*75 Decision will be entered under Rule 50.
Lawrence E. Bevers, a dealer in a gambling casino in Las Vegas, Nevada, received certain sums throughout 1953 which represented his share of the proceeds of winning wagers which had been made on behalf of all the dealers in the casino by the patrons. Held, these sums represent taxable income in the form of compensation for personal services.
*1218 This proceeding involves a deficiency in income tax for the year 1953 in the amount of $ 143.
The issues for decision are: (1) Whether amounts received by a dealer in a gambling casino as his share of the proceeds of wagers made by the patrons for him, and other dealers employed*76 therein, represented taxable income or a gift; and (2) if such amounts are taxable, whether they represented ordinary income, or gambling income from which gambling losses sustained during the taxable year may be offset.
FINDINGS OF FACT.
Lawrence E. Bevers (hereinafter referred to as the petitioner) and his wife, Madeline V. Bevers, resided in Las Vegas, Nevada, during the year 1953. Their joint Federal income tax return for the year was filed with the director of internal revenue for the district of Nevada.
Throughout the year in issue, petitioner was employed by several gambling casinos located in Las Vegas, Nevada. He performed his duties in the capacity of a dealer, or croupier, dealing a card game known as twenty-one or blackjack, and serving as a member of a crew which operated games of roulette and dice.
Petitioner's duties in these various games were as follows: In the game of twenty-one he dealt the cards, supervised the betting, paid the *1219 winning patrons, and collected from the losing patrons for the management. In the game of roulette he supervised the betting, spun the wheel, paid the winning patrons, and collected from the losing patrons for the management. *77 In the game of dice he supervised the bets as made and paid them in accordance with the roll of the dice.
In each of these games petitioner's actions were closely supervised by other employees to insure that no special favors, services, or attentions were given the patrons by the dealers. Fraternization and unnecessary conversation between the dealers and the patrons were forbidden by the management. The dealers were not permitted to advise the patrons of advantageous bets, all contact between them being reduced to an absolute minimum.
During the course of each of the aforementioned games, it was a common practice for the patrons to make, in addition to their own bets, a bet for the dealer operating the game being played. As the bet was made for him, the dealer's attention was called to it by the individual making it. In the event the bet was a winning one, its proceeds went to the dealer for whom made. Before putting the proceeds into his pocket, the dealer would notify his immediate superior that the money was the result of a bet made for him by one of the patrons. The money comprising the original bet for the dealer remained the property of the player who made it, and it*78 was customary for him to leave it on the table as a wager for the dealer until it was lost to the management. The proceeds of the winning wagers were accumulated in a common fund for the shift wherein received, and then divided equally between all the dealers on that particular shift. The money so received by the dealers was known as "side money."
The management of the casinos, wherein petitioner was employed, recognized that the dealers were receiving side money in the manner indicated, and acquiesced in the practice.
During 1953, petitioner received as side money the sum of $ 623. No portion of this sum was returned by petitioners in their joint return for the year.
Petitioner sustained a net gambling loss of $ 1,800 during the year in issue.
Respondent determined that the sum received by petitioner as side money represented taxable income in the nature of tips.
OPINION.
Respondent contends that the proceeds of the wagers made in petitioner's behalf were tips given him by the patrons of the casinos, and therefore taxable income under the authority of Harry A. Roberts, 10 T. C. 581 (1948), affd. 176 F. 2d 221 (C. A. 9, *79 1949). In attacking this contention, petitioners argue that such amounts were gifts, and were therefore excludible from gross income. In the alternative, *1220 they contend that the side money which was received represented gambling income against which their gambling losses may be offset.
Included within the sweeping definition of gross income contained in section 22 (a) of the Internal Revenue Code of 1939 is any sum which has been received as "compensation for personal service" regardless of its form of payment. In Harry A. Roberts, supra, we held that tips received by a taxicab driver represented compensation for personal services, rather than gifts, as argued by the taxpayer. Now we are asked to determine whether amounts received by a dealer in a gambling casino as the result of wagers made in his behalf by the patrons are gifts, or whether they constitute taxable income within the meaning of the Roberts decision. We believe they are taxable income.
In Roberts we were concerned with the then novel question as to whether tips constituted taxable income. In affirming our determination that they did, the Court of Appeals said, at *80 pages 225 and 226:
The word "income" has a broad meaning in income tax legislation. Its classic definition is still the all-inclusive one of "gain derived from capital, from labor, or from both combined." * * * It is "income as the word is known in the common speech of men." * * * And in applying these criteria, "the revenue laws of the United States are not over-squeamish." * * *
* * * *
Any monies which come to the taxpayer as the fruits of his labor are "income." Even the lawbreaker cannot "escape liability for the profits of his illegal enterprise." * * *
* * * *
So it is quite plain that the contention here made that tips, in general, are merely the result of the donor's exhibitionism and are given merely to satisfy the egotistical instinct of the giver, cannot overcome the unalterable fact that, so far as the recipient is concerned, -- the petitioner here --, he received tips as an incident to the service which he rendered to his patrons. They were paid concurrently with the fare as a token of better service received. They are gain derived from his labor as a taxicab driver, i. e., income from the practice of a calling.
As we see no distinction between the situation there*81 and the one presently before us, we believe the above-enunciated principles are controlling. If the amounts received in Roberts constituted taxable income in the form of compensation for services, so do the amounts received by this petitioner.
In dealing the cards, spinning the roulette wheel, and paying the winning wagers, petitioner rendered services to the patrons of the casinos where he was employed. That such services were required of him by virtue of his employment is in no way material. What is material, however, is the fact that the sums in question were received *1221 by him as an incident of the services which he performed. They were obtained as the direct result of his employment. Had he been merely an observer, taking no active part in these games of chance, he would not have received the side money. It came to him in his capacity of dealer, and therefore we can only conclude that it represented gains derived from his labor as a dealer.
Moreover, that the dealers pooled the sums received in a common fund wherein they shared equally indicates to us that they considered the side money to be an accepted portion of the consideration which they would receive *82 for their services. The fact of the management's knowledge and acquiescence in the practice lends strength to such a conclusion.
The amounts petitioner received in the form of side money came to him as an incident of the services which he performed for the patrons and were the direct result of his employment as a dealer. We, therefore, conclude that they were income for the year 1953, taxable as compensation for personal services. Harry A. Roberts, supra.Such a conclusion precludes any consideration of petitioners' alternative argument that the amounts represented gambling income.
Decision will be entered under Rule 50.