ORDERS:
FINAL DECISION
STATEMENT OF CASE
This is a case brought by the Respondents for a contested case hearing on the administrative
citations issued by the South Carolina Department of Revenue ("Department") for advertising for the
playing of video poker machines in violation of S.C. Code Ann. § 12-21-2804(B) (Supp. 1996) and
S.C. Code Regs. 117-190.2 (Supp. 1996).
By Order dated August 9, 1996, the above-captioned cases were consolidated for hearing
purposes, each retaining its separate caption and docket number. A hearing on these matters was held
on August 22, 1996 at the office of the Administrative Law Judge Division ("ALJD"). Any issues
raised in the proceedings or hearing of this case but not addressed in this Order are deemed denied.
ALJD Rule 29(B).
ISSUES
1. Did the Respondent Video Gaming Consultants, Inc., by using and displaying the term
"Jackpot Video Games" in conjunction with a symbol of a pot of gold, advertise for
the playing of video poker machines?
2. Did the Respondent Video Gaming Consultants, Inc., by using and displaying the term
"Stop Here Try Our Poker Video Games," advertise for the playing of video poker
machines?
3. Did the Respondent Slots of Fun, Inc., by using and displaying the term "Slots of
Fun," advertise for the playing of video poker machines?
4. Is the prohibition against advertising overly broad in its enforcement such that it
infringes on Constitutionally protected rights of free speech?
FINDINGS OF FACT
Having observed the witnesses and exhibits presented at the hearing and closely passed upon
their credibility, taking into consideration the burden of persuasion by the parties, I make the
following Findings of Fact by a preponderance of the evidence:
1. Notice of the time, date, place and subject matter of the hearing was timely given to
the Petitioner and the Respondents.
2. Video Gaming Consultants, Inc. is a corporation chartered by the South Carolina
Secretary of State. Video Gaming Consultants, Inc. operates a video gaming business known as
Jackpot Video Games, located at 2751 Highway 17, Garden City, Horry County, South Carolina.
3. Jackpot Video Games contains Class III video poker machines which are licensed
pursuant to S.C. Code Ann. 2720(A)(3).
4. On July 27, 1995, Revenue Officer D. Dean visited the business known as Jackpot
Video Games. No other video game machines, other than those licensed under S.C. Code Ann.
2720(A)(3), were on the premises. Maintaining machines for play appeared to be Jackpot Video
Games' only source of income. Jackpot Video Games displayed a sign stating "Stop Here Try Our
Poker Video Games" and two signs with the words "Jackpot Video Games" in front of its business.
Depictions of pots of gold overflowing with gold coins were displayed on the two "Jackpot Video
Games" signs. The three signs were clearly visible from the public thoroughfare. As a result of the
inspection, the Department issued a citation against Video Gaming Consultants, Inc. for advertising
for the playing of machines in violation of S.C. Code Ann. § 12-21-2804(B). The Department seeks
to impose a fine in the amount of $2,000 for this offense.
5. On September 25, 1995, Revenue Officer D. Dean again visited Jackpot Video Games.
No other video game machines, other than those licensed under S.C. Code Ann. 2720(A)(3), were
on the premises. Jackpot Video Games continued to display the two signs with the words "Jackpot
Video Games" in front of its business. Depictions of pots of gold overflowing with gold coins were
also still displayed on the two "Jackpot Video Games" signs. The two signs were clearly visible from
the public thoroughfare. As a result of the inspection, the Department issued a citation against Video
Gaming Consultants, Inc. for advertising for the playing of machines in violation of S.C. Code Ann.
§ 12-21-2804(B). The Department seeks to impose a fine in the amount of $2,500 for this offense.
6. Slots of Fun, Inc. is a corporation chartered by the South Carolina Secretary of State.
Slots of Fun, Inc. operates a video mall known as The Royal Flush, located at 1618 Charleston
Highway, Suite C, West Columbia, Lexington County, South Carolina.
7. The Royal Flush contains Class III video poker machines which are licensed pursuant
to S.C. Code Ann. 2720(A)(3).
