Could a company redeem out-of-state gambling prizes for cash inside South Carolina?

Plain-English summary

A senator asked about a scheme in which a South Carolina company placed gambling devices in another state, players won tickets or prizes there, and a separate company redeemed those winnings for cash in South Carolina. The 2000 informal opinion said the arrangement would be prosecutable under South Carolina anti-gambling law. It treated the in-state cash payoff as part of an effort to evade the state's restrictions, even though the machines were operated across the border.

The AG said using two legally separate companies did not insulate them and could expose participants to conspiracy charges. It also identified possible prosecution in the neighboring state and potential federal gambling or interstate-travel issues, while directing questions about federal applicability to the United States Attorney. The letter addressed the described scheme, not every lawful out-of-state prize or ordinary purchase of a ticket.

Currency note

This opinion was issued in 2000. Subsequent statutory amendments, court decisions, or later
AG opinions may have changed the analysis. Treat this page as historical context, not current
legal advice. Verify current law before relying on any specific rule, deadline, or remedy
mentioned here.

Common questions

Q: Did locating the gambling machine outside South Carolina settle the issue?
A: No. The opinion said the intended cash payoff inside the state could support prosecution of the combined arrangement.

Q: Did using two separate companies avoid liability?
A: The AG said no. It treated that separation as insufficient and discussed potential conspiracy charges.

Q: Did the AG say federal charges were certain?
A: No. It listed federal provisions that might apply and referred their applicability to federal prosecutors.

Background and statutory framework

The letter cited state gambling prohibitions, the then-recent end of lawful video gaming in South Carolina, and decisions permitting a state to address intended harmful effects within its territory. Its federal discussion was expressly conditional on the facts and federal enforcement judgment.

Citations and references

• § 16-19-40 and § 16-19-50, state gambling provisions discussed in the opinion.
• State v. Mcintire, cited on prosecution of conspiracy where an overt act occurs.
• 18 U.S.C. § 1955 and 18 U.S.C. § 1952, potential federal provisions identified by the AG.

Official title

Asking “if a South Carolina based company operates a game of chance, coin-operated device, or any other gaming device in a neighboring state, is it unlawful for another company to buy back the validated ticket or prizes from that player within the State of South Carolina?”

Requester

The Honorable Andre Bauer, Senator, District No. 18

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/august-3-2000/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/11/00aug3bauer.pdf

Original opinion text

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The State of South Carolina

OFFICE OF THE ·ATTORNEY GENERAL
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CHARLIE CoNDON
ATTORN~Y GENERAL

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August 3, 2000

The Honorable Andre Bauer
Senator, District No. 18 - - ·
Post Office Box 142
Columbia, S. C. 29202

Re:

Informal Opinion

Dear Senator Bauer:
yqu have requested .an opinion on the following question:

"IfaSouth Carolina ~~mpany operates a game ofchance, coin-operated device, or any other gaming device in a neighboring state, is it unlawful for another<:<>mj>any (providing that the two companies have no corporate 'COnnection) to buy back the validated ticket(s) or prize(s) from that player within the State of South Carolina?" i

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The circwnstanoes which you describe in your letter involve a South Carolina company plac4tg gambling devices. otherwise illegal under South Carolina law, in another state where they are used by players to win tickets or prizes. These tickets or prizes are then brought into South Carolina where the gambler receives a cash payout representing the player's winnings.

This appears to represent ascheme or contrivance designed to avoid prosecution under South _:· · Carolina's anti-.gambling laws (including S.C. Code Ann. § 16-19-40 (West 2000)(unlawful games and betting),§ 16-19-50 (keeping unlawful gaming tables), and§ 12-21·2710(unlawful possession and operation of gambling devices)). It also appears to constitute an attempt to drcumvent the neighboring state's prohibition against cash payoffs to gamblers using certain types of gaming ·
·devices. Such an artifice would be unlawful and would subjectthe individuals or corporate entities employing it to criminal prosecution, not only in South-Carolina, but in the neighboring state where the gambling devices are located. The fact that two separate South Carolina companies or corporations may be involved in this scheme would not absolve either, and both companies would be subject to additional prosecution under the charge of criminally conspiring to engage in an unlaWful act. State v. Mcintire, 221 S.C. 504, 71 S.E.2d 410 (1952) (In prosecution for conspiracy to set up a lottery known as the numbers
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The Honorable Andre Bauer
August 3~ 2000
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game,· if an overt act in pursuance of the conspiracy is committed in a jurisdiction other than that

where the combination was made, the conspirators may be prosecuted in the plaee where the overt act was committed.) ·

It is primarily the province ofthe State within its police power to regulate gambling activity. ~Anny Nayy Binao. Garrison No. 2196 v. flowden, 281S.C~226, 228, 314 S.E.2d 339, 340 .
· {1984) (There is no fundamental right to gamble, and the State's power to suppress it is practically .·-· unrestrained.). ~ee also Posacias QePuerto Rico Assocs. v. Tourism Co. of Puerto Rigo, 478 U.S. 328 ( 1986) (The majority of the fifty states prohibit casino gambling, and a state has a substantial interest in the health, safety and welfare ofits citizens in doing so.); Casino Ventures v. Stewart. 183 F.3d 307 (4th Cir. 1999) (State gambling restrictions are aimed at promoting the welfare, safety, and morals of South Carolinians, and represent a well~recognized exercise of state police power.); Holliday v. Qovernor of South Cwolina. 78 F.Supp. 918 (W.D.S.C.), affld, 335 U.S. 803 (1948) (recognizing that it is the public_policy of the State of South Carolina to suppress gambling and that gambling in all forms is illegal). i

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The possession and use of video gaming machines in South Carolina became illegal Qn July 1, 2000. 1999 S.C. Act No. 125; &t Westside Ouik Shop. Inc. X· Stewart, 2000 WL 823346(8.C. Sup. Ct., June 21, 2000); Joytime Disti:ib. and Amusement Co. V. State, 338 s.c. 634, 528 S.E.2d ; 647 (1999). At the same time, S.C. Code Ann § 16-19-60 (West 2000), under which video game machine operators were previously authorized to make non-machine cash payoffs, was repealed, thereby making any cash payoffs derived from gambling on these devices illegal under S.C. law.
!9~9 S.C. Act No 125, Part I,§ 8.

