ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This is a case brought by the Respondent for a contested case hearing, pursuant to S.C. Code Ann. §§ 1-23-310, et seq., and 12-4-30 (Supp. 1997). Respondent has appealed an administrative citation issued by the South Carolina Department of Revenue ("Department") against it for a violation of the South Carolina Video Game Machines Act (the "Act"). The Department issued an administrative citation and Final Agency Determination finding that the Respondent had violated the provisions of S. C. Code Ann. § 12-21-2748 (Supp. 1997) by failing to have identification of itself as the owner of a Class III video game machine.
A hearing on this matter was held on November 18, 1998 at the Administrative Law Judge Division ("ALJD"). Any issues raised in the proceedings or hearing of this case not addressed in this Order are deemed denied. ALJD Rule 29(B).
ISSUES
1. Did the Respondent violate the owner identification requirement of S.C. Code Ann. § 12-21-2748 (Supp. 1997) by failing to have identification properly posted on a Class III video game machine owned by and licensed to the Respondent?
2. If the Respondent did violate the statute, is the penalty of Two Thousand Five Hundred ($2,500.00) Dollars imposed by the Department under S.C. Code Ann. § 12-21-2738 (Supp. 1997) appropriate?
FINDINGS OF FACT
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. Notice of the time, date, place and subject matter of the hearing was timely given to the Petitioner and the Respondent.
2. Jack W. Gardner holds a South Carolina Class III Coin Operated Device license for a video machine bearing license number 3927667. The machine upon which that license was attached was operated at The Spinx Company # 223 ("Spinx") at 11068 Anderson Road, Piedmont, South Carolina.
3. On March 26, 1998, South Carolina Law Enforcement ("SLED") Special Agent James R. Causey of the SLED Alcohol Enforcement Unit conducted an inspection of Spinx. While inspecting the Class III video game machines at this location, Agent Causey noted that one of the machines, bearing license number 3927667, did not have any owner identification attached anywhere to the machine. After checking the front, rear, and both sides of the machine, Agent Causey asked the manager of the location, Annette Dixon, to recheck the machine to see if she could find any owner identification. Neither Agent Causey nor Ms. Dixon could locate any owner identification on the machine. Agent Causey prepared a Preliminary Findings Report citing the Respondent for violating Section 12-21-2748. Agent Causey provided a copy of the Report to Ms. Dixon on that date.
4. On the basis of Agent Causey's Preliminary Findings Report, the Department assessed the Respondent a penalty in the amount of Two Thousand Five Hundred ($2,500.00) Dollars under Section 12-21-2738.
5. Respondent’s route operator, Kimberly Crum, testified that she inspected the machine in question on March 20, 1998. At that time, a proper owner identification was affixed to the machine. Furthermore, she stated that Respondent has made efforts to decrease such tampering, subsequent to the date of this violation, by placing the machine owner identification behind plexiglass.
6. Ms. Crum specifically testified that she was not aware of any previous instances in which Paradise Games violated the provisions requiring owner identification upon the machines on her route. However, in South Carolina Department of Revenue v. Jack W. Gardner d/b/a Paradise Games, 98-ALJ-17-0388-CC, Paradise Games was found in violation of the provisions of S. C. Code Ann. § 12-21-2748 by failing to have the owner identification attached to its Class III video game machines on January 19, 1998. Kimberly Crum, on behalf of Paradise Games, argued in a Pre-Hearing Statement that :
We employ a weekly auditor that visits each and every location of which one of the responsibilities is to insure all required video poker postings are on each unit as
required by law. Knowing this is audited weekly, we maintain our position in that two of the four units were maliciously tampered with by removing the owner/operator license.
I find that Ms. Crum mislead this court concerning the previous violation of Paradise Games. Not only has the Respondent previously violated the owner identification provision, but after the violation on January 19, 1998, the Respondent did not rectify this problem.
7. I find that a penalty of Two Thousand Five Hundred ($2,500.00 ) Dollars is appropriate in this case.
CONCLUSIONS OF LAW
Based on the above Findings of Fact, I conclude the following as a matter of law:
1. The Administrative Law Judge Division has jurisdiction to hear this matter pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1997) and S.C. Code Ann. § 1-23-320 (Supp. 1997).
2. The Department contends that the Respondent violated S.C. Code Ann. § 12-21-2748 which provides that:
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 visible for inspection purposes. This identification is a condition precedent before the machines may be operated on location. Failure to comply with this requirement subjects the violator to the penalty and enforcement provisions of this chapter and of Chapter 54 as applicable.
3. The Video Games Machine Act which regulates video game machine activity in South Carolina, was enacted in 1993 and became effective on July 1, 1993. The Act is codified at S.C. Code Ann. §§ 12-21-2770, et seq. (Supp. 1997). The express purpose of the Act is to regulate the video games machine industry in South Carolina.
4. The Respondent in this case violated S.C. Code Ann. § 12-21-2748 on March 26, 1998 by not having proper owner identification affixed to a Class III video game machine it owned at the Spinx location.
5. The penalty to be imposed for a violation of § 12-21-2748 is provided for in S. C. Code Ann. § 12-21-2738 (Supp. 1997) which provides in relevant part that:
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.
Under this statute, both the Department and the Administrative Law Judge Division may reduce the amount of the fine to be imposed under Section 12-21-2738 for a violation of Section 12-21-2748 provided that the party found in violation of Section 12-21-2748 can show some extenuating circumstance or "reason" for the violation. However, the Respondent failed to produce sufficient evidence to warrant the reduction of this amount.
6. On March 26, 1998, the Respondent violated S.C. Code Ann. § 12-21-2748. The Respondent had knowledge that its owner identification stickers placed on the front of its machines on the date in question were subject to being lost or removed by patrons. Despite this knowledge, Respondent either intentionally or negligently failed to take action to reduce such alleged tampering or loss of identification from its machines until some time after the date of the violation at issue in this case. I therefore conclude as a matter of law that the Respondent violated the "owner identification" requirement of Section 12-21-2748 and that the appropriate penalty for such violation is Two Thousand Five Hundred ($2,500.00) Dollars under Section 12-21-2738.
ORDER
Based upon the Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that the Respondent pay a fine in the amount of Two Thousand Five Hundred ($2,500.00) Dollars to the Department of Revenue within thirty days from the date of this Order.
AND IT IS SO ORDERED.
_______________________________
Ralph K. Anderson, III
Administrative Law Judge
April 1, 1999
Columbia, South Carolina
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