Here, the plain wording of the statute indicates that the General Assembly intended the six month prohibition to flow as a
natural consequence of a proven violation and did not intend to create a prohibition so easily defeated as that suggested by
Wheeler.(3)
Accordingly, the expiration of the licenses on the thirty-five machines owned by Wheeler prevents neither the
revocation of the licenses nor the imposition of a six month prohibition.
B. Six Month Prohibition
1. Positions of Parties
DOR asserts the statute requires a prohibition on the use of any Class III machines at the location for a period of six months
from the time the revocation becomes final. Wheeler and Hot Spot argue that if a revocation is applied, no six month penalty
should be imposed on the location, but should be imposed only on the machines in use at the time of the violation.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
Wheeler has placed numerous Class III machines in twenty-four game rooms. At the time of the inspection on November 5,
1997, Hot Spot operated the seven locations involved in this dispute with those seven game rooms housing thirty-five Class
III machines. Each of the seven rooms held separate retail licenses issued by DOR pursuant to Chapter 36 of Title 12 of the
S.C. Code. At the time of the inspection, the location was a licensed establishment.
Judicial notice is taken of the published decisions of the Administrative Law Judge Division and of the numerous instances in
which DOR has argued before the Division that S.C. Code Ann. § 12-21-2804(A) imposes a six month prohibition on the
use of any Class III machine at the offending location. However, judicial notice is also taken of the extensive opposition to
DOR's view. In hearings before the Division, license holders routinely and repeatedly object to DOR's position.
3. Conclusions of Law
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
A. Prohibition Applicable to Machines or to Location
1. Introduction
The following language of § 12-21-2804 is in issue:
No license may be issued for a machine in an establishment in which a license has been revoked for a period of six months
from the date of the revocation.
This language has produced two interpretations. DOR's interpretation is that once a license for a Class III machine in a
location is revoked, the location is prohibited from having any Class III machines on its premises for a period of six months
from the date of the revocation. This view is the "dead location" interpretation. Wheeler's interpretation is that once the
location has a revocation of a Class III machine license, the machines within the establishment (but not the establishment
itself) are prohibited from being re-licensed as Class III machines for a period of six months from the date of the revocation.
This view is the "dead machines" interpretation. Considering the plain language of the statute and applying the legislative
intent as gleaned from applicable factors, the six month prohibition applies to the machines involved and not to the location
involved.
2. Legislative Intent
Courts do not legislate. Rather, when asked to interpret the meaning of a statute, the task is solely that of seeking to
effectuate the legislature's intent. Laird v. Nationwide Ins. Co., 243 S.C. 388, 134 S.E.2d 206 (1964). In deciding
legislative intent, the first and most basic inquiry is whether the language of the statute is plain and unambiguous and whether
the statute conveys a clear and definite meaning. If the answer is yes, no occasion exists for employing rules of statutory
interpretation, and the court has no right to look for or impose another meaning. Paschal v. State Election Comm'n, 317
S.C. 434, 454 S.E.2d 890 (1995).
However, where an ambiguity prevents the statute from conveying a clear and definite meaning, the court must find the
legislative intent through statutory construction. See Abell v. Bell, 229 S.C. 1, 91 S.E.2d 548 (1956) ("But where the
language of the statute gives rise to doubt or uncertainty as to the legislative intent, the search for that intent may range
beyond the borders of the statute itself; for it must be gathered from a reading of the statute as a whole in the light of the
circumstances and conditions existing at the time of its enactment.") An ambiguity arises when the meaning of the language
is doubtful or provides "doubleness of meaning." Chapman v. Metropolitan Life Ins. Co., 172 S.C. 250, 173 S.E. 801, 803
(1934); see also Southeastern Fire Ins. Co. v. S.C. Tax Comm'n, 253 S.C. 407, 171 S.E.2d 355 (1969) (language is
ambiguous when it is capable of being understood by reasonably well-informed persons in either of two or more senses.).
