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. Busters, Inc., and Great Games, Inc.

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Busters, Inc., and Great Games, Inc.
 
DOCKET NUMBER:
98-ALJ-17-0547-CC

APPEARANCES:
Nicholas P. Sipe, Esquire for Petitioner

John G. O'Day, Esquire for Respondent
 

ORDERS:

FINAL ORDER AND DECISION

This matter is before the South Carolina Administrative Law Judge Division ("Division") pursuant to a citation issued by the South Carolina Department of Revenue ("Department" or "DOR") against Busters, Inc., and Great Games, Inc., ("Respondents" or "Great Games") for violating S.C. Code Ann. § 12-21-2804(A)(3) (Supp. 1997) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997). In particular, the Department alleges that Respondents operated more than five Class III machines at a single place or premise by failing to have an employee on the premises at all times. After notice to the parties, a hearing was conducted on December 7, 1998.

Any issues raised or presented in the proceedings or hearing of this case not specifically addressed in this Order are deemed denied. ALJD Rule 29(B).

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:

1. Jimmy L. Martin, Jr., and T. Shay Martin are co-owners of Great Games, Inc., and co-operators of Busters, Inc.

2. There are thirty-five (35) video game machines owned by Busters, Inc. and Great Games, Inc., located at 532 St. Andrews Road, Columbia, South Carolina in seven video gaming businesses: "Club House (Suite B);" "Club House II (Suite E);" "Sands (Suite C);" "Sands II (Suite F);" "Players Club (Suite A);" "Players Club II (Suite D)" and "Players Club III."

3. A site inspection was conducted on November 13, 1997, by two undercover South Carolina Law Enforcement Division (SLED) officers, John Tanner and Konnie Smith.

4. At the time of the inspection, each of the suites contained five Class III video game machines. However, two of the five machines located in The Players Club (Suite A) were disabled, and the licenses for those two machines are not at issue in this proceeding before the Division. The suites were joined by a common area, but each entity was separated by its own door.

5. Upon entering the location, the SLED agents observed that within all seven suites, each room was lighted and thirty-three (33) of the machines were plugged in and operable. In addition, the agents observed that only one of the seven suites had a door hung within its frame. Six suites had no doors, due to construction.

6. The door to Clubhouse II (Suite E) was closed, but was later opened by a security guard at the request of agent Smith, who entered the room and began to play a machine.

7. Agent Tanner played a machine in Players Club II (Suite D), and then went to Sands II (Suite F) and played a machine. No employees were present at the time he played the machines in either room.

8. The agents further observed two people playing machines in Sands (Suite C). Although an employee was present in the room, he did not remain in the room at all times, but rather was in and out.

9. Both agents then went to Players Club III, where they observed a person playing a machine with no employee in the room.

10. Three employees and the security guard were located in Players Club II (Suite D).

11. There were no employees in any of the rooms except Players Club II (Suite D).

12. The agents then identified themselves to the employees as SLED agents. At which time, the agents discussed the violations and explained the citation to the employee in charge.

13. The following is a list of the location names and their respective license numbers for each of the machines at issue in this proceeding:

Club House, Suite B Club House II, Suite E Sands, Suite C

3810576 3815770 3937281

3810318 3815769 3937282

3810578 3815826 3810321

3815535 3815827 3937283

3815534 3815828 3937289

Sands II, Suite F Players Club, Suite A Players Club III

3937277 3810320 3810333

3937276 3815533 3810334

3937278 3815532 3810355

3937280 3815553

3937279 3815552

14. The business is open twenty-four (24) hours a day and is accessible to the public during those hours.

15. Although the location was undergoing some construction which caused the doors not to be in place, there were no signs indicating that the rooms were closed and no barriers to prevent access to the room to play the machines. The machines located in these rooms were not disabled to prevent someone from attempting to play the machines.

16. The South Carolina Department of Revenue issued its Final Agency Determination revoking the licenses of the twenty-eight (28) machines listed above. The Department also assessed a penalty of $5,000 against each entity subject to the violations.

17. Respondents, Busters, Inc., and Great Games, Inc., previously have been cited for violations of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997) by failing to have an employee on the premises during business hours, and this Division has issued orders finding that violations occurred and imposed fines.

CONCLUSIONS OF LAW

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

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

2. As the proponent of an order seeking sanctions against a private party in this contested case, the Department held the burden to establish that Respondents violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1997) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997). See Am. Jur.2d Administrative Law § 360 (1994).

3. The standard of proof in administrative proceedings is a preponderance of the evidence, absent an allegation of fraud, or a statute or court rule requiring a higher standard. E.g., Anonymous v. State Bd. of Medical Examiners, 329 S.C. 371, 496 S.E.2d 17 (1998).

4. The Class III machines that are at issue in this proceeding were licensed pursuant to S.C. Code Ann. § 12-21-2720(A)(3).

5. S.C. Code Ann. § 12-21-2804(A)(Supp. 1997) prohibits the operation of more than five video game machines under S.C. Code Ann. § 12-21-2720(A)(3) at a single place or premises.

6. Pursuant to the Video Game Machines Act, S.C.Code Ann. § 12-21-2770 et seq. (Supp. 1997), the South Carolina Department of Revenue has the authority to promulgate regulations pertaining to video poker machines and persons licensed by the Department. S.C. Code Ann. § 12-21-2798 (Supp. 1997).

7. The Department promulgated 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997) to clarify the phrase "single place or premises."

8. 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997) requires that each business have at least one separate employee on the premises during business hours in order to be considered a "single place or premises" for purposes of the Act.

9. S.C. Code Ann. Regs. 117-190 provides in relevant part:

. . .

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 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 Games Machines Act.

10. Regulation 117-190 clearly requires that each business entity have at least one separate employee on the premises during business hours in order to be considered a "single place or premises.

11. In the setting such as 532 St. Andrews Road, an employee working anywhere else outside the game rooms is not "on the premises" of the game room. See South Carolina Dep't of Revenue & Taxation v. Stacks, 95-ALJ-17-0742-CC (March 8, 1996), aff'd Court of Common Pleas, Richland County, Civil Action 96-CP-40-0889 (March 21, 1997).

12. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997) expressly authorizes the Department 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.

13. 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 established in which a license has been revoked for a period of six months from the date of revocation.

14. Respondents 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.

15. 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. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).

16. 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).

17. 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).

18. Based upon the prior history of the violations involving the Respondents, the maximum penalty should be imposed.

ORDER

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

ORDERED, that the twenty-eight Class III video game machine licenses, previously identified in this order as being located within the same building at 532 St. Andrews Road, Columbia, South Carolina, on November 13, 1997, and licensed for operation by six video gaming businesses known as "Club House (Suite B);" "Club House II (Suite E);" "Sands (Suite C);" "Sands II (Suite F);" "Players Club (Suite A);" and "Players Club III" are hereby revoked.

IT IS FURTHER ORDERED that no Class III video game machine licenses be issued for, nor any Class III machines be operated at "Club House (Suite B);" "Club House II (Suite E);" "Sands (Suite C);" "Sands II (Suite F);" "Players Club (Suite A);" and "Players Club III", 532 St. Andrews Road, Columbia, for a period of six months from the date of this order.

IT IS FURTHER ORDERED that the Respondents, Busters, Inc. and Great Games, Inc., each pay a fine of $5,000 to the South Carolina Department of Revenue.

AND IT IS SO ORDERED.



_____________________________

ALISON RENEE LEE

Administrative Law Judge

January 29, 1999

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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