SC Administrative Law Court Decisions

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 (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 primary issue for determination is whether the Respondents failed to have at least one separate employee on each of the premises during business hours.

After notice was sent to each of the parties, a hearing on this matter was held before the undersigned Administrative Law Judge on January 5, 1998. Based upon the relevant and probative evidence and the applicable law, I find Respondents violated R. 117-190 and

§ 12-21-2804. The ten Class III machine licenses in the subject rooms are hereby revoked. No machines may be operated in the game rooms for a period of six (6) months, and a fine of Four Thousand Five Hundred Dollars ($4,500) is imposed upon Casino Games, Inc.

I find the following by a preponderance of the:

1. The Administrative Law Judge Division has personal and subject matter jurisdiction in this case.

2. Notice of the time, date, place, and subject matter of the hearing was given to Respondents and DOR.

3. On June 14, 1996, DOR Agents David Dean and Nancy Carter conducted an inspection of 11 North Ocean Boulevard, Surfside Beach, South Carolina.

4. The location is a mall-type arrangement with two video game rooms and a common area.

5. One employee was located in the common area.

6. Both game rooms were open and the machines available for play. Each game room contained five Class III video game machines.

7. No employees were present in either game room.

8. The following video game machine licenses were affixed to machines located in the respective game rooms.

Pierview: 041484, 041478, 041481, 041480, 3808615

Beachcomber: 041479, 041483, 041477, 041482, 3808614

9. Respondent J.M. Brown Amusements Co., Inc. was the machine licensee for all ten game machines.

10. Respondent J.M. Brown Amusements Co., Inc. maintained no control, management or supervision of the location or the employees.

11. Respondent Casino Games, Inc. held a retail license (Lic. No. 026-410027) for the Pierview game room.

12. Respondent Casino Games, Inc. held a retail license (Lic. No. 026-41001-8) for the Beachcomber game room.

13. Casino Games, Inc. is the retail operator of Pierview and Beachcomber game rooms, with exclusive management, control and supervision of the location and the employees.

14. The Regulatory Violation and Proposed Assessment Report was left by Agents Dean and Carter with Hannah Jacobs, an employee of Casino Games, Inc., at approximately 10:45 a.m., citing J.M. Brown Amusements Co., Inc. with a violation of § 12-21-2804(A) and

R. 117-190 for failing to have an employee on a single place or premises.

15. The Final Agency Determination citing J.M. Brown Amusements Co., Inc. and Casino Games, Inc. with a violation of §12-21-2804(A) was issued on April 15, 1997. The Final Agency Determination sought a $5,000 fine from each Respondent, revocation of ten machine licenses and asked that no licenses be issued at the location for a period of six months.

16. On April 22, 1997, Respondents requested a contested case hearing.

Based upon the 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 94-4 Op. Att'y Gen. 21 (1994).

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 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 § 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 fire walls 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.

. . . .

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.

5. In construing statutes, the language used should be given its plain and ordinary meaning without resort to subtle or forced construction to limit or expand the statute's operation. Home Health Serv., Inc. v. South Carolina Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994). Where terms of a statute are clear and unambiguous, they must be applied according to their literal meaning. Medlock v. 1985 Ford F-150 Pick Up, 308 S.C. 68, 417 S.E.2d 85 (1992). "[A] statute should be so construed that no word, clause, sentence, provision or part shall be rendered surplusage, or superfluous . . . ." 82 C.J.S. Statutes § 346 (1953); See also Savannah Bank & Trust Co. of Savannah v. Shuman, 250 S.C. 344, 157 S.E.2d 864 (1967).

6. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) expressly authorizes DOR 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.

7. The trier of fact must weigh and pass upon the credibility of evidence presented. See S.C. Cable Television 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 McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Mann v. Walker, 285 S.C. 194, 328 S.E.2d (Ct. App. 1985).

8. Respondent Casino Games, Inc. failed to have "one separate employee" in Pierview during business hours, in violation of the requirement set forth in R. 117-190.

9. Respondent Casino Games, Inc. failed to have "one separate employee" in Beachcomber during business hours, in violation of the requirement set forth in R. 117-190.

10. 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).

11. Respondent Casino Games, Inc. 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).

12. Respondent J.M. Brown Amusements Co., Inc. did not violate the statute or regulations because the J.M. Brown Amusements Co., Inc. exercised no management, control or supervision of the location or the employees.

13. 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."

14. 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.

15. Under the facts of this case, a $4,500 fine, revocation of the ten machine licenses and a six-month prohibition on the use of machine licenses on the premises is reasonable.

16. Pursuant to ALJD Rule 29(B), any issues or motions raised at the hearing but not addressed in this Order are deemed denied.

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

ORDERED, that Respondent Casino Games, Inc. shall pay a fine in the amount of Four Thousand Five Hundred Dollars ($4,500) to DOR within fifteen (15) days of the date of this order.

IT IS FURTHER ORDERED that the ten (10) Class III video machine licenses in game rooms Pierview and Beachcomber are revoked.

IT IS FURTHER ORDERED that no video game machine licenses shall be utilized at Respondents' place of business for a period of six (6) months from the date of revocation of the licenses.

AND IT IS SO ORDERED.

__________________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

February 19, 1998

Columbia, South Carolina