South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. James R. McDonald, III, d/b/a Coastal Video Gaming, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
James R. McDonald, III, d/b/a Coastal Video Gaming, CC Electronics, Inc., and CC Electronics, Inc., d/b/a Stop Zone 1, Stop Zone 2, Stop Zone 3, Stop Zone 4, and Stop Zone 5
 
DOCKET NUMBER:
00-ALJ-17-0577-CC

APPEARANCES:
Petitioner & Representative: South Carolina Department of Revenue, Jeffrey M. Nelson, Esquire

Respondents & Representative: James R. McDonald, III, d/b/a Coastal Video Gaming, CC Electronics, Inc. and CC Electronics, Inc., d/b/a Stop Zone I, Stop Zone 2, Stop Zone 3, Stop Zone 4, and Stop Zone 5, Robert G. Rikard, Esquire

Parties Present: All parties
 

ORDERS:

FINAL ORDER AND DECISION

I. Statement of the Case



The South Carolina Department of Revenue (DOR) seeks to revoke twenty-five video poker licenses and impose penalties of $12,500 on James R. McDonald, III (McDonald) as the machine owner and $12,500 on CC Electronics, Inc. (CC Electronics) as the location operator for alleged violations of S.C. Code Ann. § 12-22-740 (Rev. 2000). (1) An additional fine of $5,000 is sought against CC Electronics for an alleged violation of S.C. Code Ann. § 12-21-2804(A) (Rev. 2000). Respondents oppose DOR's position.



The disagreement by the parties places jurisdiction in the Administrative Law Judge Division (ALJD) under S.C. Code Ann. §§ 12-60-1310 & 12-60-1320 (Rev. 2000) and S.C. Code Ann. § 1-23-600 (Supp. 2000). After a hearing of this matter held on December 18, 2000 at the Edgar Brown Building, Columbia, South Carolina, I conclude that the revocation is proper. I further conclude that a fine of $5,000 is imposed on McDonald and a fine of $6,250 is imposed on CC Electronics.



II. Issues



  • Did CC Electronics and McDonald allow Class III machines to be operated at a casino in violation of S.C. Code Ann. § 12-22-740, and if so what is the appropriate penalty?


  • Did CC Electronics violate S.C. Code Ann. § 12-21-2804(A) by having more than five machines at a single place or premises, and if so what is the appropriate penalty?


III. Analysis



A. Casino Violation



1. Positions of Parties



DOR seeks to revoke the Class III machine licenses of McDonald and CC Electronics based on the operation of a "casino" in violation of S.C. Code Ann. § 12-22-740 (Rev. 2000). (2) Further, DOR seeks penalties for these violations totaling $25,000.



Respondents argue that the statute is invalid and cannot be enforced. In particular, their challenge is that S.C. Code Ann. § 12-22-740 (Rev. 2000) has been rendered invalid by a decision of the South Carolina Supreme Court, is unconstitutional on its face, and takes away a vested property right resulting in an unconstitutional taking.



2. Findings of Fact



The parties placed in evidence the following stipulated facts:



  • On December 20, 1999, the South Carolina Department of Revenue issued violations to James McDonald and McDonald Amusements, d/b/a Coastal Video Gaming for violations of S.C. Code Ann. §§ 12-22-740 and 12-21-2804.


  • S.C. Code Ann. § 12-22-740 was signed by the Governor on July 2, 1999.


  • On September 9, 1999, at the time of the inspection by SLED, machines were in operation at the location, and were accessible for the public to play in five rooms.


  • The machine owner delivered machines to the multiple "single places or premises" at the location on or about August 30, 1999. Prior to that date there were no machines in operation in the location.


  • Prior to May, 1999 McDonald had expended time and money at the location.




In addition to the stipulated facts, I make the following Findings of Fact based on the preponderance of the evidence:



On September 9, 1999, agents of the South Carolina Law Enforcement Division ("SLED") conducted an investigation of the location at 695 Highway 17, Little River, South Carolina and observed machines in the five game rooms were operational and available for play. After speaking with the manager and the location operator, the SLED agents ascertained that the location did not open for business until August 30, 1999. The location operator explained that the building's prior tenants refused to leave prior to May 31, 1999. The location operator also explained that the establishment licenses went into effect on June 1, 1999 and the retail sales licenses went into effect on May 28, 1999.



