SC Administrative Law Court Decisions

This matter comes before me pursuant to S.C. Code Ann. § 1-23-310 et seq. (1986 & Supp. 1997), upon a request for a contested case hearing by Frederic A. Lester ("Lester") and Quick Foods, Inc. ("Quick Foods") subsequent to the issuance by Petitioner South Carolina Department of Revenue ("DOR") of citations for alleged administrative violations of the Video Game Machines Act and related DOR regulations. DOR issued citations to Respondents for failure to have "at least one separate employee on the premises during business hours," failure to have a separate electric utility meter for each entity or business, failure to attach owner identification to ten video poker machines, failure to post penalty signs on nine video poker machines, and for exceeding the $125 maximum payout limit. DOR seeks total fines of $30,700 against Lester and $7,500 against Quick Foods for the various violations, revocation of twenty-four Class III machine licenses in five game rooms, and a six-month ban on the use or operation of Class III machines in those game rooms.

A contested case hearing was held at the Administrative Law Judge Division in Columbia, South Carolina, on October 5, 1998. Based upon the relevant and probative evidence and the applicable law, I conclude the alleged violations occurred. Total fines assessed against Lester are $8,000; total fines assessed against Quick Foods are $1,400; the twenty-four Class III machine licenses are revoked; and a six-month prohibition on Class III machines in those game rooms is imposed.

Although this case is similar in nature to many other video poker enforcement cases previously heard and decided by the ALJD, it does present two somewhat novel issues: (1) whether SLED's undercover entry and inspection amounts to an unlawful search and seizure; and (2) in calculating the $125 cash payout maximum under § 12-27-2791, whether a player's initial cash deposits must be considered.

Respondents claim Ric's Fair Play Video was not open to the general public and that SLED agents were allowed entry to Ric's under false pretenses and without permission to conduct an official inspection, thereby performing an illegal search and seizure. Accordingly, at the hearing Respondents moved to suppress or strike any evidence resulting from the inspection and to dismiss this action.

In standard fashion, SLED agents performed an undercover inspection of the business premises, posing as customers and playing video game machines in one or more of the various game rooms. Ric's Fair Play Video is a typical video mall, consisting of a common area connecting several individual game rooms which contain video game machines. Based upon their play of the machines and their observations of the location and its employees, Grimsley and Snow returned soon after their undercover visit to Ric's to complete their inspection in a more formal capacity. On the second visit, the agents presented their credentials and identified themselves at the door before proceeding to question employees and examine machine licenses, utility meters, retail tax licenses, and business licenses. The inspection concluded with the issuance of a Preliminary Findings Report citing several administrative violations.

The only thing unusual about this inspection was the means of entry. Ric's outside doors are locked, and patrons must display a membership card to be admitted. Patrons must complete an application form to obtain a membership card. Prior to the inspection, Lt. Grimsley of SLED applied for membership to Ric's using a fictitious name and place of employment and received a membership card. On the date of the inspection, Lt. Grimsley presented his membership card at the front door of Ric's and entered. Although SLED Agent Stacey Snow who accompanied Lt. Grimsley did not have a membership card, he was allowed to enter as a "guest" of Lt. Grimsley. Once inside, Grimsley and Snow merely walked within the common area and individual game rooms open to all patrons and played several machines.

Respondents assert that SLED's undercover operation was an administrative entry without consent upon portions of a commercial premises not open to the public, which required a search warrant under See v. City of Seattle, 387 U.S. 541, 87 S.Ct. 1737 (1967). I find Respondents' argument intriguing but not persuasive. Given the purpose, nature, scope, and method of the inspection, and the public interest and privacy expectation involved here, Agents Snow and Grimsley acted within acceptable parameters, and Respondents' constitutional rights were not violated.

Undercover operations are a necessary and successful enforcement tool, especially for those situations in which an announced inspection would not be an effective deterrent to or means of discovery of illegal activities. The prerequisite of a warrant or consent from the owner could easily frustrate inspection efforts. U.S. v. Biswell, 406 U.S. 311, 92 S.Ct. 1593 (1972). The use of information obtained through an undercover operation is generally acceptable as long as no due process violation occurs. When an official's manner of carrying out an enforcement action is asserted to be in violation of due process, the test is whether the official's conduct is so egregious as to be arbitrary in the constitutional sense. County of Sacramento v. Lewis, 140 L.Ed.2d 1043, 66 USLW 4407 (May 26, 1998).

