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., et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Great Games, Inc., Jimmy L. Martin, and S.C. Amusement Company, Inc., at 315 Church Street, Williston, S.C.
 
DOCKET NUMBER:
98-ALJ-17-0114-CC

APPEARANCES:
Nicholas P. Sipe, Esquire for Petitioner

C. Tyrone Courtney, Esquire for Respondents, Great Games, Inc., and Jimmy L. Martin

No Appearance for Respondent, South Carolina Amusement Company, Inc.
 

ORDERS:

ORDER AND DECISION

STATEMENT OF THE CASE


This matter is before the South Carolina Administrative Law Judge Division pursuant to requests for a contested case hearing on citations issued by the South Carolina Department of Revenue (DOR) for violations of the Video Game Machines Act, specifically S.C. Code Ann. §§ 12-21-2804(A), 12-21-2802, and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997). After notice to the parties, a hearing was conducted on June 30, 1998 in Aiken. Any issues raised in the proceedings, but not addressed in this Order are deemed denied pursuant to ALJD Rule 29(C).

FINDINGS OF FACT

I make the following findings of fact, taking into consideration the burden on the parties to establish their respective cases by a preponderance of the evidence and taking into account the credibility of the witnesses:

On December 12, 1996, the South Carolina Law Enforcement Division (SLED) inspected three video gaming businesses known as "My Place," "Our Place," and "Your Place," which were located within the same building at 315 Church Street, Williston, South Carolina. The rooms in which the businesses were contained were joined by a common area, leading to a cashier's area and two restrooms. At the time of the inspection, My Place, Our Place, and Your Place each contained five Class III video game machines.

S.C. Amusement Company, Inc. operates My Place, Our Place, and Your Place.

During the inspection, only one employee, Ms. Ward, was located in the building. She was located in the cashier's room. Two game rooms, Our Place and My Place, were open with individuals playing the video game machines in both rooms. No employees were located in either room.

Upon inspection, SLED agents were unable to locate penalty signs citing the penalties provided by sections 12-21-2790, 12-21-2792, and 12-21-2794 for fourteen of the fifteen machines located in the building. Ms. Ward also attempted to located the penalty signs but was not able to find them.

The machines containing the following license numbers were located within Our Place at the time of the inspection, with the machine licensee indicated in parenthesis: 025562 (Great Games, Inc.), 025596 (Jimmy L. Martin), 025597 (Jimmy L. Martin), 025599 (Jimmy L. Martin), and 025600 (Jimmy L. Martin).

As a result of the inspection, DOR cited S.C. Amusement Company, Inc., Great Games, Inc., and Jimmy L. Martin for having more than five video game machines at a single place or premises in violation of S.C. Code Ann. § 12-21-2804 (Supp. 1997) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997).

The Department also cited S.C. Amusement Company, Inc. for failing to post the required penalty signs on fourteen video game machines.

Prior to the hearing on this matter, DOR reached an agreement with Respondents Great Games, Inc. and Jimmy L. Martin. The agreement was stated on the record and encompasses the following terms:

(a) the Class III video game machine licenses held by Jimmy L. Martin and Great Games, Inc. as reflected in the Final Agency Determination dated July 28, 1997 are revoked effective June 30, 1998;

(b) Jimmy L. Martin and Great Games, Inc. shall not operate Class III video game machines at Our Place located at 315 Church Street in Williston, South Carolina for a period of six months beginning June 30, 1998; and

(c) Jimmy L. Martin and Great Games, Inc. are fined a total of $2,000, payable to DOR within thirty days of June 30, 1998.

S.C. Amusement Company, Inc. failed to appear at the scheduled time or place for the hearing. Notice of the hearing was properly sent to Ken McDonald, President of S.C. Amusement Company, Inc., at the business address. No one contacted the Administrative Law Judge Division to request a continuance or to notify the Division that S.C. Amusement Company, Inc. would not appear at the hearing scheduled in this matter.