On September 9, 1999, CC Electronics held the following South Carolina retail/sales tax licenses for the five game rooms noted below:



D/B/A LOCATION RETAIL/SALES TAX LIC. #

Stop Zone 1 695 Highway 17 026475519

Little River, S.C.

Stop Zone 2 695 Highway 17 026475528

Little River, S.C.

Stop Zone 3 695 Highway 17 026475537

Little River, S.C.

Stop Zone 4 695 Highway 17 026475546

Little River, S.C.

Stop Zone 5 695 Highway 17 026475564

Little River, S.C.



On September 9, 1999, James R. McDonald, III and McDonald Amusements, d/b/a Coastal Video Gaming, held the following video poker licenses (acquired pursuant to S.C. Code Ann. § 12-21-2720(A)(3) (Rev. 2000), commonly referred to as "Class III" machines and licenses) that were on McDonald's video poker machines at each of the game rooms noted below:



MACHINE LICENSE # PREMISES

3161710 Stop Zone 1

3161518 Stop Zone 1

3161708 Stop Zone 1

3161707 Stop Zone 1

3161706 Stop Zone 1



3161711 Stop Zone 2

3161712 Stop Zone 2

3161713 Stop Zone 2

3161714 Stop Zone 2

3161715 Stop Zone 2



3161719 Stop Zone 3

3161720 Stop Zone 3

3161718 Stop Zone 3

3161717 Stop Zone 3

3161716 Stop Zone 3



3161696 Stop Zone 5

3161697 Stop Zone 5

3161698 Stop Zone 5

3161699 Stop Zone 5

3161700 Stop Zone 5



These licenses were issued and valid for the dates of May 28, 1999 to May 31, 2001.



On September 9, 1999, CC Electronics held the following video poker licenses that were on its video poker machines at the game rooms noted below:



MACHINE LICENSE # PREMISES

0633207 Stop Zone 4

0633208 Stop Zone 4

0633209 Stop Zone 4

0633206 Stop Zone 4





These licenses were issued and valid for the dates of May 29, 1999 through September 30, 1999.



On September 9, 1999, CC Electronics held the following video poker license that was on one of its video poker machines at the game room noted below:



MACHINE LICENSE # PREMISES

3161993 Stop Zone 4



This license was issued and valid for the dates of May 28, 1999 to May 31, 2001.





3. Conclusions of Law



Based upon the above Findings of Fact, I conclude as a matter of law, the following:



a. Introduction



DOR seeks to establish that McDonald and CC Electronics violated S.C. Code Ann. 12-22-740 (Rev. 2000). The statute seeks to prohibit "casinos" as that term is defined in the statute. However, under certain conditions, the statute allows casinos to be "grandfathered" and thus allows those casinos to operate. The specific language of S.C. Code Ann. 12-22-740 (Rev. 2000) is as follows:



(A)(1) Except as provided in subsection (B), machines shall not be operated or continue to operate at any casino. For purposes of this chapter, the term 'casino' shall mean both of the following:



(a) any two or more 'single place or premises', as that term was defined, applied, and interpreted in Regulation 117-190 on or before May 31, 1999, that are located within a single structure; and



(b) beginning December 1, 1999, any two or more establishments located within one hundred feet of each other that have establishment licenses issued to the same person or a person who has the same principals. . . .



(B)(1) A casino shall not operate or continue to operate except as provided in this subsection. No casino shall continue to operate as a casino unless on May 31, 1999:



(a) machines were both licensed and in operation within each 'single place or premises' as that term was defined, applied, and interpreted in Regulation 117-190 on or before May 31, 1999; and



(b) each single place or premises within the casino met the qualifications of Regulation 117-190 and a certificate of occupancy, if otherwise required by law, has been issued for the structure within which two or more single places or premises are located.



b. Validity and Enforcement of Section 12-22-740



McDonald and CC Electronics argue that S.C. Code Ann. § 12-22-740 (Rev. 2000) cannot be enforced against them since the statute has been rendered invalid and unenforceable by a decision of the South Carolina Supreme Court, is unconstitutional on its face, and takes away a vested property right resulting in an unconstitutional taking.



i. Impact of Joytime, infra. on § 12-22-740.