There was no egregious conduct on the part of either agent in this case. No force, coercion, or other outrageous or offensive means was used to gain access to or inspection of the Respondent's business location. The undercover agents did not inspect any portion of the commercial establishment not open to and in plain view of any other patron. The agents merely played the licensed machines during normal business hours and observed their surroundings as any of the 800 to 1000 other patrons could do on the commercial premises. Lester, the owner of Ric's, testified that security was the primary reason for the implementation of the membership system.⁽¹⁾ The presence of law enforcement officers would have improved rather than decreased the safety and security of the premises, patrons, and employees.

The Fourth Amendment prohibition on unreasonable search and seizure applies to government action in an arena of reasonable expectation of privacy. Courts have long recognized that this prohibition applies to private homes and commercial premises. An expectation of privacy on commercial premises, however, is less than the one in a private home. Donovan v. Dewey, 452 U.S. 594, 598-599, 101 S.Ct. 2534, 2537-2538, 69 L.Ed.2d 262 (1981). The privacy expectation for a commercial property used in a "closely regulated" industry is lesser still. See New York v. Burger, 482 U.S. 691, 107 S.Ct. 2636, 96 L.Ed.2d 601 (1987). The liquor industry and firearms sales business are recognized as closely regulated. See Colonnade Corp. V. U.S., 397 U.S. 72, 90 S.Ct. 774, 25 L.Ed.2d 60 (1970) and United States v. Biswell, 406 U.S. 311, 92 S.Ct. 1593, 32 L.Ed.2d 87 (1972), respectively. Like those industries, the gaming industry in South Carolina is one which is subject to a high degree of regulation and scrutiny and the State's authority to enforce its regulations by means of reasonable inspection of licensed premises is inherent. See S.C. Code Ann. § 12-21-2770 (Sup. 1997) et seq; R. 117.

Had the SLED agents' undercover, warrantless inspection also included locked storage areas or management offices not open to patrons, Fourth Amendment rights may have been jeopardized, but the facts of this case do not present such a scenario. There is very little expectation of privacy for those portions of a commercial business premises to which over 800 persons can enter at any given time during business hours. By the very nature of the gaming business, Ric's relies upon and seeks public admission to the location and interaction with the video game machines on the premises. Ric's employees were able, at all times, to monitor the agents' actions and movements.

For the foregoing reasons, Respondent's Motions to Suppress and to Dismiss are denied.

After playing one of the machines for a period of time, Agent Snow "cashed out" on the machine he had been playing for $130.00, meaning he received $130.00 cash by an employee of the business for the credits he accumulated on the machine. DOR alleges that payout violated S.C. Code Ann. § 12-27-2791 by paying out cash winnings to a player in excess of the $125 daily per player limit. Respondents argue that the statute imposes a limit of $125 on credits actually earned while playing, but does not include any credits automatically received upon depositing cash in the machine.

S.C. Code Ann. § 12-27-2791 (Supp. 1997) provides that:

Any location which operates or allows the operation of coin-operated machines

pursuant to Section 12-21-2720(A)(3) which provides payouts authorized

pursuant to Section 16-19-60 shall limit the cash payout for credits earned

for free games to two thousand five hundred credits per player per location

during any twenty-four hour period. The cash value of credits for each free

game shall be limited to five cents.

A court must find an ambiguity within the statute to apply the rules of statutory construction. Lester claims the phrase "payout for credits earned for free games... during any twenty-four hour period" is ambiguous. A cardinal rule of statutory construction is that the words used in a statute should be given their plain and ordinary meaning. Multimedia, Inc. V. Greenville Airport Commission, 287 S.C. 521, 339 S.E.2d 884 (Ct. App. 1986); Hughes v. Edwards, 265 S.C. 529, 220 S.E.2d 231 (1975). When the terms of a statute are plain and unambiguous, the courts must apply those terms according to their literal meaning, without resort to subtle or forced construction in an attempt to limit or expand the scope of the statute. Holley v. Mount Vernon Mills, Inc., 312 S.C. 320, 440 S.E.2d 373 (1994). "If a statute's language is unambiguous and conveys a clear and definite meaning, it is unnecessary and inappropriate for the court to use rules of statutory interpretation to impose another meaning." State v. Evans, 309 S.C. 471, 474, 424 S.E.2d 512, 514 (Ct. App. 1992). The primary function in interpreting a statute is to ascertain the intent of the legislature. Multi-Cinema, Ltd. v. South Carolina Tax Comm'n, 292 S.C. 411, 357 S.E.2d 6 (1987). The court must presume that the legislature did not intend the statute to be futile. State ex rel McLeod v. Montgomery, 136 S.E.2d 778 (1964). The statutory cap on payouts is clearly intended to discourage gambling by limiting potential winnings. Johnson v. Collins Entertainment Co. Inc., 3:97-2139-17 (D.S.C. August 28, 1998).

