Opinion ID: 515452
Heading Depth: 2
Heading Rank: 1

Heading: Gross Revenues

Text: 9 Section 1955(a) imposes criminal penalties on any person who conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling business. 18 U.S.C. Sec. 1955(a). An illegal gambling business within the meaning of Sec. 1955(a) is defined, in pertinent part, as one that has a gross revenue of $2,000 in any single day. Id. Sec. 1955(b)(1)(iii). In challenging the use of amounts wagered to establish his club's gross revenue, Reitano relies on the fact that rough-and-tumble blackjack involves no bets against the house, and he contends that the amounts wagered therefore did not constitute revenue to the house within the meaning of Sec. 1955. We disagree. 10 Enacted as part of Title VIII of the Organized Crime Control Act of 1970, Sec. 1955 was included in order to allow the federal government to cut off income from illegal gambling, described as the  'the lifeline of organized crime.'  S.Rep. No. 617, 91st Cong., 1st Sess. 71 (1969) (S.Rep. 617) (quoting President's Message on Organized Crime (President's Message), H.R. Doc. No. 105, 91st Cong., 1st Sess. 6 (1969)). Nonetheless, Congress did not seek to reach all illegal gambling activity, and the $2,000-gross-revenue-in-a-day portion of the statutory definition was fashioned in order to reach operations that did substantial amounts of gambling business but to exclude operations of insignificant monetary proportions. S.Rep. 617, at 73; see also Hearings on S. 2022, etc. Before the Subcomm. on Criminal Laws and Procedures of the Senate Comm. on the Judiciary, 91st Cong., 1st Sess. 399-400 (1969) (testimony of Henry E. Petersen, Deputy Assistant Attorney General). 11 While Congress did not define gross revenue, the language used in the legislative history suggests that it meant that term to encompass all of the moneys coming into the possession of the gambling establishment. The President's Message had urged Congress to adopt legislation making it a federal crime to engage in an illicit gambling operation from which the daily take was more than $2,000, id. at 449, and the term take was also used during hearings and floor debates, see id. at 401 (subcommittee counsel inquiring whether law enforcement officers would be aided, in efforts to obtain search warrants, by a presumption of a 2,000-a-day take); 115 Cong.Rec. 10786 (1969) (statement of Rep. McCulloch describing $2,000 as focusing on the daily 'take' ). In common slang usage, the term take refers to the money received, and it may connote either receipts or profit. Webster's New Twentieth Century Dictionary of the English Language, Unabridged 1859 (2d ed. 1979). It is clear, however, as other courts have concluded, see, e.g., United States v. Sacco, 491 F.2d 995, 1001 (9th Cir.1974) (en banc); United States v. Ceraso, 467 F.2d 653, 657 (3d Cir.1972), that take was not used by Congress to refer merely to profit since the only pertinent definitions in any of the bills it considered used the term gross revenues. See, e.g., S. 2022, 91st Cong., 1st Sess. Sec. 201(b)(3), 115 Cong.Rec. 10736 (1969); H.R. 10683, 91st Cong., 1st Sess. Sec. 201(b)(3) (1969), Hearings on S. 30, etc. Before Subcomm. No. 5 of the House Comm. on the Judiciary, 91st Cong., 2d Sess. 975 (1970). 12 We are left with the inference, therefore, that take meant all sums received, regardless of any sums that might later have to be paid to bettors. This inference is supported by Congress's use of other descriptions of the $2,000 gross revenue provision that suggested even more plainly the intention that, in calculating gross revenue, all amounts received as wagers were to be considered. For example, Senator Allott repeatedly referred to the amounts that illegal gambling operations such as casinos, bookmakers, and lotteries were handling, stating that the premise of this part of the proposed statutory definition was that most of the gambling operations in which the federal government would be interested would handle at least $2,000 daily. 116 Cong.Rec. 604 (1970). References to the amounts handle[d] by gambling establishments reveal an intent to include in the $2,000 provision the total wagers dealt with by the house. 