Was a restaurant tabletop device used for ordering, paying, surveys, and optional games a taxable amusement device or redemption machine?

Plain-English summary

A company supplied multifunction tabletop devices to casual-dining restaurants. Customers could view menus, order food, pay bills, complete surveys, and access optional games. The company asked whether each device was subject to Illinois' annual tax on coin-operated amusement devices or redemption machines.

IDOR said the device did not appear taxable under either category. A taxable amusement device had to be coin-operated and played primarily for amusement or entertainment rather than to buy a particular commodity or service. The described device was primarily used to buy food, place orders, and make payments.

It also did not appear to meet the separate redemption-machine definition, which required a specified skill game and merchandise-prize structure.

What this means for you

Optional entertainment did not control when the device's primary use was restaurant ordering and payment. The GIL was limited to the described device, and IDOR expressly gave no opinion on other issues involving it.

Common questions

Did game access make the device taxable? Not on the facts IDOR understood.

Was it a redemption machine? IDOR said it did not appear to be one.

Citations and references

• 35 ILCS 510/1.
• 86 Ill. Adm. Code 460.101 and 460.105.
• 720 ILCS 5/28-2(a)(4).

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2015.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2015/st-15-0072-gil.pdf

Original ruling text

ST 15-0072 (GIL) October 15, 2015 C.O.A.D
A coin-operated amusement device includes any "...device operated or operable by
insertion of coins, tokens, chips or similar objects...which returns to the player thereof no
money or property or right to receive money or property..." 35 ILCS 510/1. (This is a
GIL).

October 15, 2015

Dear Xxxxx:
This letter is in response to your letter dated September 10, 2015, in which you request
information.
The Department issues two types of letter rulings. Private Letter Rulings
(“PLRs”) are issued by the Department in response to specific taxpayer inquiries concerning the
application of a tax statute or rule to a particular fact situation. A PLR is binding on the
Department, but only as to the taxpayer who is the subject of the request for ruling and only to
the extent the facts recited in the PLR are correct and complete. Persons seeking PLRs must
comply with the procedures for PLRs found in the Department’s regulations at 2 Ill. Adm. Code
1200.110. The purpose of a General Information Letter (“GIL”) is to direct taxpayers to
Department regulations or other sources of information regarding the topic about which they
have inquired. A GIL is not a statement of Department policy and is not binding on the
Department.
See 2 Ill. Adm. Code 1200.120.
You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant
to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
This letter constitutes a request for a General Information Letter (“GIL”),
under Ill. Admin. Code tit. 2, § 1200.120, with respect to the proper taxability of a
mobile point of sale device (described below) used within restaurants in Illinois.
STATEMENT OF FACTS
Our client the COMPANY is the manufacturer of a mobile point of sale (therein
"Device") specifically designed for the casual dining restaurant industry to
enhance the restaurant customer’s satisfaction and increase food sales and
restaurant efficiencies. The Device is a small XXX tablet, approximately Y inches
by Z inches, with a touch screen interface placed at each table within a restaurant.
The Device facilitates: order placement; order add-ons; dietary/nutritional

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information; check out and payment; customer satisfaction surveys; and customer
loyalty programs.
The Device provides detailed descriptions of certain menu items, and in some
cases pictures and even videos of food preparations are available for customer
viewing. The Device permits customers to place orders for certain food items and
beverages, re-order beverages throughout the meal, call the water/waitress during
the meal, scan coupons, and to pay their checks directly through the Device. The
customer is given the option on the Device to pay the check by credit card, debit
card, or even gift card. A picture of the Device and it intended use (e.g., ordering
food through a mobile menu) is included on the next page.
The benefits of the Device to the casual dining industry include better customer
education, increased food and beverage sales, quicker table turnovers, increased
customer satisfaction, and greater guest loyalty. Guests have better control over
the pace of their meals and are able to keep their payment cards secure. An
average casual dining restaurant typically has 50 tables, and so on the average,
each restaurant has 50 Devices.
The Device is accessible only to customers who are seated at tables in the
restaurant and participating in a dining experience; the Devices are not accessible
to the general public. At restaurants featuring the Devices, approximately XX%
of the customers desiring to pay their bill with a credit card are using these
Devices as part of their dining and payment experience. At the time of payment,
the Device is programmed to seek information from the customers concerning the
dining experience. This real time information is invaluable to the management
and operations of the restaurant. At the time of payment, the Device is also
programmed to allow customers to join and participate in loyalty programs that
are designed to promote customer loyalty to the restaurant chain.
The Device allows restaurants the option to further enhance their customers’
dining experience by allowing their customers, for a one time dining charge
commonly referred to as the “Premium License Fee”, to access software programs
contained on the Device during the course of the customer’s dining experience.
The software comprises a separate section on the Device during the course of the
customer’s dining experience. The software comprises a separate section on the
Device (the “Premium Content”). The Premium License Fee allows customers
access to certain specialized software that is ancillary to the primary purposes of
the Device and includes educational applications, puzzles, cartoons, videos, and a
limited number of games.1 The Premium License Fee is added at the end of the
dining experience to the customer’s bill. There are no individual charges for the
various Premium Content items, and the customer may access as many Premium
1

The customer only pays a license fee for the software access. The customer pays no fees for access to any puzzles,
cartoons, videos, or games or other content on the device.

