How did South Carolina Revenue Ruling 16-4 classify coin-operated amusement devices and their license requirements?

Plain-English summary

South Carolina Revenue Ruling 16-4 was the Department's detailed guide to licenses for coin-operated amusement machines, arcade devices, and specified game tables.

The ruling described three machine-license categories under Section 12-21-2720:

• Type I: machines for music, kiddy rides, jukeboxes, and mechanical amusement devices with a free-play feature;
• Type II: amusement or video-game machines without a free-play feature, crane machines, and the pin-table categories described in the statute; and
• Type III: nonpayout or in-line pin games covered by Section 12-21-2720(A)(3).

It also treated for-profit billiard, pocket-billiard, foosball, bowling-lane, and skeeball tables covered by Section 12-21-2730 as Type I devices for the Department's summary. In addition to machine licenses, a person owning or operating covered devices needed a separate operator license every two years.

The ruling's stated 2016 biennial charges were $50 for Type I, $200 for Type II, and $4,000 for Type III machines, with an additional $50 fee on each Type II license for video-gaming enforcement. Those are historical amounts quoted in RR 16-4 and should be checked against current law.

How classification worked

The Department focused on what the machine actually did:

• A blood-pressure, pulse, or stress-measurement machine provided medical information and was not an amusement device.
• A computerized breath-alcohol tester primarily serving customer safety was not an amusement device.
• A machine measuring a person's "love" level or other nonmedical information was an amusement device: Type I with a free-play feature and Type II without one.
• Not every electronic display was a video game. The ruling defined video games as games played by manipulating images on a television, computer, or similar display.
• A billiard, foosball, bowling, or skeeball table governed by Section 12-21-2730 had to be operated for profit; if players were not charged, that license tax did not apply.
• A video-game version of those activities operated by a coin or thing of value fell under Section 12-21-2720 rather than the physical-table provision.

Free play, multi-player machines, and admissions tax

A free-play feature let a person play an entire game without charge, equivalent to the paid game. To treat a machine as lacking that feature, the mechanism had to be completely removed and certified as removed when applying for the license.

For connected or multi-player systems, the Department considered the number of screens, whether players could play independently, the number of payment slots, the design, and whether the public perceived the setup as one machine or several.

Type I and Type II machines on which admissions tax was imposed were exempt from the coin-operated-device license under the quoted statute. The ruling used a coin-activated baseball batting cage as an example.

Legality and refunds

The Department said state and local law enforcement and courts—not the Revenue Department—decided whether a machine was legal. Issuing a tax license did not make an unlawful gambling machine legal. If a licensed machine was later held illegal, the owner could not obtain a refund of the license payment.

Common questions

Q: Does every electronic machine need a video-game license?

A: No. Classification depended on whether the device was actually used to play a video game or amusement and on its features.

Q: Does a free-play feature matter?

A: Yes. The ruling used it to distinguish several Type I and Type II machines, and said the feature had to be completely removed for the machine to qualify as one without free play.

Q: Are physical game tables licensed if no one pays to play?

A: Not under Section 12-21-2730 as described in the ruling, because the table had to be operated for profit.

Q: Does paying admissions tax affect the device license?

A: Yes. A Type I or Type II machine subject to admissions tax was exempt from the device-license fee under the cited provisions.

Q: Does a Department license prove the machine is legal?

A: No. The ruling expressly said licensing did not legalize unlawful gambling equipment.

Citations and references

• S.C. Code Ann. Section 12-21-2720 (covered machines and license categories)
• S.C. Code Ann. Section 12-21-2728 (operator license)
• S.C. Code Ann. Section 12-21-2730 (specified for-profit tables)
• S.C. Code Ann. Sections 12-21-2724 and 12-21-2736 (nonrefundability and no legalization of unlawful machines)
• S.C. Regulation 117-1300.2 (free-play feature)

Subject

Coin-Operated Devices

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR16-4.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #16-4

SUBJECT:

Coin-Operated Devices

EFFECTIVE DATE:

Applies to all periods open under statute.