8. On November 20, 1995, Revenue Officer William Byers visited The Royal Flush to
conduct a routine inspection. No other devices that accept money through slots, other than those
licensed under S.C. Code Ann. 2720(A)(3), were on the premises. Slots of Fun, Inc. displayed two
signs stating "Slots of Fun," one placed in front of the building and the other displayed across the
facade of the business. Both signs were clearly visible from the public thoroughfare. As a result of
the inspection, the Department issued a citation against Slots of Fun, Inc. for advertising for the
playing of machines in violation of S.C. Code Ann. § 12-21-2804(B) and S.C. Code Reg. 117-190.2.
The Department seeks to impose a fine in the amount of $500 for this offense.
9. The sign "Jackpot Video Games," when advertised, informs the public that video
poker game machines are available for play on the premises. Moreover, the sign "Stop Here Try Our
Poker Video Games," when advertised, calls to the attention of the general public that video game
machines are available for play on the premises. Based on the above facts, I find that the appropriate
fine for the Respondent, Video Gaming Consultant, Inc. is $2,500.
10. The sign "Slots of Fun," when advertised, calls to the attention of the general public
that video game machines are available for play on the premises. Based on the above facts, I find that
the appropriate fine for the Respondent, Slots of Fun, Inc., is $500.
11. Dr. Valerie P. Loranz is Executive Director of the Compulsive Gambling Center in
Baltimore, Maryland. Dr. Loranz earned a Masters degree from Penn State in Community
Psychology. She wrote her dissertation on compulsive gambling. She earned a Doctorate degree
from the University of Pennsylvania. Again, her dissertation topic was compulsive gambling. She
has published about 80 articles on various aspects of compulsive gambling. Dr. Loranz was qualified
as an expert in the area of the diagnosis and treatment of pathological gambling, the impact of
gambling on society in general, and the relationship between gambling and crime.
12. Dr. William Norman Thompson is a professor of Public Administration at the
University of Nevada, Las Vegas. Over the past ten years, Dr. Thompson has been a consultant for
a panoply of gambling organizations. He has written approximately 100 articles on gambling and four
published books. Dr. Thompson was qualified as an expert in the general area of gambling and
specifically in the area of the economic impact of gambling upon society.
13. Joseph Crawford Cook was a founding partner of Cook, Luke and Associates, a
Columbia based advertising firm. Mr. Cook sold that firm in 1991 and since that date has been an
independent consultant in marketing and advertising. Mr. Cook was qualified as an expert in
advertising.
14. Based on the testimony of Drs. Loranz and Thompson and Mr. Cook, I find the
following attributes exist concerning gambling in society. Pathological gambling, the clinical term
used to describe compulsive gamblers, is a very disruptive illness that occurs in some individuals who
choose to gamble. The increase of the legalization of various forms of gambling increases the
occurrence of pathological gambling in society. Various direct and indirect economic and social costs
accompany pathological gambling, including crime, loss of productivity, broken homes, bankruptcy,
etc. In fact, pathological gambling affects the entire society, in the work environment and the family
environment. Specifically, there is a strong relationship between compulsive gambling and crime.
Money is the substance of the pathological gambling addiction. Once the compulsive gambler
exhausts all legal access to money, he routinely commits crimes to get money. Thus the greater the
prevalence of gambling, the greater the prevalence of crime. Consequently, the reduction of gambling
reduces the potential for pathological gambling, and the resulting amount of social harm.
15. The purpose of advertising is to create demand, and to entice people to try a product.
Advertising increases the demand for gambling. Conversely, the reduction in the advertising of
gambling reduces the amount of gambling. Since the advertisement of gambling increases the amount
of gambling, and the increase in gambling produces a potential social harm upon society, the
advertising of gambling has a direct potential social cost upon society. In other words,
advertisements, by increasing the prevalence of gambling, increase the potential deleterious impact
upon society.
16. Advertisements fail to communicate the addictiveness of gambling. Advertisements,
specifically those such as "Slots of Fun," suggest that gambling is entertaining. However, for the
compulsive gambler, gambling is not entertaining.
DISCUSSION
S.C. Code Ann. § 12-21-2804(B) (Supp. 1996) 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
any manner 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).
The clear meaning and intent of the section is to prohibit any form of advertising of the playing of
video game machines and to prohibit any form of encouragement to persons to play video game
machines by persons who maintain "a place or premises" where machines are operated.