Here, I am not convinced that the language is devoid of a clear and definite meaning. A plain and unforced reading requires
a dead machine result and does not support a dead location result. However, even if the statute creates an ambiguity, an
inquiry into statutory construction still leads me to conclude that the legislature imposed a six month prohibition on the
machines and not on the location.
a. Plain Meaning
The plain meaning of a statute is best determined by reading the statute as a whole so that phraseology of an isolated section
is not controlling. City of Columbia v. Niagara Fire Insurance Company, 249 S.C. 388, 154 S.E.2d 674 (1967). When
read as a whole, S.C. Code Ann. § 12-21-2804(A) states that DOR is required to "revoke the licenses of machines located in
an establishment which fails to meet the requirements of [§ 12-21-2804]." Under that language, a failure to satisfy the single
place or premises requirement causes a revocation of all of the machine licenses in the establishment that failed to meet the
test. As a result of that violation, an establishment becomes filled with unlicensed machines.
In fact, that is precisely what has happened in this case. Wheeler's machines effectively became unlicensed, and those
unlicensed machines were incapable of being lawfully operated until new licenses were issued. See S.C. Code Ann. § 12-21-2776 (Supp. 1998) (all machines must be licensed). This factual and legal background supplies the proper context for an
unforced reading of the plain language of the six month prohibition.
Following the statutory language revoking the machine licenses in the offending establishment, the statute immediately and
succinctly states "[n]o license may be issued for a machine in an establishment in which a license has been revoked for a
period of six months from the date of the revocation." In other words, the specific machines that lost their licenses due to
the revocation are prohibited from receiving a new machine license until a six month period has elapsed.
When relying upon the plain meaning of words in a statute, the words must be applied without resorting to a subtle or forced
construction to limit or expand the statute's operation. Stephen v. Avins Constr. Co., 324 S.C. 334, 478 S.E.2d 74 (Ct.
App. 1996). The interpretation expressed above provides a plain, unforced reading that answers an obvious need raised by
the revocation language. Obviously, to make the revocation meaningful, a fixed period is needed. Otherwise, the owner
would be able to acquire a new license the same day as the revocation and begin operating the same machine almost
immediately. In my view, the six month period simply tells the owner that the machine is dead for six months and serves to
give teeth to the revocation of the machine license.(4)
In contrast to the plain reading of the language that supports the dead machine interpretation, a reading giving a dead
location requires a forced construction. For example, to impose a six month limitation on the location requires reading
additional language into the statute so that the statute states "no license may be issued for a machine TO BE PLACED in an
establishment in which a license has been revoked for a period of six months from the date of the revocation." (Capitalized
words added). Obviously, a court may not add words to a statute but can only apply the statutory language given by the
General Assembly. Banks v. Columbia Ry., Gas & Electric Co., 113 S.C. 99, 101 S.E. 285 (1919).
Accordingly, § 12-21-2804(A) imposes a six month prohibition on the issuance of licenses for those Class III machines that
were in an establishment at the time a license for a machine in that establishment was revoked. No prohibition is imposed on
the location itself.
b. Statutory Construction
While I believe a plain reading requires a dead machine interpretation, even if resort to statutory construction is required,
such an inquiry does not support a dead location view.
A commonly applied rule of statutory construction is that where the same words are used in an enactment more than once, it
is presumed the words have the same meaning throughout unless a different meaning is necessary to avoid an absurd result.
Busby v. State Farm Mut. Auto. Ins. Co., 280 S.C. 330, 312 S.E.2d 716 (Ct. App. 1984). Likewise, when the legislative
body defines a term, the use of that term in the enactment must be interpreted as having the defined meaning. Windham v.
Pace, 192 S.C. 271, 6 S.E.2d 270 (1939).