On December 12, 1996, S.C. Amusement Company, Inc., operated more than five Class III video game machines licensed to Great Games, Inc., and Jimmy L. Martin at a single place or premises in violation of S.C. Code Ann. § 12-21-2804 (Supp. 1997) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997).

CONCLUSIONS OF LAW

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

Pursuant to S.C. Code Ann. §§ 12-4-30(D) and 1-23-310 et seq. (Rev. 1986 & Supp. 1997), the Administrative Law Judge Division has jurisdiction to hear this matter.

Under the Video Game Machines Act, no person shall apply for, receive, maintain, or permit to be used, licenses for the operation of more than five Class III machines at a single place or premises. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).

Under the Act, DOR has the authority to promulgate regulations pertaining to video poker machines and persons licensed by DOR. S.C. Code Ann. § 12-21-2798 (Supp. 1997).

Pursuant to this statutory authority, DOR promulgated Regulation 117-190 to clarify the phrase "single place or premises" contained in Section 12-21-2804(A), and the General Assembly approved these regulations.

S.C. Code Ann. Regs. 117-190 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.

Regulation 117-190 clearly requires at least one separate employee on the premises during business hours.

S.C. 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.

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 of each machine license in the establishment pursuant to S.C. Code Ann. § 12-21-2804(A) (Supp. 1997). Additionally, section 12-21-2804(A) provides that no machine license may be issued for, nor a machine operated at, an establishment in which a license has been revoked for a period of six months from the date of revocation.

S.C. Amusement Company, Inc., Great Games, Inc., and Jimmy L. Martin have violated Section 12-21-2804(A) by allowing the operation of more than five Class III video game machines at a single place or premises.

A person who violates Section 12-21-2804(A) is subject to a fine of up to $5,000. S.C. Code Ann. § 12-21-2804(F) (Supp. 1997).

As the finder of fact, it is the administrative law judge's prerogative "to impose the appropriate penalty based on the facts presented." Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633, 634 (1991).

S.C. Amusement Company, Inc. violated S.C. Code Ann. § 12-21-2802 (Supp. 1997), which requires each machine licensed under the Video Game Machines Act to have a "prominently displayed sign citing the penalties provided by Section 12-21-2790, 12-21-2792, and 12-21-2794 on the wall above the machine or affixed prominently to the machine."

Violation of S.C. Code Ann. § 12-21-2802 warrants a monetary penalty between $50 and $500 for each infraction. S.C. Code Ann. §§ 12-54-40(b)(3) and 12-54-90 (Supp. 1997). A total monetary penalty of $4,200 against S.C. Amusement Company, Inc. for the penalty signs violation is appropriate based on the facts presented.

Pursuant to ALJD Rule 23, Respondent S.C. Amusement Company, Inc. has defaulted. A default occurs in a contested case when a party fails to respond or otherwise prosecute or defend, or fails to comply with any interlocutory order of the administrative law judge. An administrative law judge may dismiss or dispose of a contested case adversely to the defaulting party.

ORDER

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

ORDERED, pursuant to agreement reached by Great Games, Inc., Jimmy L. Martin, and the Department of Revenue, that Class III video game machine licenses listed in the Final Agency Determination dated July 28, 1998 are revoked effective June 30, 1998. Great Games, Inc. and Jimmy L. Martin shall not operate Class III video game machines in Our Place at 315 Church Street, Williston, for a six-month period, beginning June 30, 1998. Great Games, Inc. and Jimmy L. Martin are fined a total of $2,000, payable to DOR within thirty days of June 30, 1998.

IT IS FURTHER ORDERED that S.C. Amusement Company, Inc. shall not operate any Class III video game machines in the location of Our Place located at 315 Church Street, Williston, South Carolina for a six-month period, beginning on the date of this order. S.C. Amusement Company, Inc., shall pay a total monetary penalty of $9,200 ($5,000 for single place or premise violation and $4,200 for the penalty signs violation), payable within thirty days of the date of this order.

IT IS SO ORDERED.



_________________________________

ALISON RENEE LEE

Administrative Law Judge

July 6, 1998

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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