ORDERS:
FINAL ORDER AND DECISION
This matter comes before me pursuant to S.C. Code Ann. § 12-4-30(D) and § 1-23-310 et
seq. (Supp. 1996), upon Respondents' request for a contested case hearing after being cited by
the South Carolina Department of Revenue (hereinafter referred to as "DOR") for administrative
violations of the Video Game Machines Act, S.C. Code Ann. § 12-21-2804(A) (Supp. 1996), and
27 S.C. Code Ann. Regs. 117-190 (Supp. 1996). The sole issue for determination is whether the
Respondents violated R. 117-190 by not having "at least one separate employee on the premises
during business hours." DOR contends that two game rooms were open and operational without
an employee present. Respondents dispute the allegations. A hearing of this matter was held
before the Administrative Law Judge Division on August 14, 1997. Based upon the relevant and
probative evidence and the applicable law, I find Respondents violated R. 117-190 and Section
12-21-2804. The ten machine licenses in the subject rooms are hereby revoked, and no machines
may be operated in the game rooms for a period of six months. Also, a fine of $2,000 is hereby
imposed.
DISCUSSION
It is undisputed that at the time of inspection on June 13, 1996, there were five
operational Class III video game machines located in One Stop 4, and five operational Class III
video game machines located in One Stop 5. It is also undisputed that both rooms were open for
business and that persons were playing the machines. DOR alleges that neither open room
contained an employee, as required by law. Respondent contends that a separate employee was
assigned to and stationed in each individual game room at the time of inspection and that an
additional employee was working at the payout counter in the common area.
The determination in this case is ultimately a question of witness credibility. Mr. Ward
was not present at the commencement of the inspection. The only eye witness testimony offered
at the hearing came from Revenue Officer Tillman and Christy Wilson, a One Stop Place
employee at the time of the inspection. Officer Tillman testified that she encountered two female
employees in the common area but no employees in either open game room. All persons in the
game rooms were playing the machines. Christy Wilson refuted the assertion that no employees
were in the game rooms, and Respondent pointed out that the revenue agents conducting the
inspection failed to take the common sense measure of inquiring in each game room as to the
identity of those inside and whether anyone in the respective game rooms was an employee.
There is no doubt the inspection could have been conducted more thoroughly and
professionally, with more information gathered. The testimony of Officer Tillman, however, is
sufficient to establish that the game rooms in question lacked the requisite employees at the time
of inspection, and I find her testimony more persuasive and convincing than that of Christy
Wilson. Accordingly, I find and conclude that One Stop 4 and One Stop 5, located at One Stop
Palace, Inc. at 4920 Highway 72, Waterloo, South Carolina were operated in violation of
S.C. Code Ann. § 12-21-2804(A).
FINDINGS OF FACT
By a preponderance of the evidence, I find:
- One Stop Palace, Inc., located at 4920 Highway 72, Waterloo, South Carolina, is owned
by Respondent T. Scott Ward and operates as a video gaming business in a mall-type
structure containing eight video gaming rooms.
- Respondent T. Ward Scott is the licensee and operator of Class III video game machines
located in the game rooms of One Stop Palace, Inc.
- On June 13, 1996, the Department's agents, Daphne M. Tillman and Vickie Fleming,
conducted an inspection of the One Stop Palace, Inc. video gaming business.
- The main entrance to One Stop Palace, Inc. opens into a common area, which contains a
payout counter.
- Two of the eight rooms, One Stop 4 and One Stop 5, were open for business at the date
and time of inspection. The other six rooms were closed and are not the subject of this
proceeding.
- The inspection included walking into the common area and the open game rooms, listing
the license numbers for machines located in the open game rooms, taking photographs of
the location, examining the business licenses, retail tax licenses, and utility meters for the
location, and talking to employees and the manager of the location.
- One Stop 4 and One Stop 5 each contained five(5) Class III video game machines owned
by T. Scott Ward.
- The following video game machine licenses were affixed to machines located in the
respective game rooms:
One Stop 4 One Stop 5
043983 043988
043982 043984
043986 043985
043987 043990
043989 043991
- At the time of inspection, Revenue Officer Daphne M. Tillman entered One Stop Palace,
and two female employees were observed at or near the payout counter in the common
area.
- At the time of the inspection, persons were in One Stop 4 or One Stop 5, all of whom
were playing the machines.
- At the time of the inspection, no employees were located on the premises of One Stop 4
or One Stop 5.
- Respondent T. Scott Ward was not on the premises when the Department agents arrived
to conduct the inspection, but he arrived prior to the conclusion of the inspection.
