From D&D Wiki
A slingshot crossbow is a light crossbow designed to shoot sling lead bullets. The crossbow design gives the bullets a +1 to their normal damage and a critical range of 19-20/x2. You need at least two hands to use a slingshot crossbow.
Normally, operating a slingshot crossbow requires two hands. However, you can shoot, but not load, a slingshot crossbow with one hand at a –2 penalty on attack rolls. You can shoot a slingshot crossbow with each hand, but you take a penalty on attack rolls as if attacking with two light weapons. This penalty is cumulative with the penalty for one-handed firing.
You can fire ordinary stones with a slingshot crossbow, but stones are not as dense or as round as bullets. Thus, such an attack deals damage as if the weapon were designed for a creature one size category smaller than you (for instance, 1d3+1 instead of 1d4+1 for medium size), and you take a -1 penalty on attack rolls.
Halflings Do Not gain their +1 racial bonus on attack rolls with a slingshot crossbow
--Mufasa 14:56, 20 May 2011 (MDT)