H 3626 Joint Resolution, By  House Ways and Means
 A JOINT RESOLUTION TO DIRECT THE DEPARTMENT OF REVENUE TO PROMULGATE STRICT
 AND COMPREHENSIVE REGULATIONS NECESSARY TO REGULATE THE OPERATION OF VIDEO
 GAME MACHINES WITH A FREE PLAY FEATURE INCLUDING A RECOMMENDATION FOR THE
 IMPOSITION OF A TAX RATE AND REGULATIONS TO IMPOSE FEES ON SUCH MACHINES OR ON
 THE OWNERS, DISTRIBUTORS, OR OPERATORS THEREOF IN AN AMOUNT NECESSARY TO
 GENERATE REVENUE IN THE AGGREGATE OF AT LEAST TWO HUNDRED MILLION DOLLARS
 ANNUALLY, AND TO PROVIDE FOR THE PROCEDURES UNDER WHICH THE REGULATIONS MUST
 BE PROMULGATED INCLUDING A PROVISION THAT THEY MUST BE SUBMITTED TO THE
 GENERAL ASSEMBLY BY APRIL 1, 1999, AND ARE DEEMED APPROVED ON JUNE 3, 1999, IF
 THE GENERAL ASSEMBLY HAS NOT ENACTED A JOINT RESOLUTION PRIOR TO THIS DATE
 APPROVING OR DISAPPROVING SUCH REGULATIONS.

   03/02/99  House  Introduced, read first time, placed on calendar
                     without reference HJ-11
   03/03/99  House  Special order, set for Wednesday, March 3, 1999,
                     after call of uncontested calendar (Under H
                     3664) HJ-23
   03/03/99  House  Amended HJ-27
   03/03/99  House  Read second time HJ-35
   03/03/99  House  Roll call Yeas-90  Nays-26 HJ-35
   03/04/99  House  Read third time and sent to Senate HJ-17
   03/09/99  Senate Introduced and read first time SJ-10
   03/09/99  Senate Referred to Committee on Finance SJ-10
   03/24/99  Senate Committee report: Favorable with amendment
                     Finance SJ-12
   06/01/99  Senate Read second time SJ-35
   06/01/99  Senate Ordered to third reading with notice of
                     amendments SJ-35
   06/01/99  Senate Special order SJ-124
   01/12/00  Senate Recommitted to Committee on Finance SJ-19

Indicates New Matter

COMMITTEE REPORT

March 24, 1999

H. 3626

S. Printed 3/24/99--S.

Read the first time March 9, 1999.

To whom was referred a Joint Resolution (H. 3626), to direct the Department of Revenue to promulgate strict and comprehensive regulations necessary to regulate the operation of video game machines, etc., respectfully

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

Amend the resolution, as and if amended, by striking all after the enacting words and inserting in lieu thereof the following:

SECTION 1. (A) A statewide referendum must be conducted at the time of the general election in 2000 to ascertain whether or not video game machine payouts will continue to be allowed in this State. The State Election Commission must place the exact question contained in subsection (B) of this section on the referendum ballot. The state election laws shall apply to the referendum, mutatis mutandis. The State Board of Canvassers shall publish the results of the referendum and certify them to the Secretary of State, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, and the Code Commissioner.

(B) The question put before the qualified electors in the referendum shall read:

"Shall cash payoffs for credits earned on video game machines continue to be allowed after December 31, 2000?

Those voting in favor of the question shall deposit a ballot with a check or cross mark in the square after the word 'Yes', and those voting against the question shall deposit a ballot with a check or cross mark in the square after the word 'No'."

SECTION 2. Section 12-21-2710 of the 1976 Code, as amended by Act 155 of 1997, is further amended to read:

"Section 12-21-2710. It is unlawful for any person to keep on his premises or operate or permit to be kept on his premises or operated within this State any vending or slot machine, or any video game machine with a free play feature operated by a slot in which is deposited a coin or thing of value, or other device operated by a slot in which is deposited a coin or thing of value for the play of poker, blackjack, keno, lotto, bingo, or craps, or any machine or device licensed pursuant to Section 12-21-2720 and used for gambling or any punch board, pull board, or other device pertaining to games of chance of whatever name or kind, including those machines, boards, or other devices that display different pictures, words, or symbols, at different plays or different numbers, whether in words or figures or, which deposit tokens or coins at regular intervals or in varying numbers to the player or in the machine, but the provisions of this section do not extend to coin-operated nonpayout pin tables, in-line pin games, and video games with free play feature which meet the technical requirements provided for in Section 12-21-2782 and Section 12-21-2783, or to automatic weighing, measuring, musical, and vending machines which are constructed as to give a certain uniform and fair return in value for each coin deposited and in which there is no element of chance.

Any person violating the provisions of this section is guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred dollars or imprisoned for a period of not more than one year, or both."

SECTION 3. Section 12-21-2712 of the 1976 Code is amended to read:

"Section 12-21-2712. Any vending or slot machine, punch board, or other device pertaining to games of chance prohibited by Section 12-21-2710 must be seized by any officer of the law law enforcement officer and at once taken before any magistrate of the county in which the machine, board, or device is seized who shall immediately examine it, and if he is satisfied that it is in violation of Section 12-21-2710 or any other law of this State, he shall direct that it be immediately destroyed."

SECTION 4. (A) Section 12-21-2720(A)(3) of the 1976 Code, as last amended by Section 148, Act 181 of 1993, is further amended to read:

"(3) a machine of the nonpayout type, or in-line pin game, or video game with free play feature operated by a slot in which is deposited a coin or thing of value except machines of the nonpayout pin table type with levers or `flippers' operated by the player by which the course of the balls may be altered or changed."

(B) Section 12-21-2720(C) of the 1976 Code, as last amended by Act 145 of 1995, is further amended to read:

"(C) The owner or operator of any coin-operated device which is exempt from Section 16-19-60 and is subject to licensing under Section 12-21-2720(A)(3) and which has multi-player stations, shall purchase a separate license for each such station and any such multi-player station counts as a machine when determining the number of machines authorized for licensure under Section 12-21-2804(A)."

(C) Section 12-21-2720 of the 1976 Code, as last amended by Act 155 of 1997, is further amended by deleting subsections (E) and (F), which read:

"(E) The department shall not issue a license for the operation of a video game with a free play feature which is located or intended to be located on a watercraft or vessel plying the territorial waters of this State.

(F) Four hundred dollars of the four thousand dollar license fee imposed in subsection (A) may be retained by the department and expended in budgeted operations for the implementation and ongoing operation of the monitoring system required by law or in other programs and services as the director may determine necessary and appropriate."

SECTION 5. Section 12-21-2726 of the 1976 Code, as last amended by Act 164 of 1993, is further amended to read:

"Section 12-21-2726. Every person who maintains for use or permits the use of, on a place or premises occupied by him, a machine subject to the license imposed by this article by way of proof of licensing must have a current license displayed conspicuously on the front of the machine. Except for the provisions of Sections 12-21-2774 and 12-21-2776, each machine licensed pursuant to this section must be operated in a stand-alone fashion and may not be linked in any way to another coin-operated machine or device."

SECTION 6. Section 12-54-40 of the 1976 Code, as last amended by Act 155 of 1997, is further amended by deleting subsection (g) which reads:

"(g) A machine owner or distributor, as defined in Article 20, Chapter 21 of this title, who allows or causes a machine to be operated without a metering device, or who wilfully places a machine on location or who wilfully allows or causes a machine to be operated with a metering device that does not accurately record the information required under Article 20, Chapter 21 of this title is guilty of a felony and, upon conviction, must be imprisoned for not less than one year nor more than ten years, without benefit of probation, parole, or suspension of sentence, and in addition may be fined not more than twenty-five thousand dollars."

SECTION 7. Section 16-19-40 of the 1976 Code is amended to read:

"Section 16-19-40. If any person shall play at any tavern, inn, store for the retailing of spirituous liquors or in any house used as a place of gaming, barn, kitchen, stable or other outhouse, street, highway, open wood, race field or open place at (a) any game with cards or dice, (b) any gaming table, commonly called A, B, C, or E, O, or any gaming table known or distinguished by any other letters or by any figures, (c) any roley-poley table, (d) rouge et noir, (e) any faro bank or (f) any other table or bank of the same or the like kind under any denomination whatsoever or (g) any machine or device licensed pursuant to Section 12-21-2720 and used for gambling purposes, except the games of billiards, bowls, backgammon, chess, draughts, or whist when there is no betting on any such game of billiards, bowls, backgammon, chess, draughts, or whist or shall bet on the sides or hands of such as do game, upon being convicted thereof, before any magistrate, shall be imprisoned for a period of not over thirty days or shall suffer a fine of fined not over one hundred dollars, and every person so keeping such tavern, inn, retail store, public place, or house used as a place for gaming or such other house shall, upon being convicted thereof, upon indictment, be imprisoned for a period not exceeding twelve months and forfeit a sum not exceeding two thousand dollars, for each and every offense."

