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Administrative Law Court
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SC Administrative Law Court Decisions

SCDOR vs. J.M. Brown Amusement Company, Inc.

South Carolina Department of Revenue

South Carolina Department of Revenue

J.M. Brown Amusement Company, Inc.

Nicholas Sipe, Esquire for Petitioner

Doug Goodenough, Vice President for Respondent.



This matter comes before me on the citation issued by the Department of Revenue and Taxation on June 1, 1995 for a violation of Article 19 regulating coin-operated machine and devices and other amusements, S.C. Code Ann. §§ 12-21-2703 et seq., specifically S.C. Code Ann. § 12-21-2738. After notice to the parties a hearing was conducted on October 6, 1995.


I make the following findings of fact, considering 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. J.M. Brown Amusement has been in the coin-operated machine business since the 1940's and has not been cited for any violation relating to the licensing and operation of video poker machines.

2. The company owns over 300 machines licensed by South Carolina and contributes in excess of three million dollars to the state.

3. J.M. Brown Amusement Company, Inc., is the owner of a Class III video poker machine with a free play feature located at a Fast Fare convenience store on Reidville Road in Spartanburg County, South Carolina. The machine was in operation on June 1, 1995, the beginning of the new licensing period.

4. J.M. Brown Amusement purchased from the Department of Revenue and Taxation several licenses for Class III machines on May 18, 1995.

5. The licenses are not issued for any specific Class III machine. Once placed on the machines the licenses are not transferable and may not be removed.

6. J.M. Brown Amusement has dispatchers that travel to all the locations with machines owned by it. The dispatcher placed licenses on other machines located at this particular Fast Fare. He did not place a license on one machine. When he finished his route, one license was left. Upon discovering his error he returned to the Fast Fare to place the license on the machine.

7. On the afternoon of June 1, 1995, a revenue agent visited the Fast Fare to check the licenses on the video poker machines. Of the three machines located in the establishment, one did not have a current license. The manager of the store contacted a representative from J.M. Brown Amusement who indicated that the license was en route.

8. When the representative arrived, the agent issued a citation for a violation of S.C. Code Ann. § 12-21-2738. The dispatcher then affixed the licenses to the machines.

9. The machine owned by J.M. Brown Amusement located at the Fast Fare did not have a current license displayed on the machine on June 1, 1995.

10. Company practice is to wait until near the end of the licensing period to place new licenses on the machines to ensure that machines are properly operating because the licenses are non-transferrable once attached to the machine.


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. § 12-21-2720(A) provides that a person who maintains for use or permits the use of a video game machine with free play feature operated by a slot in which a coin is deposited shall apply for and procure from the Department a license for the privilege of making use of the machine in South Carolina and shall pay a license tax of three thousand dollars for each machine. S.C. Code Ann. § 12-21-2720(A) (Supp. 1994).

3. Every person who maintains for use or permits the use of a machine subject to license "by way of proof of licensing must have a current license displayed conspicuously on the front of the machine." (emphasis added) S.C. Code Ann. § 12-21-2726 (Supp. 1994).

4. All licenses issued for machines pursuant to Sections 12-21-2703, et seq., expire on May 31 of the second year of issue. S.C. Code Ann. § 12-21-2734 (Supp. 1994).

5. "A person who fails, neglects, or refuses to comply with the terms and provisions of [Article 19 on coin operated devices] or who fails to attach the required license to any machine ... as herein required, is subject to a penalty ... for each failure, and the penalty must be assessed and collected by the commission." S.C. Code Ann. § 12-21-2738 (Supp. 1994).

6. S.C. Code Ann. § 12-21-2738 also requires that if the violation relates to a machine licensed pursuant to S.C. Code Ann. § 12-21-2720(A)(3), the applicable penalty is $2500, no part of which may be suspended.

7. The Respondent provided evidence relating to the history and record of the company in mitigation of the proposed fine. The Respondent has demonstrated that it is a responsible company, but its policy of waiting until the end of the license period may have contributed to violation by not allowing sufficient time in the event an error occurs. The law is clear, display of the license is proof of licensing. The failure or neglect in attaching the license to a machine is a violation of the statute. For a violation involving video poker machines with free play feature, the penalty is $2500, no part of which may be suspended. There is no discretion to be exercised with respect to the imposition of the monetary penalty.


For the reasons stated in the Findings of Fact and Conclusions of Law, it is hereby,

ORDERED, that J.M. Brown Amusement Company, Inc., has violated S.C. Code Ann. § 12-21-2738 by failing to display a current license on a video poker machine with free play feature and is fined $2500 payable to the Department of Revenue and Taxation within ten days of the date of this Order.




Administrative Law Judge

October ______, 1995

Columbia, South Carolina

Brown Bldg.






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