State of North Carolina in the Office Of s1

STATE OF NORTH CAROLINA IN THE OFFICE OF ADMINISTRATIVE HEARINGS COUNTY OF MECKLENBURG 01 ABC 1325

N.C. ALCOHOLIC BEVERAGE ) CONTROL COMMISSION, ) Petitioner, ) ) RECOMMENDED DECISION v. ) ACME RETAIL, INC. ) T/A HANDY PANTRY, ) Respondent. )

This matter came on for hearing on January 8, 2002 in Charlotte, North Carolina before Administrative Law Judge Sammie Chess, Jr.

APPEARANCES

Petitioner: Timothy W. Morse Assistant Counsel N.C. ABC Commission 4307 Mail Service Center Raleigh, NC 27699-4307

Respondent: N. Leo Daughtry Attorney at Law Post Office Drawer 1960 Smithfield, NC 27577

ISSUES

Whether the Permittee’s employee possessed gambling devices on the licensed premises on or about September 14, 2000 in violation of GS 18B-1005(a)(3) and CR 4NCAC 2S.0207(b).

Whether the Permittee’s employee gambled or allowing gambling on the licensed premises on or about September 14, 2000 in violation of GS 18B-1005(a)(3) and CR 4NCAC 2S.0207(a).

STATUTES AND RULES INVOLVED

N.C.G.S. 14-306(a) defines an illegal slot machine as

Any machine, apparatus or device… that is adapted, or may be readily converted into one that is adapted, for use in such a way that, as a result of the insertion of any piece of money or coin or other object, such machine or device is caused to operate or may be operated in such a manner that the user may receive or become entitled to receive any piece of money, credit, allowance or thing of value, or any check, slug, token or memorandum, whether of value or otherwise, or which may be exchanged for any money, credit allowance or any thing of value,…

N.C.G.S. 14-306(b) sets out the requirements for two exceptions to the definition of an illegal slot machine described in paragraph (a), above, and in pertinent part, states:

The definition contained in subsection (a) of this section and G.S. 14-296, 14-301, 14-302 and 14-305 does not include coin operated machines, video games, pinball machines, and other computer, electronic or mechanical devices that are operated and played for amusement, that involve the use of skill or dexterity to solve problems or tasks or to make varying scores or tallies and that:

(1) Do not emit, issue, display, print out…. Any receipt, paper, coupon

(2) In actual operation, limit to eight, the number of accumulated credits or replays that may be played at one time and which may award free replays or paper coupons that may be exchanged for prizes or merchandise with a value not exceeding ten dollars ($10.00), but may not be exchanged or converted to money.

N.C.G.S. 14-296 Illegal slot machine defined. An illegal slot machine or punchboard within the contemplation of G.S. 14-295 through 14-298 is defined as a device where the user may become entitled to receive any money, credit, allowance, or anything of value, as defined in G.S. 14-306

N.C.G.S. 14-301. Operation or possession of slot machine; separate offenses. It shall be unlawful for any person, firm or corporation to operate, keep in his possession or in the possession of any other person, firm or corporation, for the purpose of being operated, any slot machine or device where the user may become entitled to receive any money, credit, allowance, or any thing of value, as defined in G.S. 14-306. Each….

N.C.G.S. 14-302. Punchboards, vending machines, and other gambling devices; separate offenses. It shall be unlawful for any person, firm or corporation to operate or keep in his possession, or in the possession of any other person, firm or corporation, for the purpose of being operated, any punchboard, slot machine or device where the user may become entitled to receive any money credit, allowance, or anything of value, as defined in G.S. 14-306. Each….

N.C.G.S. 18B-1005. Conduct on the Licensed Premises. (a) Certain Conduct. It shall be unlawful for the permittee or his agent or employee to knowingly allow any of the following kinds of conduct to occur on his licensed premises: (1) Any … (2) Any fighting… (3) Any violation of the controlled substances, gambling, or prostitution statutes, or any other unlawful acts; ABC Commission Rule 4 NCAC 02S.0207. Gambling: Gambling Devices Prohibited. (a) No permittee or his employee shall engage in gambling nor allow any other person to engage in gambling on the licensed premises. (b) No permittee or his employee shall possess or permit the possession by another person of any gambling devices on the licensed premises.

