How did South Carolina classify coin-operated amusement machines and game tables for license tax under its 1990 guidance?

Plain-English summary

South Carolina Revenue Ruling 90-9 classified amusement machines, video games, pinball-style devices, crane machines, and specified game tables under the coin-operated-device license taxes in effect in 1990.

The classification depended on what the device did, whether a coin or other thing of value activated it, whether it had a free-play feature, and whether it was a physical for-profit table specifically named in the statute.

The ruling's historical license amounts were:

• $25 for music machines, kiddy rides, jukeboxes, mechanical amusement devices with free play, and specified physical game tables;
• $100 for amusement or video-game machines without free play, crane machines, and nonpayout pin tables with flippers and free play; and
• $1,500 for covered nonpayout in-line pin games and video games with free play, other than the flipper-style pin tables placed in the $100 category.

Historical classification table

The ruling described the two pin-game entries as essentially pinball machines—one with player-operated flippers and one without.

Mechanical amusement devices versus amusement machines

The ruling treated the two phrases as referring to the same general kind of equipment but used the free-play feature to separate the historical categories.

Section 12-21-2720(2)'s $100 "playing of amusements" category was limited to games without free play. The $25 mechanical-amusement-device language in subsection (1) was silent about free play, so the Commission applied it to mechanical devices with that feature.

What counted as a video game

A video game was an electronic or computerized game played by manipulating images on a television or another display screen.

The ruling warned that an electronic scoreboard did not automatically turn a physical table into a video game. The player had to manipulate on-screen images as the game itself.

Video simulations of billiards, pocket billiards, foosball, bowling, or skeeball fell under the video-game provisions of § 12-21-2720, not the physical-table provision in § 12-21-2730.

Physical game tables

The specific statute controlled billiard, pocket-billiard, foosball, bowling-lane, and skeeball tables owned or operated for profit, even when another general amusement-machine provision might also appear to apply.

A table did not need a coin slot, but it had to be operated for profit. If no player was charged to use it, the ruling said the § 12-21-2730 license tax did not apply.

Free-play feature

Regulation 117-31 treated a machine as having free play when the manufacturer designed it with that feature.

To qualify as a machine without free play, the mechanism had to be completely and wholly removed, and a certificate stating that fact had to be filed with the license application. Merely disabling or not using the feature was not enough under the quoted rule.

What this means for you

Historical arcade and amusement operators

Classify the actual device, not just its marketing name. The physical-table, video-game, flipper, coin-activation, and free-play facts could move equipment among very different fee levels.

Current operators

Do not use the 1990 fee table as current law. Later statutes, regulations, and Department guidance may use different amounts and categories.

Compliance staff

For legacy-period research, document the machine's display, controls, payment mechanism, free-play hardware, and whether customers paid to use a physical table.

Common questions

Q: Was every electronic table a video game?

A: No. A video game required play through manipulated images on a display screen; an electronic scoreboard alone was not enough.

Q: Did a physical billiard or skeeball table need a coin slot?

A: No. The specific table provision required for-profit operation, not coin activation.

Q: Was a free-play video game in the $100 category?

A: Generally no under the historical table. Covered video games with free play were in the $1,500 category, while nonpayout flipper pin tables were the stated exception at $100.

Q: Could an operator call a machine "without free play" by switching the feature off?

A: No. The mechanism had to be completely removed and certified as removed.

Citations and references

• S.C. Code Ann. § 12-21-2720 — historical amusement-machine categories and fees
• S.C. Code Ann. § 12-21-2730 — historical specified for-profit game-table license
• S.C. Regulation 117-31 — historical free-play feature rule

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR90-9.pdf

Original ruling text

SC REVENUE RULING #90-9

SUBJECT:

Coin Operated Devices

TAX MANAGER:

John P. McCormack

EFFECTIVE DATE:

Applies to all periods open under statute.

