ORDERS:
FINAL ORDER AND DECISION
This matter comes before me upon Respondents' request for a contested case hearing
after being cited by the South Carolina Department of Revenue (hereinafter referred to as
"DOR") for alleged administrative violations of S.C. Code Ann. § 12-21-2804(A) (Supp. 1996)
of the Video Game Machines Act and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996). The
primary issue for determination is whether Respondents failed to have "at least one separate
employee on the premises during business hours" in two video game rooms at 1699 Highway 17
North, North Myrtle Beach, South Carolina. DOR contends that the game rooms were each
open and operational without an employee present as required by law. Respondents challenge
the validity of R. 117-190 and dispute DOR's interpretation of the statute and regulation.
A contested case hearing in this matter was held in Columbia, South Carolina, on
December 16, 1997. Based upon the relevant and probative evidence presented at the hearing
and the applicable law, I find Respondents violated R. 117-190 and S.C. Code
§ 12-21-2804. Accordingly, the ten Class III machine licenses in the subject rooms are hereby
revoked. No Class III machines shall be operated in the respective game rooms for a period of
six (6) months. Respondents, Julian Adams, and Sevens Amusements, Inc., are each fined Five
Thousand Dollars ($5,000).
DISCUSSION
The material facts are not in controversy in this case. Respondents admit that no
employees were in either of the two subject game rooms at the time of the inspection of the
premises, but argue that an employee need not remain within the physical four walls of a game
room at all times to be in compliance with the law. Respondents claim that to require an
employee to be physically present in a game room is an overbroad and expanded interpretation
of R. 117-190. Rather, Respondents, citing dicta in South Carolina Department of Revenue v.
Great Games, Inc., Docket No. 96-ALJ-17-0204-CC (January 22, 1997), submit that if an
employee located outside of the game room, but in close enough proximity to serve the needs of
the customers in that game room, the employee meets the "at least one separate employee on the
premises during business hours" legal requirement.
I have consistently applied a bright line test in "single place or premises" cases in which
the issue is the presence of an employee. The language of the regulation imposes a requirement
of having a "separate employee on the premises." The language is not ambiguous and must be
taken in its literal and ordinary meaning. Lail v. Richland Wrecking Company, Inc., 280 S.C.
532, 313 S.E.2d 342 (Ct. App. 1984). To employ the rules of statutory construction to find that
"on the premises" allows an employee to be "away from the premises" violates the principle that
the rules of statutory construction are provided to remove doubt, never to create doubt. See 73
Am. Jur. 2d Statutes § 146, citing Englewood Water Dist. v. Tate, 334 So.2d 626 (Fla. App.
1976).
Section 12-21-2804(A) prohibits the operation of more than five Class III video game
machines at a single place or premises. DOR promulgated R. 117-190 to clarify the statutory
requirements of § 12-21-2804(A) and to assist in its implementation. Regulation 117-190
merely sets forth a four-prong test to determine whether a particular business location is a
"single place or premises" and provides that for a location to be considered a "single place or
premise" for purposes of the Video Game Machines Act, it must have: (1) a separate electric
utility meter; (2) at least one separate employee on the premises during business hours; (3) a
separate local business license where required; and (4) a separate State sales tax license.
In this case, where at least two interior structures exist with machines inside those
structures, each interior structure is a "video game area" under R. 117-190. A video game room
fails to be a "single place or premises" at which Class III machines may be legally operated if
the room does not have an employee physically within the four walls of the game room. An
employee cannot be on the premises of an identified space if the employee is physically
elsewhere. Accordingly, once the employee physically leaves the space of the video game area,
the employee is no longer "on the premises."
A court must not seek ways to rewrite statutes or regulations. To depart from the plainly
expressed meaning causes the tribunal to legislate rather than interpret since Athe wisdom of
legislation rests with the Legislature, and it is the province of the Courts to construe, not to
make, the laws . . . @ Creech v. South Carolina Pub. Serv. Auth., 200 S.C. 127, 146, 20 S.E.2d
645, 652 (1942). In short, an ALJ cannot add conditions to the "on the premises" language of
the regulation trying to provide exceptions that seek to improve upon what the General
Assembly has plainly promulgated. 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996) is a valid
regulation that neither expands nor adds to the statute.
