SC Administrative Law Court Decisions

This matter comes before me upon request for a Hearing by the Respondents after being cited for violating S.C. Code Ann. § 12-21-2804(A)(Supp. 1996). The South Carolina Department of Revenue ("Department") contends that the Respondents operated more than five (5) video poker machines in a "single place or premises." A Hearing was held before the Administrative Law Judge Division on June 30, 1997.

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 evidence:

1. Legal notice of the time, date, place and subject matter of the Hearing was given to the Petitioner and the Respondents.

2. The Department's agents conducted an inspection at the "Coastal Mart" located at 1609 Leesburg Road, Columbia, South Carolina on June 14, 1996. The game rooms located in Coastal Mart were operated by Dinish Bavishi. After the inspection, the Department's agents issued a violation report against Mr. Bavishi charging him with operating in violation of S.C. Code Regs. § 117-190 (Supp. 1996) by not having "at least one separate employee on the premises during business hours."

3. The Respondents' location was a convenience store with two rooms located in the back of the store. Those two rooms, Coastal Mart Rooms 1 and 2, are operated as video game businesses. At the time of the inspection, both of the game rooms were open and the machines in these rooms were on and operational. Each game room contained five (5) Class III video game machines.

4. The only employee on the premises of Coastal Mart was one cashier located at the cash register in the convenience store of the location. There were no employees located on the premises of Room 1 or 2.

5. The above game rooms had a retail sales tax license issued to Nasib, Inc. The Class III machine licenses were all purchased by Great Games, Inc. The following Class III video game machine licenses were located in the respective game rooms:

Room 1: Room 2:

44616 44599

44618 44604

44619 44624

44628 44671

44637 44703

6. The Respondent did not have separate electric utility meters for the game rooms as required by Regulation 117-190.

7. I find the Respondent Dinish Bavishi, d/b/a Coastal Mart Room 1 and 2, was in violation of the Video Game Machines Act for failing to have at least one separate employee on each of the game room premises during business hours and for failing to have separate utility meters.

8. The Department seeks the imposition of a Five Thousand ($5,000.00) Dollar fine against each of the Respondents, revocation of the machine permits and the restriction that no permit be issued for the Respondents' location for six months. The Respondents Danish Bavishi, Bert Patel, Sam Patel, and Janak Naik did not appear at the hearing to present any defense. I find that the appropriate penalty in this case is a Two Thousand Five Hundred ($2,500.00) Dollar fine for each violation against Dinish Bavishi and revocation of the machine licenses in game rooms 1 and 2.

Based upon the 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. Code Ann. § 1-23-320 (Supp. 1996).

2. The Department contends that the Respondents violated S.C. Code Ann. § 12-21-2804(A)(Supp. 1996). That section provides:

After July 1, 1994, the commission [Department] may not issue nor authorize to be maintained any licenses or permits for more than five machines authorized under Section 12-21-2720(A)(3) at a single place or premises.

3. Machines licensed under Section 12-21-2720(A)(3) include video games with a 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. 1996).

4. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) states that the penalty for failing to comply with the maximum number of machines in a "single place or premises" is the revocation of the licenses of machines located in the establishment.

5. S.C. Code Ann. § 12-21-2804(F) (Supp. 1996) states that a person who violates Section 12-21-2804(A) may be fined up to Five Thousand ($5,000.00) Dollars.

6. The Video Game Machines Act ("Act") does not define the term "single place or premises."

7. The Department contends that the Respondents violated S.C. Code Ann. § 12-21-2804(A)(Supp. 1996). Section 2804(A) prohibits the operation of more than five video game machines authorized under S.C. Code Ann. § 12-21-2720(A)(3) at a "single place or premises." However, the Video Game Machines Act does not define the term "single place or premises." On June 23, 1995, 27 S.C. Code Regs. 117-190 (Supp. 1996) became effective. It 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 fire walls 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 fire walls as defined and required above, the Department must review all the facts and circumstances to determine if each area in reality constitutes a single place 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 separate sales tax licenses? A positive answer to these four questions is required for each area to be considered a "single place or premise" for purposes of the Video Game Machines Act.

8. The Department contends that the Respondents violated Regulation 117-190 by failing to maintain an employee in each business. Regulation 117-190 requires that each business must have a separate employee on the premises while the business is open. The cardinal rule of statutory interpretation is to ascertain and effectuate the legislative intent wherever possible. Bankers Trust of South Carolina v. Bruce, 275 S.C. 35, 267 S.E.2d 424 (1980). "Full effect must be given to each section of a statute, giving words their plain meaning, and, in the absence of ambiguity, words must not be added or taken away." Hartford Accident and Indem. Co. v. Lindsay, 273 S.C. 79, 254 S.E.2d 301, 304 (S.C. 1979). Thus, the phrase "on the premise" presumptively must have meaning. Therefore, the employees of a video poker business must be sufficiently connected to an open video game room as to indicate that each game room that is open for business has a specific employee assigned to work solely in that room.

9. Under Section 12-21-2804(A), a license on a video game machine must be revoked by virtue of its misuse under the Act, regardless if the actual violator is the licensee, machine owner, or lessee. However, a monetary fine under Section 12-21-2804(F) may only be imposed on the actual person directly involved in the violation of Section 12-21-2804(A). In this case, the Department presented sufficient evidence only to establish that the operator of the location was directly involved in violating the Act. The Department did not present sufficient evidence to warrant the imposition of a fine against Respondent Great Games, Inc.

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

ORDERED that the licenses listed in Findings of Fact paragraph 5 are revoked, and a fine of Two Thousand Five Hundred ($2,500.00) Dollars is imposed Dinish Bavishi for each violation, resulting in a total fine of Five Thousand ($5,000) Dollars.

IT IS FURTHER ORDERED that no permits shall be issued for any Class III machine to be operated in any of the above game rooms for a period of six (6) months from the date of this Final Decision.

Columbia, South Carolina

August 13, 1997