(dissenting).
I concur in the opinion of the majority that neither KRS 436.230(5) nor the licensing provisions of ICRS Chapter 137 prevent a city, in the reasonable exercise of its police power, from prohibiting the use of machines that are readily adaptable to gambling purposes, without regard to whether they are actually so used. However, I do not believe that the possession of a federal gaming stamp is a valid basis for classification.
26 U.S.C.A. § 4462(a) (1) and (2) divide coin-operated amusement or gaming devices into two defined categories. If the device comes within the definition of subsection (2) 1 the tax is $250. Otherwise it is $10. 26 U.S.C.A. § 4461. The Treasury Department’s interpretations of the statutory definitions are set forth in the form of examples or illustrations in its detailed regulations. See Federal Tax Regulations, § 45.4462-1. It is quite possible that a real question will exist as to whether a particular machine does or does not fall within the definition of subsection (2), and in that event the owner may reasonably decide to pay the $250 tax instead of taking the risk of violating the law. A taxpayer stands to lose big in an unsuccessful showdown with the Internal Revenue Service.
In this case the complaint says there was a difference in opinion between the appellants and the IRS office as to whether the $250 stamp was required for the machine in question, and that the $250 was paid under protest. It may be that the appellants were entirely correct in their position, but in all probability it would have been impracticable for them to litigate it. It is unreasonable to deprive them of the privilege of using the machine on the sheer basis of their having chosen to pay the tax.
Had the ordinance actually set forth a definitive classification along the lines of 26 U.S.C.A. § 4462(a) (2) and prohibited the use of machines falling within that classification; it would not have been objectionable. But in its present form, which makes the IRS or its local agent the effective arbiter, it seems to me that it is arbitrary and in violation of Const. § 2.
In fact, I am inclined to believe that a state or local law prohibiting an otherwise lawful activity solely on the basis of the affected party’s having obtained a federal tax stamp covering that activity may very well violate the equal protection and due process clauses of the 14th Amendment of the U. S. Constitution.
WILLIAMS, J., joins in this dissent.
. Which embraces machines that “may” be used for gambling.