ORDERS:
ORDER OF DISMISSAL
This matter is currently pending before the South Carolina Administrative Law Judge Division. (1) On November 2, 2000, counsel for
the Respondents filed a Motion to Dismiss. A hearing was held on November 20, 2000 at the Administrative Law Judge Division,
1205 Pendleton Street, Suite 224, Columbia, South Carolina.
On June 29, 1999, a SLED agent observed five video poker machines at 1 Broad River Boulevard, Beaufort, South Carolina, each of
which displayed games with possible "jackpots" of $5,000.00 on a "payout table" in the upper left hand corner of the video screen.
The Respondents were cited with violations of S.C. Code Ann. § 12-21-2804(B), which prohibits the advertising or inducing the play
of video poker.
ANALYSIS
The Respondents argue in their Motion to Dismiss that this matter should be dismissed because: (1) the South Carolina Supreme
Court declared S.C. Code Ann. § 12-21-2804(B) unconstitutional in Video Gaming Consultants, Inc., v. SC Dept. Of Revenue, 535
S.E.2d 642 (S.C. 2000), and (2) because S.C. Code Ann. § 12-21-2804 was repealed by Act No. 125 of 1999, effective July 1, 2000.
The Department argues that the statute can be severed and that the Court only declared the "advertising" portion of the statute
unconstitutional, not the "inducement" portion.
S.C. Code Ann. § 12-21-2804(B) 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).
In Video Gaming, the Court held that "the statute is unconstitutional," (emphasis added). The Court noted that in its brief, the
Department argued that video game operators would be allowed to advertise "Games," "Food," and "24 Hours" without violating the
statute. However, the Supreme Court also noted that 27 S.C. Code Ann. Reg. 117-190.1 would prohibit the offering of "food"
because that constitutes an inducement to play video poker. The Court stated : "We fail to see the practical distinction between these
supposedly legal examples of advertising and the ones for which Video Gaming was fined. All would in effect be advertising the
games and, since the gaming machines were not being sold outright, the promotion would be, or course, for the 'play' of the games"
(emphasis added).
The Court further stated, in Footnote 2, that "any attempt to call attention to, or make known, to the general public that video game
machines as defined in Code Section 12-21-2772(5) are available for play is advertising and is strictly prohibited by statute"
(emphasis added). Inducements to play certainly constitute an attempt to call attention to the general public that video games are
available for play. Respondent's citation for Administrative Violation dated September 17, 1999 treats inducement as equivalent to
advertising. That citation provides: "Based on information provided to the Department you are hereby cited for the following
administrative violation: Violation of S.C. Code Ann. § 12-21-2804(B), on or about July 29, 1999, by offering or allowing to be
offered a special inducement for the playing of machines licensed under S.C. Code Ann. § 12-21-2720(A)(3): i.e., advertising a cash
jackpot of $5,000.00 " (emphasis added).
The only instance in which the Court addresses the difference between "advertising" and "inducement" is in footnote 12, which
provides: "We note the DOR did not fine Video Gaming for a violation of offering a special inducement, such as a jackpot." The
Court did not specify that only that part of the statute concerning advertising is unconstitutional. The Court clearly held that Section
12-21-2804(B) is unconstitutional (emphasis added).
Even assuming, arguendo, that the statute is severable, and that the Supreme Court declared only the advertising language of §12-21-2804(B) unconstitutional, the electronic signs in this matter clearly fall under the definition of "advertising. The American Heritage
College Dictionary, Third Edition 1993, defines "advertise" as "To make public announcement of, especially to proclaim the qualities
or advantages of so as to increase sales." A sign on the screen of a video poker machine announcing a "jackpot" clearly falls into the
category of advertising, even though the Department attempts to classify it as an "inducement." Thus, this action is clearly
encompassed by the holding in Video Gaming.
The Petitioner argues that the citation was issued when the statute was still in effect, so that the penalty should stand. The general
rule is that the repeal of a statute operates retrospectively, and has the effect of blotting the statute out completely as if it had never
existed and of putting an end to all proceedings under it which have not been prosecuted to final judgment. Taylor v. Murphy,
293 S.C. 316, 318-319, 360 S.E.2d 314, 316 (1987); McGlohon v. Harlan, 254 S.C. 207, 174 S.E.2d 753 (1970). Because this
contested case has not been completed, there is no final judgment.
Therefore, it is hereby
ORDERED that the Respondents' Motion to Dismiss is GRANTED.
AND IT IS SO ORDERED.
________________________________ CAROLYN C. MATTHEWS
Administrative Law Judge
December 4, 2000
Columbia, South Carolina
1. South Carolina Department of Revenue v. J.B. Smith, Jr., and Perry A. Smith, d/b/a Bowman Texaco Food Mart and Michael B.
Maguire, d/b/a American Amusement of Orangeburg, Docket No. 00-ALJ-17-0543-CC, is also pending before this Court. Because
the issues are identical in this case, one hearing was heard for both matters on the Respondents' Motion to Dismiss. |