In the Video Game Machines Act (Act), Class III machines must be licensed under Article 19 before placement or operation
on the premises of a "licensed establishment." S.C. Code Ann. § 12-21-2778 (Supp. 1998). The legislature defined "licensed
establishment" as an "establishment owned or managed by a person who is licensed pursuant to Article 19 of this chapter for
the location of coin-operated nonpayout video machines with a free play feature." S.C. Code Ann. § 12-21-2772(4) (Supp.
1998). To impose a location penalty, the legislature could simply have stated the establishment may not be a licensed
establishment for six months. No such statement was made.
Additionally, Article 20 imposes a further license beyond the establishment license required by Article 19. Specifically,
Article 20 requires a location license since "[e]ach . . . licensed establishment must be licensed by [DOR] pursuant to Article
19 of this chapter and this article before a machine . . . is placed for public use in this State."(5) S.C. Code Ann. § 12-21-2784 (Supp. 1998) (emphasis added). The location license of Article 20 is identified as an "establishment license for machine
placement." S.C. Code Ann. § 12-21-2788 (Supp. 1998). In fact, DOR is required to revoke "an establishment license for
machine placement" when the placement of machines does not meet "the provisions of Article 19 of this chapter and the
[corresponding] rules and regulations promulgated by [DOR]." Id.; S.C. Code Ann. § 12-21-2786 (Supp. 1998). (6) Again,
the General Assembly could have easily penalized the location by revoking the establishment license for machine placement.
Finally, the location may not house Class III machines "unless the location is licensed pursuant to the provisions of Chapter
36 of Title 12." S.C. Code Ann. § 12-21-2703 (Supp. 1998). Again, the General Assembly could have directed that the
retail license be revoked if it wished to close the location for six months. It did not so direct.
Accordingly, at least three areas of location or establishment licenses are available for revocation. Despite these location
licenses, § 12-21-2804(A) directs the revocation of only "licenses of machines" and not location licenses. These statutes
demonstrate that the General Assembly was cognizant of the difference between a license for a machine and a license
involving an establishment or location. Being aware of the difference, the statutory language of § 12-21-2804(A) provided
for the revocation of the licenses for the machines and made no mention of revocation of an establishment license.
Such a conclusion is consistent with a plain and unforced reading of the statute which shows that a symmetry exists between
the revocation of the machine licenses and the imposition of a six month prohibition on re-licensing the affected machines.
The symmetry of machine license producing a machine revocation is broken by the dead location view since the revocation
of a machine license produces a location closure. Had the General Assembly meant to revoke the establishment or location
license it could have easily done so by specifying the revocation of a specific establishment license. Accordingly, the normal
rules of statutory construction support the dead machine interpretation.
c. Deference To Agency
DOR argues its position should be followed since it is the agency charged with administering the video games law. DOR
believes the facts are well established that it has consistently applied its interpretation of S.C. Code Ann. § 12-21-2804(A)
(Supp. 1998). Further, under such circumstances, DOR believes that its position is reasonable and should be accorded great
deference. Finally, in deciding whether to deviate from DOR's position, DOR asserts compelling reasons must be
established. In significant part, I disagree with DOR's analysis as it relates to the weight to be accorded that agency's
interpretation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998).
i. Consistently Applied Position
No doubt exists that DOR has consistently applied its position. Judicial notice is taken of the published decisions of the
Administrative Law Judge Division and of the numerous instances in which DOR has advanced its position in hearings before
the Division. DOR has consistently viewed S.C. Code Ann. § 12-21-2804(A) as imposing a six month prohibition on the use
of any Class III machine at the offending location.
However, judicial notice is also taken of the extensive opposition to DOR's view. In hearings before the Division, license
holders routinely and repeatedly object to DOR's position. The validity of that position is now pending in the S.C. Supreme
Court in the case of Gateway Enterprise, Inc., v. DOR. Thus, the position of DOR is not one which has found routine
acceptance by the affected public. On the contrary, DOR's position is far from a settled view.
ii. Deference To DOR's Position
The issue in interpreting a statute is what did the legislature intend. Laird v. Nationwide Ins. Co., 243 S.C. 388, 134 S.E.2d
206 (1964). Depending upon the nature of the language under review, an agency's view may or may not be entitled to
deference.
