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. Jackpot Casino, Inc., d/b/a Jackpot Casino

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Jackpot Casino, Inc., d/b/a Jackpot Casino
 
DOCKET NUMBER:
95-ALJ-17-0179-CC

APPEARANCES:
William L. Todd, Esquire
Attorney for the Petitioner

H. Buck Cutts, Esquire
Attorney for the Respondent
 

ORDERS:

ORDER AND DECISION

This matter comes before me pursuant to S.C. Code Ann. § 1-23-320 (Supp. 1994) on the citation issued by the Department of Revenue and Taxation ("Department") against Jackpot Casino, Inc., d/b/a Jackpot Casino. The Department alleges that respondent violated S.C. Code Ann. § 12-21-2804(B) (Supp. 1994) by advertising the playing of video poker machines and offering inducements for the playing of video poker machines. Respondent denies the alleged violations and, therefore, contests the citation of the Department, which necessitates this hearing before an Administrative Law Judge. Petitioner seeks a fine of $ 500.00 for each violation for a total fine of $1000.00. After timely notice to all parties, a hearing was held at the Administrative Law Judge Division in Columbia, South Carolina.





FINDINGS OF FACT

Having carefully considered all testimony and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:

1. Jackpot Casino, Inc. was incorporated and certified by the Secretary of State on January 3, 1994. The corporate name registered is "Jackpot Casino, Inc."

2. Jackpot Casino, Inc., d/b/a Jackpot is located at 1701 South Kings Highway, Myrtle Beach, South Carolina. The building which houses the business is situated approximately fifty (50) feet from Kings Highway.

3. The City of Myrtle Beach issued a professional business license to Jackpot Casino in 1993 and lists Steven C. Courtney, III and Beverly Barton as the registered owners.

4. On June 22, 1994, Jackpot Casino maintained Class II and Class III video game machines, rented and offered video tapes for sale, and offered snacks and cigarettes for sale. The principal revenue source for the business was from its video poker machines. The business averaged $100 to $125 a week profit from the sale and rental of video tapes.

5. On June 22, 1994, Revenue Officer Robert Bryan Lee visited Jackpot Casino for an official inspection. Officer Lee observed that Jackpot Casino displayed a sign across the facade of its building, visible from Kings Highway, which read "JACKPOT CASINO." There was also a neon sign which displayed the same. It is not clear whether the neon sign was visible from Kings Highway. Officer Lee also noticed that Jackpot Casino offered free soft drinks to all persons who entered the business, regardless of whether they played video poker machines.

6. Officer Lee filed his report with the Department's Columbia office and was instructed to "write a citation" for a violation of S.C. Code Ann. § 12-21-2804 (B) (Supp. 1994) for advertising the playing of video poker machines. Respondent was also cited because it offered free drinks to all persons who entered the premises. The Department imposed a $500.00 fine for each of these violations.

7. Steven C. Courtney, III was aware of and had knowledge of the Video Game Machines Act when it became effective in July, 1993.

MOTION

Respondent moved to quash the citation because petitioner did not publish rules and regulations "based on the Administrative Procedures Act and the Video Game Machines Act."

S.C. Code Ann. § 12-21-2804(F) (Supp. 1994) expressly authorizes the "commission" [Department] to enforce the provisions of S.C. Code Ann. § 12-21-2804(B). Consequently, it is readily apparent from a reading of this provision that it is not necessary for the Department to promulgate regulations to execute the express provisions of S.C. Code Ann. § 12-21-2804(B) (Supp. 1994). While S.C. Code Ann. § 12-21-2798 (Supp. 1994) provides: "[t]he commission shall promulgate rules and regulations pertaining to the machines and persons licensed by it," this section does not impose a specific duty on the Department to promulgate regulations with respect to S.C. Code Ann. § 12-21-2804(B). When the legislature grants general authority to an agency to promulgate regulations, it is logically consistent that an agency would adopt or promulgate regulations as necessary to enable the agency to accomplish its objectives. See David E. Shipley, South Carolina Administrative Law, 4-4 (1989). It is equally logical that an agency would not promulgate regulations if they are not necessary to accomplish its objectives, that is, to execute the enacted laws. Based upon the foregoing, respondent's motion to dismiss the citation is hereby denied.CONCLUSIONS OF LAW AND DISCUSSION

1. This matter is properly before the Administrative Law Judge Division pursuant to the provisions of Chapter 23, Title 1 and S.C. Code Ann. § 12-4-30(D) (Supp. 1994).

2. The Video Game Machines Act ("Act"), which regulates video poker machine activity in South Carolina, was enacted in 1993 and became effective on July 1, 1993. This Act is found at S.C. Code Ann. § 12-21-2770, et seq. (Supp. 1994). The statutory provision at issue before this tribunal is S.C. Code Ann. § 12-21-2804(B) (Supp. 1994).

3. S.C. Code Ann. §12-21-2804(B) (Supp. 1994) 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 anymanner 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). (emphasis added).

