahines engaged in vending a service are expressly exempt from the provisions of this Act. "Sec. 4a. Theexemptions provided herein are recognized andmadeby reason of theI

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Hon. Robert 3. Calvert, pege 4 (v-986)

Sect that gas 

### meters,pay telephones andcigarette vending machines ere nowsubject to the psyment of an occupation tax under existing laws, end pay toilets being service vendlna machines. are not covered by the levy made he&by." - With regard to these provisions the oourt said:

n

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. it is manifest chines exempted in section lservice vending machines' the other exemptions named

. _ .. .that the only ma4because deemed were pay toilets; being exoluded from - _. _ _ nnetax oecause tney were already taxea unaer existing laws. While tservice vending machines' were exempt, the act nowhere undertook to deSine what should be deemedsuch machines, and the only type of machine namedas falling within this olass was pay toilets. In defining the classes of machines to be taxed in section le of the act9 it is to be noted that *service vending machines' are not mentioned as such. Onthe contrary, the act is limited to machines vending fmerchandise, oompodities, conSections, amusement, or pleasure.' It reasonably appears, therefore, that it was the legislative intent to include within the taxing act, other than maohines vending somesort of commodity or merchandise, only machines designed to afford amusementor pleasure. Following this general deSinition were speclSically namednumerous mechines aoming within the terms of the act, the first one of whioh was a 'phonograph' operated by inserting a coin, slug, token, or oheck. Rven if it be oonoeded, therefore, that the appellees' machines be oonsidered service vending maohines as oontradistinguished 

### from machines vending articles of meFchandfse, the Sect that maohlnes vending that oharacter of service olassed as amusement

### orpleesure were expressly included in the act, end, further, the speoific lnolusion of phonographs so operated, manifests a olear legislative intent that suoh machines were to be taxed andnot exempted. Manifestly there is e clear andreasonable basis of classiSication in separating this class of vending maehines Sromsuch service vending maohines es pay toilets, pay telephones, etc.; andsuch reasonable basis of classification isHon. Robert 8. Calvert, page 5 (v-986)

suSSicient to sustain the validity of the act.

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**. .**  **.** "Wethink that there can be no doubt that there is, because of the difference in the nature, mannerof operation, andpurpose, a reasonable basis for adifference of classification between the type of machines used merely for amusementandpleasure, such as those namedin section la of the act, and those designed to serve the public health, convenience, andnecessity, such as pay toilets. That being true, the act should not be stricken downfor that reason." It is noteworthy that the present act adds but one niti speciSic example, i.e., pay telephonesr in its defi- .on of "service coin-operated machines.' (Those included in the "occupation tax" group in the original exemption provision era still given as examples of this class in the present statute.)

Thuswehave little or nomorebywayof statutory definition of a "service" machine than had the court in the Giebel case. Weare therefore inclined to adopt the view of the court that "service" machines are "those deslgned to serve the public health, convenience andnecessity, such as pay toilets." Wefind noservice of this character in coin-operated electric scoreboards. Indeed, it is apparent that the chief service is not for the convenience of the public but for the convenience of the "owner" of such machines. Wefurther thfnk that such service as is rendered the public by the electric scoreboards would be that character of service classed as amuaement or pleasure andtherefore within the statutory definition of a "skill or pleasure coin-operated machine". Surely the manufacturer of these machines would not permit the suggestion that they do not contribute to the pleasure of playing the gamethey are designed to score. Whenso used wethink they become anIntegral part of the game, rendering imaterial the fact that the game could be played without them. Weare therefore of the opinion that an "owner", as that term la defined in the Act, of one of these machioes would be required to pay ;$e r;uFtion tax imposed by Articles 7047a-2 to 7047a-

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ROU.Robert 3. Calvert, page 6 (v-986)

SUMMARY Acoin-operated electric scoreboard used to score shuffleboard games Is not a "service coin-operated machlne"; andan "owner", as that term is defined by Artfcle 7047a-2, V.C.S., must pay the occupation tax Imposed by Articles 70478-2 -- 7047a-18, v.C.8. APPROVED: W.V. Geppert Taxation Division Charles D. Mathewa Executive Assistant MMC:ebm:mw YOUPS very truly, PRICEDANIEL Attorney General