-- Plain Meaning
No deference to an agency's position is warranted where the language presents a clear meaning. Glens Falls Insurance Co.
v. City of Columbia, 242 S.C. 237, 130 S.E.2d 573 (1963) (no occasion arises for considering an agency's position where
the language of the statute is plain and unambiguous and conveys a clear and definite meaning). Further, of particular
significance to this case, the clear and definite meaning will always be applied despite an agency's contrary but consistently
followed position. Davidson v. Eastern Fire & Cas. Ins. Co., 245 S.C. 472, 141 S.E.2d 135 (1965) ("An uninsured
motorist endorsement that contravenes the requirements of the statute is, to that extent, invalid, regardless of the
Department's approval of it.").
Here, the statute in dispute is plain and unambiguous. The plain language of § 12-21-2804(A) imposes a six month
prohibition on the issuance of licenses for those Class III machines that were in an establishment at the time a license for a
machine in that establishment was revoked. Thus, having found that the plain meaning of the statute establishes legislative
intent, no deference to DOR's position is required.
-- Ambiguous Meaning
However, even if an ambiguity were found in the statute, a resort to rules of construction supports the view that the
revocation affects the machines but not the location. In examining the rules of statutory construction, deference to DOR's
view is not a meaningful indicator of legislative intent when compared to other more significant indicators.
When required to apply the rules of construction, the construction of a statute by an agency charged with administering that
statute is entitled to most respectful consideration. Stephenson Finance Co. v. South Carolina Tax Comm'n, 242 S.C. 98,
130 S.E.2d 72 (1963). More particularly, however, the degree of respect rises to one of "great weight" only if the agency
position "has been acquiesced in by the [Legislature] for a long period of time." Etiwan Fertilizer Co. v. South Carolina
Tax Comm'n, 217 S.C. 354, 60 S.E.2d 682 (1950).
Here, the Video Game Machines Act became effective July 1, 1993. Thus, even assuming DOR's position was announced,
enforced or in some way made known to the Legislature from the first day the statute became effective, DOR's position is
six years old. Such a time frame is far too short to amount to a showing of acquiescence "by the Legislature for a long
period of time." Id. Hence, the short period does not show strong evidence of acquiescence by the Legislature and does not
allow "great weight" to be accorded to DOR's position. Such is especially so where the agency position is challenged
repeatedly by the affected public. At best, only respectful consideration is due.
The Legislature is presumed to have knowledge of its own laws. See Ingram v. Bearden, 212 S.C. 399, 47 S.E.2d 833
(1948)(a machine was definitely outlawed by prior statute and the General Assembly was deemed to be aware of that fact).
Respectful consideration to DOR's position (which consideration relies upon a presumption that the Legislature has
knowledge of and gives tacit approval to the agency's actions) pales in comparison to the Legislature's presumptive
knowledge of its own laws. The Legislature intentionally created licensed establishments and created machine licenses.
Further, the Legislature defined licensed establishments and demonstrated it clearly knew the difference between machine
licenses and establishment licenses. Thus, reliance upon the Legislature's knowledge of its own laws is a far superior
indicator of legislative intent than reliance upon the respectful consideration of DOR's position.
iii. Compelling Reasons
While others may exist, at least two compelling reasons warrant deviating from DOR's view. First, DOR's position is
inconsistent with the plain meaning of the statute such that reliance upon DOR's view places far too much weight on an
administrative interpretation. See Stone Mfg. Co. v. South Carolina Employment Sec. Comm'n, 219 S.C. 239, 64 S.E.2d
644 (1951) citing F. W. Woolworth Co. v. United States, 91 F.2d 973, 976 (2d. Cir. 1937) ("At most, administrative
practice is a weight in the scale, to be considered, but not to be inevitably followed. * * * While we are of course bound to
weigh seriously such rulings, they are never conclusive."). Second, a compelling reason to deviate from DOR's view is that
following the position perpetuates an administrative error. Fennell v. South Carolina Tax Commission, 233 S.C. 43, 103
S.E.2d 424 (1958) (an interpretation presented by an administrative position is not so sacrosanct as to be beyond the
correction of error; it need not perpetuate error). In short, sufficient and compelling reasons exist to deviate from DOR's
position.