SUPERSEDES:

SC Revenue Ruling #96-2
SC Revenue Ruling #91-14
SC Technical Advice Memorandum #90-7

REFERENCE:

Article 19 of Title 12, Chapter 21 (2014)
S.C. Regulation 117-1300.2 (2012)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public. It is
an advisory opinion issued to apply principles of tax law to a set of facts or
general category of taxpayers. It is the Department’s position until
superseded or modified by a change in statute, regulation, court decision, or
another Departmental advisory opinion.

Discussion and Law:
Code Section 12-21-2720 provides, in part:
(A) Every person who maintains for use or permits the use of, on a place or premises
occupied by him, one or more of the following machines or devices shall apply for
and procure from the South Carolina Department of Revenue 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 four 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.

1

(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 may 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, or in-line pin game, 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 may be altered or changed.

(E) The Department of Revenue is authorized to assess an additional fee of fifty
dollars on each Class Two coin-operated machine license authorized in this section.
These funds must be collected by the Department of Revenue and sent to the State
Law Enforcement Division to offset the cost of video gaming enforcement. The State
Law Enforcement Division shall retain, expend, and carry forward these funds.
Code Section 12-21-2730 provides:
Every person owning or operating a billiard or pocket billiard table, foosball table,
bowling lane table, or skeeball table for profit shall apply for and procure from the
department a license for the privilege of operating the table and pay for the license a
biennial tax of fifty dollars for each table owned or operated.
The license in this section must be issued and is valid in accordance with Section
12-21-2734.
Based on the above, Code Section 12-21-2720 requires that every person who maintains or permits
the use of a machine or device, operated by coin or thing of value, for the purpose of amusement
must obtain a license every two years. Pursuant to Code Section 12-21-2730, every person owning or
operating for profit a billiard or pocket billiard table, foosball table, bowling lane table, or skeeball
table must obtain a license every two years.
In addition to all other licenses, a person who owns or operates devices described in Code Sections
12-21-2720 and 12-21-2730 shall obtain an operator’s license every two years pursuant to Code
Section 12-21-2728. All licenses are nonrefundable and may not be transferred from one machine to
another machine.
The amount of the biennial license depends upon the type of machine, device, or table. For
simplicity, the Department refers to machines or devices under Code Section 12-21-2720(A)(1) as
“Type I” machines, machines or devices under Code Section 12-21-2720(A)(2) as “Type II”
machines, and machines or devices under Code Section 12-21-2720(A)(3) as “Type III” machines.
Since the license required under Code Section 12-21-2730 is for the same amount as under Code
Section 12-21-2720(A)(1), the Department refers to the license issued under Code Section 12-212730 also as a “Type I” license.
2

The purpose of this advisory opinion is to restate and update guidelines to assist in determining the
proper licenses required on various amusement and arcade machines, devices, and tables pursuant to
Code Sections 12-21-2720 and 12-21-2730.

Questions and Answers:

