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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Great Games, Inc., and Edwin S. Alewine d/b/a Tina's Wild Cherry and The Lucky Cherry

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Great Games, Inc., and Edwin S. Alewine d/b/a Tina's Wild Cherry and The Lucky Cherry
 
DOCKET NUMBER:
95-ALJ-17-0184-CC

APPEARANCES:
William L. Todd, Esquire for Petitioner

William Otis Kneece, Esquire for Respondent Great Games

W. Jason Corbett, Esquire for Respondent Edwin S. Alewine
 

ORDERS:

ORDER AND DECISION

This matter comes before me on the citation issued by the Department of Revenue and Taxation against the respondents Great Games, Inc., and Edwin S. Alewine for violating S.C. Code Ann. § 12-21-2804 (Supp. 1994) by allowing the use of more than five video poker machines in a single place or premise. After notice to the parties, a hearing was conducted on June 12, 1995.

FINDINGS OF FACT

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

1. A site inspection was made by a revenue officer in October 1994. He gathered information, took pictures, obtained leases and reported the information to the Department. The facts regarding the location at that time are:

a. The business known as "The Wild Cherry" operates in a house located on 2213 Augusta Road in West Columbia, South Carolina. The building was leased to respondent Alewine. The business has a business license from West Columbia and a state sales tax license.
b. There is one entrance from the outside into The Wild Cherry. Inside the building there are eight class III video game (video poker) machines, a rest room, an office, and a counter. There are also snacks sold within this area.
c. To the left of the area for The Wild Cherry is a porch. The porch is the area for the business known as "Lucky Cherry". This business also has a business license and a state sales tax license. The porch contained only five video poker machines and no other equipment.
d. Access to the Lucky Cherry was either through The Wild Cherry or from a separate exterior door. Most patrons used the door leading from The Wild Cherry.
e. Only one employee was in the building at the time of the inspection. This employee made the pay-offs from all of the machines located in the building and on the porch.
f. The only sign with a business name was located at the front of the location. It stated, "The Wild Cherry".

2. The location was inspected again by one of the Department's auditors charged with the responsibility of enforcing the video game law. This inspection occurred after the October inspection but before the citation was issued in November 1994. At the time of his inspection, three of the machines formerly located in the Lucky Cherry had been moved into The Wild Cherry. The reason offered for the move was that the support beams on the porch were not sufficient to allow the extra weight caused by the machines and the people. The machines were being moved temporarily to fix the beams.

3. The door between The Wild Cherry and the Lucky Cherry was kept closed to keep the air conditioning inside the building. The door was not locked and access from The Wild Cherry was not restricted.

4. The utilities for the businesses were billed together.

5. Information obtained during the October site inspection was referred to the Policy Division of the Department for review. This division was responsible for reviewing all information relating to site inspections to determine compliance with the regulatory scheme established in the Video Game Machines Act.

6. Based upon the information gathered, the Department issued a citation against the Respondent Alewine for permitting the use of more than eight machines in a single location in violation of S.C. Code Ann. § 12-21-2804(A).

7. The Wild Cherry opened first with only eight machines on June 30, 1994. The Lucky Cherry opened later in September, 1994. The reason a second business opened was to be able to compete with the other businesses in the area that were operating with more than the legal limit of machines. Alewine was informed by other video poker operators that if there was a separate business, he could add more machines for that business.

8. The Wild Cherry was owned by Tina Alewine, the wife of respondent. Lucky Cherry was owned by Edwin S. Alewine. There was no lease between Tina and Edwin Alewine for the two businesses to operate in the building. There were a total of five employees including Alewine and his wife.

9. Great Games, Inc. has severed its business relationship with Edwin Alewine. The machines located in the building at the time of the inspection and citation have been removed.

CONCLUSIONS OF LAW

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(A) (Supp. 1994) states that no person shall maintain or permit to be used permits or licenses for the operation of more than eight machines authorized under Section 12-21-2720(A)(3) at a single place or premises. For licenses or permits issued after July 1, 1994, the limit is five machines.

3. Machines licensed under Section 12-21-2720(A)(3) include video games 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. Although the Video Game Machines Act ("Act") does not define the terms "single place or premise", the words are sufficiently definite and susceptible of a common ordinary meaning so as to provide a person of ordinary intelligence reasonable notice of what conduct is proscribed.

5. The evidence clearly leads a person of ordinary intelligence to conclude that the two businesses are designed to evade the statutory requirements and in reality the businesses are but one entity operating in a single location. Respondent Alewine leases a single building, with one address. The building cannot be subdivided. Although each business had separate W-2 forms for employees, the evidence reveals that the employees worked in both businesses. There is only one office for both businesses. There is free access to both businesses. Alewine argues that the businesses are similar to those stores in which one business opens into another without having to exit to the outside. This location is not like those stores. Although the corporate structure of the businesses may be similar, each has its own employees working at all times. There is no sharing of employees or employees covering for another business and each business has a sign over its leased space. By his own admission, Alewine added additional machines in order to compete with the other locations in the vicinity. The overall scheme in this case demonstrates that there is only one business operating at the leased space. That one business operated 13 video games licensed pursuant to Section 12-21-2720. It is therefore in violation of the provisions of the act restricting the number of machines in a single place or premise.

6. S.C. Code Ann. § 12-21-2804(A) (Supp.1994) states that the penalty for failing to comply with the maximum number of machines in a single place or premise requires the revocation of the licenses of machines located in the establishment.

7. S.C. Code Ann. § 12-21-2804(F) (Supp. 1994) states that a person who violates Section 12-21-2804(A) may be fined up to five thousand dollars.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, the Department of Revenue and Taxation properly issued a citation against the Respondents. The licenses on the video poker machines located at Tina's Wild Cherry and the Lucky Cherry on November 10, 1994 are revoked and a fine of $2500 is imposed upon the Respondents.

AND IT IS SO ORDERED.



____________________________

ALISON RENEE LEE

Administrative Law Judge



June ____, 1995

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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