SECTION 8. Section 16-19-50 of the 1976 Code is amended to read:

"Section 16-19-50. Any person who shall set up, keep, or use any (a) gaming table, commonly called A, B, C, or E, O, or any gaming table known or distinguished by any other letters or by any figures, (b) roley-poley table, (c) table to play at rouge et noir, (d) faro bank or (e) any other gaming table or bank of the like kind or of any other kind for the purpose of gaming, or (f) any machine or device licensed pursuant to Section 12-21-2720 and used for gambling purposes except the games of billiards, bowls, chess, draughts, and backgammon, upon being convicted thereof, upon indictment, shall forfeit a sum not exceeding five hundred dollars and not less than two hundred dollars."

SECTION 9. Sections 12-21-2703 and 16-19-60 and Article 20, Chapter 21 of Title 12, all of the 1976 Code, are repealed.

SECTION 10. Title 12 of the 1976 Code is amended by adding:

Section 12-22-100. As used in this chapter, unless the context indicates otherwise:

(1) `Director' means the director of the department.

(2) `Chief' means the chief of the division.

(3) `Division' means the South Carolina State Law Enforcement Division.

(4) `Associated equipment' means a device, machine, replacement part, or part used in the manufacture, operation, or maintenance of a machine including, but not limited to, integrated circuit chips, printed wired assembly, printed wired boards, printing mechanisms, video display monitors, and metering devices.

(5) `Background investigation' means the investigation conducted in accordance with Article 5 of this chapter.

(6) `Central computer monitoring system' or similar term means the computing system administered by the department for communicating with and retrieving information from machines, and activating and disabling machines.

(7) `Contraband machine', or 'contraband device', means a machine, location controller or its modem, the computer chips of a machine or location controller, or any other part of the machine, location controller or modem not meeting the requirements of this chapter. A `machine' that does not meet the requirements of this chapter is a `contraband machine' regardless of whether the machine issues winnings tickets redeemable for cash.

(8) `Disable' or 'disabling' means the process of executing a command from the central computer monitoring system or the location controller which causes a machine to cease functioning.

(9) `Distributor' means any person who sells, buys and sells, or leases machines or associated equipment. A distributor may also own, operate, service, or repair machines in this State.

(10) `Establishment' or 'location' means premises with machines.

(11) `Gross machine income' means the amount of money that goes into the machine.

(12) `Gross profits' means the amount of money that goes into the machine less winnings.

(13) `Machine' means a nonpayout electronic machine with a free play feature that, upon insertion of cash or coin, is available to play or simulate the play of games utilizing a video display and microprocessors in which the player may receive free games or credits that may be redeemed for cash. Each player station of a multi-player unit is a separate machine.

(14) `Machine owner' means any person, other than a distributor, who owns one or more machines.

(15) `Machine operator' means any person who owns, operates, or manages an establishment with one or more machines.

(16) `Manufacturer' means any person that manufactures, assembles, or programs machines, controllers, or associated equipment for sale or use in this State.

(17) `Player' means a person who participates in the playing of a machine.

(18) `Principal' means every person; association; all partners of a partnership; trust and its beneficiaries; corporation, its directors, officers, and stockholders with a ten percent or more direct or beneficial interest; or other entity who has or will have a direct or indirect ownership interest in the applicant, the machines, or the establishment for which license is sought.

(19) `Records' means all paper or electronic accounts, bank account records, financial statements, business records, contracts, reports and returns, including tax information and returns, and other information the department or division reasonably considers necessary to administer and enforce the provisions of this chapter.

(20) `Video Game Machine Identification Number' or 'VGMID' means the permanently assigned unique number issued by the department to identify a specific machine from first delivery in this State until destruction or removal from this State.

(21) `Winnings' means amounts printed on validated tickets from a licensed machine which may be paid to a player.

Section 12-22-110. (A) Unless specifically granted to the division, the department has all powers necessary and proper to fully and effectively execute the provisions of this chapter including, but not limited to, the power:

(1) notwithstanding Section 12-54-240, to enter into agreements with any department, agency, or instrumentality of the United States or this State for the purpose of regulating and controlling coin-operated devices and to enforce the provisions of this chapter and may disclose information to the division and to other governmental entities in and outside South Carolina;

(2) to investigate applicants for any license authorized to be issued under this chapter and to determine the eligibility of applicants for licenses;

(3) to exercise jurisdiction over and to supervise all coin-operated devices;

(4) to inspect and conduct investigations by entering the offices, facilities, or other places of business of a licensee where evidence of the compliance or noncompliance with the provisions of this chapter is likely to be found and to be present through its inspectors and agents any time gaming operations are conducted for the purpose of certifying the revenue thereof, receiving complaints from the public, and conducting other investigations into the conduct of the games and the maintenance of machines;

(5) to review any licenses issued under the provisions of this chapter and to investigate alleged violations of this chapter and to take appropriate disciplinary action against any licensee including the imposition of penalties for a violation, disabling of machines, suspension of licenses, or revocation of licenses, or the institution of appropriate legal action for enforcement;

(6) to require that the records of any licensee must be kept in the manner prescribed by the department. All records shall be retained for at least the period for which taxes may be assessed under Section 12-54-85;

(7) to require of applicants and their principals access for the department and division to all of the applicant's financial records pertaining to the financing of the applicant in order to evaluate statements and documentation supplied with the application in connection with background investigations;

(8) to require any person to submit any information necessary to effectively administer and enforce the provisions of this chapter;

(9) to issue subpoenas for the attendance of witnesses and subpoenas duces tecum for the production of books, records, and other pertinent documents in accordance with Chapter 4 of Title 12, to administer oaths and affirmations to witnesses, and receive and weigh testimony;

(10) to prescribe the forms which must be used by any licensee involved in the ownership or operation of coin-operated devices;

(11) to issue, deny the issuance of, suspend, or revoke any license authorized by this chapter, so long as the department's action is in compliance with the provisions of this Chapter 60 of Title 12;

(12) to suspend any license authorized by this chapter without notice or hearing upon a determination that the safety or health of patrons or employees is jeopardized by the licensee or the condition of the licensee's facilities; any suspension must remain in effect until the department determines that the cause for the suspension has been abated; a license may be revoked upon a determination that the licensee has not made satisfactory progress toward abating the hazard;

(13) to delegate the execution of any of its powers under this chapter for the purpose of administering and enforcing this chapter;

(14) to establish hours of operation for enrollment and support of machines connected to the central computer monitoring system and to charge reasonable fees for services provided outside the hours of 8:30 a.m. to 5:00 p.m., Monday through Friday;

(15) to adopt regulations in accordance with the Administrative Procedures Act; and

(16) to take any other action as may be reasonable or appropriate to enforce this chapter.

(B) Notwithstanding subsection (A), any law enforcement officer has the authority to enforce any criminal provision of this chapter.

Section 12-22-120. The director, the employees of the department, the chief, and the employees of the division, may not directly or indirectly, individually, or as a member of a partnership, or as a shareholder of a corporation, have a financial or ownership interest in any machine, machine owner, manufacturer, distributor, or establishment.

Section 12-22-125. Any person who would otherwise be subject to the provisions of this chapter, but who claims the benefit of an exemption from certain of its requirements in any manner must, on or before September 1, 1999, notify the department in a statement made under penalties of perjury that he is claiming the benefits of a specific provision, must state all reasons for claiming the benefits of the provision, and must identify all licenses claimed to be related to that exemption. The person claiming the benefit of such a provision shall have the burden of proof and must establish by clear and convincing evidence that he is entitled to the benefits claimed.

Section 12-22-300. (A) Before a machine or associated equipment is manufactured, distributed, sold, or placed for use in this State, the machine owner, machine operator, manufacturer, establishment, and distributor shall be licensed by the department as provided for in this chapter.

(B) Before placement or operation, a machine shall be licensed.

Section 12-22-310. (A) At the time provided for in Section 12-22-345, a manufacturer, distributor, machine owner, machine operator, and establishment, engaging in business in this State, shall apply for and obtain from the department a license for the privilege of engaging in the business and shall pay the fee levied at the time of license application. The fee is two thousand dollars.

(B) Except as provided in Article 5, a license authorized in this section shall not be issued unless and until the department has completed its background investigation.

Section 12-22-315. (A) The department may issue licenses authorized under this chapter to qualifying applicants.