C. Applicability of Penalty to Machine Owner
1. Positions of Parties
DOR asserts that a fine of $35,000 is due from Wheeler, the holder of the machine licenses. Wheeler argues he is not liable
for a penalty since as a machine owner he had no part in violating the single place or premises requirement. In response to
Wheeler's argument, DOR asserts that a violation of S.C. Code Ann. § 12-21-2804 has been established and that a fine is
imposed on the license holder. Further, the fine is not dependent upon a showing of scienter or that knowledge of the
violation was present in Wheeler.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
No dispute exists that Wheeler has no management control of any employee working for the game rooms involved in this
case. Rather, the day-to-day management control over employees at the twenty-four game rooms was totally outside
Wheeler and was in Hot Spot. However, despite a lack of daily control, Wheeler owned the machines and owned the
licenses on the machines. Further, he allowed his licenses and machines to be used at the Hot Spot location with those
licenses and machines used to produce income from the machines. Accordingly, maintenance and control of the licenses to
the Class III machines is in Wheeler.
3. Conclusions of Law
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
A violation of section § 12-21-2804(A) results in the imposition of a fine. S.C. Code Ann. § 12-21-2804(F) (Supp. 1998).
The pertinent question is: a fine against whom?
A. Persons Liable
The person liable for the fine is the "person violating" section 12-21-2804(A). S.C. Code Ann. § 12-21-2804(F) (Supp.
1998). For periods beginning after July 1, 1994 (obviously the case in this matter), the person violating § 12-21-2804(A) is
the one who "maintain[s] any licenses or permits for more than five machines authorized under Section 12-21-2720(A)(3) at
a single place or premises."(7) S.C. Code Ann. §§ 12-21-2804(A) (Supp. 1998). Persons maintain licenses for more than five
machines if they "continue or preserve in or with; to carry on." Black's Law Dictionary 953 (6th ed. 1990). See
Merriam-Webster OnLine Dictionary, 1998 (maintain means "to continue or persevere in: carry on, keep up" or "to
support or provide for.").(8)
Who carries on the license in this case? Both Wheeler and Hot Spot. Both maintained the licenses for the machines owned
by Wheeler. The joint "maintaining" is evident in that Wheeler owns the licenses and provides the very license needed to
operate the machines while Hot Spot provides the location from which income is generated by the machines. Likewise, Hot
Spot maintains the licenses as well since Hot Spot provides all of the operational environment for the machines: housing,
seating and equipment for customers, required employees, adequate parking, etc. Accordingly, both Wheeler and Hot Spot
maintain the thirty-five licenses involved in this dispute so that both are liable for fines under S.C. Code Ann. § 12-21-2804(F) (Supp. 1998).
B. Lack of Knowledge
For two reasons, the fact that Wheeler had no day-to-day control over the seven locations does not remove the imposition of
a fine. First, the General Assembly did not impose a duty of finding the violator had any degree of intention such as
"knowingly," "intentionally" or "willfully." Instead of an intention to violate the law, all the statute demands is proof that a
license is being maintained for more than five machines at a single place or premises. In fact, the General Assembly has
demonstrated that when it wanted to impose scienter as a part of a violation it did so by specific language. See S.C. Code
Ann. §12-21-2804(F) (upon a determination that a violation is wilful, criminal prosecution may be pursued). Second, since
the statutory language does not impose knowledge as a requirement, none can be added. Accordingly, lack of knowledge or
intention does not halt the imposition of a fine against Wheeler.