To construe § 12-27-2791, I rely heavily upon the interpretations expressed in two recent decisions involving the statute, one in Federal District Court and the other from the ALJD. In discussing plaintiff's cause of action for violation of the South Carolina Unfair Trade Practices Act in Johnson v. Collins Entertainment Co., Inc., 3:97-2136-17 (D.S.C. August 25, 1998), Federal District Court Judge Joe Anderson held that the Video Game Machines Act clearly disallows payouts in excess of $125.00 within a twenty-four hour period. The court dismissed defendant's statutory interpretation that it allowed for successive payments of $125 per day in credits earned in a given day, or that payouts of any amount were allowed so long as it was not more than $125 over the amount placed into the machine. Administrative Law Judge Alison Lee followed the Johnson reasoning in S.C. Dept. of Revenue v. McDonald Amusements, Inc, 98-ALL-17-0123-CC (Judge Lee) Nov. 13, 1998. The facts of the present case are strikingly similar to those in McDonald. In each case a SLED agent playing a machine undercover "cashed out" for an amount in excess of $125. Relying upon basic rules of statutory construction, Judge Lee rejected the argument that the statute imposes a payout limit on gross credits earned rather than the face amount of the cash payout.

The only reasonable way to read the statute to comport with its plain language and legislative intent is to limit cash payouts, regardless of when or how the payout is made, to the stated amount of $125, for any credits earned at that establishment in a 24 hour period. Johnson v. Collins Entertainment Co. Inc., supra. The "credits earned" are the credits available to a player without any additional cost to that player, regardless of whether they are due to money the player put in or credits later won. Respondent's assertion that the statutory limit of $125 only comes into play when the player wins credits with a cash value in excess of winnings plus the initial deposit is not in conjunction with the statutory interpretation. If the statute is ambiguous, deference is given to the agency's interpretation.

Furthermore, if the Legislature had intended Respondent's interpretation, the adoption of language in the 1996-97 South Carolina state budget bill would not have been necessary. A portion of the budget bill proposed, but vetoed, provided in part:

I. Section 12-21-2791 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

Section 12-21-2791. During a twenty-four hour period, a person is not permitted to win more than one hundred twenty-five dollars over and above the amount deposited in a coin-operated machine authorized under Section 12-21-2720(A)(3).

1996 Budget Bill, Part II § 54I. This provision clearly advances the position of Respondent. If the current version of Section 12-21-2791 means a payout in excess of what is deposited into the machine, then there would be no need for the Legislature to amend the statute. The Legislature is presumed not to undertake a futile act. TNS Mills, Inc. v. S.C. Dept. of R, 331 S.C. 611, 503 S.E.2d 471 (1998); See S.C. Dept. of Revenue v. McDonald Amusements, Inc, 98-ALL-17-0123-CC (Judge Lee) Nov. 13, 1998.

By a preponderance of the evidence, I find:

1. Between May 31, 1996 and July 22, 1997, Fredric A. Lester ("Lester") applied for and was issued the following biennial coin-operated device licenses: 3802026, 3802027, 3802028, 3802029, 3802030, 3802031, 3802032, 3802033 and 3802034 valid through May 31, 1998, and licenses 3924423, 3924424, 3924425, 3924426, 3924427, 3938518, 3938519, 3938520, 3931506 - 3931595 and 3931766-3931793 valid through May 31, 1999.

2. On August 8, 1997, the machines bearing the above-referenced licenses were located at Ric's Fair Play Video, 1662 Savannah Highway in Charleston, South Carolina.

3. Ric's Fair Play Video is a video mall owned and operated by Fredric Lester which contains eight individual game rooms in operation, where room #1 contained four machines, and rooms #2-8 each contained five machines.