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Content items and watch as many cartoons or play as many games as the customer
may choose during his/her visit to the restaurant, all for the one time Premium
License Fee.2 On average, approximately YY% of the customers using the
Device actually access Premium Content.
The COMPANY charges each restaurant a fair market service fee for each Device
used in its restaurant. The COMPANY desires guidance from the Department as
to whether or not the Device should be classified as a coin-operated amusement
machine or redemption machine subject to the fees imposed on such machines in
Illinois. This matter is of central importance to the COMPANY. The per-device
annual privilege tax imposed on amusement and redemption machines would
make it financially undesirable and largely impossible for restaurants to afford the
Devices notwithstanding the benefits provided to their customers.
ISSUE
Based on the multifunctional nature of the Device, and given that its primary
purpose is order placement and payment, does the Department consider the
Device a coin-operated amusement machine or redemption machine subject to an
annual privilege tax of $30 per machine?
STATEMENT OF LAW
35 Ill. Comp. Stat. § 510/1 provides:
There is imposed, on the privilege of operating every coin-in-the-slotoperated amusement device, including a device operated or operable by
insertion of coins, tokens, chips or similar objects, in this State which
returns to the player thereof no money or property or right to receive
money or property, and on the privilege of operating in this State a
redemption machine as defined in Section 28-2 of the Criminal Code of
2012, an annual privilege tax of $30 for each device for a period beginning
on or after August 1 or of any year and prior to August 1 of the succeeding
year.
720 Ill. Comp. Stat. § 5/28-2(a) provides in part:
(4) A redemption machine. For the purposes of this paragraph (4), a
“redemption machine” is a single-player or multi-player amusement
device involving a game, the object of which is throwing, rolling, bowling,
shooting, placing, or propelling a ball or other object that is either physical
or computer generated on a display or with lights into, upon, or against a
2

In this respect, the Company’s Device is priced differently than the machines used by the Company’s competitors,
as the competitors’ machines charge an additional fee each time the customer plays a game.

Page 4

hole or other target that is either physical or computer generated on a
display or with lights, or stopping, by physical, mechanical, or electronic
means, a moving object that is either physical or computer generated on a
display or with lights into, upon, or against a hole or other target that is
either physical or computer generated on a display or with lights, provided
that all of the following conditions are met:
(A) The outcome of the game is predominantly determined by the
skill of the player.
(B) The award of the prize is based solely upon the player’s
achieving the object of the game or otherwise upon the player’s
score.
(C) Only merchandise prizes are awarded.
(D) The wholesale value of prizes awarded in lieu of tickets or
tokens for single play of the device does not exceed $25.
(E) The redemption value of tickets, tokens, and other
representations of value, which may be accumulated by players
to redeem prizes of greater value, for a single play of the
device does not exceed $25.
Ill. Admin, Code tit. 86, § 460.105 provides in part:
(a) Coin-operated Amusement Devices – Taxable Devices
(1) To be taxable, the device must be coin-operated, and it must be
an amusement device. However, if an otherwise taxable
amusement device is equipped to be operated by means of the
insertion of coins, it is the Department’s position that such device
does not cease to be a taxable device because of the fact that the
operator thereof has his customers pay the use of such device at the
bar or in some other way which avoids the use of the coin
receptacle.
(2) The device cannot return money or property or the right to
receive money or property to the player. For example, a crane
game that offers players the right to receive merchandise contained
in the machine is not subject to the tax.
(3) An amusement device is a device which is played primarily for
amusement or entertainment rather than for the purchase of some
specific commodity or service….

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(b) Explanations Redemption Machines
(1) Tax shall be imposed as required in Section 460.101 of the Part
on the privilege of operating a redemption machine. For purposes
of this Part, a redemption machine is a single-player or multiplayer amusement device involving a game, the object of which is
throwing, rolling, bowling, shooting, placing, or propelling a ball
or other object into, upon, or against a hole or other target,
provided that all the following conditions are met:
(A)

The outcome of the game is predominantly determined by
the skill of the player.

(B)

The award of the prize is based solely upon the player’s
achieving the object of the game or otherwise upon the
player’s score.

(C)

Only merchandise prizes are awarded.

(D)

The wholesale value of prizes awarded in lieu of tickets or
tokens for single play of the device does not exceed $25.