(B) If application is made for a license under this chapter, all principals are deemed to be the applicants under this chapter.

(C) The department may not issue a license under this chapter to any applicant unless the applicant and all principals meet the requirements this chapter.

Section 12-22-320. (A) Every person who owns, or maintains for use, or permits the use of on a place or premises occupied by him, one or more of the following machines or devices shall apply for and procure from the department a license effective for two years for the privilege of making use of the machine in South Carolina and shall pay for the license a tax of fifty dollars for each machine in item (1), two hundred dollars for each machine in item (2), and four thousand dollars for each machine in item (3):

(1) a machine for the playing of music or kiddy rides operated by a slot or mechanical amusement devices and juke boxes in which is deposited a coin or thing of value. A machine on which an admissions tax is imposed is exempt from the coin operated device license provisions of this section;

(2) a machine for the playing of amusements or video games, without free play feature, or machines of the crane type operated by a slot in which is deposited a coin or thing of value and a machine for the playing of games or amusements, which has a free play feature, operated by a slot in which is deposited a coin or thing of value, and the machine is of the nonpayout pin table type with levers or 'flippers' operated by the player by which the course of the balls may be altered or changed. A machine required to be licensed under this item is exempt from the license fee if an admissions tax is imposed; and

(3) a machine of the nonpayout type, in-line pin game, or video game with free play feature operated by a slot in which is deposited a coin or thing of value except machines of the nonpayout pin table type with levers or 'flippers' operated by the player by which the course of the balls may be altered or changed.

(B) The owner or operator of any coin-operated device which is exempt by Section 16-19-60 which has multi-player stations, shall purchase a separate license for each such station and any such multi-player station counts as a machine when determining the number of machines authorized for licensure under Section 12-22-800(A).

(C) Failure to obtain a license as required by this article makes the person liable for the penalties imposed in this chapter.

(D) Failure to remit taxes to the State is justification for the cancellation of the license provided in this section.

(E) The department shall not issue a license for the operation of a video game with a free play feature which is located or intended to be located on a watercraft or vessel plying the territorial waters of this State.

(F) A license for a machine included in Section 12-22-320(A)(3) shall be issued only to a person who has been licensed pursuant to Section 12-22-300 for use at a licensed establishment. No machine included in Section 12-22-320(A)(3) may be operated without a license.

(G) No machine licensed under the provisions of Section 12-22-320(A)(3) may be operated at an establishment unless the establishment is licensed pursuant to the provisions of Chapter 36 of Title 12.

Section 12-22-325. (A) Every person owning or operating a billiard or pocket billiard table, foosball table, bowling lane table, or skeeball table for profit shall apply for and procure from the department a license for the privilege of operating the table and pay for the license a biennial tax of fifty dollars for each table owned or operated.

(B) Every person who maintains for use, or permits the use, on any place or premises occupied by him, any machines subject to the license imposed by subsection (A) of this section shall see that the proper state license is attached to a permanent, nontransferable part of the machine before its operation is commenced.

Section 12-22-330. (A) In addition to all other licenses required by this chapter, a person who owns devices described in Sections 12-22-320(A)(1), (A)(2), and 12-22-325 shall obtain an owner's license biennially as follows:

(1) fifty dollars for devices in Sections 12-22-320(A)(1) and 12-22-325; and

(2) two hundred dollars for devices in Section 12-22-320(A)(2).

(B) Only one license is required pursuant to this section regardless of the number or type of devices owned or operated, and the cost of that license is the highest fee enumerated in this section for a device owned.

(C) The licenses provided by this section are subject to Section 12-22-345 and are a condition precedent to engaging in or the continuing operation of machines described in this chapter.

Section 12-22-335. Every person required to obtain a license required under Sections 12-22-320 (A)(3) shall maintain records showing the manufacturers' serial number, model, or type of machine and the VGMID.

Section 12-22-340. In lieu of the license required under Sections 12-22-320(A)(1) and (2), 12-22-325, and 12-22-330 the department may issue a temporary license to persons making application to operate machines defined in Sections 12-22-320 (A)(1) and (A)(2) and 12-22-335 at a recognized county or state fair. The temporary license is the total amount of license fees required on all machines for which application is made, based upon one-twenty-fourth of the biennial license required under Sections 12-22-320(A)(1) and(A)(2), 12-22-325 and 12-22-330. The license is valid for the specific location designated on the license and the number of machines for which application was made and expires when the designated fair officially ends.

Section 12-22-345. (A) Every person subject to payment of tax under Sections 12-22-320 and 12-22-325, in advance on or before the first day of June every two years or before doing an act taxable under this article, shall apply for and obtain from the department a license for the privilege of engaging in the business and shall pay the tax levied for it. All licenses expire May thirty-first the second year of which the license is valid following the date of issue.

(B) As an alternative to the license required in subsection (A), a person may be granted a nonrefundable license beginning April first and to expire September thirtieth, following the date of issue, which may not be prorated. The fee for this six-month license is one-fourth the biennial license fee.

(C) If a license required in subsection (A) is purchased after June thirtieth, the license tax must be prorated on a twenty-four month basis with each month representing one twenty-fourth of the license fee imposed under Sections 12-22-320 and 12-22-325.

(D) Biennial licenses for machine owners, machine operators, distributors, manufacturers, or establishments issued under this chapter expire according to the county where the principal place of business, as determined by the department, of the machine owner, machine operator, distributor, or manufacturer is situated or, in the case of an establishment license, the county where the establishment is situated. The expiration dates are the last day of:

(1) February in years which end in an:

(a) odd number for Allendale, Bamberg, Barnwell, Beaufort, and Berkeley Counties;

(b) even number for Charleston, Clarendon, Colleton, Dorchester, Georgetown, Hampton, Jasper, and Williamsburg Counties;

(2) May in years which end in an:

(a) odd number for Cherokee, Chester, Chesterfield, Darlington, Dillon, Fairfield, Florence, and Horry Counties;

(b) even number for Lancaster, Marion, Marlboro, Union, and York Counties;

(3) August in years which end in an:

(a) odd number for Calhoun, Kershaw, Lee, Orangeburg, and Sumter Counties;

(b) even number for Richland County;

(4) November in years which end in an:

(a) odd number for Abbeville, Aiken, Anderson, Edgefield, Greenville, and Greenwood Counties;

(b) even number for Laurens, Lexington, McCormick, Newberry, Oconee, Pickens, Saluda, and Spartanburg Counties.

If a license purchased will be for less than twenty-three months because of this section, the license tax must be prorated on a twenty-four month basis with each month representing one twenty-fourth of the license fee imposed under Sections 12-22-310 and 12-22-330.

(E) The department, at its discretion and for the efficient administration of the law, may prorate licenses in any manner to implement or change the expiration date established in this section and to stagger the issuances of the licenses by county or by any other method deemed appropriate by the department.

Section 12-22-500. (A) The department shall issue the license required by Section 12-22-300 to the applicant upon a determination by the department that the applicant is eligible for the license pursuant to the provisions of this chapter.

(B) The application must be made on forms provided by the department and the applicant must submit any information required by this chapter. An application which contains material omissions or misrepresentations is cause for denial, suspension, or revocation of a license and disabling of all machines of that owner.

(C) The applicant for a license must provide detailed information regarding:

(1) the ownership and management, including information on all principals;

(2) a detailed history and explanation of gambling activities and licenses in other jurisdictions of the applicant and all principals;

(3) federal registration with respect to gambling devices; and

(4) any other information deemed necessary by the department for the proper administration and enforcement of this chapter.

(D)(1) In addition to the information contained on the department's application form as provided in subsection (C), if not contained on the form, the applicant for a license must disclose, at the time of filing the application form, the identity and address of every principal.

(2) When the applicant has principals it must disclose any information required by the department to obtain fingerprints and criminal background checks for the principals so that an applicant may not circumvent the purpose of this section. Failure to comply with a reasonable request of the department is grounds to deny or revoke a license.

(E) A person applying for a license or required under this article to undergo a criminal history background check shall undergo a state fingerprint review to be conducted by the division to determine any state criminal history and a fingerprint review to be conducted by the Federal Bureau of Investigation to determine any other criminal history. The fingerprint reviews required by this subsection may be required upon subsequent applications.

(F) A person with a license issued pursuant to this chapter has an affirmative duty to maintain on file with the department a current and correct disclosure of the identity of and updated information on all those persons and principals required to be disclosed in subsections (C) and (D).

(G) At the time of filing the application for a license, the applicant must pay the fee imposed pursuant to Section 12-22-310.

Section 12-22-505. (A) Upon receipt of a timely and complete application for a license required by Section 12-22-300, the department or its designee must begin a background investigation using the information in the application as a basis for a thorough investigation which the department must conduct with respect to each applicant.

