ORDERS:
CONSENT ORDER
This matter comes before me on the motion of the South Carolina Department of Revenue and
Taxation ("Department") for a summary order pursuant to S.C. Code Ann. § 1-23-370 (c) to
restrict the operation of video game machines at Caesar's Place on Broad River Road in Columbia
pending a hearing on the merits of a violation. The location currently has 40 machines in
operation. The Department moves to restrict the number to five machines pursuant to S.C. Code
Ann. § 12-21-2804(A) (Supp. 1993) to protect the public health, safety and welfare of the citizens
of this State. In support of its motion, the Department submitted the Affidavit of Burnett R.
Maybank, III, its director, copies of photographs of the machines and a sketch of the floor plan of
the building where the machines are located. The Department also cites various legal authorities.
S.C. Code Ann. § 1-23-370 (c) provides:
No revocation, suspension, annulment, or withdrawal of any license is lawful unless, prior
to the institution of agency proceedings, the agency gave notice by mail to the licensee of
facts or conduct which warrant the intended action, and the licensee was given an
opportunity to show compliance with all lawful requirements for the retention of the license.
If the agency finds that public health, safety or welfare imperatively requires emergency
action, and incorporates a finding to that effect in its order, summary suspension of a license
may be ordered pending proceedings for revocation or other action. These proceedings
shall be promptly instituted and determined.
The Department argues that large scale use of the video machines regulated by the Video Game
Machines Act, S.C. Code Ann. §§ 12-21-2770 et seq. (Supp. 1993) is prohibited by the act,
constitutes gambling also prohibited by law, and could produce harmful effects on the health,
safety, and welfare of the citizens of this State. Posadas De Puerto Rico Associates v. Tourism
Company of Puerto Rico, 478 U.S. 328 (1986) (gambling would produce serious harmful effects
on the health, safety and welfare of the citizens).
The South Carolina Supreme Court has held that coin-operated nonpayout machines with free
play features are not illegal as long as the machines themselves do not disburse money to the
player. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991). Thereafter, the legislature
undertook to regulate the video game industry by enacting the Video Game Machines Act, S.C.
Code Ann. §§ 12-21-2770 et seq. (Supp. 1993). This act specifies the type of machines that must
be licensed, the location of machines, and restricts the number of machines at a location. The
Department issued a citation in this case for exceeding the number of machines in a single place or
premises. The hearing on this violation is scheduled at the end of April, 1995 in approximately
four weeks.
Under Section 1-23-370 (c), the Department has the burden of establishing that the public health,
safety and welfare imperatively requires emergency action to revoke the license prior to the
hearing on the merits. The Department has failed to meet that burden. Video games are legal in
South Carolina and the legislature has enacted a scheme to regulate the industry. The Department
has failed to establish that continuing operation of the location until a hearing on the merits would
create a danger to the public health, safety and welfare. The Department has not demonstrated
immediate danger to the public other than reliance on the Posadas case that gambling in and of
itself creates a danger to the public welfare. While gambling may indeed create a public welfare
hazard it is not so imperative as to warrant emergency action in the revocation of the licenses for
the machines.
The motion for a summary order restricting the operation of Caesar's Place pending the hearing
on the violation is DENIED.
AND IT IS SO ORDERED.
______________________________
ALISON RENEE LEE
Administrative Law Judge
April ____, 1995
Columbia, South Carolina |