SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter is before this tribunal for a contested case hearing pursuant to S.C. Code Ann. §§ 1-23-310 et seq. (Supp. 1998) and S.C. Code Ann. § 12-4-30(D) (Supp. 1998) on alleged administrative violations. The South Carolina Department of Revenue (Department) claims that Respondents Mid-South, Inc. and Sand Dollars Saloon, Inc. violated the advertising prohibitions contained in S.C. Code Ann. § 12-21-2804(B) (Supp. 1998) and 27 S.C. Code Ann. Regs. 117-190.2 (Supp. 1998). The Department seeks (1) a $5,000 fine against Mid-South, Inc. and a $5,000 fine against Sand Dollar Saloon, Inc.; and (2) the revocation of 27 retail licenses held by Mid-South, Inc. in South Carolina and the retail license held by Sand Dollar Saloon, Inc., pursuant to S.C. Code Ann. § 12-54-90(A) (Supp. 1998).

Based upon the following Findings of Fact and Conclusions of Law, this tribunal concludes that only Respondent Mid-South, Inc. violated S.C. Code Ann. § 12-21-2804(B) and 27 S.C. Code Ann. Regs. 117-190.2 by improperly advertising for the playing of Class III machines. Consequently, the Department shall impose a fine of $5,000 against Respondent Mid-South, Inc.

FINDINGS OF FACT

Having carefully considered all testimony, exhibits and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:

1. On June 5, 1998, Special Agents Saundra Rhodes and Eugene L. McNeil of the South Carolina Law Enforcement Division visited the video gaming businesses located at 2000 Highway 17 North, Surfside Beach, South Carolina. The agents saw several signs on the exterior of the front of the building, including signs that stated "Jackpot Fever" and "Big Jack Pots." The agents issued a citation against Respondents Mid-South, Inc., Coastal Coin, Inc. and Sand Dollars Saloon, Inc. for violating the advertising prohibitions contained in S.C. Code Ann. § 12-21-2804(B) (Supp. 1998) and 27 S.C. Code Ann. Regs. 117-190.2 (Supp. 1998).
2. The agents discovered 44 licensed Class III machines in the 12 game rooms at 2000 Highway 17 North, Surfside Beach, South Carolina.
3. The Department seeks (1) a $5,000 fine against each Mid-South, Inc., d/b/a Unit A, and Sand Dollars Saloon; and (2) the revocation of the 27 retail licenses held by Mid-South, Inc. in South Carolina, pursuant to 27 S.C. Code Ann. § 12-54-90(A) (Supp. 1998).
4. At the time of the inspection, Respondent Mid-South, Inc. held the retail licenses for the twelve businesses at the location at issue.
5. Mid-South, Inc. leased the building in which the businesses were located and hired the attendants for the game rooms.
6. Coastal Coin, Inc. supplied the Class III machines at issue and held the licenses for these machines.
7. Sand Dollars Saloon, Inc. is the corporation that operated the bar in the common area and owns the liquor, glasses and equipment at the bar.
8. This is the second violation of the Video Game Machines Act charged to Sand Dollars Saloon, Inc.

CONCLUSIONS OF LAW AND ANALYSIS

1. Jurisdiction
2. Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1998) and S.C. Code Ann. § 1-23-320 (Supp. 1998), the Administrative Law Judge Division has jurisdiction to hear this matter.
3. Burden of Proof
4. In civil cases, generally, the burden of proof rests upon the party who asserts the affirmative of an issue. 2 Am. Jur. 2d Administrative Law § 360 (1994); Alex Sanders, et al., South Carolina Trial Handbook § 9:3 Party With Burden, Civil Cases (1999). The Department is the party asserting the affirmative in this case; therefore, the Department must prove by a preponderance of the evidence that Respondents violated § 12-21-2804(B), by advertising for the playing of video poker machines. See Anonymous v. State Bd. of Medical Examiners, 329 S.C. 371, 496 S.E.2d 17 (1998) (standard of proof in an administrative proceeding is the preponderance of the evidence).⁽¹⁾
5. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See S.C. Cable Television Ass'n v. Southern Bell Telephone and Telegraph Co., 308 S.C. 216, 417 S.E.2d 586 (1992). Furthermore, a trial judge, who observes a witness, is in the better position to judge the witness's demeanor and veracity and evaluate his testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260 S.C. 108, 194 S.E.2d 392 (1973); Mann v. Walker, 285 S.C. 194, 328 S.E.2d 659 (Ct. App. 1985); Marshall v. Marshall, 282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984).

