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. C. Dwight Cox, Pee Dee Amusements, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
C. Dwight Cox, Pee Dee Amusements, Paul D. Sanders, d/b/a Minnesoda Fats, d/b/a Dealers, d/b/a Dealer's Choice
 
DOCKET NUMBER:
96-ALJ-17-0538-CC

APPEARANCES:
Carol I. McMahan, Esquire, for Petitioner

G. Scott Bellamy, Esquire, for Respondent
 

ORDERS:

ORDER AND DECISION

STATEMENT OF THE CASE

This matter came before me pursuant to a citation issued by the Department of Revenue against the respondents C. Dwight Cox, Pee Dee Amusements, and Paul D. Sanders for violating S.C. Code Ann. § 12-21-2804 (Supp. 1996), by allowing the use of more than five Class III licenses acquired pursuant to S.C. Code Ann. Section 12-21-2720(A)(3) (Supp. 1996) for machines in a "single place or premises," as defined in 27 S.C. Code Regs. 117-190 (Supp. 1996). A citation was also issued against C. Dwight Cox and Pee Dee Amusements for failing to affix owner/operator identification to Class III machines in violation of S.C. Code Ann. § 12-21-2748 (Supp. 1996). After notice to the parties, a hearing was conducted on May 9, 1997.

Any issues raised or presented in the proceeding or hearing of this case not specifically addressed in this Order are deemed denied. ALJD Rule 29(B).

FINDINGS OF FACT

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

1. On June 13, 1996, two revenue officers of the South Carolina Department of Revenue made a site inspection of the businesses located at 210 Laurel Street and 1029 Third Avenue in Conway, South Carolina. This structure has two separate entrances resulting in the separate addresses listed above. They gathered information, took pictures, and obtained relevant documentation for enforcement of the Video Game Machines Act.

2. The retailers at the location on that date were "Minnesoda Fats," "Dealers," and "Dealer's Choice." Each retailer had a separate retail license for operation within the structure. The retail licensee for all three businesses is Paul D. Sanders.

3. "Minnesoda Fats" contained five Class III licenses and video game machines. "Dealers" contained five Class III licenses for one multi-player machine on which five persons may play. "Dealer's Choice" also contained five Class III licenses for one multi-player machine on which five persons may play.

4. Respondents have admitted that C. Dwight Cox was the owner of nine (9) Class III machines at the location. These machines bear the following license numbers: "Dealers" - #035121; "Minnesoda Fats" - #034913, 034917, 034914; "Dealer's Choice" - #035119, 035743, 035744, 035745, 035746. The expiration date for the licenses was May 31, 1997.

5. Respondents have admitted that Pee Dee Amusements, a partnership, was the owner or operator/licensee for six (6) of the Class III machines at the location. These machines bear the following license numbers: "Dealers" - #039765, 039746, 039749, 039766; "Minnesoda Fats" - #035689, 039763. The expiration date for these licenses was May 31, 1997.

6. At the time of the inspection, all the video poker machines in the three businesses were turned on and available for play. There were no customers in any of the rooms.

7. At the time of the inspection, there were three employees on the premises.

8. Although the facts are disputed, the doors leading to the rooms were unlocked and open and none of the employees were located in the rooms in which the machines were located at the time the revenue officers inspected.

9. Allegations by the respondents that there were "Closed" signs hung near the bottom on the glass doors are not supported by independent evidence. Two of the photographs clearly show that there were no "Closed" signs attached to the glass doors leading into the rooms. The third photograph does not show the very bottom of the door, but what is shown does not reveal the existence of any "Closed" sign on the door.

10. The Respondents do not claim that the rooms were closed or not open for business at the time the inspection was conducted.

11. The photographs taken by the revenue officers show the condition of the doors leading into the rooms and the Class III machines in those rooms. The photographs reveal that the doors to two of the rooms were open. The photograph of the remaining room shows one door open and one door closed. In all rooms, the machines were on.