(B) The department may request the assistance of the division in conducting the background investigation on an applicant.

(C) The department must not issue, or must revoke, a license pursuant to Sections 12-22-300 and 12-22-310 if the person, applicant, or principal of the applicant:

(1) has been convicted within the last fifteen years of a state or federal felony; gambling offense; criminal fraud; or a crime with a sentence of two or more years; or

(2) has had a gambling license in another jurisdiction revoked; or

(3) has submitted an application which contains material information which is false; or

(4) the person was determined to be liable for, or agreed that he was liable for, a civil judgment based in whole or in part upon criminal conduct which carries a penalty of imprisonment for two or more years, or violations of gambling laws, or consumer fraud; or

(5) has any outstanding tax or fee liability with the department; or

(6) the applicant for a machine license under Section 12-22-320(A)(3) has not been a resident of the State for two years.

(D) The applicant for a license required by this chapter, and all principals of the applicant, must file with the application a sworn statement, under penalties of perjury, affirming that:

(1) the person is not attempting to obtain a license on behalf of any undisclosed person or entity;

(2) the person is of good character, honesty, and integrity; and

(3) the person's prior activities, criminal record, if any, reputation, habits, and associations do not pose a threat to the public interest of this State or to the effective regulation and control of video gaming.

Section 12-22-510. The department must make its decision on whether to issue a license to the applicant not later than sixty days after the completion of the background investigation, including the fingerprint reviews, and the recommendation, if any, of the division, or not later than one hundred eighty days from the date a complete application is filed with the department, whichever occurs first. The department must inform each applicant of the department's decision. A person must be issued a provisional license upon receipt and review of the results of the division fingerprint review if the results show no convictions of the crimes referenced in Section 12-22-505(C)(1) for either the applicant or the persons subject to disclosure pursuant to Section 12-22-500(D). Pending receipt of the results of the Federal Bureau of Investigation fingerprint review, the department must obtain from the prospective licensee a written affirmation on a form provided by the department that neither the prospective licensee nor any person subject to disclosure pursuant to this section has been convicted of any crime referenced in Section 12-22-505(C)(1).

Section 12-22-515. (A) The department must be given within ten business days written notice of termination of a business, transfer of a business, or a change of ownership, possession, or control of an interest in a business holding a license or an establishment licensed under this chapter. The transfer of twenty-five percent or more of corporate stock is considered a change in ownership. Anyone whose interest in the business has ended must immediately surrender to the department any licenses in his possession related to that business. Failure to surrender a license as required by this subsection is justification for revocation of any and all licenses issued by the department and held by the licensee.

(B) A person who acquires an interest in a business which holds licenses issued under this chapter, upon initiating the application process for a biennial license issued under Section 12-22-310, may be issued a temporary license by the department at the time of the acquisition if the applicant or location for which the temporary license is sought is not considered by the department to be ineligible under the provisions of this chapter or the applicant currently holds a valid license previously issued pursuant to this chapter, or the applicant has had a criminal history background check conducted by the division within the past thirty days.

(C) A temporary license issued pursuant to subsection (B) is valid until a biennial or regular license is approved or disapproved by the department, but in no case is it valid for more than one hundred eighty days from the date of issuance. The department may revoke a temporary license if the applicant fails to pursue the biennial license in a timely manner. The department shall collect a fee of twenty-five dollars for each temporary license.

Section 12-22-700. Every person who maintains for use or permits the use of, on a place or premises occupied by him, a machine subject to the license imposed by this chapter by way of proof of licensing must have a current license displayed conspicuously on the front of the machine. Each machine licensed pursuant to this chapter must be operated in a stand-alone fashion and may not be linked in any way to another coin-operated machine or device.

Section 12-22-705. Any person who owns or operates devices described in Sections 12-22-320 and 12-22-325 must have attached to the machine information identifying the owner of the machine. The identification must be placed on an area of the machine which is visible for inspection purposes. This identification is a condition precedent before the machines may be operated on location. Intentional or willful failure to comply with this requirement subjects the violator to the penalty and enforcement provisions of this chapter.

Section 12-22-710. Every person required to obtain a license pursuant to Sections 12-22-320 and 12-22-325 shall maintain records showing the manufacturers' serial number; model and type of machine; the VGMID; the license number; the location's name, address, and telephone number; the machine operator; the date the machine entered the State; the date it entered the location; and the date the machine went on-line. The taxpayer shall maintain information relating to the payment of any monies or compensation made to any persons as part of a lease or contractual agreement to operate the machine on the premises of the person. Information required by this section must be available on demand for inspection by a representative of the department. The licensee shall be provided a reasonable time in which to provide the information demanded.

Section 12-22-715. Before a machine may be connected, or remain connected, to the central computer monitoring system, the machine shall have a current and valid machine license. The machine owner and the machine operator and the establishment shall have current and valid licenses as required by this chapter.

Section 12-22-720. (A) All machines, location controllers and associated modems, computer chips, and any other part of a machine shall be verifiably of a make, model, and software version, certified by the department or a testing lab selected by the department before such items may be possessed, owned, operated, or allowed to operate at any place within this State.

(B) A person may not possess, own, operate, or allow the operation of a contraband machine or device at any place within this State.

Section 12-22-725. (A) Within 90 days from enactment, all machines shall meet the following standards, and machine owners shall certify to the department, under oath and in a form prescribed by the department, that the machines are prepared for connection to the central computer monitoring system:

(1) have games that are random and have games which have minimum payout of between ninety and ninety-nine percent, within standard rounding, in which the theoretical payout percentage is determined using standard methods of probability theory at optimal play;

(2) be secure and accountable;

(3) not operate in a misleading or deceptive manner;

(4) not have any means of manipulation that affect the random probabilities of winning a game;

(5) have one or more mechanisms that accept only coins or cash in the form of bills. The mechanisms shall be designed to prevent obtaining credits without paying by stringing, slamming, drilling, or other means;

(6) have one or more metering devices that keep a record of: all cash inserted or deposited into the machine; credits played; credits won; validated cash ticket amounts; and other information prescribed by the department. Cash records shall include total coins and bills accepted and total credit generated by coin and bill acceptors;

(7) shall be capable of being accessed on demand by telecommunication through a location controller from the central computer monitoring system for purposes of polling or reading device activities and for central computer remote enabling or disabling of machine operations;

(8) be capable of interfacing with a central computer monitoring system through a location controller;

(9) when requested by the department after certification, be connected to the central computer monitoring system through a location controller; and

(10) meet the standards set by the department.

(B)(1) Machines not meeting the standards of this chapter, or the standards of the department, shall not be licensed. The license of any machine which fails to maintain the standards of this chapter shall be revoked.

(2) The department shall connect licensed machines at licensed establishments meeting the requirements of this section as soon as is practicable after receipt of certification from the machine owner that a machine meets the standards of subsection (A) within 150 days after enactment but no later than December 1, 1999.

(C) When the department approves the software and logic board of a machine, the division may use a prescribed security seal process to guard against any unauthorized tampering or changes to the erasable programmable read only memory (EPROM) chip or chips, or future, similar such technology. Any repair, replacement, or adjustment to the machine's EPROM chips or similar such technology must be done in the presence of an employee of the division.

(D) The department is authorized to revise technical standards as is necessary providing sufficient time for compliance by licensees. The technical standards established by the department must, to the extent possible within the limitations of this chapter, maximize competition among manufacturers.

Section 12-22-730. The department is authorized to set standards for machines, modems, location controllers, the central computer monitoring system, and associated equipment, including, but not limited to, technical standards, hardware specifications, software specifications, and standards relating to multi-player units. Applicants must meet these standards before any license may be issued.

Section 12-22-735. The burden of proof that a machine, game, location controller, modem, or any part of a machine meets the required standards and requirements, is the responsibility of the manufacturer or machine owner. The department may require the manufacturer or machine owner to obtain a certification from an approved laboratory indicating that the machine, game, location controller, modem, or any part of a machine meets the required standards and requirements. The cost of this certification is the responsibility of the manufacturer or machine owner. The department shall provide a list of approved laboratories. The department may also review a laboratory to determine if the laboratory should be added or removed from the department's list of approved laboratories. The department may contract with a testing laboratory to ensure and certify that a machine, game, location controller, modem, or any part of a machine meets the required standards and requirements. Payment of the cost of testing by the laboratory is the responsibility of the manufacturer or machine owner.

Section 12-22-740. (A) Each location controller must be programmed so as to automatically disable the play of all machines connected to the location controller, if the location controller has not been polled by the central computer monitoring system for the purpose of collecting meter and event data, for a period to be determined by the department of not less than seventy-two hours. The machine shall be enabled when communication has been restored.

