BRIGHT, Circuit Judge.
The Internal Revenue Service (IRS) appeals from a summary judgment in favor of Clarence LaBelle Post No. 217, Veterans of Foreign Wars of the United States (Taxpayer), in an action for refund of taxes. The issue in this case is whether income from bingo games conducted by Taxpayer should be subject to the unrelated business income tax imposed by sections 511-513 of the Internal Revenue Code, 26 U.S.C. §§ 511-513 (1970). We reverse and remand.
An organization exempt from taxation under section 501 of the Internal Revenue Code may be required to pay a tax on income derived from a trade or business not related to its exempt purposes. Section 513(a) defines the term “unrelated trade or business” as follows:
[A]ny trade or business the conduct of which is not substantially related (aside from the need of such organization for income or funds or the use it makes of the profits derived) to the exercise or performance by such organization of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501 * * *.1
Section 512(a)(1) defines the term “unrelated business taxable income” to mean the net income derived from an unrelated trade or business. Section 511(a) imposes a tax on unrelated business taxable income.
The Taxpayer, a fraternal and patriotic veterans organization located in Minneapolis, Minnesota, qualifies as an organization exempt from federal income taxation under section 501(c)(4). Taxpayer has held public bingo games twice weekly since 1969 under authority of a Minnesota state law that permits nonprofit organizations such as Taxpayer to conduct bingo games.2 The IRS treated these bingo games as an “unrelated trade or business” within the meaning of section 513 and taxed the net income from the games under section 511. Taxpayer paid $12,153.31 in taxes for the fiscal years ending June 30, 1971, through June 30, 1974, and then brought this action to obtain a refund. On cross motions for summary judgment, the district court found in favor of Taxpayer. The Government appeals.
Under Taxpayer’s theory, income from an unrelated trade or business may be taxed only if the trade or business competes with a taxpaying entity. Taxpayer argues that only tax-exempt nonprofit organizations may operate bingo games in Minnesota; therefore Taxpayer does not compete with taxpaying entities and is not subject to taxes. The Government presents two argu[272]*272ments on appeal. First, it argues that the tax on unrelated business income is not limited to competitive businesses. In the alternative, it argues that Taxpayer’s bingo games compete with other forms of entertainment and possibly could compete with bingo games conducted by nonprofit corporations that are not exempt from federal taxes. We need not reach the latter argument for we hold that the tax on unrelated business income is not limited to income earned by a trade or business that operates in competition with taxpaying entities.
Congress enacted sections 511-513 for two purposes: to close a tax loophole and to eliminate a form of unfair competition. The well-known macaroni monopoly case brought the loophole to the attention of Congress. In 1947 a group of benefactors purchased the C. F. Mueller Company, the nation’s largest manufacturer of noodles, to be operated solely for the benefit of the New York University School of Law. Because the business was operated solely for a charitable purpose, its income was held to be tax exempt. C. F. Mueller Co. v. Commissioner, 190 F.2d 120 (3d Cir. 1951). This gave the Mueller Company a substantial competitive advantage over competing manufacturers of noodles. See Comment, The Macaroni Monopoly: The Developing Concept of Unrelated Business Income of Exempt Organizations, 81 Harv.L.Rev. 1280 (1968). Recognition of the anticompetitive effect of this loophole led Congress to enact the predecessors to sections 511-513 in the Revenue Act of 1950.3
The legislative history of the Revenue Act of 1950 indicates, however, that Congress enacted these provisions not only to eliminate a form of unfair competition, but also to raise revenue. When President Truman presented his 1950 tax proposal to Congress, he stressed the importance of economic growth. Eliminating the loophole that “developed through the abuse of the tax exemption accorded educational and charitable organizations” would, he stated, yield additional revenue as well as reduce inequities in the tax system.4 The House Ways and Means Committee viewed the bill as one designed to reduce the war excise taxes imposed during World War II and replace the resulting lost revenue by closing loopholes and imposing additional taxes.5 By the time the bill had reached the Senate the Korean War had begun, and the need for additional revenue was even greater. The Senate converted the bill passed by the House “into a bill to raise revenues.”6 Thus, although Congress enacted sections 511-513 to eliminate a form of unfair competition, that goal existed only as part of a larger goal of raising revenue.
The language of the statute does not limit this new source of revenue to only those unrelated trades or businesses that compete with taxpaying entities, for the term is defined as “any trade or business” unrelated to the exempt purpose of the organization. The Senate Report provides further clarification:
As used in this section, the term “trade or business” has the same meaning as it [273]*273has elsewhere in the code, as, for example, in section 23(a)(1). [S.Rep.No. 2375, supra note 6, 1950-2 C.B. at 559, [1950] U.S.Code Cong.Serv. at 3165.]
