ORDERS:
FINAL ORDER AND DECISION
This matter comes before me pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1997) and
S.C. Code Ann. §§ 1-23-310 et seq. (1986 & Supp. 1997), 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. 1997), and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997). 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 three game
rooms were open and operational without an employee present. Respondents dispute the
allegations.
A hearing of this matter was conducted before the Administrative Law Judge Division on
January 28, 1998. Based upon the relevant and probative evidence and the applicable law, I find
Respondents violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1997), and 27 S.C. Code Ann.
Regs. 117-190 (Supp. 1997). The fifteen (15) machine licenses in the subject rooms are hereby
revoked; no Class III machines may be operated in the game rooms for a period of six (6)
months; and a total fine of Five Thousand Dollars ($5,000) is imposed against Respondent
Buster's, Inc.
DISCUSSION
On October 19, 1996, SLED agents J.C. Tanner and G.W. Reinhart inspected "Players
Club," located at 532 St. Andrews Road, Columbia, South Carolina, and operated by Respondent
Busters, Inc. The eyewitness testimony of agent Tanner is in substantive agreement with his
Preliminary Findings Report. SLED agents noticed that three (3) rooms, each containing five (5)
machines, were operating. Agents Tanner and Reinhart entered the facility and found that the
doors to three (3) of the game rooms were open, video poker machines were turned on and
customers were playing the machines. The other rooms at the location were closed. No
employees or owners were located in any of the three (3) open game rooms. Agents Tanner and
Reinhart identified themselves to a female employee in the common area and asked to see the
manager.
During their inspection, agents Tanner and Reinhart also found that nine (9) machines
had no penalty signs and that the manager was aware of these omissions. Upon completion of
the inspection, agent Tanner completed a Preliminary Findings Report and left it with the
manager. The report cited Respondents for violation of S.C. Code Ann. §§ 12-21-2802 and 12-21-2804(A) (Supp. 1997). In its July 11, 1997 Final Agency Determination, DOR revoked
licenses for the fifteen (15) machines in rooms operating without an employee present and
assessed a $5,000 penalty against each Respondent for violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997). DOR also assessed a
$2,700 penalty against Respondent Busters, Inc. for nine violations of S.C. Code Ann. § 12-21-2802 (Supp. 1997) for missing penalty signs. The violations for missing penalty signs is not an
issue in this case.
Respondents assert that they have "operated all businesses within the statutory and
regulatory guidelines." Respondents contend that "at no time did [DOR] ever visit [the] location
and there [sic] not be an employee assigned to each room which was operating and which was
being visited by customers." While Respondents had a sufficient number of employees present
to potentially comply with the law, those employees were located in the common area rather than
the individual game rooms.
Failure to meet any of the requirements of the "single place or premises" criteria set forth
in 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997) is grounds for revocation. The testimony
presented at the hearing is sufficient to establish that the game rooms in question were open for
business and lacked the requisite employees at the time of inspection. Players Club II,
Clubhouse, and Sands located at Players Club at 532 St. Andrews Road, Columbia, South
Carolina, were operated in violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).
Because Respondents' evidence indicated that the two corporate entities share the same
owners, I find and conclude that imposition of a fine of Five Thousand Dollars ($5,000) only
against Respondent Busters, Inc. is reasonable under the circumstances.
FINDINGS OF FACT
By a preponderance of the evidence, I find:
- Players Club, located at 532 St. Andrews Road, Columbia, South Carolina, is a video
gaming business in a mall-type structure containing six (6) video gaming rooms and a
common area.
2. On October 19, 1996, SLED agents J.C. Tanner and G.W. Reinhart conducted an inspection of the Players Club video gaming business.
3. Three game rooms, Players Club II, Clubhouse, and Sands, were operational on
October 19, 1996 at the time of inspection.
4. Players Club II, Clubhouse, and Sands each contained five (5) Class III video game machines owned by Respondent Great Games, Inc.