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-21-2720 (Supp. 1989)
S.C. Code Ann. Section 12-21-2730 (Supp. 1989)

AUTHORITY:

S.C. Code Ann. Section 12-3-170 (1976)
SC Revenue Procedure #87-3

SCOPE:

A Revenue Ruling is the Commission's official interpretation of
how tax law is to be applied to a specific set of facts. A Revenue
Ruling is public information and remains a permanent document
until superseded by a Regulation or is rescinded by a subsequent
Revenue Ruling.

Question:
What guidelines can the Commission provide that will assist in determining the proper
license taxes required on various types of amusement and arcade machines, devices and
tables, pursuant to Code Sections 12-21-2720 and 12-21-2730,?
Facts:
Advice has been requested with regard to the imposition of the license taxes under Chapter
21 of Title 12 on various types of amusement and arcade machines, devices and tables.
Questions have been raised concerning machines using electronic scoreboards, such as
skeeball tables, shuffleboard tables and pool tables. Also of concern are these same games
played on a video screen, in that, the computer simulates a game of pool or shuffleboard.
Furthermore, some machines or devices appear to fall within several different categories of
games described in the statute.
In addition, many machines award a player a free game if the player achieves a certain score
or desired goal.
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Discussion:
Code Section 12-21-2720 imposes license taxes on three categories of amusement machines,
and reads, in part:
Every person who maintains for use or permits the use of, on any place or premise
occupied by him, any of the machines or devices described below shall apply for and
procure from the South Carolina Tax Commission a license for the privilege of
making use of every such machine in South Carolina and shall pay for the license a
tax of twenty-five dollars for each machine described in item (1) of this section, one
hundred dollars for each machine described in item (2) of this section, and one
thousand five hundred dollars for each machine described in item (3) of this section.
(1) Any machine for the playing of music or kiddy rides operated by a slot or
mechanical amusement devices and juke boxes wherein is deposited any coin or thing
of value.
(2) Any machine for the playing of amusements or video games, without free play
feature, or machines of the crane type operated by a slot wherein is deposited any coin
or thing of value, and any machine for the playing of games or amusements, which
has a free play feature, operated by a slot wherein is deposited any 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 can be altered or changed.
(3) Any machine of the nonpayout type, in-line pin game, or video game with free
play feature operated by a slot wherein is deposited any 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 can be altered or changed.
Code Section 12-21-2730 imposes a license tax on specific amusement devices, and reads, in
part:
Every person owning or operating any billiard or pocket billiard table, footsball table,
bowling lane table, or skeeball table for profit shall apply for and procure from the
Commission a license for the privilege of operating the table and pay for the license a
tax of twenty-five dollars for each table owned or operated.
A review of the above statutes reveals two areas which need clarification. First, what is the
difference between "machines for the playing of amusements" without a free play feature and
"mechanical amusement devices"? Second, what constitutes a "video game" ?
The Code does not define the aforementioned terms and phrases: however, it is accepted
practice in South Carolina to resort to the dictionary to determine the literal meaning of
words used in statutes. For cases where this has been done, see Hay v. South Carolina Tax

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Commission, 273 SC 269, 255 SE 2d 837 (1979); Fennell v. South Carolina Tax
Commission, 233 S.C. 43, 103 SE2d 424 (1958); Etiwan Fertilizer Co. v. South Carolina Tax
Commission, 217 SC 484, 60 SE2d 682 (1950).
The Second College Edition of the American Heritage Dictionary defines the following
terms, in part:
"machine"

1. A system or device together with its power source and
   auxiliary equipment, 2. A system or device, such as an
   electronic computer, that performs or assists in the
   performance of a human task.

"mechanical"

1. Of or pertaining to machines or tools. 2. Operated or
   produced by a machine

"amusement"

1. The state of being amused, entertained or pleased. 2.
   Something that amuses.

"device"

Something devised or constructed for a particular
purposes, esp. a machine used to perform one or more
relatively simple tasks.

"video games"

An electronic or computerized game played by
manipulating images on a television or other display
screen".