The purpose of the regulation is to provide a high degree of certainty to defining a
separate place or premises. The very reason for the promulgation is that no statutory definition
was provided. In accordance with the purpose sought, the regulation adopts site specific
criteria. Indeed, the regulation counts walls, limits openings in the walls, prevents access from
one area to another, and even details the type of walls that can be used. Given the regulations's
site specific analysis, the most consistent view is that the plain language of "on the premises"
limits the employee to the physical space of the four walls. On the contrary, inconsistency with
the regulation results if "on the premises" requires examining whether the employee's line of
sight covers more than one area or whether the reason the employee is away is a proper reason.
In short, the regulation is site specific and requires that "on the premises" be within the four
walls of the area under review.
FINDINGS OF FACT
By a preponderance of the evidence I make the following Findings of Fact:
On January 21, 1997, a video gaming business known as "Mardi Gras" operated
at 1699 Highway 17 North, North Myrtle Beach, South Carolina, in a mall-type structure
containing six video gaming rooms and a common area.
SLED agent Pam Williamson entered the subject location at 1699 Highway 17
North and conducted an inspection of the premises.
Agent Williamson's inspection included examining each of the open game
rooms, playing video games in several of the game rooms, taking photographs of the location,
examining the wall construction, utility meters, business and sales tax licenses for the game
rooms, listing the owner information and license numbers for each of the machines in the game
rooms, drawing a diagram of the location's floor plan, and determining the number and location
of any employees for the open game rooms.
Upon inspection, four of the six video game rooms were open for business with
machines operational and available for play.
Of the four open game rooms, two game rooms, Mardi Gras and Lucky Seven
Art Gallery, were without an employee within the rooms during the inspection.
Agent Williamson played the video games located in game rooms Mardi Gras
and Lucky Seven Art Gallery.
No employee was present in either room during while Agent Williamson played
the video games.
The following Class III video game machine licenses were affixed to Class III
video game machines located in the room at the subject location known as Mardi Gras
(identified as game room #2 on Petitioner's Exhibit #4): 3810736, 3810735, 3810734, 3810733,
3810732.
The following Class III video game machine licenses were affixed to Class III
video game machines located in the room at the subject location known as Lucky Seven Art
Gallery Gras (identified as game room #3 on Petitioner's Exhibit # 4): 3810731, 3810730,
3810729, 3810728, 035209.
Collins Amusements Corp. owns nine of the machines in Mardi Gras and Lucky
Sevens Art Gallery and is the licensee for each of those nine machines.
Brian Nesbitt owns one of the machines located in Lucky Sevens Art Gallery and
is the licensee for that machine.
Julian Adams holds the retail license for the game room Lucky Sevens Art
Gallery (#026-37559-2).
Sevens Amusements Co. holds the retail license for the game room Mardi Gras
(#026-40935-1).
Neither Collins Amusements Corp. nor Brian Nesbitt exercised any control or
management of the subject game rooms or their employees operated by the retailers.
Prior to leaving the location upon the conclusion of her inspection, Agent
Williamson issued and left with an employee at the location a Preliminary Findings Report For
Video Gaming in which citations for alleged violations of the single place or premises
requirement of R. 117-190 and § 12-21-2804(4).
CONCLUSIONS OF LAW
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 the Administrative Procedures Act (APA), S.C. Code Ann. §§ 1-23-310 et
seq. (1986 & Supp. 1996), S.C. Code § 12-4-30(D), and §§ 12-60-1310 through 12-60-1350 of
the South Carolina Revenue Procedures Act (RPA).
- The Video Game Machines Act, S.C. Code Ann. §§ 12-21-2770, et seq. (Supp. 1996)
became effective on July 1, 1993, 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. South
Carolina Tax Comm'n, 6:93-1491-3 and 6:93-1493-3 (D.S.C., Nov. 15, 1993); see also 1994
Op. S.C. Att'y Gen. 21.
- Video Game Machines Act § 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.