C. Advertising

1. Section 12-21-2804(B) provides:

No person who maintains a place or premises for the operation of machines licensed under Section 12-21-2720(A)(3) may advertise in any manner for the playing of the machines nor may a person offer or allow to be offered any special inducement to a person for the playing of machines permitted under Section 12-21-2720(A)(3).

S.C. Code Ann. § 12-21-2804(B) (Supp. 1998) (emphasis added). To clarify and simplify the provisions of this statute, the Department promulgated Regulation 117-190.2 which defines the word "advertise." As it relates to advertising, the regulation provides that ". . . any attempt to call attention to, or make known, to the general public that video game machines as defined in Code Section 12-21-2772(5) are available for play is advertising and is strictly prohibited by the statute."

1. Section 12-21-2804(B) clearly provides that a person who maintains a place or premises for the operation of Class III video machines may not advertise for the playing of the machines. In the instant case, a sign displaying the words "Jackpot Fever" was positioned on the exterior and the front of the building in which Mid-South, Inc., d/b/a Unit A was located. The first definition of "jackpot" is "[t]he accumulated stakes in a kind of poker that requires one to hold a pair of jacks or better in order to open the betting." The American Heritage College Dictionary 724 (3d ed. 1993). Consistent with this definition, to most observers, the word "jackpot" would connote gambling and the playing of the Class III machines and, accordingly, constitutes the type of advertising that the General Assembly intended to prohibit.
2. The Department charged Mid-South, Inc., d/b/a Unit A and Sand Dollars Saloon with violating § 12-21-2804(B). The evidence supports that Mid-South leased the building in which the game rooms were located, hired the game room attendants and maintained the retail licenses for the businesses at issue. Consequently, Mid-South clearly maintained businesses for the operation of Class III machines. Mid-South, which leased the building at issue and maintained the businesses at issue, also permitted the erection by Sand Dollars Saloon of the signs; these signs constituted advertisements that clearly benefitted Mid-South as well as Sand Dollar Saloon. In fact, the advertisement may have primarily benefitted the business of Mid-South. Consequently, Mid-South advertised the playing of its Class III machines, thereby violating § 12-21-2804(B) and Reg. 117-190.2.
3. Sand Dollars Saloon may have advertised the playing of Class III machines, but did not "maintain[] a place or premises for the operation of machines licensed under Section 12-21-2720(A)(3)," as required by § 12-21-2804(B) for a violation thereunder. Accordingly, the Department may not impose a fine for the advertisement against Sand Dollars Saloon.
4. Therefore, the fine under § 12-21-2804(B) and Reg. 117-190.2 is proper against only Mid-South. The Department shall impose a fine of $5,000 against Mid-South for the advertisement at issue.

D. Revocation of Business License of Mid-South and Other Retail Licenses

1. S.C. Code Ann. § 12-54-90(A) states that:

When a person fails, neglects, violates, or refuses to comply with a provision of law or regulation administered by the department, the department, in its discretion, may revoke one or more licenses held by the taxpayer within ten days of notification in writing of the taxpayer's failure to comply.

S.C. Code Ann. § 12-54-90(A) (Supp. 1998). Under this statute, the Department has the discretion to revoke the businesss and retail license of certain violators of laws or regulations administered by the Department. In the present case, however, the Department failed to present evidence of the nature or quantity of the underlying violations to support the revocation of any of the business and retail licenses of Mid-South or Sand Dollars Saloon.

1. Pursuant to ALJD Rule 29(C), issues raised in the proceedings but not addressed in this Order are deemed denied.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law,

IT IS HEREBY ORDERED that, as mandated by S.C. Code Ann. § 12-21-2804(B) (Supp. 1998), the Department shall impose a fine against Mid-South, Inc., d/b/a Unit A, located at 2000 Highway 17 North, Surfside Beach, South Carolina, in the amount of $5,000.

AND IT IS SO ORDERED.

______________________________

JOHN D. GEATHERS

Administrative Law Judge

March 8, 2000

Columbia, South Carolina

1. The preponderance of the evidence is "[t]he greater weight of the evidence" or "superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other." BLACK'S LAW DICTIONARY 1201 (7th ed. 1999). "The preponderance of the evidence means such evidence as, when considered and compared with that opposed to it, has more convincing force and produces in the mind the belief that what is sought to be proved is more likely true than not true." Sanders, supra, § 9:5 Quantum of Evidence in Civil Cases (1999) (citing Frazier v. Frazier, 228 S.C. 149, 89 S.E.2d 225 (1955)).