4. Respondent argues that the enforcement of the prohibition set forth in S.C. Code Ann. §12-21-2804(B) is more extensive than necessary, in that the enforcement is "overbroad and violates the respondent's right as guaranteed by both constitutions." In Reyelt, et al. v. South Carolina Tax Commission, the court upheld S.C. Code Ann. § 12-21-2804(B) and found that its restriction on advertising for the playing of video poker machines did not violate the First Amendment of the Constitution. Reyelt, et al. v. South Carolina Tax Commission, Civil Action No. 6:93-1491-3 (D.S.C. Nov. 15,1993). The statute met the test, which was used for assessing the constitutionality of restrictions on commercial speech, advanced in Central Hudson Gas & Electric Corp. vs. Public Service Comm'n of New York, 447 U.S. 557(1980). The three prongs of the test applicable to this statute are: (1) the government must have a substantial interest in regulating the speech, (2) the restrictions must directly advance the government's asserted interest, and (3) the restrictions must not be more extensive than necessary to serve that interest.(1) Reyelt, et al. v. South Carolina Tax Commission, Civil Action No. 6:93-1491-3 (D.S.C. Nov. 15,1993). Thus, it is clear that the state may ban advertising by video poker machine operators. What is before this tribunal is whether respondent's sign displaying its corporate name, "JACKPOT CASINO" constitutes advertising for the playing of video poker machines.

5. The Video Game Machines Act does not define the term "advertise." The meaning of the term may be derived from the common meaning as found in the dictionary. "Advertise" means (1) "to make something known;" (2) "to announce publicly especially by a printed notice or a broadcast;" (3) "to call public attention to especially by emphasizing so as to arouse a desire to buy or patronize." Merriam Webster's Collegiate Dictionary 18 (10th ed. 1993).

It is clear from this definition that respondent's sign constituted advertisement. It was displayed to make his business known to the public. The next question is whether it constituted advertisement for the playing of video poker machines.

6. The nature and essence of the corporate name "JACKPOT CASINO" connotes the playing of video poker machines. At its elementary level, these terms when displayed to the public would put reasonable persons on notice or call attention to the availability and opportunity for playing video poker machines at the subject location. The term "Jackpot" means (1) "a hand or game of draw poker . . . ;" (2) " a combination on a slot machine that wins a top prize or all the coins available for paying out." Merriam Webster's Collegiate Dictionary 625 (10th ed. 1993). The term "casino" means "a building or room used for social amusements; specifically one used for gambling." Id. at 177.

The clear effect of respondent's sign is an advertisement for the playing of video poker machines in contravention of the S.C. Code Ann. § 12-21-2804(B) (Supp. 1994). The Act clearly prohibits advertising in any manner. While respondent may have a right to its legal corporate name, it does not have a right to advertise the playing of video poker machines. The argument that a business should be able to advertise its corporate name, which connotes the playing of video poker machines, is not plausible in view of the state's substantial interest in regulating the video poker machine industry. Further, if such an argument were allowed to stand, it would render S.C. Code Ann. § 12-21-2804(B) (Supp. 1994) meaningless through circumvention under the guise of the corporate veil. It should also be noted that the respondent incorporated and registered its corporate name after the enactment of the Video Game Machines Act.

7. S.C. Code Ann. § 12-21-2804(B) (Supp. 1994) also prohibits the offering of any special inducement to a person for the playing of video poker machines. The construction of this provision of the statute suggests an exchange or quid pro quo. The term "inducement" in its ordinary meaning is defined as "a motive or consideration that leads one to action or to additional or more effective actions." Merriam Webster's Collegiate Dictionary 594 (10th ed. 1993). There was no evidence presented to establish that respondent offered soft drinks for the playing of video poker machines. Absolutely no nexus was established between the offering of soft drinks to all persons entering the subject location by respondent and the playing of video poker machines.

8. S.C. Code Ann. § 12-21-2804(F) (Supp. 1994) allows for the imposition of a fine of up to $5,000.00 for the violation of S.C. Code Ann. § 12-21-2804(B) (Supp. 1994).

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, its therefore:

ORDERED that Jackpot Casino, Inc., d/b/a Jackpot Casino shall pay to the Department a fine of $500.00 within ten days of the date of this Order, as imposed by the Department for violating the advertising provision of the Video Game Machines Act.

AND IT IS FURTHER ORDERED that the fine of $500.00 imposed by the Department on respondent for offering inducements for the playing of video poker machines is suspended, as it was unsubstantiated by a preponderance of the evidence.

AND IT IS SO ORDERED.





_______________________________

JOHN D. GEATHERS

Administrative Law Judge

Edgar A. Brown Building

1205 Pendleton Street

Columbia, South Carolina 29201



July 21, 1995

_________________

Fn. 1. The court in Reyelt applied this prong and found that S.C. Code Ann.§ 12-21-2804(B) (Supp. 1994) satisfied this as well as the other prongs of the analysis in Central Hudson. This statute bans advertising by those who maintain a place or premises for the operation of licensed machines. It does not apply to such organizations as the Chamber of Commerce or the Tourism Department. Hence, here lies the satisfaction of this prong: the statute does not extend beyond what is necessary to reduce the demand for playing the gaming machines among South Carolinians, i.e., the video poker machine industry itself. This test is not to be applied as asserted by respondent in its brief. Further, the statute has met constitutional muster according to Reyelt. Therefore, this tribunal does not need to further address the Central Hudson analysis.


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