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 May 18, 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 May 18, 2003, undercover bingo players, Connie Buckman and Rita Autry,
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 and receive perforated admissions tickets. The player received one portion
of the admissions ticket and the house retained the other portion. Each portion reflected the same
number.
5.That the house held four drawings during the bingo session awarding a $25.00 prize
for each drawing. For each drawing, the house would draw a ticket at random and announce the
number on the ticket and the player with the winning ticket would receive a cash prize.
6.That the players paid only the admission fee as allowed by statute and were given the
tickets with no additional consideration.
7.That the undercover players and other players in the hall did participate in the
drawings.
8.That a regulatory violation of S.C. Code Section Ann. 12-21-4000(15) 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.
9.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.
10.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 the violation and
assessing a fine in the amount of $500.00.
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.On May 18, 2003, the undercover players were given torn ticket stubs that were used
in four (4) house drawings, each one valued at $25.00. However, the players did not pay an
additional fee to participate in these drawings.
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
Administrative Law Court to hear contested cases under the Administrative Procedures Act.
Specifically, S.C. Code Ann. §§12-60-30 and 12-60-460 (2000) grant the Court 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’ drawing 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, 440 S.E.2d 375(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’ drawings violated Section 12-21-4000(15). The Department relies upon the reasoning of Darlington Theatres, Inc. v. Coker, 190
S.C. 282, 2 S.E.2d 782 (1939), to support its position. However, I do not find the reasoning in the
Darlington Theatres case to be persuasive that the Respondents’ actions in this case violated Section
12-21-4000(15). In Darlington Theatres, the Court addressed the issue of whether the prizes
awarded to a person drawn from a list was a lottery. The Court held that a lottery consists of three
elements: “1) the giving of a prize, 2) by a method involving chance, 3) for a consideration paid by
a contestant or participant.” Id. at 786. In determining that the case before the Court did not
constitute a lottery, the Court held that: “Consideration paid or passed in exchange for the chance
to secure a prize is an essential element of a lottery. There is no law which prohibits the gratuitous
distribution of one's property by lot or chance.” Id. (quoting, 38 C.J. 291). In that regard, the Court
also held that:
The test by which to determine the answer to this question is not to inquire into the
theoretical possibilities of the scheme, but to examine it in actual practical operation.
If *** “the great majority of people pay for such privilege,” then it is an evasion and
as such is not to be countenanced. *** however, free participation is a reality. ***
then, regardless of the motive which induced the defendant to give such free
participation, the scheme is not within the ban of the statute.
Darlington, 2 S.E. 2d at 787 (quoting State v. Eames, 87 N.H. 477, 183 A. 590 (1936)).
Likewise, in questioning whether the Respondents engaged in a “game of chance,”
examination must be made of the consideration given to participate in the drawing.
Here, the
evidence established that when the undercover players paid their admission fee, they received
perforated admissions tickets of which one portion was retained by the house. The house
subsequently awarded four (4) $25.00 prizes during the course of the evening by drawing tickets at
random. However, the evidence did not establish that the players paid an admission fee greater than
allowed by statute and, thus, no additional consideration was given for the tickets. I, therefore, find
that since the evidence did not establish that additional consideration was given to play a “game,”
that the drawing was not a “game of chance” but rather a “gratuitous distribution . . . by lot or
chance.” Accordingly, the Respondents did not violate Section 12-21-4000(15).
ORDER
Based upon the foregoing Stipulations of Fact, Findings of Fact and Conclusions of Law,
IT IS HEREBY ORDERED that this case be dismissed.
AND IT IS SO ORDERED.
___________________________
Ralph King Anderson, III
Administrative Law Judge
April 28, 2004
Columbia, South Carolina |