STIPULATIONS BY THE PARTIES

By mutual agreement between the parties, it was stipulated that on September 14, 2000 there was present on the Respondent’s licensed premises, a “Pot of Gold” video poker machine opened to be played by the public.

To be noted with the above stipulation is the following:

(1) the afore-mentioned video poker machine was admitted into evidence as Petitioner’s Exhibit #2, and (2) Respondent’s pre-hearing statement reflects the Respondent’s position that the “facts do not support the alleged violations”, but does not dispute that the facts as alleged in the violation report are correct.

Based upon a review of the official documents in the file, sworn testimony of the witnesses, exhibits, and the transcript of the hearing, the Court makes the following:

FINDINGS OF FACT

1. On September 14, 2000, the Respondent held retail, off-premises ABC permits for the sale of malt beverages, fortified and unfortified wine.

2. Officer R. Simmons of the Charlotte-Mecklenburg Police Department and Agent Pou of Mecklenburg County ABC Law Enforcement worked together on an undercover campaign to determine if cash payouts were being made to players of video poker machines throughout the county. The respondent’s convenience store was one of the businesses checked on September 14, 2000.

3. Officer Simmons was sent inside the Respondent’s store to play the video poker machine. Officer Simmons played one of two machines located in the rear of the store. The machine played is the same “ Pot of Gold”, video poker machine stipulated to by the parties and admitted into evidence as Petitioner’s Exhibit #2. (Transcript pages 12 and 13)

4. Officer Simmons put twenty ($20.00) in the machine and played for approximately forty-five (45) minutes. While he was playing, the machine “hit the jackpot”. (Transcript page 14) At that point three separate coupons came out of the machine, one after another. (Transcript page 14)

5. Each coupon contained printing describing the credits earned by Officer Simmons as well as a dollar amount. One coupon showed fifteen hundred credits, and had seventy-five dollars ($75.00) printed across it. The second and third coupons each showed twenty-five hundred credits and had one hundred twenty-five dollars ($125.00) printed on each of the coupons. (Petitioner’s Exhibit #1) (Transcript pages 14 and 15)

6. Officer Simmons asked the store clerk, Jason Graham to “payoff” the coupons. Graham refused, saying, “I cannot pay you in cash”. (Transcript page 20) When asked by Simmons what he could get for the coupons, Graham responded, “You can have anything in the store”. Simmons asked Graham whether he could have cigarettes and beer in exchange for the coupons. Graham responded, “Sure”. (Transcript page 21)

7. Simmons asked Graham whether he could come back at a later time to exchange his coupons for merchandise. Graham told Simmons that he could come back at another time but, “Just be sure and bring the coupons back when your come”. (Transcript page 21) Simmons left the business without exchanging the coupons. Graham told Simmons that he could get three hundred and twenty-five dollars’ worth of merchandise for the coupons. (Transcript page 32)

8. The video poker machine played by Officer Simmons is owned by J.M. Vending Company. (Transcript page 36)

9. Doug Goodenough, a corporate officer for J.M. Vending Company, testified for the Respondent. Mr. Goodenough testified, that the video poker machines supplied by his corporation to North Carolina businesses are supposed to be programmed to comply with North Carolina law, and specifically to comply with G.S. 14-306(b)(2). (Transcript page 38 - 42) (Respondent’s Exhibits 1 and 2)

10. Other than hypothesizing that there must have been a “glitch” in operation, Mr. Goodenough could not offer an explanation as to why his machine gave Simmons three coupons at one time. (Transcript page 41) 11. Mr. Goodenough did not personally inspect the “Pot of Gold” video poker (Petitioners Exhibit # 2) machine to determine if the machine was programmed to operate under North Carolina law. (Transcript page 43)

