How did superseded RR 96-2 classify amusement machines, video games, free-play devices, and game tables for South Carolina license tax?

Plain-English summary

South Carolina Revenue Ruling 96-2 provided the Department's 1996 classification guide for amusement and arcade devices. It has since been expressly superseded by SC Revenue Ruling 16-4.

The historical guide separated machines by what they did and whether they had a free-play feature. Type I included music machines, kiddy rides, jukeboxes, and mechanical amusement devices with free play. Type II included amusement or video-game machines without free play, crane machines, and the pin-table category described in the statute. Type III covered the identified nonpayout or in-line pin games and video games with free play.

Physical billiard, pocket-billiard, foosball, bowling-lane, and skeeball tables operated for profit were governed by the more specific table statute and listed as Type I in the ruling's chart. Video-screen versions instead followed the video-game categories. A table was not operated for profit if players were not charged.

The ruling defined free play as an entire game provided without charge, equivalent to the paid game. A machine designed with that feature was not treated as lacking free play unless the mechanism was completely removed and the required certificate was filed.

Common questions

Q: Was every electronic device a video game? No. The ruling limited video games to games played by manipulating images on a television, computer, or similar display.

Q: Did a free game awarded for achieving a score count as free play? Yes. The ruling also listed matching a random score digit and wagering won credits as examples.

Q: How were video versions of pool, foosball, bowling, or skeeball treated? Under the video-game statute: Type II without free play and Type III with free play.

Q: Did buying a device license make a machine legal? No. The ruling expressly warned that licensing an illegal machine did not legalize it and did not entitle the owner to a refund.

Q: Is RR 96-2 current? No. RR 16-4 expressly superseded it.

Citations and references

• S.C. Code Ann. § 12-21-2720 (historical Type I, II, and III device licenses)
• S.C. Code Ann. § 12-21-2730 (specified for-profit game tables)
• S.C. Code Ann. §§ 12-21-2724 and 12-21-2736 (illegal-machine licensing and refunds cited)
• Former S.C. Regulation 117-31 (free-play feature)
• SC Revenue Ruling #16-4 (expressly superseded RR #96-2)

Subject

Coin Operated Devices

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR96-2.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214

SC REVENUE RULING #96-2 (TAX)

SUBJECT:

Coin Operated Devices

EFFECTIVE DATE: Applies to all periods open under statute.
SUPERSEDES:

SC Revenue Ruling #90-9 and all previous documents and any oral
directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-21-2720 (Supp. 1994)
S.C. Code Ann. Section 12-21-2730 (Supp. 1994)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1994)
SC Revenue Procedure #94-1

SCOPE:

A Revenue Ruling is the Department of Revenue's official
advisory opinion of how laws administered by the Department are
to be applied to a specific issue or a specific set of facts, and is
provided as guidance for all persons or a particular group. It is
valid and remains in effect until superseded or modified by a
change in the statute or regulations or a subsequent Revenue
Ruling or Revenue Procedure.

Question:
What guidelines can the Department provide that will assist in determining the proper
licenses 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, one or more of the following machines or devices shall apply for
and procure from the South Carolina Department of Revenue and Taxation 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 three 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
C.O.D. 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 can 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.
(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 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.

2

A review of the above statutes reveals three 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"?
Third, what is a free play feature?
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 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

2. A system or device together with its power source and auxiliary equipment, ... 3.
   A system or device, such as an electronic computer, that performs or assists in the
   performance of a human task.
   mechanical
3. Of or pertaining to machines or tools.
4. Operated or produced by a machine
   amusement
5. The state of being amused, entertained or pleased.
6. 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.

3

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)] are limited to those games
without a free play feature. The section concerning "mechanical amusement devices"
[Section 12-21-2720(1)] is silent concerning the free play feature; therefore, the Type I
license is applicable to those devices ("mechanical amusement 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 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.
     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.
     Finally, it has been the longstanding policy of the Department that a free play feature was
     one that allows a player to play a complete game free of charge 1 . For example 2 , a player
     may receive a free game if:
     1.

a certain number of points are scored;

2.

the last number of the player's score matches a number randomly selected by
the machine (Score: 328,446, Randomly Selected Number: 6); or

1

A free play feature allows a player to play an entire game free of charge. The free game
is the same game the player would play if he or she had paid to play the game.
2
These examples do not represent all the methods in which a player may win or achieve a
free play.
4

3.

the player is allowed to bet credits won (free games) with each bet representing
another play 3 .

Administrative interpretations of statutes by the agency charged with their administration
and not expressly changed by the legislative body are entitled to great weight. Marchant
v. Hamilton 309 S.E. 2d 781 (1983). When as in this case, the construction or
administrative interpretation of a statute has been applied for a number of years and has
not been changed by the legislature, there is created a strong presumption that such
interpretation or construction is correct. Ryder Truck Lines, Inc. v. South Carolina Tax
Commission, 248 S.C. 148, 149 S.E. 2d 435; Etiwan Fertilizer Company v. South
Carolina Tax Commission, 217 S.C. 354, 60 SE 2d, 682.
Conclusion:
The guidelines, provided by the department, 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

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

N/A
N/A
Yes
Yes
No
N/A
No
N/A 4
Yes
N/A
N/A
N/A
N/A
N/A
N/A

Yes
12-21-2720(1)
Yes
12-21-2720(1)
12-21-2720(1)
Yes
12-21-2720(1)
Yes
12-21-2720(2)
Yes
12-21-2720(2)
Yes
12-21-2720(2)
Yes
12-21-2720(2)
Yes
12-21-2720(3)
Yes
12-21-2720(3)
N/A
12-21-2730
N/A
12-21-2730
N/A
12-21-2730
N/A
12-21-2730
N/A
12-21-2730

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Section

Type
Lic.
I
I
I
I
II
II
II
II
III
III
I
I
I
I
I

This type of free play feature is usually found in Video Game Machines regulated under
Article 20 of Chapter 21 in Title 12 of the South Carolina Code of Laws.
4
While the statute specifically states that a pin table with levers and a free play feature is a
Type II machine, this chart shows that a pin table with levers without a free play feature is
also a Type II machines since it qualifies as "machine for the playing of amusements". A
"machine for the playing of amusements" is a Type II machine.
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Notes:
1.

Machines or devices subject to the licensing provisions of Code Section 12-212730, 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.

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. FOR MORE
INFORMATION ON FREE PLAY FEATURES, SEE PAGE 4 OF THE
DISCUSSION PORTION OF THIS DOCUMENT.

4.

Video games of billiards, pocket billiards, footsball, bowling and skeeball are
subject to the taxes imposed by Code Section 12-21-2720, and not Code
Section 12-21-2730. Therefore, such video games without a free play feature
are Type II machines and those with a free play feature are Type III machines.

5.

The licensing of an illegal machine does not make the machine legal in South
Carolina. If a machine is held to be illegal, the owner of the machine may not
receive a refund for the license that was purchased from the Department of
Revenue and affixed to the illegal machine. See Code Sections 12-21-2724
and 12-21-2736.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank, III, Director

Columbia, South Carolina
January 8
, 1996

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