ORDERS:
FINAL DECISION
STATEMENT OF CASE
This matter comes before me upon request for a hearing by the Respondent 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 Respondent operated more than five video poker machines
in a "single place or premises." A hearing was held before the Administrative Law Judge Division
on May 28, 1997.
I find the Respondent violated Section 12-21-2804 (A).
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 evidence:
1. Notice of the time, date, place and subject matter of the Hearing was given to the Petitioner
and the Respondent.
2. The Department issued a violation report against Darrell Starnes/Gamexpress Amusements
on June 13, 1996, charging Starnes with having more than five machines in a "single place or
premises." The Department later amended the violation to include Mr. Quick Foods, Inc., and at the
hearing, the parties agreed to remove Darrell Starnes as a party. The Department offered no evidence
as to whether each business had a separate electric meter, business license or a State sales tax license.
Rather, the sole issue for determination is whether the Respondent violated S.C. Code Regs. § 117-190 (Supp. 1996) by not having "at least one separate employee on the premises during business
hours."
3. On June 13, 1996, Revenue Officer Suzy McConnell, conducted an investigation of the
business known as Chances located at 2278 Savannah Highway, Charleston, South Carolina. Within
the structure of Chances were five video game rooms operated as Red Chips; High Roller; Jack
Potts; Dubble Down; and Annie Up.
4. Game rooms Red Chips, High Roller, and Dubble Down were open for business. However,
I find that the Department failed to prove that game rooms Annie Up and Jack Potts were open.
Though the lights and machines were on in the rooms, there were no customers present in either
room and a small sign was posted on the door frames of both Annie Up and Jack Potts stating that
the rooms were closed. Furthermore, I find Darrell Starnes's testimony persuasive in this case that
the doors were open only to allow air flow to the central air conditioning unit.
5. Each of the three open game rooms contained five video game machines. The fifteen (15)
Class III machines licences located in the above businesses were owned by Mr. Quick Foods, Inc.,
and the businesses were operated by Mr. Quick Foods, Inc. The following video game machine
licenses were located in the respective game rooms:
High Roller: Red Chips: Dubble Down: 038906 038858 038892
038847 038902 038891
3807549 3807550 038840
038846 040114 038876
038854 038859 038855
6. There were no employees on the premises of any of the open game rooms. There was one
employee working at the payout center in a commons area, but that employee had not been assigned
to any specific premises.
7. The Department seeks a Five Thousand ($5,000.00) Dollar assessment against Mr. Quick
Foods, Inc.
8. The Respondent failed to have employees assigned to service the open game rooms. In fact
though the Respondent had three open game rooms, there was only one employee upon the premises.
I find therefore that the Respondent violated S.C. Code Ann. § 12-21-2804(A) by failing to have "at
least one separate employee" in each of the open game rooms. I further find that the appropriate fine
in this case is a Two Thousand ($2,000.00) Dollars fine for each violation.
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. Code Ann. § 1-23-320 (Supp. 1996).
2. The Department contends that the Respondent 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 Dollars.
6. The Video Game Machines Act ("Act") does not define the term "single place or premises."
7. The Honorable G. Ross Anderson held that the term "single place or premises" is
"sufficiently defined and susceptible of a common and ordinary meaning to provide a person of
ordinary intelligence a reasonable notice of the prescribed conduct." Reyelt et al. v. South Carolina
Tax Commission, CA No. 6: 93-1491-3 (D.S.C. July 5, 1994). On June 23, 1995, S.C. Code Regs.
117-190 (Supp. 1996) became effective. It provides as follows:
The Video Game Machines Act, found in Article 20, Chapter
21 of Title 12, limits the number of machines that may be located in
a "single place" or "premises."
A single place or premises must be a fixed location. It does
not include moving property such as a boat or a train, unless such
property is permanently affixed to a specific location.
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 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 have at least one 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
purposes of The Video Game Machines Act.
8. 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. In this case, the Respondent testified
that the employee at the location was not specifically assigned to any of the open businesses. 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. I find that since the Respondent's video poker businesses did not have employees
specifically assigned to each open game room, the above three game rooms were not single places
or premises.
9. 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 administered by the Commission's
subordinate agency. 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. Parties are entitled to present evidence
on all issues arising out of the contested agency action and the tribunal responsible for conducting
the contested case proceedings has 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 the licenses listed in Finding of Fact number five are revoked, and a fine
of Two Thousand ($2,000.00) Dollars is imposed for each violation upon the Respondent, resulting
in a total fine of Six Thousand ($6,000.00) Dollars.
___________________________
Ralph King Anderson, III
Administrative Law Judge
Columbia, South Carolina
June 19, 1997 |