(E)

The redemption value of tickets, tokens, and other
representations of value, which may be accumulated by
players to redeem prizes of greater value, for a single play
of the device does not exceed $25….
TAXPAYER’S POSITION

Illinois’ Coin-Operated Amusement Device and Redemption Machine Tax Act3
(“the Act”) imposes an annual privilege tax of $30 on “the privilege of operating
every coin-in-the-slot-operated amusement device, including a device operated or
operable by insertion of coins, tokens, chips or similar objects, in this State which
returns to the player thereof no money or property or right to receive money or
property, and on the privilege of operating in this State a redemption machine as
defined in Section 28-2 of the Criminal Code of 1961.”
It is the COMPANY’s position that its Device does not constitute a coin-operated
amusement machine or redemption machine for the reasons set forth in this letter,
and that consequently, the proprietors of restaurants in Illinois that use the

3

35 Ill. Comp. Stat. § 510/1et seq.

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COMPANY’s Devices have no obligation to pay the annual tax based on use and
operation of such machines.
First and most importantly, in order to be taxable, the device “must be an
amusement device”4 that is “primarily for amusement or entertainment rather
than the purchase of some specific commodity or service.”5 The primary purpose
and true object of the COMPANY’s Device is the facilitation of ordering food
and
customer
payment,
not
that
of
amusement.
The Device is specifically designed for the restaurant industry for the purposes of
increasing food sales, efficiency, and enhanced customer satisfaction. Industry
statistics have shown that 80% of customers that are seated at tables with Device
use it for ordering their meals and for payment at the end of the meal, and on
average only YY% of such customers using the Device purchase premium
content. Based on the stated functionality and use of the Device, it is self-evident
that the Device is not intended primarily for the purposes of entertainment or
amusement.
Second, the COMPANY’s Device is not remotely similar to any amusement
machines described in Ill. Admin. Code tit. 86, § 460.105(a)(3), such as coinoperated pinball machines, shuffleboards, hockey games, baseball games, horse
racing games, gun games, pool games, mechanical pony rides, juke boxes, and
fortune-telling machines. As noted in the regulations, these machines fit the
definition of a coin-operated amusement device because they are both coinoperated and played primarily (and in most cases exclusively) for amusement or
entertainment. In contrast, the Device is primarily designed and intended to
facilitate order placement, order add-ons, checkout/payment, and customer
satisfaction surveys.
Moreover, unlike a “redemption machine,” the
COMPANY’s Device does not award a prize “based solely on the player’s
achieving the object of the game or otherwise upon the player’s score.” 6 In fact,
the COMPANY’s Device does not award a prize of any kind. In this manner, the
COMPANY’s Device is altogether distinguishable from a taxable redemption
machine. The Device does not allow restaurant customers using the Device to:
(1) win coupons exchangeable for prizes; (2) win free games on the Device; or (3)
accumulate wins or losses.
Third, the method and manner of payment for the use of the Device differs
materially from a coin-operated amusement machine or redemption machine. The
restaurant’s customers are able to access and use the Device during their meals; a
one-time access fee is subsequently added to the customer’s bill at the conclusion
of the dining experience. The one-time access fee is paid after access and use of
the premium content, at the end of the meal, either through the COMPANY’s
Device via a credit card or through the waiter. This payment method is
4

Ill. Admin. Code tit. 86, § 460.105(a)(1).
Ill. Admin. Code tit. 86, § 460.105(a)(3), (emphasis added).
6
720 Ill. Comp. Stat. § 5/28-2(a)(4); Ill. Admin. Code tit. 86, § 460.105(b)(1).
5

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distinguishable from an amusement device that requires payment via coin or
similar token prior to any use of the machine. Moreover, a taxable amusement
machine “must be coin-operated”.7 The COMPANY’s Device is not designed to
accept the insertion of coins, tokens, chips or similar objects.
Lastly, the COMPANY submits to the Department that access to and use of the
COMPANY’s Device is contrary to the spirit and meaning of the Illinois statutes
pertaining to coin-operated amusement devices and redemption machines. The
Illinois statutes are intended for machines accessible to the general public, like
arcades and similar amusement centers. The COMPANY’s Devices are only
accessible to and for use by customers of restaurants who have ordered food and
are dining.
The Department’s determination as to whether the COMPANY’s Device is to be
categorized as a coin-operated amusement machine or redemption machine
should be based upon the plain language of the applicable statutes. Statutes that
impose taxes are strictly construed against the taxing authority and should be
interpreted in favor of the taxpayer.8 Numerous Illinois court cases have held that
when the language of a statute is clear and unambiguous and conveys a clear and
definite meaning, the statute must be given its plain and obvious meaning. For
instance, Kraft, Inc. v. Edgar, 138 Ill. 2d 178, 189, (1990), specifically provides
that “[l]egislative intent is best evidenced by the language used by the legislature,
and where an enactment is clear and unambiguous a court is not at liberty to
depart from the plain language and meaning of the statute by reading into it
exceptions, limitations or conditions that the legislature did not express.” The
primary consideration in the construction and interpretation of tax statutes is to
ascertain and give effect to legislative intent, determined primarily from the
language of the statute.9
In the instant matter, if the legislature had intended to impose a tax on the
COMPANY’s Device as a “coin-operated amusement device” or “redemption
machine”, it would have done so explicitly by using broader language in the
applicable statute, such as “any device operated by any method of payment that
provides any form of amusement, regardless of the primary purpose and true
intent of the device”.
For each and all of the foregoing reasons, the COMPANY submits that its Device
described above does not meet the definition or the spirit of a “coin-operated
amusement device” or a “redemption machine” and is not subject to the annual
per device tax imposed on operator of such machines.
CONCLUSION
7