13 The legislative history also belies any suggestion that Congress sought to define gross revenue differently for different types of gambling operations, and references to amounts handle[d] by bookmakers are particularly instructive for purposes of the present case, for a bookmaker earns his profits in much the same way that a rough-and-tumble blackjack establishment does: His profit ... does not come from winning bets. Rather, the bookmaker charges losing bettors a 'brokerage' fee, ... which is a fixed percentage of the amount bet. United States v. Grezo, 566 F.2d 854, 857 (2d Cir.1977); see generally United States v. Box, 530 F.2d 1258, 1260-62 (5th Cir.1976); United States v. Sacco, 491 F.2d at 998 & n. 1. We think it plain that Congress intended the $2,000 figure to refer to the daily total of the amounts wagered with a bookmaker rather than to the bookmaker's percentage of those bets. The same view has been taken of a poker game in which the house made its profit by taking a rake from the pot. See United States v. Zemek, 634 F.2d 1159 (9th Cir.1980), cert. denied, 450 U.S. 916, 101 S.Ct. 1359, 67 L.Ed.2d 341 (1981). In Zemek, the house had an interest in all amounts bet at the pot limit poker game: a dollar per pot charge plus a percent of each pot, and the [h]ouse dealers would 'rake off' the pot. Id. at 1178. The court upheld a jury instruction that the house's gross revenue for a single day should be considered the total amount of money wagered. Id. at 1177. We see no reason to apply a different standard to the rough-and-tumble blackjack operator. 14 There is one major difference between a bookmaker and a rough-and-tumble blackjack operator, but it does not redound to Reitano's benefit. One of the devices used by the bookmaker to reduce his risk of loss is the laying off of excess bets with another bettor or another bookmaker. See, e.g., United States v. Grezo, 566 F.2d at 857; United States v. Sacco, 491 F.2d at 998 & n. 1. If he cannot lay off all such bets, the bookmaker will retain some risk of loss. In contrast, the rough-and-tumble operator, in effect, automatically lays off with the bank player all of the bets of the other players; only the players are at risk of losing, and the house has no risk of loss at all. This difference, however, hardly indicates that the status of rough-and-tumble operators should be judged only by the amount of their rake rather than by the total amounts they handle, for given the aim to cut off gambling funds as organized crime's lifeline, Congress cannot be deemed to have intended to exclude a handler of substantial wagers just because it has only the prospect of profit and no risk of loss. 15 Against this background, we reject all of Reitano's arguments as to how his club's gross revenue on May 10 should have been calculated. Reitano's housemen controlled the flow of the blackjack games, supervised all of the betting, maintained possession of both the bank player's stake and the stake of his opponent in a one-on-one game, kept possession of the bank player's stake in a table-against-the-bank game, and, in the latter type of game, paid the winning table players and collected the bets of the losers. In either type of game, the housemen ensured that the house received its proper percentage of the sums bet. Given the house's control of the games and its stakes in the wagers, the legislative history indicates that the total amounts wagered should be included in the computation of the house's gross revenues. 16 The fact that the wagers were between customers does not mean, as Reitano would have it, that the wagers were akin to side bets and should not be considered revenues to the club. The record reveals that in fact Reitano's club had a stake in every wager described by the witnesses. In any one-on-one game, the house took a percentage of all sums wagered; in any table-against-the-bank game, the house took a percentage of all sums left in the bank at the end of the game. 17 Finally, Reitano argues that amounts bet by the bank player should not be included in the computation of gross revenues to the house because if the house itself were the bank, its own wagers would not be considered. We doubt the merit of this analogy since Reitano's club took a rake from the sums bet by the bank player. However, we need not resolve this question since, as discussed in Part II.B. below, the evidence was sufficient to establish that more than $2,000 was wagered by the players other than the bank player.