D. Amount of Fine Based on Number of Violations
1. Positions of Parties
DOR asserts that a separate fine of $5,000 can be imposed for each of the seven game rooms in operation at the Surfside
Beach location that does not meet the regulatory definition of "single place or premises." Thus, DOR seeks a fine of
$35,000 from Wheeler, the holder of the machine licenses, and $35,000 from Hot Spot, the location owner. Both Wheeler
and Hot Spot argue the penalty cannot be imposed for each game room. Rather the penalty is imposed only for the "person"
committing the violation and here only one violation occurred. Thus, they argue only a maximum fine of $5,000 per person
is authorized and further that the maximum fine of $5,000 is not warranted here.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
Wheeler places the licensed machines with Hot Spot and Hot Spot provides the location from which the machines produce
income. Under this arrangement, management of the rooms in which the Class III machines are located is in Hot Spot.
However, actual control of the Class III machines is in Wheeler. In summary, as to the operation of the machines, Hot Spot
uses the game rooms for its retail business and Wheeler uses the game rooms for its maintenance of machines for profit.
Thus, both derive benefits from the licenses on the machines.
Further, as to the operation of the game rooms, the violations occurred near a change of employee shift so that some
employees were coming on and some employees were leaving. Thus, some of the rooms without employees arrived at that
condition because an employee left the premises before another relief employee had arrived.
3. Conclusions of Law
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
Clearly, a violation of section 12-21-2804(A) results in the imposition of some fine and the maximum amount of the fine is
$5,000. See S.C. Code Ann. § 12-21-2804(F) (Supp. 1998). Thus, to hold Wheeler and Hot Spot to a $35,000 fine each,
DOR must establish that seven violations occurred, i.e., maximum of $5,000 for each of the seven violations. Accordingly,
the precise issue becomes deciding how many violations were committed by Wheeler and Hot Spot and deciding what is the
proper amount of the fine for each violation. Under the facts of this case, I find Wheeler committed one violation and Hot
Spot committed one violation. Further, I find that Wheeler is liable for a fine of $2,500 and Hot Spot is liable for a fine of
$5,000.
In determining how many violations were committed by Wheeler and Hot Spot, it is necessary to determine exactly what act
constitutes a violation. Deciding what act constitutes a violation requires following the intent of the statute under review.
When asked to interpret the meaning of a statute, the task is solely that of seeking to effectuate the legislature's intent.
Laird v. Nationwide Ins. Co., 243 S.C. 388, 134 S.E.2d 206 (1964). In deciding legislative intent, the first and most basic
inquiry is whether the language of the statute is plain and unambiguous and whether the statute conveys a clear and definite
meaning. If the answer is yes, no occasion exists for employing rules of statutory interpretation, and the court has no right to
look for or impose another meaning. Paschal v. State Election Comm'n, 317 S.C. 434, 454 S.E.2d 890 (1995). A court
may not add words to a statute but can only apply the statutory language given by the General Assembly and must apply the
terms of a clear and unambiguous statute according to their literal and ordinary meaning. Banks v. Columbia Ry., Gas &
Electric Co., 113 S.C. 99, 101 S.E. 285 (1919); Glover v. Suitt Const. Co., 318 S.C. 465, 458 S.E.2d 535 (1995).
It is true that the courts will reject the ordinary meaning of the words used in a statute when to accept it would lead to a
result so plainly absurd that it could not possibly have been intended by the Legislature or would defeat the plain legislative
intention. Ray Bell Construction Company, Inc. v. School District of Greenville County, 331 S.C. 19, 501 S.E.2d 725
(1998). However, care must be taken not to rush to label a result "plainly absurd" when the application of the ordinary
meaning of statutory language yields a result that is merely undesirable. A court should not rewrite statutes to provide a
"better" result since such matters rest solely within the wisdom of the General Assembly. Creech v. South Carolina Pub.
Serv. Auth., 200 S.C. 127, 20 S.E.2d 645 (1942).
