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. Mickey H. Stacks d/b/a Red Dot Amusement, MHS Enterprises, Inc.

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Mickey H. Stacks d/b/a Red Dot Amusement, MHS Enterprises, Inc., and William E. Jones and David T. Whigman d/b/a B&D Enterprises
 
DOCKET NUMBER:
95-ALJ-17-0144-CC

APPEARANCES:
Nicholas Sipe, Esquire for Petitioner

David E. Belding, Esquire for Respondents
 

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


Brown Bldg.

 

 

 

 

 

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