ORDERS:
CORRECTED FINAL ORDER AND DECISION
I. Statement of the Case
The South Carolina Department of Revenue (DOR) seeks to impose a fine of $2,500 for a failure by
AAA Entertainment Corp. (AAA) to obtain a license required for the operation of a Class III video
machine. AAA, the machine owner, opposes DOR's position and asserts the amount of the fine is
improper and excessive. 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). The hearing in this
matter was held March 17, 1999 at the Edgar Brown Building, Columbia, South Carolina. Based
upon the evidence and the argument presented, a fine of $2,500 is proper.
II. Issues
1. Did AAA violate S.C. Code Ann. Sec. 12-21-2720(A) (Supp. 1998) by failing to procure
from DOR a license for the privilege of making use of a Class III machine as defined in S.C.
Code Ann. Sec. 12-21-2720(A)(3) (Supp. 1998), i.e., a video game with free play feature
operated by a slot in which a coin or thing of value is deposited?
2. If AAA violated S.C. Code Ann. § 12-21-2720(A) (Supp. 1998), what fine is imposed for the
violation?
III. Analysis
A. Failure to License a Class III Machine
1. Positions of Parties
DOR argues that AAA operated a Class III video machine without a valid license. AAA's prehearing
statement admits the machine did not have a valid license. However, AAA argues the machine was
to be removed from the premises and, at the time of the inspection by SLED, the removal had simply
not been accomplished.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
A. Background Facts
AAA owns one Class III video game machine which it maintains for use at a place of business located
at 20 Simmons Road, Burton, South Carolina. At that address on July 2, 1998, SLED Agents
conducted an inspection of AAA's video machine. The inspection included walking into the location
and searching for the license number on the machine.
During the inspection, the SLED Agents identified one unlicensed machine. The lack of a license was
determined after a through examination of the machine. The unlicensed machine was in an
establishment that was open for business. The machine was turned on, was operational, and was
accessible to customers. As the result of the lack of a license, the SLED Agents issued a citation to
AAA for a violation of S.C. Code Ann. Sec. 12-21-2720(A) (Supp. 1998) for maintaining for use an
unlicensed Class III machine. Further, DOR established a fine of $2,500.
B. Disputed Facts Decided
AAA had one Class III machine at the 20 Simmons Road, Burton, South Carolina, location at the
time of the inspection. The machine was completely functional and was accessible to customers.
Despite being fully available for play, the machine had no valid Class III license.
The lack of a Class III license is not remedied by AAA's argument that the machine was scheduled
for removal. First, the fact of a scheduled removal was not proven. Indeed, the facts demonstrate
the machine was available for play and gave no indication that the machine was prepared for
shipment. Second, even if proven, the fact that the machine was scheduled for removal does not offset
the established fact that the machine was available for play at the time of the inspection. Plainly, the
machine was operable and was accessible to customers. Thus, while a Class III license was required
for the machine, no valid license was attached.
3. Conclusions of Law
Based on the foregoing Findings of Fact, I conclude the following as a matter of law:
A person who maintains for use on a place or premises occupied by him, a Class III machine, i.e., a
video game machine (other than a flipper machine) that has a free play feature and that is operated
by a slot into which a coin or thing of value is deposited, must obtain a license from DOR. S.C. Code
Ann. Sec. 12-21-2720(A) (3) (1998). That license must be displayed conspicuously on the front of
the machine. S.C. Code Ann. Sec. 12-21-2726 (1998). Finally, the license must be attached to the
Class III machine "before placement or operation" of the machine on the premises. S.C. Code Ann.
§ 12-21-2778 (1998).
Here, the facts establish no valid Class III license was attached to AAA's machine. The requirement
to hold a state license is a basic duty fundamental to the highly regulated nature of video poker, and
the failure to obtain a license is a serious violation of the regulatory scheme. Accordingly, no license
being present, a violation of S.C. Code Ann. § 12-21-2720(A) (3) (1998) is proven.
B. Penalty for No Valid License for a Class III Machine
1. Positions of Parties
DOR asserts a fine of $2,500 is due from AAA under S.C. Code Ann. § 12-21-2738 (Supp. 1998)
since AAA operated a Class III machine without a license. AAA argues the amount of the fine is
inappropriate since the machine was scheduled to be removed from the premises and had merely not
been so removed by the July 2, 1998 inspection date.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
AAA owns a Class III video machine which it operated at 20 Simmons Road, Burton, South
Carolina. The machine was operational and available to the public for play on the inspection date of
July 2, 1998. Further, that machine did not have a valid Class III license on July 2, 1998.
3. Conclusions of Law
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
A person who fails to attach the required license to any machine as required by law is subject to a
$2,500 penalty for each failure. S.C. Code Ann § 12-21-2738 (Supp. 1998). The amount of the
penalty is not discretionary since the statute explains that "the applicable penalty is two thousand five
hundred dollars." Here, the license was not attached on the July 2, 1998 inspection date.
Accordingly, the fine of $2,500 must be imposed.
IV. Order
Based upon the Findings of Fact and Conclusions of Law, it is hereby ordered:
For its failure to obtain the license required by S.C. Code Ann. § 12-21-2720 (Supp. 1998), AAA
is liable for and shall pay a fine of $2,500 as imposed by S.C. Code Ann. § 12-21-2738 (Supp.
1998).
AND IT IS SO ORDERED.
RAY N. STEVENS
Administrative Law Judge
Dated: March 19, 1999
Columbia, South Carolina |