1. Q. Are “machines for the playing of amusements” and “mechanical amusement devices” the
   same type of machines?
   A. “Machines for the playing of amusements” and “mechanical amusement devices” are the
   same type of machines, except that “machine[s] for the playing of amusements” referenced in
   Code Section 12-21-2720(A)(2) (a “Type II” machine) are limited to those machines for the
   playing of amusements without a free play feature.
   Code Section 12-21-2720(A)(1) references “mechanical amusement devices” but is silent
   regarding amusement machines with a free play feature. It has been the Department’s
   longstanding position that “mechanical amusement devices” referenced in Code Section 1221-2720(A)(1) (a “Type I” machine) are applicable to those amusement devices with a free
   play feature. 1
2. Q. What are examples of types of machines that are not “mechanical amusement devices” or
   “machines for the playing of amusements”?
   A. A digital display machine that measures blood pressure, pulse rate or stress level provides
   medical information and is not a mechanical amusement device. Further, a coin-operated,
   computerized breath alcohol tester is a machine whose primary purpose is to provide for the
   safety of the customer and is not for the playing of amusement. Accordingly, such machines
   are not subject to the license tax under Code Section 12-21-2720.
   However, a digital display machine that measures a person’s “love” level or other nonmedical information is an amusement machine and, therefore, is subject to the coin-operated
   device license tax under Code Section 12-21-2720(A). If the machine has a free play feature,
   it is subject to licensing as a “Type I” machine. If it does not have a free play feature, it is
   subject to licensing as a “Type II” machine.
3. Q. Are all electronic machines, devices or tables considered machines for the playing of “video
   games”, subject to the license tax imposed under Code Section 12-21-2720(A)(2)?
   A. No. Not all electronic machines, devices or tables are machines for the playing of video
   games. Video games are those games played by manipulating images on a television,
   computer or other similar display screen. Video game machines without a free play feature
   are subject to licensing under Code Section 12-21-2720(A)(2) as a “Type II” machine.

1

See SC Revenue Ruling #96-2 and the Second College Edition of the American Heritage Dictionary for the
definition of the terms "machine", "mechanical", "amusement", and "device".
3

Machines operated by a slot in which a coin or thing of value is deposited for the playing of
video games of billiards, pocket billiards, foosball, bowling and skeeball are subject to the
taxes imposed by Code Section 12-21-2720, and not Code Section 12-21-2730. (See
Question 4 for additional explanation.)
Note: Pursuant to Code Section 12-21-2710, video game machines with a free play feature
(formerly “Type III” machines) are unlawful.

4. Q. What licensing provision applies to billiard and pocket billiard tables, foosball tables,
   bowling lane tables, and skeeball tables?
   A. Code Section 12-21-2730 imposes a license tax on specific devices; however, these same
   machines or devices could also fall within the provisions of Code Section 12-21-2720.
   Because it is more specific, Code Section 12-21-2730 is controlling with respect to billiard
   and pocket billiard tables, foosball tables, bowling lane tables, and skeeball tables owned or
   operated for profit.
   The devices subject to the licensing provisions of Code Section 12-21-2730, while not
   required to be operated by a slot wherein is deposited a coin or thing of value, must be “for
   profit”. If a player is not charged to use these devices, it is not for profit and is not subject to
   the license tax.
   Machines operated by a slot in which a coin or thing of value is deposited for the playing of
   video games of billiards, pocket billiards, foosball, bowling and skeeball are subject to the
   taxes imposed by Code Section 12-21-2720, and not Code Section 12-21-2730. (See
   Question 3.)
5. Q. What do the terms “free play feature” and “without a free play feature” mean?
   A. Regulation 117-1300.2 defines “free play feature” and reads:
   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
   one without a free-play feature.
   A free play feature allows a person to play an entire game free of charge where the free game
   is the same game the person would play if he had paid to play the game. For example, a
   player may receive a free game after a high score or after a number match where the last
   number of the player’s score matches a number randomly selected by the machine (Score:
   328,446, Randomly Selected Number: 6).
   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

6. Q. Is a machine with multiple player stations required to have a coin-operated device license for
each player station?
A. Code Sections 12-21-2720(A)(3) requires all “Type III” machines to have a coin-operated
device license for each player station.
While Code Section 12-21-2720(A)(1) and (2) do not specifically require a “Type I” or
“Type II” machine to have a coin-operated device license for each player station, it is
sometimes necessary to determine if a machine, a group of connected machines, or an
amusement game system is more than one machine, each of which requires its own license.
In making this determination, the Department will look at many factors, including but not
limited to:
a.
b.
c.
d.
e.

The number of video or viewing screens.
The ability of two or more players to play independently of each other.
The number of slots where a coin or thing of value is deposited in order to play.
The design of the machine.
How the machine is perceived by the public – as one machine or more than one machine.