4. The retail license numbers, machine license numbers and room ownership is divided as follows:

Room #1 Ric's Room #2 Hot Play Room #3 Victor's

retail # 545181 retail # 590050 retail # 595279

License # Owner License # Owner License # Owner

3802026 Lester 3931539 Quick Foods 3931529 Quick Foods

3802029 Lester 3931540 Quick Foods 3931784 Quick Foods

3802030 Lester 3931541 Quick Foods 3931531 Quick Foods

3924423 Lester 3931542 Quick Foods 3931533 Quick Foods

3931543 Quick Foods 3931574 Quick Foods

Room # 4 Omega House Room # 5 Play Choice Prod. Room #6 Fair Play

retail # 590041 retail # 580686 retail 545163

License # Owner License # Owner License # Owner

3807553 Quick Foods 3802031 Lester 3802028 Lester

3807556 Quick Foods 3924424 Lester 3802032 Lester

Room # 4 Omega House Room # 5 Play Choice Prod. Room #6 Fair Play

retail # 590041 retail # 580686 retail 545163

License # Owner License # Owner License # Owner

3807559 Quick Foods 3924425 Lester 3802034 Lester

3931530 Quick Foods 3802027 Lester 3924426 Lester

3931532 Quick Foods 3802033 Lester 3924427 Lester

Room # 7 Certs International Room # 8 Surprise House

retail # 552270 retail # 591451

License # Owner License # Owner

3938520 Lester 3931538 Quick Foods

3938518 Lester 3931537 Quick Foods

3938519 Lester 3931536 Quick Foods

3931528 Quick Foods 3931535 Quick Foods

3931527 Quick Foods 3931534 Quick Foods

5. On August 8, 1997, agents of the State Law Enforcement Division (SLED) inspected the location at 1662 Savannah Highway, Charleston, South Carolina for compliance with the Video Game Machine Act.

6. The SLED agents gained access to the establishment by use of a membership card issued to one of the officers in a fictitious name.

7. Lt. Grimsley entered room #6 (Fair Play Video) and played the machines.

8. Agent Snow entered room #7 (Certs International) and played the machines.

9. No employee was present in either room #6 (Fair Play Video) or #7 (Certs International) while the SLED agents were in those game rooms playing the machines.

10. After playing for a period of time, Agent Snow "cashed out" on the machine he had been playing (license 3938520), and received a $130.00 payout from an employee of the business.

11. The officers subsequently left Ric's, but returned soon thereafter, identified themselves as SLED agents and concluded an inspection of the premises.

12. At the time of inspection, the utility meters in Rooms 1,2,3,6 and 7 were inoperable.

13. No owner identification labels were attached to machines with licenses 32802031, 3924425, 3802027, 3802033, 3802028, 3802032, 3924427, 3924426, 3802034 and 3931536.

14. No "penalty sign" notices or stickers were on or near machines with licenses 3802031, 3924424, 3938520, 3938518, 3938519 and 3931536.

15. The SLED agents issued a Preliminary Findings Report for Video Gaming to the owner/Respondent on August 18, 1997, upon completion of the inspection.

16. The Report set forth alleged violations of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997), 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997), S.C. Code Ann. § 12-21-2748 (Supp. 1997), S.C. Code Ann. § 12-21-2802 (Supp. 1997) and S.C. Code Ann. § 12-21-2791 (Supp. 1997).

17. On October 28, 1997, DOR issued Respondent an administrative citation for the alleged violations.

18. On May 8, 1998, DOR issued a final determination upholding its October 28, 1997 citation against Respondents and Respondents filed a request for a contested case hearing on June 8, 1998.

CONCLUSIONS OF LAW

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

1. Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1997) and S.C. Code Ann. § 1-23-600

(Supp. 1997), the Administrative Law Judge Division has jurisdiction to hear and decide this matter.

2. The Video Game Machine Act, S.C. Code Ann. §§ 12-21-2770, et seq. (Supp. 1997)

became effective on July 1, 1993, 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. South Carolina Tax Comm'n, 6:93-1491-3 and 6:93-1493-3 (U.S. Dist. Ct., Greenville, S.C., Nov. 15, 1993); see also 1994 Op. S.C. Att'y Gen. 21.

3. Section 12-21-2804 (A) of the Video Game Machine Act prohibits a person from applying for, receiving, maintaining, or permitting to be used permits for the operation of more than five Class III machines at a single place or premises. Video poker machines authorized under S.C. Code § 12-21-2720(A)(3) (Supp. 1997) are termed Class III machines.