Based on the above definitions, "machines for the playing of amusements" and "mechanical
amusement devices" are the same type of machines, except that "machines for the playing of
amusements" [Section 12-21-2720(2) - $100 license] are limited to those games without a
free play feature. The section concerning "mechanical amusement devices" [Section 12-212720(1)], which requires a $25 license, is silent concerning the free play feature; therefore,
the $25 license is applicable to those devices with a free play feature. Also, video games are
those games "played by manipulating images on a television or other display screen".
Code Section 12-21-2730 imposes a $25 license tax on specific machines or devices;
however, these same machines or devices could also fall within the provisions of Code
Section 12-21-2720. However,".with respect to a conflict arising between a statute dealing
generally with a subject, and another dealing specifically with a certain phase of it, the
specific legislation controls in a proper case". 73 Am. Jurs.2d, Statutes, Section 258.
Therefore, Code Section 12-21-2730 is controlling with respect to billiard and pocket billiard
tables, footsball tables, bowling lane tables and skeeball tables owned or operated for profit.

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Furthermore, Regulation 117-31 provides insight as to the definition of the phrase "free play
feature" and reads, in part:
The words "which has a free-play feature" shall mean and include any machine which
is designed and made with such feature by the manufacturer of such machine,
provided, however, that where the mechanism constituting a free-play feature has
been completely and wholly removed from the machine, and a certificate to that effect
is filed at the time of application for license, the machine shall be licensed as provided
by .[Section 12-21-2720] of the 1976 Code.

Conclusion:
The guidelines, provided by the Commission, that will assist in determining the proper
license taxes on various types of amusement and arcade machines, devices and tables,
pursuant to Code Sections 12-21-2720 and 12-21-2730, are as follows:
Type Machine

Free Play
Feature

Operated By
Slot/Coin

Section

Tax

Machines for playing music
Kiddy rides
Juke box
Mechanical amusement devices
Playing of amusements
Crane type machines
Video games
Pin table, w/ levers
Video games
In-line pin game, w/o levers
Billiard table
Pocket billiard tables
Footsball table
Bowling lane table
Skeeball table

N/A
N/A
N/A
Yes
No
No
No
Yes
Yes
Yes
N/A
N/A
N/A
N/A
N/A

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
N/A
N/A
N/A
N/A
N/A

12-21-2720(1)
12-21-2720(1)
12-21-2720(1)
12-21-2720(1)
12-21-2720(2)
12-21-2720(2)
12-21-2720(2)
12-21-2720(2)
12-21-2720(3)
12-21-2720(3)
12-21-2730
12-21-2730
12-21-2730
12-21-2730
12-21-2730

$ 25
$ 25
$ 25
$ 25
$100
$100
$100
$100
$1500
$1500
$ 25
$ 25
$ 25
$ 25
$ 25

• These machines are essentially pinball machines, one with levers or "flippers" and one without
  levers or "flippers". Both machines are "nonpayout".
  Note:

1. Machines or devices subject to the license tax under Code Section 12-21-2730,
   while not required to be operated by a slot or a coin, must be "for profit". If a
   player is not charged to use these machines or devices, it is not for profit and is
   not subject to the license tax.

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2. Not all electronic machines, devices or tables qualify as video games. Video
games are those games played by manipulating images on a television, computer
or other similar display screen.

3. In order to qualify as a machine or device "without a free play feature", the
   machine or device's mechanism constituting the free play feature must be
   completely and wholly removed from the machine or device.
4. Video games of billiards, pocket billiards, footsball, bowling and skeeball are
   subject to the taxes imposed by subsections (2) and (3) of Code Section 12-212720, and not Code Section 12-21-2730.

SOUTH CAROLINA TAX COMMISSION

s/S. Hunter Howard, Jr.
S. Hunter Howard, Jr., Chairman

s/A. Crawford Clarkson, Jr.
A. Crawford Clarkson, Jr., Commissioner

s/T. R. McConnell
T. R. McConnell, Commissioner

Columbia, South Carolina
, 1990
September 6

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