SC Administrative Law Court Decisions

In an order issued April 2, 1998, Goodtime Amusements, Inc. (Goodtime) was held liable for the payment of a fine of $12,500 for a failure to post owner identification on five video poker machines. The fine was imposed after a hearing which was not attended by Goodtime and for which Goodtime was in default. However, on April 7, 1998, Goodtime filed a Motion for Reconsideration in which it presented an acceptable basis for its failure to appear at the original hearing and in which it asked for a new hearing. The Motion for Reconsideration was granted by an order dated April 14, 1998, and a new hearing was set for May 5, 1998. At the May 5, 1998 hearing, Goodtime presented its case. This matter is now ready for decision. Accordingly, the original order of April 2, 1998 is vacated and this order disposes of the controversy.

The South Carolina Department of Revenue (DOR) seeks a fine of $12,500 since it argues that Goodtime failed to post owner identification on five of its video poker machines. Goodtime opposes DOR's position and asserts the owner's name and the serial numbers of the machines were properly displayed. Goodtime's disagreement with DOR's determination places jurisdiction in the Administrative Law Judge Division (ALJD). S.C. Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1997). The rehearing in this matter was held May 5, 1998 at the Edgar Brown Building, Columbia, South Carolina. Based upon the evidence and the argument presented, Goodtime is liable for a fine of $2,500.

On January 21, 1997, did all of the Class III machines located at 311 Main Street, Allendale, South Carolina have information attached which identified the owner or operator of those machines?

1. Positions of Parties

DOR asserts five video poker machines failed to have owner identification attached. Goodtime argues the machines had the identification but the light was so poor that the stickers were overlooked during the inspection.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

a. Background Facts

Goodtime holds several licenses for Class III video game machines with five of these licenses used on machines located at 311 Main Street, Allendale, South Carolina. The Main Street location was inspected by two SLED Agents on January 21, 1997 at approximately 8:00 p.m. The SLED Agents' inspection included determining whether an owner or operator identification was displayed on the machines. The presence or lack of presence of owner identification on the machines is the controlling and highly disputed issue in this case.

b. Presence of Owner Identification

Both SLED Agents examined each of the five machines in a methodical and careful fashion and found no owner identifications. In addition, the manager at the location was asked by the SLED Agents during the inspection to show them where the owner identification was on the machines. The manager examined the machines and could not find the owner identifications. The manager so testified at the hearing and thus supported the testimony of the SLED Agent that no owner identification was on any of the five machines.

Having not found any owner identification stickers, the SLED Agents issued a Preliminary Findings Report to the manager at the conclusion of the inspection citing a violation for failing to have owner identification on the machines. On May 30, 1997, DOR issued its report finding that Goodtime violated S.C. Code Ann. § 12-21-2748 by failing to affix an owner identification to five of the Class III video game machines located at 311 Main Street, Allendale, South Carolina. Finally, on July 28, 1997, DOR issued a Final Determination seeking a fine of $12,500.

Goodtime disputes the Final Determination. In fact, after receiving the initial violation report on January 21, 1997, the manager notified Goodtime, and on January 22, 1997, the day after the inspection, an employee of Goodtime came to the location. After an investigation by the Goodtime employee, the employee determined that the owner identifications were on the top of each machine. The manager personally inspected the machines and agreed that on January 22, 1997, the owner identifications were attached to the machines. The implication from the employee's search was that the SLED Agents and the manager overlooked the stickers during the inspection of January 21, 1997 since the inspection was made at night and the lighting surrounding the five machines was poor.

To further support Goodtime's theory, Goodtime established that when these machines were placed at the Main Street location, owner identification stickers were on the top of each machine. Further, the employee testified that he serviced the machines approximately every two weeks and that, to the best of his knowledge, the stickers were always in place. Finally, the location has been inspected on previous occasions and no violation for lack of an owner identification has been written as a result of those inspections.

c. Factual Conclusions on Presence of Owner Identification

What can be concluded? I find that the owner identification stickers were on the machines at least two weeks before the January 21, 1997 inspection. Further, on January 22, 1997, the day after the inspection, the stickers were on the machines. However, considering the evidence as a whole, I conclude the owner identification stickers were not on the machines at the time of the inspection of 8:00 p.m. on January 21, 1997.

At approximately 8:00 p.m. on January 21, 1997, two SLED Agents carefully searched the machines by means of a search that included "all areas of the five machines." That search revealed no owner identification stickers. Further, the SLED Agents did not stop with their own investigation. Rather, the SLED Agents asked the manager to examine the machines for the express purpose of showing them the owner identification stickers. The manager examined the machines. His independent investigation agreed with the SLED Agents' conclusion: no owner identification stickers were on the machines.

Further, I am not persuaded that the stickers were simply missed due to an oversight caused by poor lighting. First, this was not a search by a single person. Rather, three different individuals searched the machines. Second, this was not a search of a single object. Rather, five different machines were searched for "all areas" of the machine which would have included examining the top of the machines. For stickers allegedly on the top of a machine and which were positioned near the front of the machine, I do not find it plausible to believe that three individuals (two of whom are trained investigators) searching five separate machines would fail to find even one sticker if in fact separate stickers were on every machine. Accordingly, I find no owner identification stickers were on the machines at the time of the inspection on January 21, 1997.

3. Conclusions of Law

Based upon the Findings of Fact, the following Conclusions of Law are entered:

Licensed, Class III machines must have attached information identifying the owner or operator of the machine with the identification placed on a visible area of the machine for inspection purposes. S.C. Code Ann. § 12-21-2748 (Supp. 1997). Failure to comply with the identification requirement subjects the violator to the applicable penalty and enforcement provisions of Chapter 21 and Chapter 54 of Title 12. Id.

Here, as established by the Findings of Fact, no owner identification was on any of the five machines on January 21, 1997. Accordingly, on January 21, 1997, the five Class III video game machines located at 311 Main Street, Allendale, South Carolina licensed to Goodtime did not have the owner or operator identification affixed. Thus, in the instant case, Goodtime failed to comply with the statutory requirement of owner identification and, therefore, violated S.C. Code Ann. § 12-21-2748 (Supp. 1997).

For the January 21, 1997 violations of S.C. Code Ann. § 12-21-2748, the applicable penalty is $2500 for each violation. S.C. Code Ann. § 12-21-2738 (Supp. 1997). However, in the instant case the evidence establishes that the owner identification had been on the machines at least two weeks before the inspection. Further, prior inspections had never resulted in a violation. Thus, under the circumstances of this case, a fine is imposed of $2,500.

Based upon the Findings of Fact and Conclusions of Law, it is hereby ordered:

Goodtime Amusements, Inc. is liable for a fine of $2,500 and shall pay the fine within fifteen days of the date of this order.

AND IT IS SO ORDERED.

RAY N. STEVENS

Administrative Law Judge

Dated: July 15, 1998

Columbia, South Carolina