(B) Whenever a machine is disabled during play of a game, the following shall occur:

(1) A message will appear on the screen warning the player that the machine is about to be disabled and the player will be informed that one minute remains to complete the game.

(2) A count down timer will be displayed.

(3) If the player completes the game, all credits will be reported on a winnings ticket and no other games will be allowed to be played on that machine.

(4) If the player has not completed the game in the minute allotted, then the machine will complete the hand according to the manufacturer's recommended play strategy, all credits will be reported on a winnings ticket, and the machine will be disabled.

Section 12-22-745. Each machine placed in operation in the State shall have, affixed by the manufacturer, a VGMID assigned by the department. Each machine owner shall notify the department in writing of the receipt of a machine. Manufacturers, distributors, and machine owners shall make machines and associated equipment available for inspection by the department or division. No machine may be transported out-of-state until the VGMID has been removed. No one other than an authorized department or division employee shall remove the VGMID. For qualifying machines already located in the State, the department shall assign, and the machine owner shall affix, the VGMID. The VGMID shall be programmed into the machine and shall serve as the machine's unique identifier for purposes of logging events and reporting play statistics.

Section 12-22-750. A machine shall be disposed of in a manner that makes it incapable of use or operation in any video game or other gaming or amusement activity. A machine may not be disposed of until such notice has been given to the department. An owner desiring to dispose of an unsaleable or damaged machine shall notify the department in writing prior to disposal and provide the following information in a manner as directed by the department:

(1) the full name, address, and license number of the person or entity disposing of the machine;

(2) the manufacturer's serial number of the machine;

(3) the model number and description of the machine;

(4) the manufacturer of the machine;

(5) the VGMID of the machine;

(6) the hard meter readings of the machine;

(7) the licensed establishment at which the machine was located;

(8) the proposed manner, time, and place of disposal.

Section 12-22-755. A machine shall not simulate bingo.

Section 12-22-760. Each machine shall contain a single printing mechanism capable of printing an original ticket and retaining an exact copy. Tickets shall contain any information the department determines to be reasonable for the efficient administration of this chapter. The department shall provide manufacturers information as to the information needed on a ticket and the placement of information on the ticket.

Section 12-22-765. All machines, location controllers, and the central computer monitoring system selected by the department shall perform correctly before, during, and after the Year 2000, with no error in functioning or data caused by failure to correctly interpret and utilize data contained within date fields within the system.

Section 12-22-770. The department, in its discretion, may approve alternative technical provisions provided that the technology maintains the security, account information, and integrity of the machines, location controllers, and central computer monitoring system.

Section 12-22-775. (A) As part of the central computer monitoring system required under this article, each location operating machines licensed under Section 12-22-320 (A)(3) must provide a location controller and modem meeting requirements set forth by this section and by the department. Each location controller must be capable of receiving, storing, and transmitting to the department's central computer monitoring system all information received from, and required of, machines as set forth in Section 12-22-725. Each location controller must be capable of supporting at least five video game machines. This section applies to those location controllers which participate in the central computer monitoring system as separate hardware entities, and any 'head of string' location controller which meets the specifications of this section. The cost for purchasing or leasing, as well as the cost of installing, the location controller is the responsibility of the establishment in which the machines are located.

(B) In addition to the above requirement, each location controller must be able to perform the following functions:

(1) communicate with machines in an on-line environment;

(2) when authorized parties open machine game door, store a log entry of this event;

(3) when authorized parties open machine coin or currency door, store a log entry of this event;

(4) authorize machine to be taken off-line from the location controller;

(5) disable machine and store a log entry under the following circumstances:

(a) unauthorized game door open; and

(b) unauthorized coin door open;

(6) store a log entry if machine is off-line from the location controller without prior authorization;

(7) store a log entry if machine tampering is detected. Detection of tampering occurs if the signal received from the machine is discontinuous or corrupted in such a manner as to constitute more than spurious noise in the central computer monitoring system;

(8) re-enable a machine which has been disabled and store a log entry of this event;

(9) log entries which include a unique identification number for each machine and date/time stamp;

(10) have capability for communicating to the central computer monitoring system the information which has been gathered from the machines and log any entries stored during the period;

(11) have sufficient storage capacity to maintain at least five days of data generated from the maximum playing sessions from the maximum number of associated machines linked to the location controller. The data must be stored immediately in a manner that allows on demand, real time access by the central computer monitoring system. Access to data stored in the location controller must be restricted to authorized entry from the central computer monitoring system and other authorized inquiry only access that has been preapproved by the department, provided that the department must allow access by the owner or operator of the machine to retrieve information for record keeping and related legitimate business purposes;

(12) have an internal clock;

(13) be protected from unauthorized interference or tampering by any person or external device or force, such as to corrupt or alter data or corrupt or suspend communication signals or transmitted data from the machines or to the central computer monitoring system, and this requirement extends to the location controller as well as its associated communication device, cabling between the controller and the machines, and communication device;

(14) be constructed of materials and protected in such a manner as to allow it to operate in suboptimal environments such as nonregulated temperature, dusty, tobacco-smoke filled, and humid conditions; and

(15) be capable of validating tickets printed by a machine.

Section 12-22-780. Any machine licensed pursuant to Section 12-22-320(A)(3) which provides payouts authorized pursuant to Section 16-19-60 shall limit the amount bet or wagered on any single hand or single play to credits equal to not more than ten dollars. Any location violating this section shall be subject to revocation of the license of the machine and may be fined an amount not to exceed one thousand dollars.

Section 12-22-785. (A) The department shall disable machines via the central computer monitoring system for the following reasons:

(1) the establishment license at the establishment where the machines are located has been revoked;

(2) the license of the machine has been revoked;

(3) the machine owner's license has been revoked;

(4) the machine operator's license has been revoked;

(5) the establishment license, machine license, machine owner's license, or machine operator's license has expired;

(6) the central computer monitoring system has registered a violation of system integrity by a machine. A machine disabled for this reason will be enabled again as soon as the problem has been resolved;

(7) the machine owner or the machine operator has requested that the machine be disabled for any reason, such as relocation, upgrading, or repair;

(8) the bank account from which taxes are paid has insufficient funds to pay the entire tax due upon the due date.

(B) All persons who have notified the department of an ownership or lien interest in a machine shall be notified of a proceeding to revoke licenses that may result in disabling under this section. A machine, and any part of the machine, disabled for reasons in (A)(1), (A)(2), (A)(3), or (A)(4) shall not operate in this State for five years from the date of revocation. The machine shall be sold for use out-of-state, or stored or destroyed in a manner approved by the department.

(C) All persons who have notified the department of an ownership interest in an establishment shall be notified of a proceeding to revoke licenses that may result in disabling under Section (A)(1). If machines are disabled at an establishment for the reason in (A)(1), the establishment may not operate, or allow the operation of, machines for five years from the date of the revocation or suspension.

Section 12-22-790. (A) A person in possession of, or operating, or allowing the operation of a contraband machine, contraband device, or contraband associated equipment at any place within this State, is subject to a civil penalty of not more than ten thousand dollars a machine or piece of associated equipment.

(B) When the department or division deems it necessary in connection with subsection (A), it may require the owner of a machine, device, or associate equipment to obtain a certification from an approved laboratory that the machine or a game or associate equipment meets the standards and requirements of this chapter. The cost of this certification is the responsibility of the owner of the machine, device, or associated equipment.

(C) Contraband machines, contraband devices, or contraband associate equipment may be seized by any law enforcement officer of the State or any of its political subdivisions who shall appear before any magistrate of the county in which the machine, device, or associated equipment was seized. If the magistrate is satisfied that the item is contraband, the magistrate shall direct that it be destroyed. The magistrate, at his discretion, may order an examination of the item, in person before the magistrate or by an approved laboratory, to assist in the determination as to whether the item is contraband.

Section 12-22-793. A person who knowingly possesses, owns, operates, or allows the operation, of a contraband machine, contraband device, or contraband associated equipment at any place within this State is guilty of a felony and, upon conviction, the person must be fined not more than twenty-five thousand dollars or imprisoned for not more than five years, or both.

Section 12-22-795. (A) Each machine licensed under this chapter must have a prominently displayed sign citing the penalties provided by Sections 12-22-935, 12-22-940, and 12-22-945 on the wall above the machine or affixed prominently to the machine. The department may provide sample language for these signs.

(B) A licensed establishment shall have posted and visible to the public at least one sign with the following words printed thereon:

(1) 'A person shall be twenty-one years of age to receive winnings from a video game machine.'

(2) 'It is illegal to offer inducements to a person to play video game machines.'