12. Mr. Goodenough could not explain why the coupons had printed values in excess of the ten- dollar limit ($10.00) permitted by North Carolina Law. (Transcript page 41) Mr. Goodenough stated that the machine “should have probably printed tickets in ten-dollar increments”. (Transcript page 46)

13. Upon receiving information concerning the events of September 14, 2000, Mr. Goodenough sent employees to Respondent’s place of business to check the operation of the video poker machine. At the time of this check the “machine was the way it was supposed to be”. (Transcript page 42)

14. Mr. Goodenough testified that the Respondent / Permittee, Handy Pantry does not have access to the portion of the video poker machine containing the game’s computer program.. (Transcript page 44) Based on the foregoing Findings of Fact, the undersigned Administrative Law Judge makes the following:

CONCLUSIONS OF LAW

1. The Office of Administrative Hearing has jurisdiction in this matter.

2. N.C.G.S. 14-306(a) defines an illegal slot machine as;

Any machine, apparatus or device… that is adapted, or may be readily converted into one that is adapted, for use in such a way that, as a result of the insertion of any piece of money or coin or other object, such machine or device is caused to operate or may be operated in such a manner that the user may receive or become entitled to receive any piece of money, credit, allowance or thing of value, or any check, slug, token or memorandum, whether of value or otherwise, or which may be exchanged for any money, credit allowance or any thing of value,…

The “Pot of Gold” video poker machine played by Officer Simmons is a slot machine as defined by G.S. 14-306(a). Simmons deposited twenty dollars in the machine and then played video poker. The machine awarded to Simmons three coupons, memoranda as described by the statute, which could be exchanged for something of value, merchandise.

3. N.C.G.S. 14-302. Punchboards, vending machines, and other gambling devices; separate offenses. It shall be unlawful for any person, firm or corporation to operate or keep in his possession, or in the possession of any other person, firm or corporation, for the purpose of being operated, any punchboard, slot machine or device where the user may become entitled to receive any money credit, allowance, or anything of value, as defined in G.S. 14-306. Each….

A slot machine, as defined by G.S. 14-306(a) is a gambling device under G.S. 14-302.

4. On September 14, 2000, Respondent’s employee, Jason Graham, possessed a slot machine - a gambling device as defined by G.S. 14-306(a) on the licensed premises and allowed Officer Simmons to operate the machine in violation of G.S. 18B-1005(a)(3) and ABC Commission Rule 4 NCAC 02S.0207(a) and (b).

5. The Respondent’s “Pot of Gold”, video poker machine awarded to Officer Simmons three coupons with stated monetary values of $75.00, $125.00 and $125.00 exceeding the $10.00 coupon limit required in G.S. 14-306(b)(2).

6. The Respondent has failed to show that the “Pot of Gold” video poker machine played by Officer Simmons, and marked as Petitioner’s Exhibit # 2, meets the requirements of one of the exceptions provided in G.S. 14-306(b).

RECOMMENDED DECISION

Based upon the foregoing Findings of Fact and Conclusions of Law, the undersigned Administrative Law Judge recommends that the Respondent pay a monetary penalty of $750.00 dollars and that Respondent’s retail, off-premise, malt beverage, unfortified wine and fortified wine permits shall be suspended for 30 days.

It is hereby ordered that the agency serve a copy of the final agency decision on the Office of Administrative Hearings, P.O. Drawer 27447, Raleigh, NC 27611-7447, in accordance with N.C.G.S. 150B-36(b).

NOTICE

The agency making the final decision in this contested case is required to give each party an opportunity to file exceptions to this recommended decision and to present written arguments to those in the agency who will make the final decision. G.S.150B-36(a). The agency is required by G.S. 150B-36(b) to serve a copy of the final agency decision on all the parties and to furnish a copy to the parties’ attorney of record and to the Office of Administrative hearings. The agency that will make the final decision in this contested case is the N.C. Alcoholic Beverage Control Commission.

This the 21 day of May, 2002.

______Sammie Chess, Jr. Administrative Law Judge