SC Administrative Law Court Decisions

South Carolina Department of Revenue (DOR) seeks a $2,500 monetary penalty for a failure to identify the owner or operator of a single Class III machine owned by Collins Entertainment Corp. (Collins). Collins opposes DOR's position and asserts no violation occurred. Collins' disagreement with DOR's determination places jurisdiction in the Administrative Law Judge Division (ALJD). S.C. Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1997). The hearing in this matter was held March 20, 1998 at the Edgar Brown Building, Columbia, South Carolina. Based upon the evidence and the argument presented by the parties, the penalty of $2,500 is proper.

Did all of Collins' Class III machines located at 2841 Broad River Road, Columbia, South Carolina have information attached identifying the owner or operator of those machines, and, if no, what is the applicable penalty?

1. Positions of Parties

DOR asserts the SLED Agents found no owner identification on the machine in question. Thus, DOR argues a violation occurred and penalty of $2,500 must be imposed. Collins argues the machine had an owner identification at one time but it was removed by an unauthorized and unknown individual. Under such circumstances, if a penalty is due, a penalty of less than $2,500 should be imposed.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

1. Collins holds several licenses for Class III video game machines.
2. Some of the licenses are in use on machines located at 2841 Broad River Road, Columbia, South Carolina.
3. On January 22, 1997, SLED Agents conducted an inspection of the video gaming machines at that location.
4. The inspection included determining whether an owner or operator identification was displayed on the machines.
5. On January 22, 1997, DOR issued its report finding that Collins violated S.C. Code Ann. § 12-21-2748 by failing to affix an owner identification to one of the Class III video game machines located at 2841 Broad River Road, Columbia, South Carolina.
6. On November 21, 1997, DOR issued a Final Determination on the alleged failure to affix owner identification to one Class III video game machine at this location.
7. A Collins employee services this machine on Monday of each week.
8. An owner identification decal was on the machine prior to the machine being placed on the premises.
9. The machine had an owner identification at least as late as January 20, 1997.
10. Collins has had instances in which unknown individuals have without permission removed owner identification decals from his machines.
11. On January 22, 1997, no owner or operator identification was displayed on one machine at the location of 2841 Broad River Road, Columbia, South Carolina.
12. Collins has violated the owner identification statute five times and has been fined five times.
13. By January 22, 1997, Collins had been notified of three other violations that asserted a failure to attach an owner identification on one or more of his machines.
14. DOR seeks a $2,500 fine for the January 22, 1997, failure to attach an owner identification.

3. Discussion

Licensed Class III machines must have attached information identifying the owner or operator of the machine with the identification placed on a visible area of the machine for inspection purposes. S.C. Code Ann. § 12-21-2748 (Supp. 1997). Failure to comply with the identification requirement subjects the violator to the applicable penalty and enforcement provisions of Chapter 21 and Chapter 54 of Title 12. Id.

The evidence here shows the SLED Agent found no owner identification on these machines. Further, no persuasive evidence establishes that the required identification was affixed to the machine on the date of inspection. Accordingly, on January 22, 1997, one Class III video game machine located at 2841 Broad River Road, Columbia, South Carolina licensed to Collins did not have the owner or operator identification affixed. Thus, in the instant case, Collins failed to comply with the statutory requirement of owner identification and, therefore, violated S.C. Code Ann. § 12-21-2748 (Supp. 1997).

In determining the penalty for a failure to affix an owner identification, DOR's position is that the amount of the penalty may vary depending upon the circumstances. In fact, DOR asserts that a first time violator of the statute is liable for a $500 fine, a second violation generates a $1,000 fine, and a third violation warrants the maximum penalty of $2,500. Here, the facts demonstrate that Collins has violated the owner identification statute five times and has been fined five times:

The violation in the instant case occurred on January 22, 1997. By that date, Collins had already been notified of three other violations all asserting a failure to have attached an owner identification on one or more of its machines. While Collins challenged the three citations, it was nonetheless on notice that greater care was needed in assuring owner identification was attached to its machines.

Collins has numerous machines located in every area of the State. Further, such large numbers present difficulties in assuring that unauthorized individuals do not remove the owner identifications from the machines. However, the fact an owner has a large number of machines in numerous locations does not warrant a reduction in the penalty. Rather, the decision to engage in a large scale use of the machines is a decision made by the owner and should not serve as a means to reduce the vigilance needed to comply with the law. In fact, Collins appears to agree with the need for vigilance since the evidence demonstrates Collin's current practices seek to assure ownership identification remains on the machine in that the use of tamper-proof decals are now being affixed. While the new practice is commendable as a means of avoiding future violations, such a new procedure is insufficient to decrease the fine for prior violations. Considered as a whole, a penalty of $2,500 is warranted.

4. Conclusions of Law

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

1. Machines authorized under § 12-21-2720(A)(3) are termed Class III machines.

2. Class III machines must have attached information identifying the owner or operator of the machine with the identification placed on a visible area of the machine for inspection purposes. S.C. Code Ann. § 12-21-2748 (Supp. 1997).

3. Failure to comply with the identification requirement subjects the violator to the applicable penalty and enforcement provisions of Chapter 21 and Chapter 54 of Title 12. S.C. Code Ann. § 12-21-2748 (Supp. 1997).

4. Collins failed to comply with the statutory requirement of owner identification and, therefore, violated S.C. Code Ann. § 12-21-2748 (Supp. 1997).

5. A fine of $2,500 is an appropriate penalty for the violation. S.C. Code Ann. § 12-21-2738 (Supp. 1997).

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

One of the Class III machines located at 2841 Broad River Road, Columbia, South Carolina and owned by Collins failed to have attached information identifying the owner or operator of that machine. Accordingly, Collins is liable for a fine of $2,500.

AND IT IS SO ORDERED.

RAY N. STEVENS

Administrative Law Judge

Dated: March 23, 1998

Columbia, South Carolina