The argument is that no violation can be established by DOR since § 12-22-740 is invalid under the holdings of Joytime Distributors v. State of South Carolina, 338 S.C. 634, 528 S.E.2d 647 (1999). I cannot agree.



Certainly, it is true that Joytime declared Part II of the Act invalid. Part II of the Act provided for a referendum on the legality of video game machine payouts. Joytime also declared invalid those portions of the Act which were contingent on the outcome of the referendum. Part III of the Act provided for specific regulation of the industry, and the enactment of several, but not all, portions of Part III was contingent upon the outcome of the referendum. However, the statute in dispute in this case, §12-22-740, is not a section contingent upon the referendum. Indeed, § 12-22-740 became effective upon the signature of the Governor on July 2, 1999. (3)



Admittedly, a repeal of section 12-22-740 by implication occurred on July 1, 2000, the date on which a total ban on video poker went into effect pursuant to Part I of Act 125. See Joytime, 528 S.E.2d at 655 (1999) ("The provisions [that are only repealed in the case of a majority "no" vote on the referendum] are not inconsistent with the intent of the legislature to ban video gaming on July 1, 2000. Should the legislature fail to repeal those provisions when it reconvenes, they will be repealed by necessary implication."). (4) However, a savings clause in Part V, Section 21 of the Act allows for any laws repealed by the Act to be treated as remaining in full force and effect for the purpose of enforcement of rights, duties, forfeitures, and liabilities as they stood under the repealed laws. Accordingly, McDonald and CC Electronics are subject to the requirements of § 12-22-740 and that statute is enforceable against them.



ii. Unconstitutionality of § 12-22-740



McDonald and CC Electronics argue that the twenty-five violations cannot result in revocations or penalties since § 12-22-740 is unconstitutional on its face. DOR asserts the argument should not be addressed by the ALJ since an ALJ does not have the authority to address the constitutionality of a statute. DOR is correct.



The South Carolina Supreme Court has expressly stated that an administrative law judge has no authority to pass upon the constitutionality of a statute. See Great Games, Inc. v. South Carolina Department of Revenue, 339 S.C. 79, 529 S.E.2d 6 (2000). The Administrative Law Judge Division is an agency of the executive branch of the government, and as such, it must follow the law as written until its constitutionality is judicially determined. Beaufort County Board of Education v. Lighthouse Charter School Committee, 35 S.C. 230, 516 S.E.2d 655 (1999). Therefore, no decision is reached on whether § 12-22-740 is unconstitutional on its face.



iii. Vested Rights and Unconstitutional Taking By § 12-22-740



McDonald and CC Electronics also argue that because the location was substantially completed prior to the enactment of §12-22-740 they had a vested right to use the location for video poker. Therefore, they argue, DOR's enforcement action to revoke their licenses is an unconstitutional deprivation of their property rights which results in an unconstitutional taking. Accordingly, they argue the violation should be dismissed. I cannot agree.



An administrative enforcement action cannot be dismissed on the basis that the action may result in an unconstitutional taking of property. Rather, the appropriate redress for a takings claim is in another forum having jurisdiction to award money damages. See Lucas v. South Carolina Coastal Council, 112 S.Ct. 2886 (1992) (State must pay compensation to landowner where it seeks to sustain regulation that deprives land of all economically beneficial use); Agins v. City of Tiburon, 100 S.Ct. 2138, 2143, n. 2 (1980) ("Inverse condemnation is 'a shorthand description of the manner in which a landowner recovers just compensation for a taking of his property when condemnation proceedings have not been instituted.'"). Thus, no dismissal of the violations can be allowed.



Further, and in all events, this administrative enforcement action cannot be successfully challenged under a takings argument. McDonald and CC Electronics chose to use their property for gambling in light of the fact that the State has the authority to alter or remove that privilege.



