ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter comes before the Administrative Law Judge Division for a contested case hearing. The Respondent challenges
the issuance of the South Carolina Department of Revenue's Final Determination dated January 13, 2000 assessing a Two
Thousand ($2000.00) Dollar penalty for providing a special inducement to play a video poker machine in violation of S.C.
Code Ann. § 12-21-2804(B) (Supp. 1999). A hearing was held on this matter on Thursday, April 20, 2000 at the
Administrative Law Judge Division, 1205 Pendleton Street. Suite 224, Columbia, South Carolina.
STIPULATIONS OF FACT
At the hearing in this matter, counsel for both parties submitted the following stipulations of fact:
1. Kokomo's is located at 1420 Charleston Highway, West Columbia, South Carolina.
2. Kokomo's, Inc., d/b/a Kokomo's Room 4 operates under retail sales tax license #021- 31637-9.
3. On May 11, 1999, Mr. George Parthimous was an employee of the Respondent.
4. On May 11, 1999, Mr. George Parthimous was the Room Attendant for Kokomo's Inc., Room 4.
5. On May 11, 1999, Pot-O-Gold Video Poker Machine (License #3022713, Serial # 2005130199), was in use in
Kokomo's Inc., Room 4.
6. On May 11, 1999, SLED Agent Konni Smith tendered a payout ticket to George Parthimous.
7. The ticket was generated from the video poker machine which Smith was playing at Kokomo's Inc., Room 4.
8. In exchange for the ticket, Mr. Parthimous paid Konnie Smith Eighteen ($18.00) Dollars for the cash payout amount
represented on the ticket as $17.75.
9. After the exchange, South Carolina Law Enforcement Division (SLED) Agent Konni Smith issued a Preliminary
Findings Report for violation of S.C. Code Ann. § 12-21- 2804(B) (Supp. 1999).
10. The payout ticket in issue was retained as evidence by SLED.
11. An Agency Initial Citation for violation of S.C. Code Ann. § 12-21-2804(B) (Supp. 1999) and 27 S.C. Code Ann.
Reg. 117-190.1 was issued to Respondent on December 9, 1999.
12. Respondent transmitted a protest of the Agency Initial Citation to the Petitioner on December 17, 1999.
13. The Petitioner issued a Final Determination on January 13, 2000.
14. The Respondent requested a hearing before the Administrative Law Judge Division on January 21, 2000.
FINDINGS OF FACT
Taking into account the stipulations between the parties, having carefully considered the testimony and the arguments of
counsel, and taking into account the credibility of the evidence and witnesses, I find by a preponderance of the evidence:
1. Notice of the time, date, place, and subject matter of the hearing was given to all parties in a timely manner.
2. On May 11, 1999, Mr. Parthimous told SLED Agent Konni Smith that it was "Ladies'Night," placed two Five ($5.00)
Dollars Bills in the machine which she was playing, and informed her that the payout amount was Fifteen ($15.00) Dollars.
CONCLUSIONS OF LAW
Based upon the foregoing Stipulations and Findings of Fact, I conclude the following as a matter of law:
1. S.C. Code Ann. §§ 1-23-600 (Supp. 1999) and 12-4-30(D) (Supp. 1999) grant jurisdiction to the Administrative Law
Judge Division to hear contested cases under the Administrative Procedures Act.
2. The Video Games Machine Act, which regulates video game activity in South Carolina, was enacted in 1993 and became
effective July 1, 1993. The Act is codified at S.C. Code Ann. §§ 12-21-2770, et seq. (Supp. 1999). The express purpose
of the Video Games Machine Act is to regulate the video games machine industry in South Carolina.
3. In civil cases, generally, the burden of proof rests upon the party who asserts the affirmative of an issue. 2 Am. Jur. 2d
Administrative Law § 360 (1994); Alex Sanders, et al., South Carolina Trial Handbook § 9:3 Party With Burden,
Civil Cases (1999). The Department is the party asserting the affirmative in this case; therefore, the Department must
prove by a preponderance of the evidence that Respondent violated § 12-21-2804(B), by inducing someone to play video
poker machines. See Anonymous v. State Bd. of Medical Examiners, 329 S.C. 371, 496 S.E.2d 17 (1998) (standard of
proof in an administrative proceeding is preponderance of the evidence).
4. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of
fact. See S.C. Cable Television Ass'n v. Southern Bell Telephone and Telegraph Co., 308 S.C. 216, 417 S.E.2d 586
(1992). Furthermore, a trial judge, who observes a witness is in the better position to judge the witness's demeanor and
veracity and evaluate his testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260
S.C. 108, 194 S.E.2d 392 (1973); Mann v. Walker, 285 S.C. 194, 328 S.E.2d 659 (Ct. App. 1985); Marshall v. Marshall,
282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984).
5. The Department contends the Respondent violated S.C. Code Ann. § 12-21-2804(B) which provides:
No person who maintains a place or premises for the operation of machines licensed under Section 12-21-2720(A)(3) may
advertise in any manner for the playing of the machines nor may a person offer or allow to be offered any special
inducement to a person for the playing of machines permitted under Section 12-21-2720(A)(3) (Supp. 1999) (emphasis
added).
6. 27 S.C. Code Regs. 117-190.1 (Supp. 1999) provides that: "The Video Games Machines Act, found in Article 20,
Chapter 21 of Title 12, prohibits the offering of any special inducements to a person for the playing of video poker
machines. Therefore, any attempt to influnce a person to play video game machines is an inducement and is strictly
prohibited by statute. A location will be subject to the various civil or criminal penalties imposed by the statute for
offering any of the following inducements: . . . (5) cash" (emphasis added).
7. Black's Law Dictionary defines induce as, "To bring on or about, to affect, cause, to influence to an act or course of
conduct, lead by persuasion or reasoning, incite by motives, prevail on." Black's Law Dictionary 775 (6th ed. 1990).
8. Inducement is not necessarily limited to enticing a player to start playing a video poker machine. Inducement also
encompasses enticing a player to continue playing a video poker machine. See e.g. South Carolina Department of Revenue
v. Old Mill Grocery, Inc., d/b/a Treasure Island, 2454 Charleston Highway, Cayce, South Carolina, 98-ALJ-17-0623-CC
(Anderson, J., Filed June 17, 1999) (Upholding a penalty for a violation of S.C. Code Ann. § 12-21-2804(B) for having
free food for video poker players).
8. In this matter, the Respondent violated S.C. Code Ann. § 12-21-2804(B) (Supp. 1999) on May 11, 1999 by offering the
inducement of $5.00 cash placed into the video poker machine SLED Agent Smith was playing.
9. The penalty to be imposed for a violation of S.C. Code Ann. § 12-21-2804(B) (Supp. 1999) is provided for in S.C. Code
Ann. § 12-21-2804(F) (Supp. 1999), which sets forth: "A [person violating subsections (A), (B), (D), or (E) of this section
is subject to a fine of up to five thousand dollars to be imposed by the Commission."
10. S.C. Code Ann. § 12-21-2804(F) (Supp. 1999) provides for a fine of not more than Five Thousand ($5000.00) Dollars
for a violation of S.C. Code Ann. § 12-21-2804(B) (Supp. 1999). The Department has sought to impose a Two Thousand
($2000.00) Dollar fine pursuant to S.C. Revenue Procedure #99-1 because this is a first offense. I find that the practice of
placing money into a machine being played is not a continuing practice at the location. Although the Respondent did
commit a technical violation of S.C. Code Ann. § 12-21-2804(B) (Supp. 1999), I find that a $2000.00 penalty for this
violation to be harsh. I believe that a $50.00 penalty is appropriate under these circumstances.
ORDER
Based upon the foregoing Stipulations, Findings of Fact and Conlusions of Law, it is hereby:
ORDERED that the Respondent Kokomo's Inc., Room 4 pay a penalty in the amount of $50.00 to the South Carolina
Department of Revenue for violation of S.C. Code Ann. § 12-21-2804(B) (Supp. 1999).
AND IT IS SO ORDERED.
________________________________
CAROLYN C. MATTHEWS
Administrative Law Judge
May 8, 2000
Columbia, South Carolina |