Constitutional issues have been raised in this case regarding the validity of this statute and the
regulation that defines advertising for purposes of interpreting the statute.
The Respondents contend the State's prohibition against advertising violates the First
Amendment to the United States Constitution pursuant to the U.S. Supreme Court's holding in 44
Liquormart v. Rhode Island, 64 U.S.L.W. 4313 (U.S. May 13, 1996). The Respondents further state
that this Division should declare S.C. Code Ann. § 12-21-2804(B) and S.C. Code Regs. 117-190.2
to be void and unconstitutional. The Department, on the other hand, maintains that the ban on
advertising satisfies the four-prong test announced in Central Hudson Gas v. Public Serv. Comm'n
of New York, 447 U.S. 557 (1980), and therefore the ban does not violate the requirements of the
First Amendment to the Constitution.
Commercial speech is entitled to only limited protection under the First Amendment. Greater
New Orleans Broadcasting Ass'n v. U.S., 69 F.3d 1296 (5th Cir. 1995). The four-part Central
Hudson test governs whether commercial speech is protected by the First Amendment. Id. In
Central Hudson, the Supreme Court propounded the following test:
[I]t at least must concern lawful activity and not be misleading. Next,
it must be determined whether the asserted governmental interest to
be served by the restriction on commercial speech is substantial. If
both inquiries yield positive answers, it must then be decided whether
the regulation directly advances the governmental interest asserted,
and whether it is not more extensive than is necessary to serve that
interest.
As to the first prong, the Department concedes that the speech concerns lawful activity. The
signs, "Stop Here Try Our Poker Video Games," "Jackpot Video Games" and "Slots of Fun," call
the public's attention to the fact that there were machines on the premises licensed pursuant to S.C.
Code Ann. 12-21-2720(A)(3). The businesses exclusively engage in providing to the public the
opportunity to play Class III video poker machines. The signs advertise the playing of the machines
but are misleading in that they suggest more than what is actually available. Specifically, the term
"jackpot" is deceiving to the public. A "jackpot" suggests to the public "a top prize or reward." The
American Heritage College Dictionary 1018 (3rd ed. 1993). In South Carolina, video poker machine
operators may not pay out more than $125 in winnings within any 24-hour period. Consequently,
stressing a jackpot in advertising when the maximum payoff on video poker is only $125 misleads the
public concerning the potential winnings. This is not what the public would perceive as a jackpot.
Furthermore, the gold coins displayed on the signs further reinforce the image of large potential
gambling winnings. Likewise, stating that slots are fun appear to tell the public that the sole purpose
is entertainment and fun. As established by expert testimony, entertainment would be limited to small
bets, and one could not run up the odds. Therefore, the commercial speech involved here is not
entitled to First Amendment protection because it fails to satisfy the first prong.
To satisfy the second prong, the state must prove a substantial interest to be achieved by
restricting the Respondent's speech. South Carolina's asserted interests in prohibiting the
advertisement of the playing of machines are: to prevent an increase in the demand for gambling; to
prevent an increase in crime; to prevent the deceptive message that easy money is available for
nothing; to protect the youth of South Carolina from the harmful influence of gambling; to minimize
the serious harmful effects of gambling on the health, safety and welfare of its citizens; to discourage
public participation in gambling; and to minimize the growth of pathological gambling in the State
of South Carolina. One of the above state's interests is discouraging public participation in
commercial gambling, thereby minimizing the wide variety of social ills that have historically been
associated with such activities. That interest was found to be substantial in Greater New Orleans
Broadcasting Ass'n, supra. Further, the Federal District Court in Reyelt et al. v. S.C. Tax Comm'n,
C.A. No. 6-93-1491-3 (D.S.C. Nov. 15, 1993), in upholding the "Video Game Machines Act", held
that South Carolina had a substantial governmental interest in reducing the demand for gambling
among its residents. I also find that South Carolina has a substantial public interest in regulating the
advertising of video poker for the reasons set forth in the above findings of fact.
