ORDERS:
FINAL ORDER AND DECISION
I. Statement of the Case
The South Carolina Department of Revenue (DOR) seeks the imposition of a $5,000 monetary penalty on two individuals
giving a total penalty of $10,000, the revocation of ten Class III machine licenses, and the prohibition of any Class III
licenses at the offending location for a period of six months. Richard McComas in his capacity as the machine owner and
Richard McComas and Margaret McComas in their capacities as location owners oppose DOR's position. They assert that
DOR's determination is without evidentiary or statutory support and that if any violation occurred, DOR's penalties are
excessive and should be reduced. This disagreement places jurisdiction in the Administrative Law Judge Division. S.C.
Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1998). Based upon the evidence and the argument presented by
the parties, no violation of S.C. Code § 12-21-2804(A) occurred and thus no penalty, revocation, or prohibition is imposed.
II. Issues
1. Did Richard McComas or Margaret McComas violate the limitation of having more than five Class III machines at a
single place or premises as imposed by S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) and 27 S.C. Code Ann. Regs.
117-190 (Supp. 1998)?
2. If a violation occurred, are Richard McComas and Margaret McComas denied the use of any Class III machines at the
location for a period of six months from the time the revocation becomes final or are Richard McComas and Margaret
McComas denied the privilege of using the five machines for a period of six months from the time the revocation becomes
final?
3. If a violation occurred, what monetary penalty, if any, is proper for Richard McComas and Margaret McComas?
III. Analysis
A. Excessive Machines At A Single Place or Premises
1. Positions of Parties
DOR asserts two game rooms at 2761 Highway 17 S, Garden City, South Carolina were in operation with no employee in
either of the rooms. Accordingly, DOR argues a violation of § 12-21-2804 occurred in that more than five Class III
machines were in operation at a single place or premises. Richard McComas and Margaret McComas disagree and argue
the proper number of employees were present so as to refute any alleged violation.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
A. Background Facts
Richard McComas holds several licenses for Class III video game machines with twenty of those licenses utilized at 2761
Highway 17 S, Garden City, South Carolina. The building at the Garden City address contains a video game business in a
mall-type structure housing four video game rooms. Richard McComas and Margaret McComas hold retail sales tax
licenses for the two video game rooms involved in this dispute. The two game rooms have the following names and house
the following machine licenses:
RM Amusement 3806110, 3806117, 3806065, 3806106, 3806114
Golden Image Game Room 3806108, 3806101, 3806103, 3806104, 3806105
On July 17, 1997, SLED conducted an inspection of the video game businesses at the Garden City address. The inspection
included walking into each area, listing the license numbers for machines located in the game rooms, taking photographs of
the location, examining the business licenses, retail tax licenses, and utility meters for the location, and talking to an
employee at the location.
As a result of the inspection, the SLED Agents issued a citation against Richard McComas and Margaret McComas for
violating S.C. Code Ann. § 12-21-2804(A) due to operating more than five machines in a single place or premises. Copies
of the Violation Report were left with the employee on duty. In addition to revocation and a six month prohibition on the
use of Class III machines, DOR also seeks a $5,000 fine against Richard McComas as the owner and licensee of the
machines and a $5,000 fine against Margaret McComas as the location operator.
B. Disputed Fact Issue Decided
The definitive disputed fact is whether Richard McComas and Margaret McComas had at the time of the inspection at least
one separate employee on the premises of each of the open game rooms during business hours.
Four game rooms were located at the Garden City location at the time of the inspection by SLED. However, the two SLED
Agents conducting the inspection have raised questions on only two of the rooms. One game room was closed and a second
room had an employee on the premises. However, Agent Williamson entered Golden Image Game Room (game room 1)
and Agent Holden entered RM Amusement (game room 2) with both rooms raising employee concerns.
In game room 1, Agent Williamson played at least one machine for fifteen minutes. A dispute exists as to whether an
employee was present in the room and if so whether that employee properly left the room.
Agent Williams asserts no employee was in the room when she entered, but that an employee entered later, stayed a few
minutes, and then left the room. However, the employee in dispute, Dorothy Elliott, testified that she went with the Agent
to the game room and that she remained in the room as an employee with the Agent. The employee admits, however, that
during the fifteen minute period that the Agent was in game room 1, the employee left Agent Williams alone. Dorothy
Elliott left the game room since she was requested by Richard McComas to come to game room 2.
Richard McComas made the request while he was in game room 2. Richard McComas was in game room 2 when that room
was entered by Agent Holden and Richard McComas remained in the room while Agent Holden played one of the machines
in the room. After the employee from game room 1 came into game room 2, both Richard McComas and Dorothy Elliott
remained in game room 2. Shortly thereafter, Richard McComas left game room 2 and entered game room 1 acting as the
employee on the premises of game room 1.
After both Agent Williamson and Agent Holden finished playing the machines, they left the building. Soon thereafter, they
re-entered the building and issued a violation for operating more than five Class III machines on a single place or premises.
Thus, under the facts of this case, I find an employee was not in game room 1 for the entire time that Agent Williamson was
playing a machine in that room. I find that game room 1 remained open after the employee left and that the room was
available for play by members of the public. Further, I find that an employee was in game room 2 for the entire time that
Agent Holden was playing a machine.
3. Conclusions of Law
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
A. Statutory and Regulatory Requirements for Single Place or Premises
For machines authorized under § 12-21-2720(A)(3), i.e. Class III machines, no person may maintain licenses for more than
five Class III machines at a single place or premises. S.C. Code Ann. § 12-21-2804 (Supp. 1998). While the statute does
not explain what constitutes a single place or premises, a definition is supplied by Regulation 117-190.
