South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Great Games, Inc., and Busters, Inc.

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Great Games, Inc., and Busters, Inc.
532 St. Andrews Road, Columbia, SC
 
DOCKET NUMBER:
97-ALJ-17-0552-CC

APPEARANCES:
Nicholas P. Sipe, Attorney for Petitioner

John G. O'Day, Attorney for Respondents
 

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:

  1. 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:

  1. 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).
  2. 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).
  3. 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.
  4. 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).

  1. 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.
  2. 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).
  3. 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.
  4. 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).
  5. 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).


  1. 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."
  2. 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


Brown Bldg.

 

 

 

 

 

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