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SC Administrative Law Court Decisions

SCDOR vs. Video Arcade, Inc., d/b/a/ Full House Games

South Carolina Department of Revenue

South Carolina Department of Revenue

Video Arcade, Inc., d/b/a/ Full House Games

Nicholas Sipe, Esquire for Petitioner

H. Fred Kuhn, Jr., Esquire for Respondent



This matter comes before me on the citation issued by the Department of Revenue and Taxation ("Department") against Video Arcade, Inc. for a violation of S.C. Code Ann. § 12-21-2804(B), advertising the playing of video poker. After notice to the parties, a hearing was conducted on March 29, 1995.


I make the following findings of fact, taking into consideration the burden on the parties to establish their cases by a preponderance of the evidence and taking into account the credibility of the witnesses:

1. Video Arcade, Inc. doing business as Full House Games is located on Hilton Head Island, South Carolina in a shopping mall. It has sixteen game machines inside separated by lattice walls. Some of the machines are non-video type poker machines.

2. Outside of the entrance is a sign hanging from the roof overhang stating "Full House Games". On each side of the name are three dollar signs ("$$$"). Inside the windows large signs are placed which obstruct the view inside. One sign states "The Arcade Games Vegas Style Open 24 Hours", the other states "Full House Games Open 24 Hours". There are also two smaller signs inside one of the windows that state "Full House Games Open 24 Hours".

3. On the larger signs there were also three sevens ("777") and cherries, symbols that are displayed during the play of video poker machines and symbols commonly known to be associated with the playing of these machines.

4. The signs were displayed to tell people about the business of Video Games. The major portion of the business is video poker.

5. The signs displayed are all visible from the street as depicted in photographs taken at the time of the visit to the location on September 20, 1994. The symbols on the signs inside the windows are not apparent by looking at the photographs.

6. A citation was subsequently issued to Video Arcade, Inc. for violating S.C. Code Ann. § 12-21-2804(B).

7. Owners and operators of the video gaming machines were notified of the requirements of the Video Game Machines Act, S.C. Code Ann. §§ 12-21-2770 et seq. (Supp. 1994). The Department held meetings to discuss compliance with the act.

8. Information was available from the Department in the form of a circular entitled "A Guide to Conducting Video Gaming Establishments in South Carolina". This guide states on the front that it "has been designed to aid taxpayers in the implementation of Video Game Machines Act, effective July 1, 1993." With respect to advertising it states, "Advertising will not be allowed in any manner whatsoever. Advertising will include both that displayed outside and inside of the licensed establishment." (emphasis in original) Guide, p. 4.


1. Pursuant to S.C. Code Ann. § 12-4-30 (D) all contested cases previously heard by the three commissioners of the South Carolina Tax Commission shall be heard by an administrative law judge under the provisions of Chapter 23, Title 1. S.C. Code Ann. § 12-4-30 (D) (Supp. 1994).

2. S.C. Code Ann. § 12-21-2804 (B) states that no person who maintains a place or premise for the operation of machines licensed under Section 12-21-2720(A)(3) may advertise in any manner for the playing of machines. S.C. Code Ann. § 12-21-2804 (B) (Supp. 1994).

3. Machines licensed under Section 12-21-2720(A)(3) include video game with free play feature operated by a slot in which a coin or thing of value is deposited. S.C. Code Ann. § 12-21-2720 (Supp. 1994).

4. A person who violates the advertising prohibition is subject to a fine of up to five thousand dollars. S.C. Code Ann. § 12-21-2804(F) (Supp. 1994).

5. Although the Video Game Machines Act ("Act") does not define the term "advertise", the clear meaning of the word and its intent from the statute may be derived from the term as defined in the dictionary. "Advertise" means "to make something known"; "to announce publicly especially by a printed notice or a broadcast ... to call public attention to especially by emphasizing desirable qualities so as to arouse a desire to buy or patronize...." Merriam-Webster's Collegiate Dictionary 10th Ed.

6. Clearly Video Games advertised for the playing of the machines. The signs were designed to call public attention to the location and to arouse a desire to patronize the establishment to play the video games.

7. The claims by Video Games that the Department has taken inconsistent positions about what is allowed under the Act does cause some concern. In my view it would be unconscionable for the Department to provide verbal information about its proposed enforcement and then in written materials submitted to the industry take a different approach. However, the Department is not at liberty to substitute its reading of the Act in the face of plain language which directly prohibits the advertising of the playing of video games licensed under the Act. The clear wording and meaning of the act is that advertising the playing of games licensed by the Act is unlawful. The respondent admitted that the purpose of the signs was to advertise the business which consists of providing video games licensed pursuant to the act for play by the public. It, therefore, violated the provisions of the Act.


Based upon the foregoing findings of fact and conclusions of law, it is therefore,

ORDERED, that Video Games, Inc. d/b/a Full House Games has violated the advertising provisions of the Video Game Machines Act and is fined $250 payable to the Department of Revenue and Taxation within 10 days of the date of this Order.




Administrative Law Judge Division

April _____, 1995

Columbia, South Carolina.

Brown Bldg.






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