- As a result of her inspection, Revenue Officer Tillman issued a Regulatory Violation and
Proposed Assessment Report against One Stop Palace, Inc., citing Respondent with an
alleged violation of S.C. Code § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190
(Supp. 1996) for operation of more machines in a single place or premise without an
employee present in One Stop 4 and One Stop 5.
- Copies of the Violation Report were left with Mr. Ward.
- The Department seeks a $5,000 fine against T. Scott Ward as the licensee and a $5,000
fine against One Stop Palace, Inc. as the retail operator, for the violations.
- Respondents have never been cited for any other violations of the video Game Machines
Act.
- Notice of the time, date, place and subject matter of the hearing was given to the
Petitioner and the Respondents.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
- The Administrative Law Judge Division has jurisdiction to hear and decide this matter
pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1996) and S.C. Code Ann. § 1-23-320
(Supp. 1996).
- The Video Game Machines Act ("Act") which regulates video game machine activity in
South Carolina was enacted in 1993, became effective on July 1, 1993, and is codified at
S.C. Code Ann. §§ 12-21-2770, et seq. (Supp. 1996). The purpose of the Act is to
regulate the video game machines industry and to prevent large-scale casino type
gambling operations in the State of South Carolina. See Reyelt v. S.C. Tax Comm'n,
6:93-1491-3 and 6:93-1493-3 (U.S. Dist. Ct., Greenville, S.C., Nov. 15, 1993); See also
1994 Op. S.C. Att'y Gen. No. 94-21.
- S.C. Code Ann. § 12-21-2804(A) prohibits a person from applying for, receiving,
maintaining, or permitting to be used permits for the operation of more than five (5) Class
III machines at a single place or premises.
- 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996), promulgated by DOR, clarifies the
meaning of the phrase "single place or premises" as set forth in Section 12-21-2804(A).
The regulation provides in relevant part (emphasis added):
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 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 purposes of the
Video Game Machines Act.
- S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) expressly authorizes the Department to
enforce the provisions of this section and also provides that the penalty for exceeding the
maximum number of video game machines permitted in a single place or premises
requires the revocation of the licenses of machines located in the establishment.
- The trier of fact must weigh and pass upon the credibility of evidence presented. See
S.C. Cable Tel. Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586
(1992). The trial judge who observes a witness is in the best position to judge the
witness's demeanor and veracity and evaluate their testimony. See Mann v. Walker, 285
S.C. 194, 328 S.E.2d (Ct. App. 1985); Marshall v. Marshall, 282 S.C. 534, 320 S.E.2d 44
(Ct. App. 1984); McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v.
Peay, 260 S.C. 108, 194 S.E.2d 392 (1973).
- Respondents failed to have "one separate employee" in One Stop 4 and One Stop 5 at the
time of inspection, in violation of the requirement set forth in Regulation 117-190.
- Failing to satisfy one requirement is a sufficient ground constituting a violation of the
single place or premises requirements of S.C. Code Ann. § 12-21-2804(A) (Supp. 1996).
- Respondents violated S.C. Code Ann. § 12-21-2804 by operating video machines in two
locations which fail to meet all requirements of the "single place or premises" criteria set
forth in 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996).
- S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) further provides: "No license may be
issued for a machine in an establishment in which a license has been revoked for a period
of six months from the date of revocation."
- S.C. Code Ann. § 12-21-2804(F) (Supp. 1996) provides that a person who violates S.C.
Code Ann. § 12-21-2804(A) is subject to a fine of up to $5,000.
12. Because this is the first violation against Respondents and appears to be one of ignorance
rather than willfulness, a fine of $2,000 is reasonable.
13 Pursuant to ALJD Rule 29B, any issues or motions raised at the hearing but not addressed
in this Order are deemed denied.
ORDER
IT IS THEREFORE ORDERED that the following ten (10) video game machine
licenses owned by T. Scott Ward, located at 4920 Highway 72, Waterloo, South Carolina in the
business known as One Stop Palace, Inc. are revoked:
One Stop 4 One Stop 5
043983 043988
043982 043984
043986 043985
043987 043990
043989 043991
IT IS FURTHER ORDERED that no video game machine licenses shall be utilized in
game rooms One Stop 4 and One Stop 5 for a period of six months from the date of revocation of
the licenses.
IT IS FURTHER ORDERED that One Stop Palace, Inc. shall pay a fine of $2,000 to
the South Carolina Department of Revenue.
AND IT IS SO ORDERED.
_____________________________
STEPHEN P. BATES
ADMINISTRATIVE LAW JUDGE
September 2, 1997
Columbia, South Carolina |