THE STATE OF SOUTH CAROLINA
In The Supreme Court
South Carolina
Department of Revenue, Appellant,
v.
Stardust Amusement
Company, Thomas H.
Starnes, d/b/a Midway
Truck Stop d/b/a
Tommy's, Respondents.
Appeal From Orangeburg County
Olin D. Burgdorf, Master-in-Equity
Opinion No. 25171
Heard October 6, 1999 - Filed July 10, 2000
AFFIRMED
Carol I. McMahan, Nicholas P. Sipe and Harry T.
Cooper, Jr., all of Columbia, for appellant.
Charles H. Williams and C. Bradley Hutto, both of
Williams & Williams, of Orangeburg, for
respondents.
FINNEY, C.J.: Appellant, South Carolina Department of
Revenue (Department), issued a "single place or premises" violation of S.C.
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S.C. Department of Revenue v. Stardust Amusement Company
Code Ann. 12-21-2804(A)(Supp. 1998) to respondents for failing to have an
employee present pursuant to Regulation 117-190. The respondents
appealed the violation to the Administrative Law Judge Division (ALJ) who
determined as a matter of law that there was no violation. Department then
appealed to the Circuit Court which affirmed the ALJ. We affirm.
FACTS:
Stardust Amusement Company (Stardust) is the licensee and owner of
ten (10) Class III video poker machines located in a mall type arrangement
in Orangeburg, South Carolina. On June 13, 1996, revenue officers for the
Department made a routine inspection of the Class III video poker machines
on the premises. The revenue officers entered through the main entrance
and after entering the common area, they observed two rooms that had
video poker machines in them. The video poker machines were on, the doors
to the rooms were open, there were no closed signs on the doors, and the
lights were on. There were no customers in the rooms and no employees.
Revenue Officer D. Jackson Rash (Rash) testified that two of respondents'
employees were in the common area. The two rooms with five machines in
them are adjacent to the common area.
Rash testified that had the employees been standing in the rooms
instead of the common areas then he would not have written a ticket.
Customers could not get into the rooms without walking past the employees
who were approximately five to ten feet away from the rooms. Rash testified
that the employees stated that they were assigned to the two locations.
He then charged respondents with a "single place or premises" violation of
S.C. Code Ann. 12-21-2804(A) for failing to have an employee present
pursuant to Regulation 117-190.
ISSUE
Does the "separate employee" requirement of 27 S.C. Code Ann. Reg.
117-190 require that one separate employee be within the four walls of each
individual game room during business hours?
DISCUSSION
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S.C. Department of Revenue v. Stardust Amusement Company
S.C. Code Ann. Reg. 117-190 provides:
A single place or premises must be a fixed location. It does
not include moving property such as a boat or a train, unless
such property is permanently affixed to a specific location.
A "single place" or "premises" means a structure
surrounded by exterior walls or firewalls consistent with the
requirements of the applicable building code (or where no
building code is applicable, a one hour rated firewall), provided
such exterior walls and firewalls may not have any windows,
doors or other openings leading to another area where video
game machines are located.
If a structure surrounded by exterior walls has two or more
areas where video games are located, each surrounded by
exterior walls or firewalls as defined and required above, the
Department must review all the facts and circumstances to
determine if each area in reality constitutes a single place or
premise for video game machines. In determining whether each
entity is in fact a single place or premises, the Department of
Revenue will consider the following factors: (1) Does each entity
or business have a separate electric utility meter? (2) Does each
entity or business have at least one separate employee on the
premises during business hours? (3) Does each entity or business
have a separate local business license where required? (4) Does
each entity or business have a separate state sales tax license? A
positive answer to these four questions is required for each area
to be considered a "single place or premise for the purposes of
The Video Game Machines Act. (emphasis added)
The Department contends that the purpose of the regulation is to
provide a high degree of certainty in defining what constitutes a "single place
or premises" and that "on the premises" means exactly what it says. The
Department asserts that the most consistent view is the plain language of
"on the premises" which limits the employee to the physical space of the four
walls. The Department argues that the ALJ committed error in applying the
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S.C. Department of Revenue v. Stardust Amusement Company
provisions of Regulation 117-190, based on the plain language of the statute
and regulation, the legislature's intent in its enactment of the Video Game
Machine Act (VGMA), and in filing to give deference to the Department's
long standing administrative application of these provisions. We disagree.
The Department also contends that the facts in this case parallel those
in McNickel's Inc., v. South Carolina Department of Revenue, 331 S.C. 629,
503 S.E.2d 723 (1998). We agree. In McNickel, we found that the
Department did not exceed its authority in imposing an employee
requirement under Regulation: 117-190. We noted that "[w]ithout at least
one employee, it would be possible for video poker operators to largely
circumvent the `single place or ;premises' requirement by securing separate
licenses for technically separate, but practically joined, businesses."
However, we also noted that "[d]uring the inspection only one employee was
found in the common area of the business (i.e. each business did not have at
least one of its own employees present). "(emphasis added) The problem in
McNickel was not that the employee was in the common area, but that there
was only one employee and two businesses.
In this particular case, the revenue officers found two employees in
the common area, one for each' business. Since there were no customers in
the rooms, and since customers could not get into the rooms without walking
past the employees, we agree with the ALJ and the circuit court that there
was no violation.
Under the specific facts of the present case, we AFFIRM the decision or
the circuit court.
TOAL, MOORE, BURNETT, JJ., and Acting Justice Alison Renee Lee,
concur.
p.417