- DOR regulations clarify the meaning of "single place or premises" (for purposes of the
Video Games Machines Act):
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.
27 S.C. Code Ann. Regs. 117-190 (Supp. 1996) (emphasis added).
- 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996) is a valid regulation which is not
overbroad in scope of application.
- If a statute's language is plain and unambiguous, and conveys a clear and definite
meaning, there is no occasion for employing rules of statutory interpretation and the court has
no right to look for or impose another meaning. Paschal v. State Election Comm'n, 454 S.E.2d
890, 317 S.C. 434 (1995); see Miller v. Doe, 312 S.C. 444, 441 S.E.2d 319 (1994).
- Where the terms of the statute are clear, the court must apply those terms according to
their literal meaning. Paschal v. State Election Comm'n, 454 S.E.2d 890, 317 S.C. 434 (1995);
see Adkins v. Varn, 312 S.C. 188, 439 S.E.2d 822 (1993).
- A court cannot construe a statute without regard to its plain and ordinary meaning, and
may not resort to subtle or forced construction in an attempt to limit or expand a statute's scope.
Paschal v. State Election Comm'n, 454 S.E.2d 890, 317 S.C. 434 (1995); see Berkebile v.
Outen, 311 S.C. 50, 426 S.E.2d 760 (1993).
- Respondents Julian Adams and Sevens Amusements, Inc. failed to have "one separate
employee" within each of the two subject rooms, as defined in R. 117-190.
- Respondents Julian Adams and Sevens Amusements, Inc. violated S.C. Code Ann. § 12-21-2804 by operating Class III video machines in locations failing to meet all requirements of
the "single place or premises" criteria set forth in Regulation 117-190.
- Under § 12-21-2804(A), a license on a Class III video poker machine must be revoked
by virtue of its misuse under the Act, regardless if the actual violator is the retail operator,
machine owner, or licensee.
- Section 12-21-2804(F) (Supp. 1996) provides that a person who violates § 12-21-2804(A) is subject to a fine of up to $5,000.
- Section 12-21-2804(F) provides that only those persons directly involved in the
management or operation of a location in violation of § 12-21-2804(A) are subject to monetary
fines.
- Within statutory limits, the amount of a fine is a matter of trial-court discretion. State v.
Sheppard, 54 S.C. 178, 32 S.E. 146 (1899). An administrative law judge, as fact finder, has the
prerogative "to impose an appropriate penalty based on the facts presented." Walker v. South
Carolina ABC Comm'n, 305 S.C. 209, 211, 407 S.E.2d 633, 634 (1991).
- 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 is in the best position to weigh witnesses' demeanor and veracity and to
evaluate their testimony. See 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); 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).
- Because Collins Entertainment Corp. and Brian Nesbitt were merely the licensees of the
machines in question and exercised no control or management of the subject game rooms or
their employees operated by the retailers, they should not be assessed a monetary penalty for the
failure to maintain a separate employee for each game room under the provisions of S.C. Code
Ann. §§ 12-21-2804(A) and 12-21-2804(F).
- A fine of $5,000 imposed upon each of the retail operators in violation is reasonable
under the circumstances of this case.
- Section 12-21-2804(A) also provides that "[n]o 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."
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby
ORDERED, that the ten game machine licenses in subject rooms Mardi Gras (3810736,
3810735, 3810734, 3810733, 3810732) and Lucky Sevens Art Gallery (3810731, 3810730,
3810729, 3810728, 035209) are revoked.
IT IS FURTHER ORDERED that no Class III machines shall be operated in the two
subject rooms at the location at 1699 Highway 17 North, North Myrtle Beach, South Carolina,
for a period of six (6) months from the date of revocation of the licenses.
IT IS FURTHER ORDERED that Respondents Julian Adams and Sevens
Amusements, Inc. shall pay a monetary fine to the Department of Revenue in the amount of Five
Thousand Dollars ($5,000) each for violation of the "single place or premises" statute and
regulation.
AND IT IS SO ORDERED.
__________________________________
STEPHEN P. BATES
ADMINISTRATIVE LAW JUDGE
April 7, 1998
Columbia, South Carolina |