The third prong addresses whether the regulation directly advances the governmental interest
asserted. The Court in Central Hudson found this immediate connection between advertising and
demand by stating that the corporation would not contest the advertising ban unless it believed that
promotion would increase its sales. Here, the Department established through expert testimony that
there is a direct relationship between advertising and the amount of gambling, that a reduction in
advertising will reduce gambling in general, and will significantly minimize the increase in the growth
of pathological gamblers in South Carolina. In Reyelt, the Court found "that a ban on the advertising
for the playing of video game machines will directly advance South Carolina's asserted objective of
reducing the demand for playing these machines among South Carolinians." Reyelt at 11, supra. A
reduction in gambling will materially meet South Carolina's stated interest. In Greater New Orleans,
the Court stated "[I]t is axiomatic that the purpose and effect of advertising is to increase consumer
demand." The purpose of advertising is to create demand and to entice people to try a product. The
Department has demonstrated that the ban on advertising directly advances the State's interests, and
does so to a material degree.
South Carolina is entitled to use the less than strict fourth prong, that there is a reasonable
fit between the abridgement of speech and that stated interest, as the ban is to protect consumers from
misleading, deceptive, or aggressive sales practices. See State Univ. of New York v. Fox, 492 U.S.
469 (1989). Also, South Carolina is entitled to the relaxed fourth prong of Central Hudson because
the state has not entirely prohibited the dissemination of commercial messages. See 44 Liquormart
v. Rhode Island, 64 U.S.L.W. 4313 (U.S. May 13, 1996). The ban at issue only applies to persons
who maintain a place or premises for the operation of machines, those persons who would most likely
engage in deceptive or overly aggressive advertising. The manufacturers could advertise as well as
organizations such as Chambers of Commerce or Tourism, as noted in Reyelt. Further, the persons
who operate the businesses can advertise their premises, as long as the playing of machines is
excluded from such advertising.
The South Carolina restriction on advertising satisfies the criteria established in Central
Hudson. Specifically, S.C. Code Ann. § 12-21-2804(B) is not violative of the First Amendment to
the Constitution since the government's interest in regulating the advertising of gambling is
substantial, the restrictions on speech directly advance South Carolina's asserted interest, and the
restrictions are no more extensive than necessary to serve that interest. This use of the Central
Hudson test was recently affirmed in 44 Liquormart, supra.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude as a matter of law the following:
1. The Administrative Law Judge Division has jurisdiction to hear this matter pursuant
to S.C. Code Ann. § 12-4-30(D) (Supp. 1996) and S.C. Ann. § 1-23-320 (Supp. 1996).
2. The Department contends that the Respondent violated S.C. Code Ann. § 12-21-2804(B) (Supp. 1996). That section 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
any manner 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).
3. Pursuant to S.C. Code Ann. § 12-21-2798 (Supp. 1996), the Department promulgates
rules and regulations pertaining to machines and persons licensed.
4. 27 S.C. Code Regs. 117-190.2 (Supp. 1996) defines advertising as "any attempt to
call attention to, or make known, to the general public that video game machines as defined in Code
Section 12-21-2772(5) are available for play."
5. S.C. Code Ann. § 12-21-2772(5) (Supp. 1996) defines machine as "an electronic video
games machine that, upon insertion of cash, is available to play or simulate the play of games as
authorized by the commission utilizing a video display and microprocessors in which the player may
receive free games or credits that can be redeemed for cash."
6. Words used in a statute should be given their plain and ordinary meaning. Multimedia,
Inc. v. Greenville Airport Comm'n, 287 S.C. 521, 339 S.E.2d 884 (Ct. App. 1986); Hughes v.
Edwards, 265 S.C. 529, 220 S.E.2d 231 (1975). When the terms of a statute are plain and
unambiguous, the courts must apply those terms according to their literal meaning, without resort to
subtle or forced construction in an attempt to limit or expand the scope of the statute. Holley v.
Mount Vernon Mills, Inc., 312 S.C. 320, 440 S.E.2d 373 (1994); First Baptist Church of Mauldin
v. City of Mauldin, 308 S.C. 226, 417 S.E.2d 592 (1992). Likewise, if a statute's language is plain
and unambiguous and conveys clear and definite meaning, there is no occasion for employing rules
of statutory interpretation, and the court has no right to look for or impose another meaning. Miller
v. Doe, 312 S.C. 444, 441 S.E.2d 319 (1994).