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The fact that these Video gaming machines other gaming devices are gambled on in one state, while the cash payoffs to the gamblers occur in another, in no way insulates those perpetrating such a scheme from criminal prosecution in one or both states. It bas long,been recogniz¢that acts , done outside a jurisdiction, but intended to produce and producing "detrimental effects" or violations ofits criminal laws withiriit,jUStify a state in punishing the perpetrators of these acts as ifthe crime were committed entirely within its jurisdiction. Str~heim v. Daily, 221 U.S. 280~ 285~ 31 S.Ct. 558, 560, 55 L.Ed. 73~.(19Jl). SS$( al~Q Skiriotes v. Flori~ 313 U.S: §9, 76, 61S.Ct.924, 929, 85 L.Ed.1193 (1941) (Even though the locus of the offense occiirrfid.~utside the ~te's territory, a
· Florida citizen was properly convicted under state law prohibiting the· use of diving equipment in taking sponges from the Gulf ofMexico, where the exercise ofstate jurisdiction did not contl ict with any federal authority, the rights of a citizen of another state wi::re not involved, and thequestion was solely between the person convicted and his own state.).

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The principal that the crime fa regarded as having been committed where the conseqt,tences· occur, regardless of where certain elements of the crime may take place, has been applied in South '·.

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The Honorable Andre Bauer
August 3t 2000
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Carolina. State v. Morrow, 40 S.C. 221, 18 S.E. 853, 859(1893) (Where acts done by the defendant. outside the state with the intention of procuring an illegal abortion ultimately took effect within the · state~ even though the. defendant himself did no act within the state to accomplis!t this illegal
. : objective, the state court where the acts took effect could properly exercise jurisdiction over the person of,,fue defendant and the subject matter of the offense charged;) See alSQ Statg v. Hill. 19 S.C. 43 S ( 1883) (Where one steals goods in another state and converts them to his own use in South
· Caroli~ ouroourts have jurisdiction over the offense.); State vtMcCann. 167 S.C. 3:93; 166 S.E. 411 (1932) (Thief bringing goods stolen in one county or state into another may be indicted in either.).
·In the final analysis~ South Carolina's anti.. gambling statutes involve an important state interest directed at preventing illegal behavior connected with various forms of gambling and precluding the-use"and possession ofgambling devices.• including video gaming machines. Westside Oµik Sbog, Inc. v. Stewart. 2000 WL 823346 (S.C. Sup. Ct., June 21~ 2000); State v. 192 Coin..
· . ~Video Qmne Machirw, 338 S.C. 176, 525 S.E.2d.872 (2000). Placing gambling devices for use outside state territoty with the ultimate intent and effect of making cash payoffs in South Carolina based on winnings derived from the use of these out-of-state machines will be viewed as a device employed to evade South Carolina's laws prohibiting this conduct and will be prosecutable.
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Federal "Sta!Utory law may also be relevant to these circumstances. Federal law s~bjects to
-Oriminal penalty anyone who conducts, finances, manages, supervises, directs or owns all or part of an illegal gambling business. 18 U.S.C. § 1955. Additionally.a federal statute, commonly known as the Travel Act, 18 U.S.C. § 1952, makes it an offense to travel in interstate commerce or to use the mail or any facility in interstate commerce, with the intent,. among other things, to "promote,. manage, establis~ carry on. or facilitate the promotion, management, establishment. or1:arrying on, of any unlawful activity." "Unlawful activity" is defined, in part, as. including any business enterprise involving gambling in violation of the-laW8 of the state in which it is committed, or of the United States. The Gambling Devices Transportation Act, comm.only referred to as the Johnson Act, 15 U.S.C. §§ ll 71 .. ll 78, may also come into play, depending upon how the gambling devices are used and the destination to which they are shipped. Of course, any questions dealing with the applicability of such federal provisions to the situation you ~ssed should be directed to the United States Attorney. Based on the foregoing authorities, it is my opinion that a scheme, such as that described in your letter, where video game machines or other gambling devices are placed and used in an adjoining state which allows their possession, but with the intent to offer to gamblers who come to South Carolina cash payoffs based on tickets or prizes won in the adjoiningjurisdiction, would subject those engaged in such an enterprise to criminal prosecution. not only in this State., but in th~ , adjoining jurisdiction, and potentially under federal law as well. Should you become aware of any

The Honorable Andre Bauer
August 3t 2000
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effort on the part of any person, company, or corporation tO effectuate such a scheme, please report. this immediately to this Office.

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This letter·is an infonnal·opinion only. It has been written by designated Senior Assistant . Attorney General and represents the position ofthe undersigned attomey as to the specific questions . asked. It has no4 however, been personally scrutinized by the Attorney General nor officially published in the manner-ofa format opinie.nt.·
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With kind regards, I remain
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Very truly yours,

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Senior Assistant Attorney Gene

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