ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter comes before the Administrative Law Court (ALC or Court) pursuant to S.C.
Code Ann. §§12-60-30 and 12-60-460 (2000). The South Carolina Department of Revenue
(Department) seeks a fine in the amount of $500.00 for violation of S.C. Code Ann. §§ 12-21-4000(14) & (15) (2000 & Supp. 2002). A hearing was held before me on March 16, 2004 at the
offices of the Administrative Law Court in Columbia, South Carolina.
STIPULATIONS OF FACT
At the hearing on this matter and pursuant to ALC Rule 25(C), the parties entered the
following written stipulations of fact into the Record:
1.On July 11, 2003, LBC American Legion was doing business as Mr. Bingo located
at 1215A St. Andrews Road, Columbia, S.C., 29210 and was operating under bingo license number
80000144-0.
2.Paul Hermelink was the promoter for LBC American Legion d/b/a Mr. Bingo and was
operating under bingo promoter license number 80008363-7.
3.On July 11, 2003, undercover bingo players, Connie Bucknam and Donna Crowley,
conducted an undercover bingo inspection of the above organization.
4.That upon entry to the bingo hall, the undercover players did purchase bingo paper
and pay the admission fee.
5.That the house was selling “pull tab” cards.
6.That the undercover players did purchase and play pull tab cards during the bingo
session. Several pull tab cards were purchased from a runner on the floor of the bingo hall and one
was purchased from a machine. All pull tabs were purchased for $1 each.
7.That these cards are played by pulling open the perforations on the back of the card
to see if any of the combinations of numbers and/or symbols match the winning combinations on the
front of the cards.
8.That runners often announce as they are walking the floor that they have pull tabs for
sale.
9.That winners of these cards redeem their cash prize by signaling a runner who will
verify the winning card and pay the amount of the prize to the winner.
10.That a regulatory violation of S.C. Code Section Ann. 12-21-4000(14) was served on
August 3, 2003, by the Department Inspectors, William Riley and William Byars, to Paul Hermelink
and to LBC American Legion d/b/a Mr. Bingo.
11.That on August 3, 2003, Paul Hermelink, promoter, did sign for the regulatory
violation and proposed assessment report as well as attachment FS-31 entitled “Explanation of
Regulatory Violation” served by William Riley and William Byars.
12.That the Department did issue a Final Determination dated October 30, 2003 to Paul
Hermelink and LBC Midland Valley Lions Club
d/b/a Mr. Bingo sustaining a violation of Sections
12-21-4000 (14) and (15) and assessing a fine in the amount of $500.
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 the evidence:
1.Notice of the time, date, place and subject matter of the hearing was given to the
Petitioner and the Respondents.
2.The red labeled pull tab cards (pull tabs) were purchased from the floor at Mr. Bingo
and the blue labeled pull tabs were purchased from machines that are located in the building but not
in the bingo hall. The player could potentially win between $1 and $2,500 depending on the type
of pull tab card purchased.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude the following as a matter of law:
1.S.C. Code Ann. § 1-23-600 (1986 & Supp. 2002) grants jurisdiction to the ALC to
hear contested cases under the Administrative Procedures Act. Specifically, S.C. Code Ann. §§12-60-30 and 12-60-460 (2000) grant the ALC the authority to hear contested case hearings in matters
arising under the Department of Revenue, and, more specifically, the Bingo Tax Act.
2.The Respondents are charged with violating S.C. Code Ann. §§ 12-21-4000(14) &
(15).
Those sections provide that:
(14) Bingo only may be played at the place designated by the bingo licensee on its
original or amended application.
(15) The house may hold promotions of special events during a session offering
players prizes other than from the play of bingo not to exceed one hundred dollars in
cash or merchandise for each session. This amount is not to be paid out of the bingo
account and is not included in total payouts for a session. There is no additional
charge to players to participate in a special promotion. The promotion must not be
a form of gambling or a game of chance.
3.The Department contends that the Respondents’ sale of pull tabs violated Section 12-21-4000 (14) because that section requires that only bingo may be played upon the place designated
by the license. “The construction of a statute by an agency charged with its administration is entitled
to the most respectful consideration and should not be overruled absent compelling reasons.” Home
Health Service, Inc. v. South Carolina Tax Com'n, 312 S.C. 324, 327, 440 S.E.2d 375, 377 (1994).