7. The terms of S.C. Code Ann. § 12-21-2804(B) are plain and unambiguous. The clear
meaning and intent of the section is to prohibit any form of advertising of the playing of video game
machines and to prohibit any form of encouragement to persons to play video game machines by
persons who maintain "a place or premises" where machines are operated. Accordingly, there is no
reason to apply the rules of statutory construction.
8. The signs "Stop Here Try Our Poker Video Games" and "Jackpot Video Games"
clearly call public attention to the fact that there were on the premises machines licensed under S.C.
Code Ann. § 12-21-2720(A)(3). The gold coins displayed on the signs further reinforce the image
of potential gambling winnings. These signs indicate clear attempts to call attention to or make
known to the general public that video game machines are available for play.
9. The sign "Slots of Fun" also clearly makes it known to the public that machines
licensed under S.C. Code Ann. § 12-21-2720(A)(3) are available for play. The term "slot machine"
is commonly used for a gambling device. These machines are operated by slots in which a player
deposits coins to engage in play. Slots of Fun, Inc. advertised the fact that video game machines were
on the premises.
10. The Respondents violated S.C. Code Ann. § 12-21-2804(B) (Supp. 1996) by
advertising for the playing of machines. The penalty for failure to comply with S.C. Code Ann. §12-21-2804(B) is a fine of up to $5,000. S.C. Code Ann. § 12-21-2804(F) (Supp. 1996).
11. S.C. Code Ann. § 12-21-2791 (Supp. 1996) limits cash payouts for credits earned for
free games during any twenty-four-hour period to no more than $125.
12. Commercial speech is entitled to less protection under the First Amendment. The
four-part Central Hudson test governs whether commercial speech is protected by the First
Amendment. Greater New Orleans Broadcasting Assoc. v. U.S., 69 F.3d 1296 (5th Cir. 1995).
13. Commercial speech involves an "expression related solely to the economic interests
of the speaker and its audience" and do "no more than propose a commercial transaction." Greater
New Orleans Broadcasting, supra. (citing Virginia Pharmacy Bd. v. Virginia Citizens Consumer
Council, 425 U.S. 748 (1976)).
14. According to Central Hudson, in order for commercial speech to be protected by the
First Amendment:
"[I]t at least must concern lawful activity and not be misleading.
Next, it must be determined whether the asserted governmental
interest to be served by the restriction on commercial speech is
substantial. If both inquiries yield positive answers, it must then be
decided whether the regulation directly advances the governmental
interest asserted, and whether it is not more extensive than is
necessary to serve that interest."
15. The advertising involved here is of lawful activity. However, this advertising does not
satisfy the first prong of the Central Hudson test because it is misleading.
16. The second prong of the test is satisfied because South Carolina's asserted
governmental interest is substantial. The current interest the restriction now serves is the proper
factor to consider. Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 71-73 (1983). In addition,
the State may readjust its views and emphases in light of current knowledge of its governmental
interest. Doe v. Bolton, 410 U.S. 179, 190-191 (1973).
One of South Carolina's asserted interests is discouraging public participation in commercial
gambling, thereby minimizing the wide variety of social ills that have historically been associated with
such activities. This interest was found to be substantial in Greater New Orleans Broadcasting Ass'n
v. U.S., 69 F.3d 1296 (5th Cir. 1995). South Carolina also has a substantial interest in protecting its
youth from the constant bombardment of a message that wealth is available without hard work and
study. Additionally, the State has a substantial interest in protecting consumers from the aggressive
and misleading advertising that winning is easy and that one can change his or her lifestyle merely by
taking a chance. South Carolina also has a substantial interest in reducing the growth of pathological
gambling. Pathological gamblers lose everything they own, and often commit crimes in order to raise
money to fuel their sickness. Finally, the Court in Posadas de Puerto Rico Assocs. v. Tourism Co.
of P.R., 478 U.S. 328, 341 (1986) found that:
[E]xcessive casino gambling among local residents . . . would produce serious
harmful effects on the health, safety and welfare of the Puerto Rican citizens, such as
the disruption of moral and cultural patterns, the increase in local crime, the fostering
of prostitution, the development of corruption, and the infiltration of organized crime.
