[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR44.4402-1]

[Page 35-36]
 
                       TITLE 26--INTERNAL REVENUE
 
                               (Continued)
 
PART 44--TAXES ON WAGERING; EFFECTIVE JANUARY 1, 1955--Table of Contents
 
                        Subpart B--Tax on Wagers
 
Sec. 44.4402-1  Exemptions.

    (a) Parimutuel wagering enterprises. Section 4402 provides that no 
tax shall be imposed by section 4401 on any wager placed with, or on any 
wager placed in a wagering pool conducted by, a parimutuel wagering 
enterprise licensed under State law.
    (b) Wagering machines--(1) In general. Section 4402 provides that no 
tax shall be imposed by section 4401 on any wager placed in a coin-
operated device (as defined in section 4462 as in effect for years 
beginning before July 1, 1980), or on any amount paid, in lieu of 
inserting a coin, token, or similar object, to operate a device 
described in section 4462(a)(2) (as so in effect). These devices 
include:
    (i) So-called ``slot'' machines that operate by means of the 
insertion of a

[[Page 36]]

coin, token, or similar object and that, 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; and
    (ii) Machines that are similar to machines described in paragraph 
(b)(1)(i) of this section and are operated without the insertion of a 
coin, token, or similar object.
    (2) Examples. The following devices and machines are examples of the 
devices referred to in paragraph (b)(1) of this section:
    (i) A machine that is operated by means of the insertion of a coin, 
token, or similar object and that, even though it does not dispense cash 
or tokens, has the features and characteristics of a gaming device 
whether or not evidence exists as to actual payoffs.
    (ii) A so-called crane machine, claw, digger, or rotary 
merchandising type device that is operated by the insertion of a coin 
and adjustment of a control lever for the purpose or removing from the 
machine, by gripping, pushing, or other manipulation articles such as 
figurines, lighters, etc., in the machine.
    (iii) A pinball machine equipped with a pushbutton for releasing 
free plays and a meter for recording the plays so released, or equipped 
with provisions for multiple coin insertion for increasing the odds.
    (iv) Pinball machines in connection with which free plays are 
redeemed in cash, tokens, or merchandise, or prizes are offered to any 
person for the attainment of designated scores.
    (v) A coin-operated machine that displays a poker hand or delivers a 
ticket with a poker hand symbolized on it that entitles the player to a 
prize if the poker hand displayed by the machine or symbolized on the 
ticket constitutes a winning hand.

[T.D. 8328, 56 FR 188, Jan. 3, 1991; Redesignated and amended by T.D. 
8442, 57 FR 48186, Oct. 22, 1992]