The Big Jolt

The Bureau of Internal Revenue was so polite about the new gambling tax. So friendly. No television cameras. No lawyers. No subpoenas. It just wanted bookies to I) fill out form 11-C, giving their real names, their addresses and the names of their partners and employees, 2) buy a $50 federal tax stamp which, in effect, would label them as professional gamblers, and 3) turn over 10% of their gross business to the Government.

Experts estimated that the new tax, if paid, would bring in $400 million. From the way things looked last week, it might never bring in $4,000. But it had a far more profound effect, which may have been the real intention of Congress when it wrote the new law: the gambling business of the U.S. almost came to a standstill. A 10% tax on gross business was probably more than the traffic would bear. Even more discouraging was form 11-C. Names and addresses on it would be open to local police, who are supposed to enforce antigambling laws in 47 states (gambling is legal in Nevada). Even a bribed policeman would find it hard to protect a gambler whose name and address appeared on a federal list.

The Internal Revenue Bureau shipped out thousands of stamps (marked "This is a tax receipt--not a license"), but at week's end only a few gamblers had applied for them. Instead:

P: In New Orleans, bookies and numbers operators closed.

P: In Boston, gamblers thought that a way around the law would be found; meanwhile operations ceased.

P: In Los Angeles, one lawyer said that he had received 200 telephone calls from distressed and bewildered bookies who suspended business pending legal clarification.

P: In Las Vegas, Nev., twelve legal horse parlors closed. They did not mind form 11-C or the stamp, but they said the 10% tax was impossible. Other kinds of Nevada gambling continued, with the tax passed on to the customers.

P: In Washington, a suit challenging the constitutionality of the tax was filed.

P: In Omaha, most bookies closed down, but did not consider their long-range situation hopeless. Said a bookie to a reporter: "I'll lay you 8 to 5 we beat this law."

Meanwhile, form 11-C was the biggest jolt to the American gambling fraternity since 1913, when Donerail won the Kentucky Derby at 91 to 1.

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