The Court further stated that:
We have no difficulty in concluding that the Puerto Rico Legislature's interest in the health, safety, and welfare of its citizens constitutes a "substantial" governmental interest.
The above-stated findings by the Court were not overruled by 44 Liquormart v. Rhode Island,
116 S. Ct. 1495 (1996). In addition, the Court in Reyelt et al. v. S.C. Tax Comm'n, C.A. No. 6-93-1491-3 (D.S.C. Nov. 15, 1993) at p. 10 found that South Carolina had "shown a substantial
government interest in banning advertising by video game machine operators." The Court found that
gambling by South Carolina residents would have the same deleterious effects that were feared by
the legislature of Puerto Rico, and reduction of demand for gambling was a substantial interest.
17. The third prong that must be satisfied is whether the restriction directly advances the
governmental interest asserted, and does so "to a material degree." Edenfield v. Fane, 507 U.S. 761,
771 (1993). The Court in Reyelt found that the restriction directly advanced South Carolina's
asserted governmental objective of reducing the demand for playing these machines among South
Carolinians. Here, the State established through expert testimony that there is a direct relationship
between advertising and the amount of gambling, that the prohibition against advertising will preclude
the growth in gambling in general, and will significantly minimize the increase in growth of
pathological gamblers in South Carolina. A reduction in gambling growth will materially meet South
Carolina's stated interests. In Greater New Orleans at 1301 the Court stated "It is axiomatic that the
purpose and effect of advertising is to increase consumer demand." The Department met its burden
of showing that the ban on advertising directly advances the State's interests, and does so to a
material degree.
18. South Carolina is entitled to the relaxed fourth prong of Central Hudson for two
reasons. First, South Carolina has not entirely prohibited the dissemination of these commercial
messages. See 44 Liquormart at 1507. S.C. Code Ann. § 12-21-2804(B) (Supp. 1995) only
prohibits the person who maintains a place or premises for the operation of machines from
advertising. Others may advertise the playing of machines with impunity. Also, even the person who
maintains the premises may advertise his or her business as long as the video poker machines are not
advertised. The second reason that the ban is entitled to the relaxed prong is that one stated
governmental interest is to protect consumers from aggressive gambling advertising that depicts easy
riches or something for nothing that has the potential to exert undue influence over consumers,
especially those in the lower income brackets that can least afford gambling. See 44 Liquormart at
1507.
19. The relaxed fourth prong is that there must be a reasonable fit between the abridgment
of speech and that stated interest. South Carolina has met this burden. The ban on advertising is not
complete. Businesses can advertise, they just can't advertise the playing of machines, which has been
shown through expert testimony to be harmful. The purpose of advertising is to create demand, and
to entice people to try a product. Testimony has shown that for many, financial ruin and significant
harm will result from trying the product at issue here. The prohibition against advertising will keep
many who would otherwise try the product from doing so. This alone makes the fit reasonable and
satisfies the forth prong.
20. Even if the State had to satisfy the strict fourth prong test, the prohibition against
advertising is not more extensive than necessary to serve the asserted State interests. Only the party
who would be most likely to engage in deceptive advertising is barred. In addition, other less
intrusive methods will not serve the stated interests. Education could not be efficiently dispersed, and
has not shown to be effective with pathological gamblers. Increasing taxes, increasing prices, or
changing the odds to make it harder for the gambler to win would not deter the compulsive gambler,
and would merely increase the harmful effects of gambling.
21. The Administrative Law Judge Division has the authority to determine whether S.C.
Code Ann. § 12-21-2804 (B) (Supp. 1996) is constitutional. According to S.C. Code Ann.
§1-23-630 (Supp. 1996):
Each of the law judges of the division has the same power at chambers or in
open hearing as do circuit court judges, and to issue those remedial writs as are
necessary to give effect to its jurisdiction.