McDonald and CC Electronics merely hold licenses to legally gamble. See Berkebile v. Outen, 311 S.C. 50, 426 S.E.2d 760 (1993) (where statute permitting recovery of gambling loss of $50 or greater was applicable to gambler playing legalized video poker). Legal gambling is solely a statutory privilege subject to the police power of the State and the privilege of gambling does not rise to the level of a right protected by the Federal Constitution. Army Navy Bingo, Garrison No. 2196 v. Plowden, 281 S.C. 226, 314 S.E.2d 339 (1984), citing Lewis v. United States, 75 S.Ct. 415 (1955); Feldman v. South Carolina Tax Comm'n, 203 S.C. 49, 26 S.E.2d 22 (1943). Under the police powers, the privilege can be limited or withdrawn altogether.



No person can acquire a vested right to continue, when once licensed, in a business, trade or profession which is subject to legislative control and regulation under the police power, as regulations prescribed for such may be changed or modified by the legislature, in the public interest . . . .



Dantzler v. Callison, 230 S.C. 75, 94 S.E.2d 177 (1956).



Indeed, since the license is a creature of statute, the privileges of the licensee are only those which the statute confers. See State ex rel. Pollard v. Superior Court of Marion County, 233 Ind. 667, 122 N.E.2d 612 (1954). Even after the statute confers a privilege, the privilege continues only so long as the licensee complies with the restrictions governing its continuance. Feldman v. South Carolina Tax Comm'n, 203 S.C. 49, 26 S.E.2d 22 (1943).



In short, at most the license grants a special privilege but does not create a vested or a permanent right. Heslep v. State Hwy. Dep't, 171 S.C. 186, 171 S.E. 913 (1933). McDonald's and CC Electronics' use of the building for video poker is entirely dependent upon regulatory licensing in this State, and such an interest is not a property interest that is compensable under the takings clause. Mibbs, Inc. v. South Carolina Department of Revenue, 337 S.C. 601, 524 S.E.2d 626 (1999).



c. Determination of Violation



The next determination is whether McDonald and CC Electronics violated § 12-22-740. I find violations have been proven.



Section 12-22-740 is violated when a Class III machine is operated at any casino: "Except as provided in subsection (B), machines shall not be operated or continue to operate at any casino." S.C. Code Ann. § 12-22-740(A)(1) (Rev. 2000). Here, twenty-five violations have been proven.



The evidence shows that the facility in dispute is a "casino" within the meaning of § 12-22-740. Section 12-22-740(A)(1)(a) defines a "casino" as any two or more "single place or premises," as that term was defined, applied, and interpreted in Regulation 117-190 on or before May 31, 1999, that are located within a single structure. (5) In this case, the evidence shows that the location holds at least two single places or premises for the playing of video poker.



Further, the evidence establishes that twenty-five Class III machines were operated at the casino on September 9, 1999, well beyond the July 2, 1999 effective date of the statute. All five of the game rooms at the location were open for business and their machines were available for play. Thus, a violation is proven unless the casino is within the "grandfathering" provisions of subsection (B) of the statute.



The McDonald and CC Electronics casino is not within the grandfathering provision. The evidence establishes that none of Respondents' Class III machines were in operation within the location on or before May 31, 1999. Under these circumstances, the location does not meet the statutory requirements necessary to be within the grandfathering statute. Therefore, CC Electronics committed twenty-five violations of § 12-22-740 and McDonald committed twenty violations of § 12-22-740 on September 9, 1999. (6)



d. Applicable Penalties



For the violations of § 12-22-740, DOR seeks the imposition of a monetary penalty of $12,500 against McDonald and $12,500 against CC Electronics. DOR also seeks the revocation of all machine licenses involved in this case. I find that a monetary penalty of $5,000 against McDonald and $6,250 against CC Electronics is warranted under the facts of this case. Further, I find that revocation of the machine licenses is authorized by law and is appropriate.



i. Monetary Penalty



The penalty provisions in Part III of Act 125 were invalidated by the Supreme Court's decision in Joytime. Therefore, the general penalty provision of S.C. Code Ann. § 12-54-43(H) (Rev. 2000) applies to the violation. Section 12-54-43(H) provides:



A person who must obtain a license or purchase stamps for identification purposes, and who fails to obtain or display the license properly, or to affix the stamps properly, or to comply with statutory provisions, is subject to a penalty of not less than fifty dollars nor more than five hundred dollars for each failure.



Here, McDonald and CC Electronics have failed to comply with the statutory provisions governing casinos. Accordingly, a penalty is proper.