4. DOR regulations clarify the meaning of "single place or premises" for purposes of the

Video Games Machines Act:

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.

S.C. Code Regs. 117-190 (Supp. 1996).

5. Respondent Lester violated S.C. Code Ann. § 12-21-2804 by operating video machines in

a location failing to meet all requirements of the "single place or premises" criteria set forth in R. 117-190 by virtue of its failure to have an employee on the premises in room #6 (Fair Play Video) and room #7 (Certs International) while these rooms were open and in operation.

6. In addition, Lester violated S.C. Code Ann. § 12-21-2804 by operating video machines in a location failing to meet all requirements of the "single place or premises" criteria set forth in R. 117-190 by virtue of its failure to have separate utility meters in rooms #1 (Ric's Fair Play Video), and #7 (Certs International) while the rooms were open and in operation.

7. Quick Foods violated S.C. Code Ann. § 12-21-2804 by operating video machines in a location failing to meet all requirements of the "single place or premises" criteria set forth in R. 117-190 by virtue of its failure to have separate utility meters in rooms #2 (Hot Play), #3 (Victor's House), and #6 (Fair Play)

8. Under § 12-21-2804(A), a license on a video poker machine must be revoked by virtue of its misuse under the Act, regardless if the actual violator is the retail licensee, machine owner, or lessee. A monetary fine under § 12-21-2804(F), however, must be imposed only upon those persons directly involved in the management or operation of the location, in violation of § 12-21-2804(A).

9. Each individual person or entity found in violation of the statute is subject to the monetary penalty for each individual violation. S.C. Code Ann. § 12-21-2804(F) (Supp. 1996).

10. Section 12-21-2804(F) (Supp. 1997) provides that a person who violates § 12-21-2804(A)

is subject to a fine of up to $5,000.

11. Within statutory limits, the amount of a fine is a matter of trial-court discretion. State v. Sheppard, 54 S.C. 178, 32 S.E. 146 (1899). An administrative law judge, as fact finder, has the prerogative "to impose an appropriate penalty based on the facts presented." Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 211, 407 S.E.2d 633, 634 (1991).

12. Under the circumstances of this case, a fine of $4,000 imposed upon Lester for violation of § 12-21-2804(A) is reasonable and appropriate.

13. Under the circumstances of this case, a fine of $1,000 imposed upon Quick Foods for violation of § 12-21-2804(A) is reasonable and appropriate.

14. Pursuant to S.C. Code Ann. § 12-21-2802 (Supp. 1997), "[E]ach machine licensed under this article [Video Game Machines Act] or Article 19 must have a prominently displayed sign citing the penalties provided by Sections 12-21-2790, 12-21-2792, and 12-21-2794 on the wall above the machine or affixed prominently to the machine."

15. In construing a statute, the language used should be given its plain and ordinary meaning without resort to subtle or forced construction to limit or expand the statute's operation. Home Health Serv., Inc. v. S.C. Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994); Bryant v. City of Charleston, 295 S.C. 408, 368 S.E.2d 899 (1988). Under its plain and ordinary meaning, § 12-21-2802 clearly and unambiguously requires the posting of a penalty sign for each licensed machine.

16. Lester violated S.C. Code Ann. § 12-21-2802 (Supp. 1997) by not posting penalty signs on eight video gaming machines, located in room # 5 (Play Choice Productions) with machine numbers 3802031, 3924424, 3924425, 3802027 and 3802033, room # 7 (Certs International) with machine numbers 3938520, 3938518 and 3938519.

17. Quick Foods violated S.C. Code Ann. § 12-21-2802 (Supp. 1997) by not posting a penalty sign on one video gaming machine, license # 3931536, located in room #8 (Surprise House).

18. The Video Games Machines Act does not provide a specific penalty for a violation of § 12-21-2802; however, the penalty provisions of Title 12, Chapter 54 relating to license and taxes generally are applicable. See S.C. Revenue Ruling 97-2.

19. Under the circumstances of this case, a fine of $100 for each sign violation is reasonable and appropriate.

20. S.C. Code Ann. § 12-21-2791 provides that:

Any location which operates or allows the operation of coin-operated

machines pursuant to § 12-21-2720(A)(3) which provides

payouts authorized pursuant to § 16-19-60 shall limit the cash

payout for credits earned for free games to two thousand five

hundred credits per player per location during any twenty four

hour period. The cash value of credits for each game shall be

limited to five cents.