(3) 'All games are random. Games are set to issue a minimum theoretical payout of between ninety and ninety-nine percent.'

(4) `This establishment maintains a copy of the video game machine laws on the premises for review by players at their request.'

(5) `Validated tickets may be redeemed for cash.'

(6) `Violations are subject to civil and criminal penalties.'

(7) `Violations may be reported to S.C. State Law Enforcement Division or your local law enforcement agency.'

(C) The sign required by subsection (B) shall be visible and readable by the person playing the machine. Each letter on the sign shall be a minimum of two inches high.

Section 12-22-800. (A) A licensed establishment may not and the department shall not issue a license to an establishment if it does:

(1) maintain, possess, or otherwise allow on its premises more than five machines, except as provided in Section 12-22-815;

(2) advertise, or allow advertising, in any manner for the playing of the machines except as provided in Section 12-22-810;

(3) offer or allow to be offered any inducement as prohibited in Section 12-22-805 to a person to play machines or for the playing of machines;

(4) allow anyone under the age of twenty-one to receive winnings as a result of playing machines;

(5) operate machines between the hours of two o'clock Sunday morning and six o'clock a.m. Monday morning;

(6) violate valid local zoning ordinances;

(7) be located within five hundred feet, or within three hundred feet in a municipality, of any of these locations: a public or private elementary, middle, or secondary school; a public or private kindergarten or daycare; a public playground or park; a public vocational or trade school or technical educational center; a public or private college or university; or house of worship; or

(8) make loans or extend credit to a player for the purpose of playing machines.

(B) The distances in this article shall be computed by determining the shortest distance between the nearest property line of the licensed establishment and the nearest property line of the location in (A)(7).

(C) The distance requirements set forth in this section do not apply to establishments which operated or allowed the operation of machines and were licensed under former Section 12-21-2784 as of July 1, 1999, provided the establishment is operated by the same person who held the license on July 1, 1999.

(D) The department may revoke the licenses of establishments, machine owners, machine operators, and machines used in the establishment and impose a monetary penalty of not less than one thousand dollars and not more than ten thousand dollars on each of the owners of such licenses for each failure to comply with a provision of this section, or any provision of a regulation pertaining to this section.

(E) Any establishment violating a provision of this section or any provision of a regulation pertaining to this section may have its privilege for operating or allowing the operation of video game machines suspended as follows:

(1) upon the first violation, the privilege for operating or allowing the operation of machines is suspended for a period of up to six months;

(2) upon the second violation, the privilege for operating or allowing the operation of machines is suspended for a period of up to one year;

(3) upon the third or subsequent violation, the privilege for operating or allowing the operation of machines is suspended for a period of up to eighteen months.

(F) The department, upon a determination that the violation is wilful, may refer the violation to the Attorney General or to the appropriate circuit solicitor for criminal prosecution, and, upon conviction, the person must be fined not more than ten thousand dollars or imprisoned not more than two years, or both.

(G) Each violation or each day in violation of a provision of this chapter or any provision of a regulation pertaining to this chapter constitutes a separate offense.

Section 12-22-805. (A) No person may offer or allow to be offered any special inducement to a person for the playing of machines.

(B) A licensed establishment that engages in activities other than the operation of machines shall not offer any inducement unless the licensed establishment is able to prove that the inducements offered are not directed at machine players and that the offerings are part of the normal practice of similar business activities in the State.

Section 12-22-810. (A) A licensed establishment may advertise, or allow the advertising of, the playing of machines by utilizing a single green square not exceeding four by four feet which may be placed alone on any side of the building in which the licensed establishment is located.

(B) Nothing in this section prevents a licensed establishment from advertising other goods and services except as otherwise prohibited by law.

(C) No person may advertise in a misleading or deceptive manner.

(D) To protect the public from misleading, deceptive, or aggressive sales practices, no person shall advertise the playing of machines or a business regulated under this chapter in any manner that suggests winning, money, or wealth.

(E) Due to the pervasiveness of the medium and the children in the audience, no person may advertise the playing of machines in any broadcast medium between the hours of 5:00 a.m. and 11:00 p.m.

(F) No person shall advertise in any manner for the playing of machines within one thousand feet of a public or private school, daycare center, kindergarten, residence, park, playground, or church.

(G) Signs and non-broadcast advertising in existence on the date of enactment are not subject to the provisions of this section until July 1, 2001, provided notice is given to the department as required in this chapter.

Section 12-22-815. (A) Except as provided in subsection (B), machines shall not be operated or continue to operate at any casino, casino-style gaming operations, video gaming mall, or combination of 'single place or premises' as that term was applied in Regulation 117-190. In determining whether an establishment violates this section, the department shall consider whether more than one licensed establishment operates within a single structure, unless the distance between such licensed establishments exceeds one hundred feet and the licensed establishments are not owned by the same person, do not have any of the same principals, and the owner of one is not a principal of another licensed establishment. Licenses denied under this section are subject to review under Section 12-60-1310.

(B) All establishments which conducted business as a casino or otherwise within a structure which prior to April 1, 1999, contained more than one 'single place or premises' in accordance with department Regulation 117-190 must:

(1) on or before April 1, 1999, conduct business as a single operation and be licensed as a single licensed establishment to maintain on the premises more than five licensed machines;

(2) advise the department of the machine and establishment licenses currently issued for the structure and return the establishment licenses to the department at the time the new license for the single licensed establishment is approved by the department and issued;

(3) once licensed as a single establishment, never have licenses for any number of machines greater than the total number of machines licensed in the structure as of April 1, 1999, as asserted in the statement required in (6);

(4) never increase the number of machines permitted by this section after any reduction in the number of machines at the licensed establishment; provided, that a reduction, as that term is used in this subsection, does not include the routine removal and replacement of machines for maintenance, repair, service, or similar purpose;

(5) not allow the operation of an automated teller machine or any similar machine that dispenses money on the premises of the licensed establishment; and

(6) on or before April 1, 1999, file with the department a sworn statement asserting any and all reasons why it is entitled to the benefits conferred by this subsection (B).

(C) Any person claiming the provisions of subsection (B) shall have the burden of proof and must establish by clear and convincing evidence that he is entitled to operate the structure as a single licensed establishment with more than five licensed machines. Any transferee of an interest in such an establishment shall be subject to all limitations of this section.

(D)(1) No entity or entities of whatever description or kind which, prior to April 1, 1999, conducted business as a casino or otherwise through and by a combination, confederation, or aggregation of 'single place or premises' as that term prior to April 1, 1999, was interpreted and applied by the Department of Revenue in regulation may operate or continue to operate except as provided in this subsection.

(2) After April 1, 1999, entities as described in this subsection shall be permitted to re-apply for and may be granted renewal of a license for a maximum of one biennial licensure period. After completing that period, a new license shall not be issued.

Section 12-22-900. (A) It is unlawful for any person to keep on his premises or operate or permit to be kept on his premises or operated within this State any vending or slot machine, punch board, pull board, or other device pertaining to games of chance of whatever name or kind, including those machines, boards, or other devices that display different pictures, words, or symbols, at different plays or different numbers, whether in words or figures or, which deposit tokens or coins at regular intervals or in varying numbers to the player or in the machine, but the provisions of this section do not extend to coin-operated nonpayout pin tables, in-line pin games, and any video game with a free play feature which meet the technical requirements provided for in Section 12-22-725 and Section 12-22-775, or to automatic weighing, measuring, musical, and vending machines which are constructed as to give a certain uniform and fair return in value for each coin deposited and in which there is no element of chance.

(B) Any person violating the provisions of this section shall be tried before the magistrate and is guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred dollars or imprisoned for a period of not more than one year, or both.

Section 12-22-905. (A) Any machine, board, or other device prohibited by Section 12-22-900 must be seized by any law enforcement officer of the law and at the option of the magistrate taken before any magistrate of the county in which the machine, board, or device is seized who may examine it, take testimony, and if satisfied that it is in violation of Section 12-22-900 or any other law of this State, direct that it be immediately destroyed.

(B) Coin-operated machines or devices licensed pursuant to Section 12-22-320 are not subject to confiscation under this section due to any violation of Sections 16-19-30, 16-19-40, 16-19-50, or 16-19-130.

Section 12-22-910. (A) It is unlawful for a person to operate, cause to operate, or attempt to operate an automatic vending machine, slot machine, coin-box telephone, or other receptacle designed to receive lawful coin of the United States of America in connection with the sale, use, or enjoyment of property or service by means of a slug or any false, counterfeited, mutilated, sweated, or foreign coin, or by any means not lawfully authorized by the owner, lessee, or licensee of the receptacle.