Where the General Assembly authorizes a range for an administratively imposed penalty, the administrative adjudicator sitting as the fact-finder may set the amount of the penalty after a hearing on the dispute. Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991). When penalty disputes are part of the factual issues for decision, the fact-finder must receive evidence and make a determination on all such factual disputes arising from the contested case. S.C. Code Ann. § 1-23-350 (Rev. 1986).



Here, the facts warrant a penalty less than the maximum allowed. McDonald and CC Electronics both sought and obtained machine licenses, retail licenses and establishment licenses from DOR prior to July 2, 1999. Indeed, DOR issued the machine licenses purportedly effective from May 29 to September 30, 1999 and May 28, 1999 to May 31, 2001. DOR also issued the retail licenses on May 28, 1999 and the establishment licenses on June 1, 1999. Under such circumstances, the imposition of a $250 fine, rather than a $500 fine, for each violation of section 12-22-740 is appropriate. Therefore, a fine of $6,250 is imposed against CC Electronics for 25 violations, and a fine of $5,000 is imposed against McDonald for 20 violations.



ii. Revocation



South Carolina Code Ann. § 12-54-90(A) (Rev. 2000) provides as follows:



When a person fails, neglects, violates, or refuses to comply with a provision of law or regulation administered by the department, the department, in its discretion, may revoke one or more licenses held by the taxpayer within ten days of notification in writing of the taxpayer's failure to comply.



DOR has established that McDonald and CC Electronics violated § 12-22-740. Further, the evidence shows that DOR notified McDonald and CC Electronics in writing of the violations by the issuance of administrative citations on December 20, 1999. In addition, the penalty of a revocation of all machine licenses involved in the violation is appropriate given the illegality of their use on the date of the inspection. Therefore, McDonald's twenty machine licenses and CC Electronics' five machine licenses are revoked.



B. Excessive Machines at a Single Place or Premise



1. Positions of Parties



DOR asserts that one game room at the location, Stop Zone 1, was in operation without an employee present in the room. Accordingly, DOR argues that CC Electronics violated S.C. Code Ann. § 12-21-2804(A) (Rev. 2000) in that more than five Class III machines were in operation at a single place or premises. (7)



2. Findings of Fact



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



CC Electronics holds retail sales tax licenses for five game rooms at 695 Highway 17, Little River, South Carolina: Stop Zone 1, Stop Zone 2, Stop Zone 3, Stop Zone 4 and Stop Zone 5. Each game room houses five Class III machines. On September 9, 1999, SLED conducted an inspection of these game rooms at the Little River location. The inspection included walking into each area, listing the license numbers for machines located in the game rooms, examining the retail tax licenses for the location, playing the machines in Stop Zone 1, and talking to the manager and location operator.



As a result of the inspection, the SLED agents issued a citation against CC Electronics for violating S.C. Code Ann. § 12-21-2804(A) due to operating more than five machines in a single place or premises. Copies of the Violation Report were left with the location operator. DOR seeks a $5,000 fine against CC Electronics as the location operator.



Upon entering the location, agents Williamson and Ramey were able to play the machines in Stop Zone 1 for approximately 15 minutes without an employee present within the four walls of the game room. Three employees were in the commons area eating lunch. One employee moved to the end of the bar near Stop Zone 1 but never entered the room. Soon after exiting Stop Zone 1, agent Williamson spoke with the manager and the location operator and issued a violation for operating more than five machines in a single place or premises.



3. Conclusions of Law



Based upon the above Findings of Fact, I conclude as a matter of law the following:



a. Statutory and Regulatory Requirements for Single Place or Premises



For machines authorized under § 12-21-2720(A)(3), i.e. Class III machines, no person may maintain licenses for more than five Class III machines at a single place or premises. S.C. Code Ann. § 12-21-2804 (Rev. 2000). While the statute does not explain what constitutes a single place or premises, a definition is supplied by Regulation 117-190.



Regulation 117-190 concentrates its analysis of a single place or premises by examining the physical characteristics of the structure enclosing the Class III machines and gives particular attention to exterior walls surrounding two or more video game areas. If at least two interior structures exist (i.e., each having a proper four wall configuration) and if Class III video games are located within each interior structure, each interior structure is characterized as a video game area. Under such circumstances the inquiry becomes whether each video game area is a single place or premises allowing five machines within each area.