12. The photographs do not depict the interior of the rooms.

13. The employee for Minnesoda Fats was located behind the bar at the time of the inspection.

14. According to Respondents, Minnesoda Fats retail license included the room were five Class III licenses were located, the bar and restaurant, the pool tables, and the remaining "common" area.

15. Respondents have admitted that at the time of the inspection the video poker machines in "Minnesoda Fats" and "Dealer's Choice" did not have owner/operator identification affixed to them. See Petitioner's Exhibit #8 "Response to Requests for Admission".

16. On prior occasions when the revenue officer visited the location, the machines had owner/operator identification affixed to them and the location was in compliance with all of the requirements of the Video Game Machines Act.

17. Based upon the information gathered on June 13, 1996, the Department issued a citation against the respondents C. Dwight Cox, Pee Dee Amusements, and Paul D. Sanders for permitting the use of more than five Class III licenses for machines in a single place or premises in violation of Section 12-21-2804(A) and 27 S.C. Code Regs. 117-190, by failing to have employees present in the game rooms.

18. The respondents were also issued a citation by the Department for failing to affix owner/operator identification to Class III machines in violation of S.C. Code Ann. § 12-21-2748 (Supp. 1996).

CONCLUSIONS OF LAW

Based upon the foregoing Findings of Fact, I conclude, as a matter of law, the following:

A. Violation of the Statute

1. Pursuant to S.C. Code Ann. §§ 12-60-460 and 12-60-1320 (Supp. 1996) and Chapter 23 of Title I of the 1976 Code, as amended, the South Carolina Administrative Law Judge Division has jurisdiction in this matter.

2. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See S. C. Cable Tel. Ass'n. v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). Conflicts in the testimony were resolved in favor of the Department based upon the credibility of the witnesses and the weight assigned to their testimony.

3. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) prohibits the operation of more than five machines authorized under Section 12-21-2720(A)(3) at a single place or premises. A machine that has multi-player station is required to have each station licensed and each licensed station is considered to be a separate machine for determining the number of licensed machines under Section 12-21-2804. S.C. Code Ann. § 12-21-2720(C) (Supp. 1996).

4. 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(A) (Supp. 1996).

5. Pursuant to S.C. Code Ann. § 12-21-2798 (Supp. 1996), the Department is authorized to promulgate regulations to assist in the administration and enforcement of the Video Game Machines Act.

6. 27 S.C. Code Regs. 117-190 defines "single place or premises" for purposes of interpreting the Video Game Machines Act, including Section 12-21-2804(A). It provides:

A "single place" or premises means a structure surrounded by exterior walls or firewalls consistent with the requirements of the applicable building code (or where no building code is applicable, a one hour rated firewall), provided such exterior walls and firewalls may not have any windows, doors or other openings leading to another area where video game machines are located.

If a structure surrounded by exterior walls has two or more areas where video game machines are located, each surrounded by exterior walls or firewalls as defined and required above, the Department must review all the facts and circumstances to determine if each area in reality constitutes a single space or premise for video game machines. In determining whether each entity is in fact a single place or premises, the Department of Revenue will consider the following factors: (1) Does each entity or business have a separate electric utility meter? (2) Does each entity or business have at least one separate employee on the premises during business hours? (3) Does each entity or business have a separate local business license where required? (4) Does each entity or business have a separate state sales tax license? A positive answer to these four questions is required for each area to be considered a "single place or premise" for the purposes of The Video Game Machines Act.

7. With respect to the employee requirement, the regulation requires that each individual game room containing the Class III licenses and machines, have a separate employee working in that room at all times during business hours. If a game room is accessible to customers and no employee is present in that room, the room is being operated in violation of Section 12-21-2804(A). An employee working in a common area or anywhere else outside the game rooms is not considered to be "on the premises" of the game room. See South Carolina Department of Revenue and Taxation v. Mickey Stacks, 95-ALJ-17-0742-CC (March 8, 1996).