Section 23(a)(1), the predecessor to the present section 162(a), authorized a deduction for expenses incurred in carrying on any trade or business.
An amendment to section 513 contained in the Tax Reform Act of 19767 provides further indication that sections 511-513 should be interpreted broadly to apply to all businesses falling within the literal meaning of the term “any trade or business.” That amendment added subsection 513(d), which expressly excludes two types of noncompetitive businesses — horse racing at county fairs and renting display space at trade shows — from the term “unrelated trade or business.” Taxpayer argues that the amendment, along with the Senate Report explaining it, demonstrates a congressional intent to tax only unrelated businesses that compete with taxpaying businesses. A close analysis of the amendment, however, belies Taxpayer’s argument. Although the Senate Committee on Finance recognized in its report that the two activities in question did not compete with taxpaying entities, it also emphasized that the activities were related to the exempt purposes of the organizations.8 Thus, the Senate Report does not support the contention that lack of competition, in itself, excludes an activity from the unrelated business income tax.
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BRIGHT, Circuit Judge.
The Internal Revenue Service (IRS) appeals from a summary judgment in favor of Clarence LaBelle Post No. 217, Veterans of Foreign Wars of the United States (Taxpayer), in an action for refund of taxes. The issue in this case is whether income from bingo games conducted by Taxpayer should be subject to the unrelated business income tax imposed by sections 511-513 of the Internal Revenue Code, 26 U.S.C. §§ 511-513 (1970). We reverse and remand.
An organization exempt from taxation under section 501 of the Internal Revenue Code may be required to pay a tax on income derived from a trade or business not related to its exempt purposes. Section 513(a) defines the term “unrelated trade or business” as follows:
[A]ny trade or business the conduct of which is not substantially related (aside from the need of such organization for income or funds or the use it makes of the profits derived) to the exercise or performance by such organization of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501 * * *.1
Section 512(a)(1) defines the term “unrelated business taxable income” to mean the net income derived from an unrelated trade or business. Section 511(a) imposes a tax on unrelated business taxable income.
The Taxpayer, a fraternal and patriotic veterans organization located in Minneapolis, Minnesota, qualifies as an organization exempt from federal income taxation under section 501(c)(4). Taxpayer has held public bingo games twice weekly since 1969 under authority of a Minnesota state law that permits nonprofit organizations such as Taxpayer to conduct bingo games.2 The IRS treated these bingo games as an “unrelated trade or business” within the meaning of section 513 and taxed the net income from the games under section 511. Taxpayer paid $12,153.31 in taxes for the fiscal years ending June 30, 1971, through June 30, 1974, and then brought this action to obtain a refund. On cross motions for summary judgment, the district court found in favor of Taxpayer. The Government appeals.
Under Taxpayer’s theory, income from an unrelated trade or business may be taxed only if the trade or business competes with a taxpaying entity. Taxpayer argues that only tax-exempt nonprofit organizations may operate bingo games in Minnesota; therefore Taxpayer does not compete with taxpaying entities and is not subject to taxes. The Government presents two argu[272]*272ments on appeal. First, it argues that the tax on unrelated business income is not limited to competitive businesses. In the alternative, it argues that Taxpayer’s bingo games compete with other forms of entertainment and possibly could compete with bingo games conducted by nonprofit corporations that are not exempt from federal taxes. We need not reach the latter argument for we hold that the tax on unrelated business income is not limited to income earned by a trade or business that operates in competition with taxpaying entities.
Congress enacted sections 511-513 for two purposes: to close a tax loophole and to eliminate a form of unfair competition. The well-known macaroni monopoly case brought the loophole to the attention of Congress. In 1947 a group of benefactors purchased the C. F. Mueller Company, the nation’s largest manufacturer of noodles, to be operated solely for the benefit of the New York University School of Law. Because the business was operated solely for a charitable purpose, its income was held to be tax exempt. C. F. Mueller Co. v. Commissioner, 190 F.2d 120 (3d Cir. 1951). This gave the Mueller Company a substantial competitive advantage over competing manufacturers of noodles. See Comment, The Macaroni Monopoly: The Developing Concept of Unrelated Business Income of Exempt Organizations, 81 Harv.L.Rev. 1280 (1968). Recognition of the anticompetitive effect of this loophole led Congress to enact the predecessors to sections 511-513 in the Revenue Act of 1950.3
The legislative history of the Revenue Act of 1950 indicates, however, that Congress enacted these provisions not only to eliminate a form of unfair competition, but also to raise revenue. When President Truman presented his 1950 tax proposal to Congress, he stressed the importance of economic growth. Eliminating the loophole that “developed through the abuse of the tax exemption accorded educational and charitable organizations” would, he stated, yield additional revenue as well as reduce inequities in the tax system.4 The House Ways and Means Committee viewed the bill as one designed to reduce the war excise taxes imposed during World War II and replace the resulting lost revenue by closing loopholes and imposing additional taxes.5 By the time the bill had reached the Senate the Korean War had begun, and the need for additional revenue was even greater. The Senate converted the bill passed by the House “into a bill to raise revenues.”6 Thus, although Congress enacted sections 511-513 to eliminate a form of unfair competition, that goal existed only as part of a larger goal of raising revenue.