A decision on whether each video game area is a single place or premises is reached by a facts and circumstances methodology imposed by Regs. 117-190. Under the regulation, DOR "must review all the facts and circumstances to determine if each area in reality constitutes a single place or premise for video game machines." While a facts and circumstances review is normally very general, the regulation requires the existence of at least four facts. Indeed, a failure to meet any one of these criteria results in the video game area not being a separate place or premise. The four criteria are: (1) Does each entity or business have a separate electric utility meter? (2) Does each entity or business have at least one separate employee on the premises during business hours? (3) Does each entity or business have a separate local business license where required? (4) Does each entity or business have a separate state sales tax license?



In this case, of the five game rooms at the location, only one is in dispute. DOR asserts that the game room Stop Zone 1 is not a separate place or premises.



b. Law Applied to Facts



DOR bears the burden of proving that no employee was on the premises of the game room under review. See 2 Am. Jur. 2d Administrative Law § 360 (1994) (burden of proof generally rests with the party who asserts the affirmative of an issue). Under the facts of this case, DOR has established that Stop Zone 1 lacked an employee "on the premises."



Admittedly, the "separate employee" requirement of Regulation 117-190 may be met by the temporary location of an employee in a common area adjacent to the game room in question where no customers are in the game room at the time and customers cannot get into the room without walking past the employee. South Carolina Department of Revenue v. Stardust Amusement Company, 341 S.C. 430, 534 S.E.2d 698 (2000). However, in this case, agents Williamson and Ramey played the machines in Stop Zone 1 as if they were customers for fifteen minutes, and at no time during this fifteen minute period did any employee located in the common area enter Stop Zone 1. Thus, Stop Zone 1 did not meet the "separate employee" requirement of Regulation 117-190 at the time of the SLED agents' inspection. Therefore, Stop Zone 1 did not constitute a "separate place or premises" under Regulation 117-190.



The lack of an employee on the premises of Stop Zone 1 means the game room is not a single place or premises. However, finding that an area is not a single place or premises does not automatically determine that a violation of the five machine limit of S.C. Code Ann. Sec. 12-21-2804(A) has occurred. Indeed, the General Assembly did not impose a violation of S.C. Code Ann. §12-21-2804(A) for attempting but failing to create a specific area as a single place or premises. Rather, the statute imposes a violation only when more than five machines are "at a single place or premises." S.C. Code Ann. Sec. 12-21-2804(A) (Rev. 2000). Accordingly, the question is, "Once a specific area has been found not to be a single place or premises, what is the area that comprises the 'single place or premises' used to count the number of machines in that area?"



DOR's longstanding position has been that once an area has been found not to be a single place or premises, all of the machines in the entire structure must be utilized in the counting of machines. Applying such a view to the instant case gives twenty-five machines (five in each of the game rooms) on a "single place or premises" and creates a violation. I cannot agree with DOR's analysis.



In deciding the meaning of "single," DOR's view ignores the plain language of the statute under review. Green v. Thornton, 265 S.C. 436, 219 S.E.2d 827 (1975). The legislature's intent should be ascertained primarily from the plain language of the statute. 82 C.J.S. Statutes § 322 (b), at 571 (1953). Further, unless a statute requires a different interpretation, the words used must be given their ordinary meaning. Hughes v. Edwards, 265 S.C. 529, 220 S.E.2d 231 (1975). Here, the plain language of §12-21-2804(A) is specific and imposes a duty to count the machines "at a single place or premises."



In the instant case, four of the game rooms at the location qualify as separated areas with each being a "single place or premises." (8) The common meaning of "single" is "unaccompanied by others: lone, sole." Merriam-Webster: WWWebster Dictionary 1999; www.m-w.com/dictionary.htm (24 March 2000). Thus, based on the plain meaning of the word "single," the controlling logical syllogism is as follows:



A single place or premises is unaccompanied by any other area.

Four game rooms are single places or premises.

Therefore, four games rooms are unaccompanied by any other area.