(B) It is unlawful for a person to take, obtain, or receive from or in connection with any receptacle designed to receive lawful coin of the United States of America in connection with the sale, use, or enjoyment of property or service any goods, wares, merchandise, gas, electric current, or other article of value or the use or enjoyment of any telephone or telegraph facilities, or service, or of any musical instrument, phonograph, or other property, without depositing in and surrendering to the receptacle lawful coin of the United States of America in the amount required by the owner, lessee, or licensee of the receptacle.

(C) A person who violates the provisions of this section shall be tried before the magistrate and is guilty of a misdemeanor and, upon conviction, must be fined in the discretion of the court or imprisoned not more than two years.

Section 12-22-915. A person who, with intent to cheat or defraud the owner, lessee, licensee, or other person entitled to the contents of an automatic vending machine, slot machine, coin-box telephone, or other receptacle, depository, or contrivance designed to receive lawful coin of the United States of America in connection with the sale, use, or enjoyment of property or service or who, knowing that the same is intended for unlawful use, manufactures for sale, or sells or gives away any slug, device, or substance intended or calculated to be placed or deposited in the automatic vending machine, slot machine, coin-box telephone, or other receptacle, depository, or contrivance is guilty of a felony and, upon conviction, must be fined in the discretion of the court or imprisoned not more than five years.

Section 12-22-920. The issuance of a license under the provisions of this chapter by the department does not make lawful the operation of any gambling machine or device, the operation of which is made unlawful under the laws of this State.

Section 12-22-925. A person who fails, neglects, or refuses to comply with the terms and provisions of this chapter or who fails to attach the required license to any machine, apparatus, billiard, or pocket billiard table, as herein required, is subject to a penalty of fifty dollars for each failure, and the penalty must be assessed and collected by the department. If the violation under this section relates to a machine licensed pursuant to Section 12-22-320(A)(3), the applicable penalty amount is two thousand five hundred dollars. This penalty must be deposited in the same manner as other monies collected pursuant to this chapter.

Section 12-22-930. (A) In addition to the penalties above provided, any machine, apparatus, billiard, or pocket billiard table not having attached thereto the required license, or which is improperly licensed, must be seized and confiscated by the department, its agents or employees, and sold at public auction after thirty days' advertisement. Upon payment of the license required, the department may, within its discretion, return any property so seized and confiscated and compromise any penalty assessed.

(B) The owner or person from whom the property is seized may at any time within five days after the seizure repossess the property by filing with the department a bond in cash or a bond executed by a surety company authorized to do business in this State in double the amount of the tax and penalties due. Within ten days thereafter the person must bring action in a court of competent jurisdiction to have the seizure set aside; otherwise, the bond so filed must be declared forfeited by the department.

Section 12-22-935. It is unlawful to tamper with a machine with intent to interfere with its proper operation. A person who violates this section is guilty of a felony and, upon conviction, must be imprisoned not more than one year or fined not more than five thousand dollars, or both.

Section 12-22-940. Skimming of machine proceeds is the intentional excluding or the taking of any action in an attempt to exclude anything or its value from the deposit, counting, collection, or computation of revenues from machines. Whoever commits skimming of machine proceeds is guilty of a felony and, upon conviction, must be imprisoned for not less than one year nor more than ten years, without benefit of probation, parole, or suspension of sentence, and may be fined not more than twenty-five thousand dollars.

Section 12-22-945. A person who, with intent to manipulate the outcome, payoff, or operation of a machine by physical tampering or any other means is guilty of a felony and, upon conviction, must be imprisoned not less than one year nor more than five years or fined not more than one thousand dollars, or both.

Section 12-22-950. Upon application being made for a license to operate any machine or apparatus under this chapter, the department may presume that the operation of the machine or apparatus is lawful and when a license has been issued for the operation thereof, the sum paid for the license may not be refunded notwithstanding that the operation of the machine or apparatus is prohibited.

Section 12-22-1100. (A) In addition to license fees, there is imposed on the machine owner for each machine licensed under Section 12-22-320(A)(3), a tax of ten percent (10%) of the gross machine income. A player will receive credits on the machine equal to ninety percent (90%) of the number of credits allowed according to the amount of money that goes into the machine.

(B) The tax imposed by this section must be collected and remitted to the department by the machine owner. The machine owner shall be responsible for collecting and remitting any portion of the tax imposed by this section which is agreed in any manner to be paid by any other person, including the machine operator, distributor, or the owner, lessee, or manager of a place of business at which the machine is operated or offered for operation.

(C) On or before the twentieth day of the month following the end of each month, every person subject to the tax imposed by this section shall render to the department, on a form or in a manner prescribed by it, the tax due and payable and a true and correct statement showing the sum of all gross profits for the reporting period together with other information the department may require. A return is timely filed if the return is mailed and postmarked on or before the due date.

(D) The tax imposed by this section is effective beginning on the first day of the first month following enactment.

(E) Revenues derived from the tax imposed in this section must be credited as provided in Section 12-22-1110.

(F) All fees, taxes, and penalties imposed in this chapter are a first lien upon any and all property of the person charged therewith.

(G) Failure to remit taxes imposed under this chapter shall result in immediate disabling of the machines and is justification for the revocation of the machine license and machine owner's license.

Section 12-22-1105. (A) For any person owing twenty thousand dollars or more in connection with any return or reporting period, the tax imposed by this chapter shall be paid to the department through electronic transfer of funds.

(B)The taxpayer shall furnish the department all information and bank authorization required to facilitate the timely payment of taxes due. The taxpayer shall provide the department with thirty days' advance notice of any proposed bank account changes to ensure the uninterrupted electronic transfer of funds. The taxpayer shall maintain a balance in the account sufficient to cover the amount of the tax on the due dates. The failure to maintain an adequate balance authorizes the department to find the tax in jeopardy and to disable all machines licensed to that taxpayer. Appeals from a jeopardy assessment shall be governed by Title 12, Chapter 60.

(C) After notice to taxpayers, the department may draw upon the designated account to satisfy the tax indebtedness under this chapter.

(D) The taxpayer shall report to the department any discrepancies the department's statement of taxes based on a machine's mechanical and electronic meter readings, or otherwise. Until a discrepancy is resolved, the department shall not make credit adjustments. Electronic accounting meters shall not be cleared outside the presence of an authorized department or division employee. Any discrepancies that cannot be resolved because of unauthorized meter clearing shall be resolved in favor of the State. The burden of proving a discrepancy is upon the taxpayer.

(E) A licensed establishment may return to a player money which the player deposited into the machine for which the machine did not permit play and would not print a validated winnings ticket; and in such event shall obtain record the date, time, amount, and licensed machine number of the refund, and the name, addresses, telephone number, social security number, and driver's license identification number and state of that player. Thereafter the taxpayer may file a claim for refund for any taxes paid under this chapter on the amount returned to the player in accordance with Title 12, Chapter 60, but in addition to the information required by Section 12-60-470 the taxpayer shall file the information required to be maintained by the licensed establishment under this subsection.

Section 12-22-1110. All revenue derived from the fees and taxes imposed pursuant to this chapter must be credited as provided by the General Assembly.

Section 12-22-1120. Unless and until the department determines that such reports are unnecessary, each machine owner, machine operator, and licensed establishment shall report to the department for each calendar quarter, by the twentieth of the month following end of the quarter, the following information for each machine:

(1) name and address of location of the machine;

(2) denomination, whether five cents, etc. of the game;

(3) the name of the game;

(4) the name of the individual(s) collecting money from the machine and the owner of the machine;

(5) the date(s) of collection;

(6) the date of previous collection;

(7) income number at commencement of the reporting period;

(8) income number at the end of the reporting period;

(9) beginning payout number;

(10) ending payout number;

(11) payout to players;

(12) gross profit;

(13) the percentage of net profits divided between owner and the location and the formula by which those figures are calculated;

(14) the name, address, social security number, payout, and date of all payouts to players exceeding $500 per session, regardless of when the payout is delivered to the player; and

(15) the name, address, social security number, and information regarding any refunds to players.

Section 12-22-1300. (A) No municipality may limit the number of machines within the boundaries of the municipality. A municipality may by ordinance impose a license fee on machines licensed pursuant to Section 12-22-320(A)(3) in an amount not exceeding ten percent of three thousand six hundred dollars of the license fee imposed pursuant to Section 12-22-320(A) for the equivalent license period.

(B) No county may limit the number of machines within the boundaries of a county. A county may by ordinance impose a license fee on machines licensed pursuant to Section 12-22-320(A)(3) located in an unincorporated area of the county in an amount not exceeding ten percent of three thousand six hundred dollars of the license fee imposed pursuant to Section 12-22-320(A) for the equivalent license period.