The language of the statute does not limit this new source of revenue to only those unrelated trades or businesses that compete with taxpaying entities, for the term is defined as “any trade or business” unrelated to the exempt purpose of the organization. The Senate Report provides further clarification:
As used in this section, the term “trade or business” has the same meaning as it [273]*273has elsewhere in the code, as, for example, in section 23(a)(1). [S.Rep.No. 2375, supra note 6, 1950-2 C.B. at 559, [1950] U.S.Code Cong.Serv. at 3165.]
Section 23(a)(1), the predecessor to the present section 162(a), authorized a deduction for expenses incurred in carrying on any trade or business.
An amendment to section 513 contained in the Tax Reform Act of 19767 provides further indication that sections 511-513 should be interpreted broadly to apply to all businesses falling within the literal meaning of the term “any trade or business.” That amendment added subsection 513(d), which expressly excludes two types of noncompetitive businesses — horse racing at county fairs and renting display space at trade shows — from the term “unrelated trade or business.” Taxpayer argues that the amendment, along with the Senate Report explaining it, demonstrates a congressional intent to tax only unrelated businesses that compete with taxpaying businesses. A close analysis of the amendment, however, belies Taxpayer’s argument. Although the Senate Committee on Finance recognized in its report that the two activities in question did not compete with taxpaying entities, it also emphasized that the activities were related to the exempt purposes of the organizations.8 Thus, the Senate Report does not support the contention that lack of competition, in itself, excludes an activity from the unrelated business income tax. Moreover, although the Congress in 1950 might not have anticipated that the distinction between competitive and noncompetitive businesses would create uncertainty in interpreting section 513, the amendment indicates that the subsequent Congress did recognize the nature of the problem in 1976. As a solution, however, it chose to carve out only two specific exceptions rather than create a general exception for noncompeting businesses operated by tax-exempt organizations.
The Tax Court’s resolution of this issue in Smith-Dodd Businessman’s Association, Inc. v. Commissioner, 65 T.C. 620 (1975), is in accord with our holding here. The Tax Court held that an exempt organization op[274]*274erating a bingo game in St. Paul, Minnesota, was subject to tax on the income from the games. In rejecting the same arguments made by the Taxpayer in the present case, the court noted that “unfair competition plays a relatively insignificant role in the application of the amended unrelated business tax * * Id. at 624.9
Finally, the Treasury Regulation interpreting section 513 supports the view that the section should be read literally and therefore, in the context of this case, expansively. Prior to 1976, that regulation read in relevant part:
(b) Trade or business. The primary objective of adoption of the unrelated business income tax was to eliminate a source of unfair competition by placing the unrelated business activities of certain exempt organizations upon the same tax basis as the nonexempt business endeavors with which they compete. In general, any activity of a section 511 organization which is carried on for the production of income and which otherwise possesses the characteristics required to constitute “trade or business” within the meaning of section 162 — and which, in addition, is not substantially related to the performance of exempt functions — presents sufficient likelihood of unfair competition to be within the policy of the tax. Accordingly, for the purposes of section 513 the term “trade or business” has the same meaning it has in section 162, and generally includes any activity carried on for the production of income from the sale of goods or performance of services. [26 C.F.R. § 1.513-1(b) (1975).]
A 1976 change in the regulation added the following after the first sentence of the regulation:
On the other hand, where an activity does not possess the characteristics of a trade or business within the meaning of section 162, such as when an organization sends out low-cost articles incidental to the solicitation of charitable contributions, the unrelated business income tax does not apply since the organization is not in competition with taxable organizations. [26 C.F.R. § 1.513-l(b) (1976).]
Both versions of the regulation focus primarily on the commercial nature of the activity. The references to competition serve merely to explain reasons why an activity that lacks a commercial orientation should not be considered a “trade or business” under either section 162 or section 513. Under the regulation, competition alone does not determine whether an unrelated trade or business should be taxed.
Accordingly, we hold that Taxpayer’s income from its bingo games falls within the ambit of sections 511-513 even if the games do not compete with any taxpaying organizations. Taxpayer has, however, raised other defenses to the tax assessed against it, including the claim that its games fall within the exception provided by section 513(a)(1) because they are operated by uncompensated personnel.10 The district court [275]*275has not yet addressed these issues. We therefore remand the case to the district court for further proceedings.
Reversed and remanded.