Regulation 117-190 concentrates its analysis of a single place or premises by examining the physical characteristics of the
structure enclosing the Class III machines and gives particular attention to exterior walls surrounding two or more video
game areas. If at least two interior structures exist (i.e., each having a proper four wall configuration) and if Class III video
games are located within each interior structure, each interior structure is characterized as a video game area. Under such
circumstances the inquiry becomes whether each video game area is a single place or premises allowing five machines
within each area.
A decision on whether each video game area is a single place or premises is reached by a facts and circumstances
methodology imposed by Regs. 117-190. Under the regulation, DOR "must review all the facts and circumstances to
determine if each area in reality constitutes a single place or premise for video game machines." While a facts and
circumstances review is normally very general, the regulation requires the existence of at least four facts. Indeed, a failure to
meet any one of these criteria results in the video game area not being a separate place or premise. The four criteria are: (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?
In this case, of the four game rooms, only two are in dispute. DOR asserts that neither is a separate place or premises.
B. Law Applied to Facts
DOR bears the burden of proving that no employee was on the premises of either of the two game rooms under review. See
2 Am. Jur. 2d Administrative Law § 360 (1994) (burden of proof generally rests with the party who asserts the affirmative
of an issue). Under the facts of this case, DOR has established that game room 1 lacked an employee "on the premises" but
has not established that game room 2 lacked an employee.
An employee is not "on the premises" when the employee is working outside the game room and the Class III video game
machines are operational and accessible to customers; i.e., the employee must be physically present in the room. S.C. Dep't
of Revenue and Taxation v. Mickey Stacks, 95-ALJ-17-0742-CC (March 8, 1996). In this matter, during the fifteen minute
period that Agent Williamson was in game room 1, the employee left the room. Thus, an employee was not on the premises
of game room 1 while the machines in that room were available and open to play by the public. Therefore, game room 1
does not constitute a separate place or premises. However, game room 2 had at least one employee and sometimes two
employees during the time that Agent Holden played the machines in that room. Thus, game room 2 constitutes a separate
place or premises.
The lack of an employee on the premises of game room 1 means the game room is not a single place or premises. However,
finding that an area is not a single place or premises does not automatically determine that a violation of the five machine
limit of S.C. Code Ann. Sec. 12-21-2804(A) has occurred. Indeed, the General Assembly did not impose a violation of S.C.
Code Ann. §12-21-2804(A) for attempting but failing to create a specific area as a single place or premises. Rather, the
statute imposes a violation only when more than five machines are "at a single place or premises." S.C. Code Ann. Sec.
12-21-2804(A) (Supp. 1998). Accordingly, the question is, "Once a specific area has been found not to be a single place or
premises, what is the area that comprises the 'single place or premises' used to count the number of machines in that area?"
DOR argues that once an area has been found not to be a single place or premises, all of the machines in the entire structure
must be utilized in the counting of machines. Applying such a view to the instant case gives twenty machines (five in each
of the game rooms) on a "single place or premises" and creates a violation. I cannot agree with DOR's analysis.
In deciding the meaning of "single," DOR's view ignores the plain language of the statute under review. Green v.
Thornton, 265 S.C. 436, 219 S.E.2d 827 (1975). The legislature's intent should be ascertained primarily from the plain
language of the statute. 82 C.J.S. Statutes § 322 (b), at 571 (1953). Further, unless a statute requires a different
interpretation, the words used must be given their ordinary meaning. Hughes v. Edwards, 265 S.C. 529, 220 S.E.2d 231
(1975). Here, the plain language of §12-21-2804(A) is specific and imposes a duty to count the machines "at a single place
or premises."
In the instant case, three of the game rooms at the location qualify as separated areas with each being a "single place or
premises." The common meaning of "single" is "unaccompanied by others: lone, sole." Merriam-Webster: WWWebster
Dictionary 1999; www.m-w.com/dictionary.htm (24 March 2000). Thus, based on the plain meaning of the word "single,"
the controlling logical syllogism is as follows:
A single place or premises is unaccompanied by any other area.
The three other game rooms are single places or premises.
The three other games rooms are unaccompanied by any other area.
Accordingly, none of the three game rooms that are separate "single place or premises" can be combined with some other
area for the purpose of counting machines in that "other area." Rather, having once counted the machines in the three
separate place or premises to establish the five machine limit for each of those areas, a second counting of those same
machines is improper as being contrary to the statute's plain use of the term "single" in reference to a "single place or
premises."
Therefore, not being able to count the machines in the other three game rooms, the remaining square footage of the structure
(comprised primarily of game room 1 and the common area) is to be examined for the existence of more than five
machines. In this case, the remaining area does not yield more than five machines but rather gives exactly five machines.
Accordingly, no violation of Sec. 12-21-2804(A) occurred on July 17, 1997 at 2761 Highway 17 S, Garden City, South
Carolina.
B. Other Issues Not Addressed
Since no violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred, no need exists to address the dependent
issues of penalties, revocation, or prohibition of licenses resulting from a violation of S.C. Code Ann. Sec. 12-21-2804(A)
(Supp. 1998). Thus, no other issues are examined.
IV. Order
Based upon the Findings of Fact and Conclusions of Law, it is hereby ordered:
No violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred on July 17, 1997 at 2761 Highway 17 S, Garden
City, South Carolina. Accordingly, Richard McComas and Margaret McComas are not liable for any penalty, revocation, or
prohibition, and the citation issued against them is dismissed.
AND IT IS SO ORDERED.
____________________________
RAY N. STEVENS
Administrative Law Judge
Dated: March 28, 2000
Columbia, South Carolina |