7. Q. Is a “Type I” or “Type II” machine required to have a coin-operated device license if an
   admissions tax is imposed to play that machine?
   A. No. Code Section 12-21-2720(A)(1) and (2) specifically provide that a Type I or Type II
   machine on which an admissions tax is imposed is exempt from the license provisions of that
   section.
   For example, a coin-activated baseball batting machine where the participant deposits his
   own coins to enter and activate a baseball batting cage equipped with a mechanical pitching
   device is subject to the admissions tax imposed by Code Section 12-21-2420. Since the
   machine is subject to admissions tax, it is not subject to a coin-operated device license tax
   imposed on a machine under Code Section 12-21-2720(A)(1) or (2).
8. Q. Can the amount paid to purchase a license for a machine that is determined to be illegal be
   refunded?
   A. No. State and local law enforcement agencies and the judicial system make the determination
   as to whether a machine or device is legal or illegal under the laws of South Carolina. The
   Department is not authorized to make this determination. Furthermore, Code Section 12-212724 provides that, upon application for a license under these provisions, the Department
   may presume that the operation of the machine is lawful and, when a license has been issued,
   the license may not be refunded notwithstanding that the operation of the machine is
   prohibited.
   Accordingly, the licensing of an illegal machine does not make the machine legal in South
   Carolina. Code Section 12-21-2736 provides that the issuance of a license by the Department
   does not make lawful the operation of any unlawful gambling machine. 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 and affixed to the illegal machine.
   5

Summary of Guidelines:
A summary of guidelines 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 1221-2730 is provided below.
Type I Machine
Code Section 12-21-2720(A)(1) 2

Free Play
Feature 3

Operated
By Slot

Type
License

Machine for playing music
Kiddy ride
Juke box
Mechanical amusement device

N/A
N/A
N/A
Yes

Yes
Yes
Yes
Yes

I
I
I
I

Type II Machine
Code Section 12-21-2720(A)(2) 4

Free Play
Feature

Operated
By Slot

Type
License

No
N/A
No
Yes
No 6

Yes
Yes
Yes
Yes
Yes

II
II
II
II
II

Type III Machine
Code Section 12-21-2720(A)(3)

Free Play
Feature

Operated
By Slot

Type
License

In-line pin game without flippers

N/A

Yes

III

Free Play
Feature

Operated
By Slot

Type
License

N/A
N/A
N/A
N/A
N/A

N/A
N/A
N/A
N/A
N/A

I
I
I
I
I

Machine for playing of amusements
Crane type machine
Machine for the playing of video games 5
Pin table with levers
Pin table with levers

Type of Device
Code Section 12-21-27307
Billiard table
Pocket billiard table
Foosball table
Bowling lane table
Skeeball table
2

Code Section 12-21-2720(A)(1) specifically provides that a machine on which the admissions tax is
imposed is exempt. See Question 7 above.
3
See Regulation 117-1300.2 and Question 5.
4
Code Section 12-21-2720(A)(2) specifically provides that a machine on which the admissions tax is
imposed is exempt. See Question 7 above.
5
Not all electronic machines, devices or tables qualify as machines for the playing of video games. Video games are
those games played by manipulating images on a television, computer or other similar display screen. Machines
operated by a slot in which a coin or thing of value is deposited for the playing of video games of billiards, pocket
billiards, foosball, bowling and skeeball are subject to the taxes imposed by Code Section 12-21-2720(A)(2) and not
under Code Section 12-21-2730.
6
Code Section 12-21-2720(A)(2) provides that a pin table with levers and a free play feature is a “Type II”
machine. It is the Department’s position that a pin table with levers without a free play feature is a "machine
for the playing of amusements", which is also a “Type II” machine.
7
Devices subject to the licensing provisions of 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.
6

SC Revenue Ruling #16-4

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Rick Reames III
Rick Reames III, Director
May 17
, 2016
Columbia, South Carolina

7