5. Respondent Busters, Inc. is the retail operator of Players Club II, Clubhouse, and Sands.
6. SLED agents J.C. Tanner and G.W. Reinhart entered the location and identified themselves to the employees present.
7. The inspection included walking into the common area and the open game rooms, making
notes, taking photographs of the location, and talking to employees and the manager of the location.
8. The following video game machine licenses were affixed to machines located in the respective game rooms:
Players Club II Clubhouse Sands
044668 044626 044698
044652 044640 044697
044653 3810319 044696
044654 3810318 044651
044655 044702 3810321
9. At the time of the inspection, customers were in each of the three open game rooms, playing the machines.
10. At the time of the inspection, three employees were in the common area.
11. At the time of the inspection, no employees were located on the premises of any of the open game rooms.
12. As a result of his inspection, agent Tanner issued a Preliminary Findings Report, citing Respondents with an alleged violation of S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997) for operation of more than five (5) machines in a single place or premise without an employee present in Players Club II, Clubhouse, and Sands. The report also cited Respondents for violation of S.C. Code Ann. § 12-21-2802 (Supp. 1997).
13. Copies of the Preliminary Findings Report were left with the manager, Mr. Alan Lawson.
14. In its July 11, 1997 Final Agency Determination, DOR revoked licenses for the fifteen (15) machines in rooms operating without an employee present and assessed a $5,000 penalty against each Respondent for violation of S.C. Code Ann. § 12-21-2804(A) (Supp.
1997) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997). DOR also assessed a $2,700 penalty against Respondent Busters, Inc. for nine violations of S.C. Code Ann. § 12-21- 2802 (Supp. 1997) for missing penalty signs.
15. 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. 1997) and S.C. Code Ann. § 1-23-310 et
seq. (1986 & Supp. 1997).
- The Video Game Machines Act ("the 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. 1997). 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 Op. S.C. Att'y Gen. 21 (1994).
- South Carolina Code Ann. § 12-21-2804(A) (Supp. 1997) 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. 1997), 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:
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.
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 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.
(emphasis added).
- South Carolina Code Ann. § 12-21-2804(A) (Supp. 1997) 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.
- 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, e.g., McAlister v.
Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982).
- Respondents failed to have "one separate employee" in Players Club II, Clubhouse and
Sands during business hours, in violation of the requirement set forth in R. 117-190.
- Failing to satisfy one requirement is a sufficient ground for finding a violation of the
single place or premises requirements of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).
- Respondents violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1997) by operating video
machines in three locations which failed to meet all requirements of the "single place or
premises" criteria set forth in 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997).
- South Carolina Code Ann. § 12-21-2804(A) (Supp. 1997) 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."
- South Carolina Code Ann. § 12-21-2804(F) (Supp. 1997) provides that a person who
violates Section 12-21-2804(A) is subject to a fine of up to $5,000.
12. Because Great Games, Inc. and Busters, Inc. share the same owners, imposition of a fine
of Five Thousand Dollars ($5,000) only against Busters, Inc. is reasonable.
13. Pursuant to ALJD Rule 29(B), 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 fifteen (15) video game machine
licenses owned by Respondent Great Games, Inc., located at 532 St. Andrews Road, Columbia,
South Carolina in the business known as Players Club are revoked:
Players Club II Clubhouse Sands
044668 044626 044698
044652 044640 044697
044653 3810319 044696
044654 3810318 044651
044655 044702 3810321
IT IS FURTHER ORDERED that no video game machine licenses shall be utilized in
Players Club II, Clubhouse, and Sands for a period of six (6) months from the date of revocation
of the licenses.
IT IS FURTHER ORDERED that Respondent Busters, Inc. shall pay total penalties of
Five Thousand Dollars ($5,000) to the South Carolina Department of Revenue for violation of
S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).
AND IT IS SO ORDERED.
____________________________________
STEPHEN P. BATES
ADMINISTRATIVE LAW JUDGE
April 2, 1998
Columbia, South Carolina |