Ill. Admin. Code tit. 86, § 460.105 (a)(1).
Kankakee Cnty. Bd. of Review v. Prop. Tax Appeal Bd., 226 Ill. 2d 36, 52, (2007), (emphasis added).
9
Kraft, Inc. v. Edgar, 138 Ill. 2d 178, 189, (1990).
8

Page 8

The COMPANY’s Device does not meet the definition of a coin-operated
amusement machine or redemption machine subject to any annual per device
taxes in Illinois. The primary purpose of the COMPANY’s Device is supported
by the actual use of the Device as an integrated part of each restaurant’s point of
sale system designed to increase sales, improve efficiency, and enhance customer
loyalty and satisfaction by providing functionality for the customers to view the
menu, order food and pay for meals on demand. In summary, it is simply
unreasonable to burden the Illinois restaurant industry with substantial operational
taxes and fees on the COMPANY’s Device which is specifically designed
primarily to assist customers in ordering food and paying their bills, to increase
restaurant sales, to conduct surveys, and to develop customer loyalty.
We request the Department review the facts presented in this request and provide
a GIL with regard to the proper categorization of this emerging technology. Due
to the significant impact that the Department’s determination will have on the
casual dining restaurant industry in Illinois, we respectfully request that the
Department give thorough consideration to the issues and arguments provided
herein.
If I may of further assistance, please do not hesitate to contact me at (312) 8792021.

DEPARTMENT’S RESPONSE:
The Coin-Operated Amusement Device and Redemption Machine Tax Act imposes an
annual privilege tax on the privilege of operating, in this State: 1) every coin-in-the-slot-operated
amusement device that returns to the player no money or property or right to receive money or
property; and 2) every redemption machine, as defined in 86 Ill. Adm. Code 460.105. 86 Ill.
Adm. Code 460.101.
For an amusement device to be taxable, it must be coin-operated, and it must be an
amusement device. The device cannot return money or property or the right to receive money or
property to the player. An amusement device is a device which is played primarily for
amusement or entertainment rather than for the purchase of some specific commodity or service.
Every kind of coin-operated amusement device, which does not return money or property or the
right to receive money or property to the player, is subject to the tax. 86 Ill. Adm. Code
460.105(a).
A "redemption machine" is a single-player or multi-player amusement device involving
a game, the object of which is throwing, rolling, bowling, shooting, placing, or propelling a ball
or other object that is either physical or computer generated on a display or with lights into,
upon, or against a hole or other target that is either physical or computer generated on a display

Page 9

or with lights, or stopping, by physical, mechanical, or electronic means, a moving object that is
either physical or computer generated on a display or with lights into, upon, or against a hole or
other target that is either physical or computer generated on a display or with lights, provided
that all of the following conditions are met:
A)

The outcome of the game is predominantly determined by the skill of the player;

B)

The award of the prize is based solely upon the player's achieving the object of
the game or otherwise upon the player's score;

C)

Only merchandise prizes are awarded;

D)

The wholesale value of prizes awarded in lieu of tickets or tokens for single play
of the device does not exceed $25, and

E)

The redemption value of tickets, tokens, and other representations of value, which
may be accumulated by players to redeem prizes of greater value, for a single play
of the device does not exceed $25. 720 ILCS 5/28-2(a)(4).

Based on our understanding of the Device described in your letter, it does not appear to
be an amusement device subject to the tax imposed by the Coin-Operated Amusement Device
and Redemption Machine Tax Act because it is not played primarily for amusement or
entertainment; rather, it appears to be primarily used for the purchase of a specific commodity,
such as food, and service, such as order placement and order payment. The Device also does not
appear to meet the definition of a redemption machine. The Department does express any
opinion on any other issues relating to the devices.
I hope this information is helpful. If you require additional information, please visit our
website at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at
(217) 782-3336.

Very truly yours,

Richard S. Wolters
Associate Counsel

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