8. In this case, the evidence indicates that there were three employees in the common area at the time of the inspection, and no employees in the game rooms. Furthermore, the evidence indicates that the premises were open for business at the time of the inspection. The machines were plugged in and available for play, and the doors to the game rooms were open.

9. The Department's policy with respect to the enforcement of Reg. 117-190 has been that a structure with multiple rooms containing Class III video game machines is required to have an employee in the room where the machines are located.

10. The Respondents violated Section 12-21-2804(A) by failing to have an employee present in each game room during business hours.

11. S.C. Code Ann. § 12-21-2748 (Supp. 1996) requires that a person who owns or operates a machine authorized under Section 12-21-2720 must have affixed to it information identifying the owner or operator. "The identification must be placed on an area of the machine which is visible for inspection purposes. This identification is a condition precedent before the machines may be operated on location." If the machine is accessible to customers and no owner/operator identification is affixed to the machine, the machine is being operated in violation of Section 12-21-2748.

12. In this case, the evidence indicates, and Respondents have admitted, that the machines failed to have the owner/operator identification attached. The evidence also indicates that the machines were plugged in and available for play.

13. The existence of the identification on the machines during a previous inspection is not sufficient to comply with the law during the current inspection. Even though there was a procedure in place to check the machines each day, at the time of the inspection there was no identification on the six machines. The identification is required before the machines are operated on location.

14. The Respondents, C. Dwight Cox and Pee Dee Amusements, violated Section 12-21-2748 by operating video game machines without having the owner/operator identifications attached.

B. Penalty

15. The penalty for failure to comply with the limitation on the number of machines permitted within a "single place or premises" is the mandatory revocation of the licenses of machines located in the establishment. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996). In addition, no license may be used for the operation of a machine in an establishment in which a license has been revoked for a period of six months from the date of revocation. Id.

16. Section 12-21-2804(F) states that a person who violates Section 12-21-2804(A) may be fined up to five thousand dollars ($5,000.00).

17. As the finder of fact, it is the administrative law judge's prerogative "to impose an appropriate penalty based on the facts presented." Walker v. S.C. ABC Comm 'n, 305 S.C. 209, 211, 407 S.E.2d 633, 634 (1991). In the present case, the administrative law judge has the authority to establish the monetary fine within the allowable range provided for by Section 12-21-2804(F). S.C. Code Ann. § 12-4-30(D) (Supp. 1996).

18. Pursuant to S.C. Code Ann. § 12-21-2738, "A person who fails, neglects, or refuses to comply with the terms and provisions of this article [relating to the licensing of coin-operated games and devices] ... is subject to a penalty ... . If the violation under this section relates to a machine licensed pursuant to Section 12-21-2720(A)(3), the applicable penalty amount is two thousand five hundred dollars, no part of which may be suspended ... ."

19. The Respondents, C. Dwight Cox and Pee Dee Amusements neglected to have the owner/operator identification attached to six Class III machines licensed pursuant to Section 12-21-2720(A)(3) as required by Section 12-21-2748, thereby subjecting them to a $2500 penalty for each machine.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby

ORDERED that the Department of Revenue properly issued a citation against Respondents C. Dwight Cox, Pee Dee Amusements, and Paul D. Sanders for violation of S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Regs. 117-190. The licenses of the video poker machines located in "Minnesoda Fats," "Dealers," and "Dealer's Choice" on June 13, 1996, are hereby revoked and the Respondents are ordered to pay a monetary fine of $5,000.00.

IT IS FURTHER ORDERED that no licenses shall be used for the operation of the Class III machines in the subject premises for a period of six (6) months from the date of this Order.

IT IS FURTHER ORDERED that the Department properly issued a citation against Respondents C. Dwight Cox and Pee Dee Amusements for a violation of S.C. Code Ann. § 12-21-2748 (Supp. 1996) and are ordered to pay a monetary fine in the amount $15,000.00 to the Department.

AND IT IS SO ORDERED.






ALISON RENEE LEE

Administrative Law Judge

June 23, 1997.

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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