Accordingly, none of the four game rooms that respectively constitute a separate "single place or premises" can be combined with any other area for the purpose of counting machines in that "other area." Rather, having once counted the machines in the four separate premises to establish the five machine limit for each of those areas, a second counting of those same machines is improper as being contrary to the statute's plain use of the term "single" in reference to a "single place or premises."



Therefore, not being able to count the machines in the other four game rooms, the remaining square footage of the structure (comprised primarily of Stop Zone 1 and the common area) is to be examined for the existence of more than five machines. In this case, the remaining area does not yield more than five machines but rather gives exactly five machines. Accordingly, no violation of Sec. 12-21-2804(A) occurred on September 9, 1999 at 695 Highway 17, Little River, South Carolina.



C. Penalties Not Addressed



Since no violation of S.C. Code Ann. § 12-21-2804(A) (Rev. 2000) occurred, no need exists to address the dependent issue of resulting penalties.

IV. Order



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



No violation of S.C. Code Ann. § 12-21-2804(A) (Rev. 2000) occurred on September 9, 1999 at 695 Highway 17, Little River, South Carolina. Accordingly, the citation issued against CC Electronics for that particular violation is dismissed.



For the violations of S.C. Code Ann. § 12-22-740 (Rev. 2000), a fine of $5,000 is imposed upon McDonald and a fine of $6,250 is imposed upon CC Electronics. The twenty Class III machine licenses held by McDonald and the five Class III machine licenses held by CC Electronics are revoked effective as of the date of this order.



AND IT IS SO ORDERED.



____________________________

RAY N. STEVENS

Administrative Law Judge



Dated: February 22, 2001

Columbia, South Carolina

1. McDonald owns 20 of the 25 machines in question and CC Electronics owns 5 of the 25 machines in question. CC Electronics is also the location operator.

2. As of July 1, 2000, Section 12-22-740 was repealed by Part I of Act No. 125, 1999 S.C. Acts by necessary implication. See Joytime Distributors v. State of South Carolina, 338 S.C. 634, 528 S.E.2d 647 (1999). Ordinarily, 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). However, a savings clause in Part V, Section 21 of the Act allows for any laws repealed by the Act to be treated as remaining in full force and effect for the purpose of enforcement of rights, duties, forfeitures, and liabilities as they stood under the repealed laws.

3. The Supreme Court in Joytime implied in dicta that the effective date of all of Part III of the Act is contingent upon the outcome of the referendum contained in Part II. Joytime, 528 S.E.2d at 655 (1999). It is clear, however, from a reading of Section 23(B) of the Act that section 12-22-740, which was included in Part III of the Act, was not made contingent upon the referendum and that it became effective upon the signature of the Governor.

4. Citing Yahnis Coastal, Inc. v. Stroh Brewery Company, 295 S.C. 243, 368 S.E.2d 64 (1988). In Yahnis, the Court held that if statutes in apparent conflict are incapable of any reasonable reconcilement, the last statute passed will prevail, so as to impliedly repeal the earlier statute to the extent of the repugnancy. Yahnis, 368 S.E.2d at 66 (1988).

5. Prior to May 31, 1999, Regulation 117-190 defined, applied and interpreted a "single place or premises" to be an area surrounded by exterior walls or firewalls consistent with the requirements of the applicable building code where video game machines are located, each having a separate electric utility meter, at least one separate employee during business hours, a separate local business license, and a separate state sales tax license.

6. The evidence does not establish that McDonald had any part in the day to day operation of the casino. Thus, McDonald violated § 12-22-740 only to the extent that he placed each machine owned by him in the casino for the purpose of their operation for profit. In this case, five of the twenty-five machines in the casino were owned by CC Electronics. Therefore McDonald committed only twenty violations of § 12-22-740.

7. As of July 1, 2000, Section 12-21-2804 was repealed by Part I, Section 8 of Act No. 125, 1999 S.C. Acts. However, the savings clause in Part V, Section 21 of the Act allows for any laws repealed by the Act to be treated as remaining in full force and effect for the purpose of enforcement of rights, duties, forfeitures, and liabilities as they stood under the repealed laws.

8. DOR raised no questions as to the employee requirement or any other requirement being met for any of the remaining four game rooms at the location.


Brown Bldg.

 

 

 

 

 

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