SC Administrative Law Court Decisions

This matter comes before me upon request for a Hearing by the Respondents after being cited for violating S.C. Code Ann. § 12-21-2804(A)(Supp. 1996). The South Carolina Department of Revenue ("Department") contends that the Respondents operated more than five (5) video poker machines in a "single place or premises." This matter was set for a contested case hearing on February 10, 1998 at 9:30 a.m.. Counsel for both parties were notified of the date, time, and place of the hearing in this matter by a Notice of Hearing mailed by my office on November 14, 1997. Neither counsel for the Respondents or the Respondents themselves appeared at the designated time and place. Furthermore, Respondents at no time contacted the court to request a continuance or to inform the court that they would not appear at the hearing on this matter. After waiting until ten minutes beyond the scheduled time of the hearing for Respondents to make an appearance, the hearing was commenced in the Respondents' absence.

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the Parties, I make the following Findings of Fact by a preponderance of evidence:

1. Legal notice of the time, date, place and subject matter of the Hearing was given to the Petitioner and the Respondents.

2. The Department's agents conducted an inspection at the "Coastal Mart" located at 1609 Leesburg Road, Columbia, South Carolina on August 29, 1996. After the inspection, the Department's agents issued a violation report charging the Respondents with operating in violation of S.C. Code Regs. § 117-190 (Supp. 1996) by not having "at least one separate employee on the premises during business hours."

3. The Respondents' location was a convenience store with two rooms to the side of the store. Those two rooms, Coastal Mart Rooms 1 and 2, are operated as video game businesses. At the time of the inspection, both of the game rooms were open and the machines in these rooms were on and operational. Each game room contained five (5) Class III video game machines.

4. The only employee on the premises of Coastal Mart was one cashier located at the cash register in the convenience store of the location. There were no employees located on the premises of Room 1 or 2.

5. The above game rooms had a retail sales tax license issued to Nasib, Inc. Nasib is a corporation whose stockholders are Dinish Bavishi, Bert Patel, Sam Patel, and Janak Naik. The Class III machine licenses were all purchased by Great Games, Inc. The following Class III video game machine licenses were located in the respective game rooms:

Room 1: Room 2:

44616 44599

44618 44604

44619 44624

44628 44671

44637 44703

6. I find the Respondent Nasib, Inc., d/b/a Coastal Mart Rooms 1 and 2, was in violation of the Video Game Machines Act for failing to have at least one separate employee on each of the game room premises during business hours.

7. The Department seeks the imposition of a Five Thousand ($5,000.00) Dollar fine against each of the Respondents, revocation of the machine permits and the restriction that no permit be issued for the Respondents' location for six months. The Respondents Danish Bavishi, Bert Patel, Sam Patel, and Janak Naik did not appear at the hearing to present any defense. I find that the appropriate penalty in this case is a Two Thousand Five Hundred ($2,500.00) Dollar fine for each violation against Nasib, Inc. and revocation of the machine licenses in game rooms 1 and 2.

8. I find that the previous findings of fact made in Department of Revenue v. Great Games, and Dinish Bavishi, Bert Patel, Sam Patel, and Janak Naik, a partnership, d/b/a Coastal Mart, Docket No. 97-ALJ-17-0001-CC are relevant for consideration in this decision. See, Freeman v. McBee, 280 S.C. 490, 313 S.E.2d 325 (Ct. App. 1984) ("A court can take judicial notice of its own records, files, and proceedings for all proper purposes including facts established in its records"). That case reflects that on June 14, 1996 the Respondents were cited for failing to have employees in the game rooms at the same location involved in this case. Therefore, since the Respondent Great Games was on notice that the Coastal Mart was operating without employees in its game rooms where Great Games' machines were located, I find that the appropriate penalty in this case is a One Thousand ($1,000.00) Dollar fine for each violation against Great Games.

Based upon the Findings of Fact, I conclude as a matter of law, the following:

1. The Administrative Law Judge Division has jurisdiction to hear this matter pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1996) and S.C. Code Ann. § 1-23-320 (Supp. 1996).

2. The Department contends that the Respondents violated S.C. Code Ann. § 12-21-2804(A)(Supp. 1996). That section provides:

After July 1, 1994, the commission [Department] may not issue nor authorize to be maintained any licenses or permits for more than five machines authorized under Section 12-21-2720(A)(3) at a single place or premises.

3. Machines licensed under Section 12-21-2720(A)(3) include video games with a free play feature operated by a slot in which a coin or thing of value is deposited. S.C. Code Ann. § 12-21-2720 (Supp. 1996).

4. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) states that the penalty for failing to comply with the maximum number of machines in a "single place or premises" is the revocation of the licenses of machines located in the establishment.

5. S.C. Code Ann. § 12-21-2804(F) (Supp. 1996) states that a person who violates Section 12-21-2804(A) may be fined up to Five Thousand ($5,000.00) Dollars.

6. The Video Game Machines Act ("Act") does not define the term "single place or premises."

7. The Department contends that the Respondents violated S.C. Code Ann. § 12-21-2804(A)(Supp. 1996). Section 2804(A) prohibits the operation of more than five video game machines authorized under S.C. Code Ann. § 12-21-2720(A)(3) at a "single place or premises." However, the Video Game Machines Act does not define the term "single place or premises." On June 23, 1995, 27 S.C. Code Regs. 117-190 (Supp. 1996) became effective. It defines "single place or premises" for purposes of interpreting the Video Game Machines Act, including Section 12-21-2804(A). It provides:

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 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 separate sales tax licenses? 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.

8. The Department contends that the Respondents violated Regulation 117-190 by failing to maintain an employee in each business. Regulation 117-190 requires that each business must have a separate employee on the premises while the business is open. The cardinal rule of statutory interpretation is to ascertain and effectuate the legislative intent wherever possible. Bankers Trust of South Carolina v. Bruce, 275 S.C. 35, 267 S.E.2d 424 (1980). "Full effect must be given to each section of a statute, giving words their plain meaning, and, in the absence of ambiguity, words must not be added or taken away." Hartford Accident and Indem. Co. v. Lindsay, 273 S.C. 79, 254 S.E.2d 301, 304 (S.C. 1979). Thus, the phrase "on the premise" presumptively must have meaning. Therefore, the employees of a video poker business must be sufficiently connected to an open video game room as to indicate that each game room that is open for business has a specific employee assigned to work solely in that room.

9. Under Section 12-21-2804(A), a license on a video game machine must be revoked by virtue of its misuse under the Act, regardless of whether the actual violator is the licensee, machine owner, or lessee. However, a monetary fine under Section 12-21-2804(F) may only be imposed on the actual person directly involved in the violation of Section 12-21-2804(A). In this case, the evidence established that Great Games was cited for violations of the Act on June 14, 1996. However, despite Great Games' knowledge of the Department's citation of Coastal Mart for violating the Act, Great Games allowed its machines to remain at the location until the inspection on August 29, 1996. Therefore, Great Games was directly involved in violating the Act.

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

ORDERED that the licenses listed in Findings of Fact paragraph 5 are revoked, and a fine of Two Thousand Five Hundred ($2,500.00) Dollars is imposed against Nasib, Inc. for each violation, resulting in a total fine of Five Thousand ($5,000) Dollars. Furthermore, a fine of One Thousand ($1,000.00) Dollars for each violation against Great Games, resulting in a total fine of Two Thousand ($2,000) Dollars.

IT IS FURTHER ORDERED that no permits shall be issued for any Class III machine to be operated in any of the above game rooms for a period of six (6) months from the date of this Final Decision.

Columbia, South Carolina

February 19, 1998