Here, however, there is no evidence that the Department has formally adopted the interpretation its
agents are propounding. Therefore, the Department’s current position is not entitled to the Home
Health Service deference. More importantly, the South Carolina Supreme Court has held that:
The principle is well established that penal statutes are strictly construed, and one
who seeks to recover a penalty for the failure on the part of the defendant to
discharge some duty imposed by law, must bring his case clearly within the language
and meaning of the statute awarding the penalty. Such laws are to be expounded
strictly against the offender and liberally in his favor. . . . And it is immaterial, for
the purpose of the application of the rule of strict construction whether the
proceedings for the enforcement of the penal law, be criminal or civil. . . .
South Carolina Dept. of Revenue v. Collins Entertainment Corp, 530 S.E.2d 635, 636 (2000)
(quoting State ex rel. Moody v. Stem, 213 S.C. 465, 50 S.E.2d 175 (1948)). Since “only” follows
the word “bingo” in Section 12-21-4000(14), that section could also be read to state that upon
receiving a bingo license, the promoter must hold the bingo games authorized by that license at the
specific place designated by the license. Therefore, strictly construing Section 12-21-4000(14)
against the Department, I find that this statute does not prohibit any activity other than bingo in a
bingo hall. Consequently, I find the Department failed to establish a violation of Section 12-21-4000
(14) in this case.
4.The Department also contends that the Respondents violated Section 12-21-4000(15)
because the pull tabs sold by the Respondents were sold during a session “offering players prizes
other than from the play of bingo” in excess of one hundred dollars in cash. The Department further
argues that the sale of pull tabs was unlawful because those sales are a promotion in the form of a
game of chance. The Respondents, on the other hand, argue that the sale of pull tabs is neither a
“promotion of a special event”
or “a game of chance.”
Rather, interestingly, the Respondents
contend that if the sale of pull tabs are lawful, their sale inside the bingo hall would be akin to the
sale of any other merchandise in the hall.
I find that, in order to violate Section 12-21-4000(15), the bingo promoter/operator must:
•hold a “promotion of special events;”
•during a session;
•offering players prizes other than from the play of bingo;
•in which the cash or merchandise exceeds one hundred dollars.
Moreover, any “special event” or promotion in the form of gambling or a game of chance is a
prohibited promotion in a bingo hall. Here, the Respondents clearly sold “pull tabs” during a session
in the bingo hall. Those sales were an event that was promoted by the hall involving the sale of a
game of chance other than the play of bingo. In other words, even if lawful elsewhere, the sale of
pull tabs in a bingo hall during a session is prohibited because the statute unambiguously prohibits
a “promotion” involving a “game of chance.” Consequently, the sale of pull tabs during a bingo
session violates Section 12-21-4000(15). Nevertheless, if the sale of pull tabs is lawful, in general,
there is nothing in the statute prohibiting the sale of such items outside of the bingo hall. Therefore,
the sales that occurred from the machines that were outside of the bingo hall did not violate Section
12-21-4000(15).
5.The Administrative Law Court has the authority to establish the imposition of a
penalty for a violation. Inherent in and fundamental to the powers of an Administrative Law Judge,
as the trier of fact in contested cases under the Administrative Procedures Act, is the authority to
decide the appropriate sanction when such is disputed. Walker v. South Carolina ABC Comm’n,
305 S.C. 209, 407 S.E. 2d 633 (1991). To that end, the Administrative Law Judge must consider
relevant evidence presented in mitigation. Mitigation is defined as a lessening to any extent, great
or small. It may be anything between the limits of complete remission on the one hand and a denial
of any relief on the other. In a legal sense, it necessarily implies the exercise of the judgment of the
court as to what is proper under the facts of the particular case. 58 C.J.S. Mitigation p. 834-835
(1948). A legitimate as well as a significant consideration is whether the alleged mitigating factor
demonstrates reasonable cause to reduce the penalty. Kroger Co. v. Department of Revenue, 673
N.E. 2d 710 (Ill. 1996).
In this case, the Department seeks a fine in the amount of $500.00 for violating Sections 12-21-4000(14) and (15). As I do not conclude that the Respondents violated the provisions of Section
12-21-4000(14), no sanctions are warranted for that offense. Moreover, the sale of “pull tabs”
outside of the bingo hall did not violate Section 12-21-4000(15). Therefore, in light of the dismissal
of those charges, I find that a reduction in the fine is warranted.
ORDER
Based upon the foregoing Stipulations of Fact, Findings of Fact and Conclusions of Law,
IT IS HEREBY ORDERED that the Respondents remit a fine of $200.00 to the Department
for violation of Section 12-21-4000(15) within thirty (30) days from the date of this Order.
AND IT IS SO ORDERED.
___________________________
Ralph King Anderson, III
Administrative Law Judge
April 28, 2004
Columbia, South Carolina |