21. The Respondent violated S.C. Code Ann. § 12-21-2791 (Supp. 1997) by tendering cash payouts exceeding $125 in a twenty-four hour period on August 12, 1997.

22. Section 12-54-40(b)(3) provides: "a person who is liable to obtain a license or purchase stamps for identification purposes, who fails to obtain or display the license properly, or who fails to affix the stamps properly, or fails to comply with statutory provisions, is subject to a penalty of not less than fifty dollars nor more than five hundred dollars for each failure." (emphasis added).

23. No coin-operated machine licensed under the provisions of Section 12-21-2720(A)(3) may be operated at a location unless the location is licensed pursuant to the provisions of Chapter 36 of Title 12. S.C. Code Ann. § 12-21-2703 (Supp. 1997). As the Respondent was required to obtain a retail license to allow or operate Class III machines on the licensed premises, the penalty provisions of S.C. Code Ann. § 12-21-2703 (Supp. 1997) apply to the violation at issue.

24. A penalty of $500 imposed against Respondent Lester for violations of §§ 12-54-40(b)(3) and 12-21-2791 is appropriate under the facts and circumstances of this case.

25. Licensed Class III video poker machines must have information identifying the owner or operator of the machine attached on an area of the machine visible for inspection purposes. S.C. Code Ann. § 12-21-2748 (Supp.1997).

26. S.C. Code Ann. § 12-21-2748 provides in part:

Any person who owns or operates devices described in §§ 12-21-2720

and 12-21-2730 must have attached to the machine information identifying

the owner or operator of the machine. The identification must be placed on

an area of the machine which is available for inspection purposes...Failure to

comply with this requirement subjects the violator to the penalty and

enforcement provisions of this chapter and of Chapter 54 as applicable.

27. Lester failed to have owner identification attached to nine video poker machines in room #5 (Play Choice Productions), with licenses 32802031, 3924425, 3802027 and 3802033, and room #6 (Fair Play Video) with licenses 3802028, 3802032, 3924427, 3924426 and 3802034, in violation of S.C. Code Ann. § 12-21-2748 (Supp. 1997).

28. Quick Foods failed have owner identification attached to one video poker machine in room #8 (Surprise House) with license 3931536 in violation of S.C. Code Ann. § 12-21-2748 (Supp. 1997).

29. S.C. Code Ann § 12-21-2738 provides as follows:

If the violation under this section relates to a machine licensed pursuant to Section 12-21-2720(A)(3), the applicable penalty amount is two thousand five hundred dollars.

30. Fines of $300 per owner identification violation are imposed against Respondents, totaling $2,700 against Lester and $300 against Quick Foods.

IT IS THEREFORE ORDERED that Respondent Lester must pay a total penalty of Eight Thousand Dollars ($8,000), and Respondent Quick Foods must pay a total penalty of One Thousand Four Hundred Dollars ($1,400).

IT IS FURTHER ORDERED that the licenses of the following twenty-four Class III machines are revoked:

Room #1 Ric's Room #2 Hot Play Room #3 Victor's

License # Owner License # Owner License # Owner

3802026 Lester 3931539 Quick Foods 3931529 Quick Foods

3802029 Lester 3931540 Quick Foods 3931784 Quick Foods

3802030 Lester 3931541 Quick Foods 3931531 Quick Foods

3924423 Lester 3931542 Quick Foods 3931533 Quick Foods

3931543 Quick Foods 3931574 Quick Foods

Room #6 Fair Play Room #7 Certs

License # Owner License # Owner

3802028 Lester 3938518 Lester

3802032 Lester 3938519 Lester

3802034 Lester 3938520 Lester

3924426 Lester 3931527 Lester

3924427 Lester 3931528 Lester

IT IS FURTHER ORDERED that the use or operation of any Class III coin-operated devices in the following game rooms located at 1662 Savannah Highway, Charleston, South Carolina, is prohibited for a period of six months after the entry of this Order:

Room #1, Ric's; Room #2, Hot Play; Room #3, Victor's;

Room #6, Fair Play; and Room #7, Certs. International.

AND IT IS SO ORDERED.

__________________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

January 14, 1999

Columbia, South Carolina

1. An employee at one of Lester's other video poker businesses was previously shot and robbed. By screening potential patrons through an application and membership process and limiting access to the business premises to members, Lester hoped to decrease the chances of such an incident occurring again.