Section 12-22-1305. Municipalities and counties may levy a license tax on the business taxed under this article, but in no case may a tax so levied exceed one-half of the amount levied by the State before March 28, 1956."

SECTION 11. Articles 19 and 20, Chapter 21, Title 12 are repealed. To the extent that regulations promulgated pursuant to the authority of Articles 19 and 20, Chapter 21, Title 12 are not inconsistent with Section 10, those regulations remain in effect until and unless otherwise modified or repealed pursuant to the Administrative Procedures Act.

SECTION 12. Section 16-19-60 of the 1976 Code is amended to read:

"Section 16-19-60. Nothing in Section 16-19-40 or 16-19-50 shall extend to coin-operated nonpayout machines with a free play feature; provided, that nothing herein shall authorize the licensing, possession, or operation of any machine which disburses money to the player. Nothing in this section prohibits regulation of video games pursuant to Article 20, Chapter 21 of Title 12, the Video Games Machines Act, including the prohibition on payoffs and location of these machines in counties where such payouts and machines are prohibited under the local option provisions of that article."

SECTION 13. Section 12-54-40(H) of the 1976 Code is amended to read:

"(H) A person who:

(1) must obtain a license or purchase stamps for identification purposes and fails to obtain or display the license properly, or fails to affix the stamps properly; or

(2) must comply with statutory provisions and fails to do so, is subject to a penalty of not less than fifty dollars nor more than five hundred dollars for each failure. For failure to obtain or display a license as prescribed in Sections 12-22-320 and 12-22-325, the penalty is two hundred dollars for each failure to comply."

SECTION 14. Section 12-54-40(M) of the 1976 Code is amended to read:

"(M) A machine owner or distributor, as defined in Article 20, Chapter 21 of this title, who allows or causes a machine to be operated without a metering device, or who wilfully places a machine on location or who wilfully allows or causes a machine to be operated with a metering device that does not accurately record the information required under Article 20, Chapter 21 of this title is guilty of a felony and, upon conviction, must be imprisoned for not less than one year nor more than ten years, without benefit of probation, parole, or suspension of sentence, and in addition may be fined not more than twenty-five thousand dollars. A machine owner or distributor, as defined in Chapter 22 of this title, who wilfully places a machine on location, or who wilfully allows or causes a machine to be operated, that does not accurately record the information required under Chapter 22 of this title is guilty of a felony and, upon conviction, must be imprisoned for not less than one year nor more than ten years, without benefit of probation, parole, or suspension of sentence, and in addition may be fined not more than twenty-five thousand dollars."

SECTION 15. Section 12-54-240(A) of the 1976 Code is amended to read:

"(A) Except in accordance with proper judicial order or as otherwise provided by law it is unlawful for a person to divulge or make known in any manner any particulars set forth or disclosed in any report or return required under Chapters 6, 8, 11, 13, 16, 20, 22, or 36 of this title. A person violating the provisions of this section is guilty of a misdemeanor and, upon conviction, must be punished by a fine of not more than one thousand dollars or by imprisonment for not more than one year, or both. If the offender is an officer or an employee of the State, he must be dismissed from office and is disqualified from holding any public office in this State for a period of five years thereafter. If the offender is an officer or employee of a company retained by the State on an independent contract basis under subsection (B)(3) of this section or Section 12-4-350, the contract is immediately terminated and the company is not eligible to contract with the State for this purpose for a period of five years thereafter."

SECTION 16. Article 1, Chapter 1, Title 32 of the 1976 Code is amended by adding:

"Section 32-1-60. The provisions of Sections 32-1-10, 32-1-20, and 32-1-30 do not apply to losses arising from the play of machines licensed pursuant to Section 12-22-320 (A)(3)."

SECTION 17. Sub-item (3) of Section 61-4-580 of the 1976 Code is amended to read:

"(3) permit gambling or games of chance which is not authorized by Chapter 22 of Title 12."

SECTION 18. The provisions of Chapter 22 of Title 12 as added by this act apply to any and all licenses to be issued on or after July 1, 1999. All persons who are licensed pursuant to Section 12-21-2728(A)(3) to own devices described in Section 12-21-2720(A)(3) on the effective date of this act are considered licensed under the provisions of Chapter 22 of Title 12 as added by this act until the time when the license would have expired as originally issued. Thereafter, the person shall apply for new licenses to be issued in accordance with Articles 3 and 5, Chapter 22, Title 12 as added by this act.

SECTION 19. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this chapter, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

SECTION 20. Except as may be otherwise provided in this act, this act takes effect upon approval by the Governor except that: (a) Part II takes effect December 31, 2000, only if the State Election Commission certifies, as provided in Section 2(A), that a majority of the qualified electors voting in the referendum voted "no". If Part II of this act takes effect, the South Carolina Department of Revenue, upon application, shall issue pro rata refunds of license fees on machines licensed pursuant to Section 12-21-2720(A)(3) as of December 31, 2000; and (b) Sections 10 and 11 are effective July 1, 1999, provided, however, Sections 10 and 11 are repealed December 31, 2000, if the State Election Commission certifies, as provided in Section 2(A), that a majority of the qualified electors voting in the referendum voted "no"./

Renumber sections to conform.

Amend title to conform.

JOHN W. DRUMMOND, for Committee.

TO DIRECT THE DEPARTMENT OF REVENUE TO PROMULGATE STRICT AND COMPREHENSIVE REGULATIONS NECESSARY TO REGULATE THE OPERATION OF VIDEO GAME MACHINES WITH A FREE PLAY FEATURE INCLUDING A RECOMMENDATION FOR THE IMPOSITION OF A TAX RATE AND REGULATIONS TO IMPOSE FEES ON SUCH MACHINES OR ON THE OWNERS, DISTRIBUTORS, OR OPERATORS THEREOF IN AN AMOUNT NECESSARY TO GENERATE REVENUE IN THE AGGREGATE OF AT LEAST TWO HUNDRED MILLION DOLLARS ANNUALLY, AND TO PROVIDE FOR THE PROCEDURES UNDER WHICH THE REGULATIONS MUST BE PROMULGATED INCLUDING A PROVISION THAT THEY MUST BE SUBMITTED TO THE GENERAL ASSEMBLY BY APRIL 1, 1999, AND ARE DEEMED APPROVED ON JUNE 3, 1999, IF THE GENERAL ASSEMBLY HAS NOT ENACTED A JOINT RESOLUTION PRIOR TO THIS DATE APPROVING OR DISAPPROVING SUCH REGULATIONS.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. (A) Notwithstanding any other provision of law, the Department of Revenue is directed to promulgate strict and comprehensive regulations necessary to regulate the operation of video game machines with a free play feature licensed pursuant to Section 12-21-2720(A)(3) of the 1976 Code including a recommendation for the imposition of a tax rate and regulations to impose fees on such machines or on the owners, distributors, and operators thereof in an amount necessary to generate, in addition to those fees and taxes already provided by law, revenue in the aggregate of at least $300,000,000 annually. These regulations must include, but are not limited to, the following:

(1) a requirement for background checks for video gaming industry employees, owners, distributors, and operators and any person having a financial interest in the business;

(2) a requirement for a minimum payout percentage for such machines as a function of the amount of money inserted into the machine;

(3) limitations on video gaming industry advertising of whatever form;

(4) a requirement for the electronic collection of the taxes so generated;

(5) any other regulations the department deems necessary for the proper regulation, supervision, and taxation of the video gaming industry, including, but not limited to, criteria by which licenses will be denied or revoked on the basis of information obtained in background checks as provided in item (1);

(6) no person under the age of twenty-one is allowed to play the machines or receive any compensation or pay-out from the machines.

(B) Notwithstanding the provisions of the Administrative Procedures Act, the following procedures apply with regard to the promulgation of the regulations required by subsection (A). The drafting notice and public notice requirements of the Administrative Procedures Act are waived and the department is directed to promulgate these regulations and submit them to the General Assembly for approval on or before April 1, 1999. If a committee to which the regulations are assigned determines that any changes are necessary in these regulations, the department must withdraw and resubmit the amended regulations within twenty days. These regulations are deemed to be approved on June 3, 1999, unless the General Assembly enacts a Joint Resolution approving these regulations at an earlier date or a Joint Resolution disapproving these regulations is introduced in the General Assembly on or before June 3, 1999, by the committee to which the regulations are assigned. In promulgating these regulations the department shall stipulate that these regulations shall have an effective date of July 1, 1999. All other provisions of the Administrative Procedures Act shall apply to the promulgation of these regulations mutatis mutandis.

(C) The Department of Revenue is directed to implement not later than May 31, 1999, the monitoring requirements for video games with a free play feature.

SECTION 2. This joint resolution takes effect upon approval by the Governor.