This court has no legislative powers. In the interpretation of statutes our sole function is to determine and, within
constitutional limits, give effect to the intention of the legislature. We must do this based upon the words of the statutes
themselves. To do otherwise is to legislate, not interpret. The responsibility for the justice or wisdom of legislation rests
exclusively with the legislature, whether or not we agree with the laws it enacts.
Busby v. State Farm Mut. Auto. Ins. Co., 280 S.C. 330, 337, 312 S.E.2d 716, 720 (S.C. App. 1984).
a. Background Nature of the Violation
A violation occurs when a person "maintain[s] any licenses or permits for more than five [Class III] machines . . . at a single
place or premises." To determine if a person has more than the authorized five machines, Regulation 117-190 explains what
constitutes the requisite space identified as a single place or premises. In general, a single place or premises can be achieved
in two configurations.
First, (omitting some requirements not pertinent to the issue at hand) a single place or premise is achieved by "a structure
surrounded by exterior walls or firewalls consistent with the requirements of the applicable building code." Regs. 117-190.
Such a structure is the common stand-alone building providing an entrance from the outside and providing an exit from the
building to the outside. Such a structure may lawfully house five machines. The more difficult determination is the second
permissible structure.
The second permissible structure that may be used to establish a single place or premises is that of "a structure surrounded
by exterior walls [which] has two or more areas where video game machines are located." The "areas where video game
machines are located" are interior configurations and those interior configurations are eligible for consideration as a "single
place or premises" under two determinations. First, when considering the interior configuration, "each [must be] surrounded
by exterior walls or firewalls." Second, before each interior configuration can become a single place or premises, DOR
"must review all the facts and circumstances to determine if each area in reality constitutes a single place or premise for
video game machines." That review may include many factors but must include at least the four factors of having a separate
electric utility meter, having at least one separate employee on the premises during business hours, having a separate local
business license where required, and having a separate state sales tax license.
b. Number of Violations
In the instant case, Wheeler and Hot Spot sought to create twenty-four separate places or premises with each place or
premises holding five Class III machines. However, a configuration is not a separate place or premises if the configuration
does not have an employee on the premises. Regs. 117-190.
Here, seventeen game rooms had an employee within their interior configurations and thus those game rooms were separate
places or premises. However, the seven configurations that had no employee were not separate places or premises. Rather
the seven game rooms essentially became a single place or premises since the seven game rooms were within "a structure
surrounded by exterior walls or firewalls consistent with the requirements of the applicable building code." Thus, a total of
eighteen separate places or premises were present at the Surfside address: seventeen spaces as proper interior game rooms
and one space consisting of the seven interior configurations that failed to have an employee.
Having identified the eighteen spaces that constitute separate places or premises, the statute demands an inventory of the
Class III machines occupying each space. Here, the inventory presents five machines in each of the seventeen interior
spaces but thirty-five machines in the "eighteenth" space. Under the statute, a violation occurs when the number of machines
on the space exceeds five. S.C. Code Ann. § 12-21-2804(A) (Supp. 1998). Since obviously thirty-five exceeds five, a
violation has been proven in the instant case. Moreover, and more to the point of this case, the excess over the limit of five
produces only one violation whether the limit is exceeded by one or ten or twenty-five or any other number.
The imposition of a single fine is consistent with the clear language of the statute and imposing a single fine does not produce
an absurd result so as to warrant disregarding that plain language. Had the General Assembly wanted multiple violations for
each set of five excess machines, it could have easily created such a penalty. Rather, instead of multiple violations based on
sets of five, the statute declares a single limit of five machines and explains that a penalty is imposed on the person that
violates the five machine limit. Indeed, the General Assembly was aware that some violations would present facts requiring a
greater penalty than other violations since § 12-21-2804(F) allows the imposition of a "fine of up to five thousand dollars" to
account for violations deemed more significant than others.
