Does a South Carolina coin-operated device license make it legal to operate the machine (per SC IL #12-10)?

Plain-English summary

Holding a South Carolina coin-operated device license does NOT make it legal to operate the machine. The Department issued this letter because individuals and businesses were claiming that if a machine or device is licensed under S.C. Code § 12-21-2720 or § 12-21-2730, it is legal to operate in South Carolina. That is wrong.

Who decides legality. State and local law enforcement agencies and the judicial system — not the Department of Revenue — determine whether a machine or device is legal or illegal under South Carolina law. The Department is not authorized to make that determination.

What the statutes say. Under § 12-21-2724, when someone applies for a license, the Department "may presume that the operation of the machine or apparatus is lawful," and once a license is issued the license fee is not refundable even if the operation is in fact prohibited. Under § 12-21-2736, issuing a license "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."

Bottom line. A license issued under § 12-21-2720 or § 12-21-2730 does not make lawful the operation of any gambling machine or device that is unlawful under South Carolina law, and no person may rely on a license as evidence that a machine or device is legal.

What this means for you

If you own or operate coin-operated machines

Do not treat a Department license as proof that a machine is legal to operate. Paying for and holding the license does not shield you if the machine is an unlawful gambling device — and the license fee is non-refundable even then. Confirm a machine's legality through the proper legal channels, not the licensing tax.

Common questions

Q: Does a coin-operated device license make my machine legal?
A: No. The license does not make lawful the operation of any machine or device that is unlawful under South Carolina law.

Q: Who determines whether a machine is legal?
A: State and local law enforcement and the courts — not the Department of Revenue.

Q: Is the license fee refundable if the machine turns out to be illegal?
A: No. Under § 12-21-2724 the fee is not refundable even if the operation is prohibited.

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL12-10.pdf

Original ruling text

State of South Carolina
Department of Revenue
301 Gervais Street, P.O. Box 125, Columbia, South Carolina 29214
Web Address: www.sctax.org

SC INFORMATION LETTER #12-10

SUBJECT:

Coin-Operated Device Licenses – Unlawful Machines or Devices
(Coin-Operated Device License Tax)

DATE:

August 21, 2012

REFERENCE:

S.C. Code Ann. Section 12-21-2720 (2000)
S.C. Code Ann. Section 12-21-2730 (2000)
S.C. Code Ann. Section 12-21-2724 (2000)
S.C. Code Ann. Section 12-21-2736 (2000)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2000 and Supp. 2007)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

An Information Letter is a written statement issued to the public to announce
general information useful in complying with the laws administered by the
Department. An Information Letter has no precedential value.

It has come to the attention of the Department of Revenue that individuals and businesses are claiming
that if a machine or device is licensed under the provisions of Code Sections 12-21-2720 or 12-21-2730
that it is legal to operate that machine or device in South Carolina.
State and local law enforcement agencies, and the judicial system, are the agencies authorized to make the
determination as to whether a machine or device is legal or illegal under the laws of South Carolina. The
Department of Revenue is not authorized to make this determination. In fact, Code Section 12-21-2724
states that, upon application for a license under these provisions, the Department of Revenue “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.”
Further, it should be noted that Code Section 12-21-2736 states:
The issuance of a license under the provisions of this article 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.
Therefore, a license on a machine or device issued pursuant to Code Section 12-21-2720 or Code Section
12-21-2730 “does not make lawful the operation of any gambling machine or device, the operation of
which is made unlawful under the laws of [South Carolina];” and no person in possession of any such
machine or device may rely upon a license issued pursuant to these code sections as evidence of the
legality of a machine or device.