A circuit court judge has the authority to declare a statute unconstitutional. Therefore, an
administrative law judge has the authority to do so as well. However, it is well settled that a statute
enacted by the legislature is presumed constitutional and the party attacking the statute bears the
burden of proving its unconstitutionality beyond a reasonable doubt. Nichols v. S.C. Research Auth.,
290 S.C. 415, 351 S.E.2d 155 (1986). The burden requires the party attacking constitutionality to
" . . . negative every conceivable basis which might support it." N. Charleston Land Corp. v. N.
Charleston, 281 S.C. 470, 316 S.E.2d 137 (1984) citing Lehnhausen v. Lake Shore Auto Parts Co.,
410 U.S. 356, 364, 93 S. Ct. 1001, 1006, 35 L. Ed. 2d 351 (1973) (quoting Madden v. Kentucky,
309 U.S. 83, 88, 60 S. Ct. 406, 408, 84 L. Ed. 590 (1940)).
Furthermore, one attacking the constitutionality of a statute must meet this burden even where
a statute allegedly violates First Amendment rights. See City of Beaufort v. Baker, 315 S.C. 146, 432
S.E.2d 470 (1993) (ordinance would not be presumed void even though its language raised
substantial constitutional issues). Consequently, before section 12-21-2804(B) may be declared
unconstitutional, the Respondents bear the burden of proving its unconstitutionality "beyond a
reasonable doubt" and the burden requires the Respondents to " . . . negative every conceivable basis
which might support it." N. Charleston Land Corp. v. N. Charleston supra. Respondents failed to
meet this burden.
22. The Department has fully met its burden established by Central Hudson and 44
Liquormart. I, therefore, conclude that S.C. Code Ann. § 12-21-2804(B) (Supp. 1996) does not
violate the requirements of the First Amendment to the Constitution.
23. It is a generally recognized principle of administrative law that the fact finder has the
authority to impose an administrative penalty after the parties have had an opportunity to have a
hearing and be heard on the issues. See Ohio Real Estate Comm'n v. Aqua Sun Investments, 655
N.E. 2d 266 (Ohio 1995); Shadow Lake of Noel, Inc. v. Supervisor of Liquor Control, 893 S.W. 2d
835 (Mo. App. S.D. 1995); Matter of Henry Youth Hockey Ass'n, 511 N.W. 2d 452 (Minn. App.
1994); Vermont Agency of Natural Resources v. Duranleau, 617 A.2d 143 (Vt. 1992); City of
Louisville v. Milligan, 798 S.W. 2d 454 (Ky. 1990); Com., Dept. of Transp. v. Slipp, 550 A.2d 838
(Pa. 1988); Dept. of Transp. v. Miller, 528 A.2d 1030 (Pa. 1987); State Police v. Cantina Gloria's,
639 A. 2d 14 (Pa. 1994).
Prior to governmental restructuring, a commission sitting in its adjudicatory capacity imposed
penalties for violations of statutory provisions its agency administered. In its capacity as the fact-finder, the Tax Commission would conduct an adjudicatory hearing in all contested cases arising
under Title 12 of the South Carolina Code, and would render an order containing findings of fact and
conclusions of law. As the fact-finder, it was the commission's prerogative "to impose the
appropriate penalty based on the facts presented." Walker v. South Carolina ABC Comm'n, 305 S.C.
209, 407 S.E.2d 633, 634 (1991). With the advent of restructuring and the abolition of the Tax
Commission, however, the Administrative Law Judge Division was given the authority to hear "all
contested cases, as defined by Section 1-23-310 and as previously considered by the three [Tax]
commissioners. . . ." S.C. Code Ann. §12-4-30(D) (Supp. 1996). The Administrative Law Judge,
as the current fact-finder, must also impose a penalty based on the facts presented at the contested
case hearing. As parties are entitled to present evidence on all issues arising out of the contested
agency action, it follows that the tribunal responsible for conducting the contested case proceedings
as mandated by the legislature must have the authority to decide the issues based on the facts
presented and make the final decisions on all the issues, including the appropriate penalty.
ORDER
Based upon the Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that a fine of $2,500 is imposed upon the Respondent, Video Gaming
Consultants, Inc. and a fine of $500 is imposed upon the Respondent, Slots of Fun, Inc.
AND IT IS SO ORDERED.
___________________________
Ralph King Anderson, III
Administrative Law Judge
Columbia, South Carolina
March 26, 1997 |