In conclusion, in determining how many violations to cite under § 12-21-2804(A), an important distinction exists between a
failure to create separate places or premises and a failure to limit the number of machines at a proper place or premises to
five. The former, in and of itself, establishes no violation of § 12-21-2804. The latter, however, violates § 12-21-2804 and
gives rise to a penalty of up to $5,000. In other words, no penalty arises under § 12-21-2804(A) for attempting but failing to
create a separate place or premises. Rather, § 12-21-2804(A) imposes a penalty only when the number of Class III machines
on a properly constituted place or premises exceeds five. For example, an operator could place one Class III machine in
each of five "interior" structures, fail to have an employee in any of the interior structures (thus, fail the separate place or
premises requirement of Reg. 117-190), and not violate § 12-21-2804(A), since the proper place or premises (the exterior
walls comprising the structure that surrounds the interior configurations) is a valid single place or premises that does not
exceed the five machines limit.
Based on the foregoing, Wheeler and Hot Spot committed a single violation since more than five machines were in the single
place or premises here denoted as the "eighteenth" space. (9) Accordingly, the remaining issue is determining the amount of
the fine to be imposed.
c. Amount of Fine
Where the General Assembly authorizes a range for an administratively imposed penalty, the administrative adjudicator
sitting as the fact-finder may set the amount of the penalty after a hearing on the dispute. Walker v. South Carolina ABC
Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991). When penalty disputes are part of the factual issues for decision, the fact-finder must receive evidence and make a determination on all such factual disputes arising from the contested case. S.C.
Code Ann. § 1-23-350 (Rev. 1986).
Here, the evidence establishes that Hot Spot and Wheeler have violated section 12-21-2804(A). While Hot Spot may have
violated the statute due to a failure to adequately staff game rooms during employee shift times, such a reason is not a
sufficient basis to avoid a significant fine. Operators must provide adequate control over employee assignments at shift
changes so as to ensure that all rooms have an employee present. Under such circumstances, the imposition of a $5,000 fine
on Hot Spot is proper.
Wheeler on the other hand has no management control at the location. While a party who derives income from the machines
should not be dismissed from liability for violations on the very premises that produce the income, the lack of control over
the basis that caused the violation is a mitigating factor. Given Wheeler's lesser control, Wheeler is liable for a penalty of
$2,500.
IV. Order
Based upon the Findings of Fact and Conclusions of Law, it is hereby ordered:
A fine of $2,500 is imposed upon Wheeler and a fine of $5,000 is imposed upon Hot Spot. The thirty-five Class III machine
licenses held by Wheeler are revoked effective as of the date of this order. The thirty-five Class III machines involved in this
matter shall not be licensed for a period of six months from the date of this order. Finally, Wheeler shall provide DOR with
the serial numbers of the thirty-five machines involved in this matter so that DOR may adequately enforce the six month
revocation period.
AND IT IS SO ORDERED.
____________________________
RAY N. STEVENS
Administrative Law Judge
Dated: February 7, 2000
Columbia, South Carolina
1. At the beginning of the hearing DOR gave notice that no revocation or fine was being sought for Hot Spot Casino Inc., #
12. Accordingly, with consent of all parties, the case proceeded with Hot Spot Casino Inc., # 12 being dismissed and the
caption of this case altered to reflect that dismissal.
2. Normally, the first issue examined in a case involving an alleged violation of the five machine limit of S.C. Code Ann. §
12-21-2804(A) (Supp. 1998) is whether each game room qualifies as a "single place or premises" as defined in 27 S.C. Code
Ann. Regs. 117-190 (Supp. 1998). However, here Wheeler and Hot Spot have admitted that a violation of § 12-21-2804(A)
occurred. Thus, no need exists for findings of fact or conclusions of law on that issue and none are presented here.
3. Other jurisdictions have also held that the expiration of a license does not moot the revocation of that license when
revocation proceedings are timely commenced. See Alpern v. License Appeal Commission of City of Chicago