September 7, 1989
Mr. Donald E. Gromer
Executive Secretary
South Dakota Commission on Gaming
500 East Capitol
Pierre, SD 57501-5070
OFFICIAL OPINION NO. 89-28
Gaming in Deadwood
Dear Mr. Gromer:
You have requested an official opinion based upon the following set of facts:
FACTS:
In November of 1988, the citizens of the State of South Dakota amended the South Dakota Constitution to allow limited card games and slot machines within the city limits of Deadwood. Pursuant to the constitutional amendment, during the 1989 legislative session, the Legislature enacted legislation that allowed limited card games and slot machines within the City of Deadwood if approved by its citizens by 60% of the votes cast in an election. On April 11, 1989, the election was held and limited gaming was approved.
The 1989 legislation (SDCL ch. 42-7B) created the South Dakota Commission on Gaming to regulate limited gaming; and established a licensing procedure, a tax structure and criteria for gaming operations. It is anticipated that legalized gaming will begin in Deadwood on November 1, 1989.
Since the enactment of the legislation and passage of the limited gaming resolution, the South Dakota Commission on Gaming has been in the process of enacting rules and procedures for gaming to take place. During this process, several issues have arose which require interpretation of the new legislation pertaining to licensing, and the shipping and storage of slot machines.
Based upon the above facts, you have asked the following questions:
QUESTION NO. 1:
SDCL 42-7B-18 discusses the licensing of businesses and addresses the issue of licenses per building. This statute contains limitations in the number of gaming devices a licensee may operate based upon "separate and distinct businesses," "common areas," and "buildings." For purposes of clarifying SDCL 42-7B-18, the Commission's questions are:
a. What constitutes a "building?"
b. If an old abstract should show that a "present" building was once more than one building, is it now one or more than one building?
c. If one building contains a large number of smaller individual businesses (a mall arrangement), is each business considered a building or is the entire mall one building?
d. What is a "common area?"
QUESTION NO. 2:
SDCL 42-7B-38 and SDCL 42-7B-39 relate to the shipping of slot machines and other gaming devices within the state for purposes of use within the City of Deadwood, South Dakota. As it relates to the storage and display of slot machines, the Commission's questions are:
a. Is it permissible for a manufacturer/distributor and operator to store or display for sale or rent slot machines within the confinements of their business if such business is licensed?;
b. If the answer to the above question is affirmative, would it be permissible to store, display for advertisement purposes, slot machines in locations other than within the city limits of Deadwood?
IN RE QUESTION NO. 1:
SDCL 42-7B-16 limits the number of limited card games and slot machines per retail license to fifteen. SDCL 42-7B-18 further identifies how limited card games and slot machines may be operated and states:
The retail space of a licensee shall be identified by a physical layout within a building, called the retail floor plan. The retail floor plan shall be submitted to the commission at the time of application, and is subject to prior approval by the Deadwood city commission. Approval is subject to gaming rules and those rules pertaining to public health, safety, good order and general welfare of the city of Deadwood. The retail gaming license shall be incidental to the primary business conducted by the retailer and may only be granted to the person conducting the business. Multiple retail licenses for a single building may not be issued to the same person unless, the second license, in good faith, represents a bona fide, separate and distinct business. No more than fifteen gaming devices shall be grouped in a common area. All gaming devices shall be located within the retail confines of the business. The number of retail licenses per person per building is limited to two and the total number of gaming devices may not exceed thirty per building, if multiple licenses are operating within the same building. A retailer may not sublease space for the principal purpose of gaming.
No provision within SDCL ch. 42-7B defines what constitutes a "building" or a "common area" within a building. In construing legislative statutes the Legislature, through SDCL 2-14-1 and 2-14-4, has instructed that whenever the meaning of a word or phrase is defined in any statute, such definition is applicable to the same word or phrase wherever it occurs except where the contrary intention plainly appears. In addition, where there is no statutory definition, words are to be construed in their ordinary sense.
Utilizing these instructions, it is my opinion that a "common area" within a building constitutes any physical space that is available for common use. This definition is consistent with the Legislature's definition of "common areas" in SDCL ch. 43-15A-5. By utilizing the term "common area" in SDCL 42-7B-18, the Legislature intended to cover all situations involving a number of businesses within a single physical structure. Consistent with SDCL 43-15A-5, common areas would include halls, lobbies, stairways and entrances, exits, communication ways and all other areas of common use. In my opinion, however, "common area" does not include physical space within a structure occupied or leased to a separate and distinct business entity.
Unlike "common area," there is no definition of what constitutes a "building." Webster's New Collegiate Dictionary 150th Anniversary Edition (1981) defines building as a "roofed and walled structure built for permanent use (as for a dwelling). Utilizing this definition, as well as the Legislature's definition of a "common area," it is my opinion that the term "building" as used in SDCL 42-7B-18 means a single physical structure in which individuals can freely move about without exiting the structure. Consistent with my opinion as to what constitutes a "common area," it is my opinion that a structure utilized as a mall would constitute a single building under SDCL 42-7B-18. Under this definition, however, buildings that are joined by a common wall, roofing, etc. would not constitute a single business as long as the only way the public has access to the other building is by leaving the confines of the structure. For example, the City of Deadwood as well as other towns and cities within the State of South Dakota have a downtown area in which buildings may have common firewalls. There are, however, no common areas and in order for individuals to move from one business to another they must exit the structure. In my opinion, the Legislature did not intend such structures to constitute one "building" for purposes of limiting the number of gaming devices available for operation.
Under the above definitions, what constitutes a "common area" or "building" depends upon the structure's configuration and condition at the time of licensing or relicensing and not what is identified in old abstracts or architectural blue prints.
IN RE QUESTION NO. 2:
SDCL 42-7B-38 states:
All shipments of gaming devices, including slot machines, into this state, the registering, recording and labeling of which has been duly had by the manufacturer or dealer thereof in accordance with sections 3 and 4 of an act of Congress of the United States entitled "An Act to prohibit transportation of gambling devices in interstate and foreign commerce,"approved January 2, 1951, designated as 15 U.S.C. 1171 to 1177, inclusive, and in effect on January 1, 1989, shall be deemed legal shipments thereof, for use only within the city of Deadwood, South Dakota.
SDCL 42-7B-39 provides:
Any slot machine manufacturer or distributor shipping a slot machine into the state of South Dakota shall provide to the commission at the time of shipment a copy of the shipment a copy of the shipping invoice including at least the destination, the serial number of each machine, and a description of each machine. Any person within the state of South Dakota receiving a slot machine shall, upon receipt of the machine, provide to the commission upon a form available from the commission information showing at least the location of each machine, its serial number and description. This report shall be provided regardless of whether the machine is received from a manufacturer or any other person. Any machine licensed pursuant to this chapter shall be licensed for a specific location and movement of the machine from that location shall be reported to the commission within twenty-four hours. A violation of this section is a Class 6 felony. Any slot machine not in compliance with this chapter is declared contraband and may be summarily seized and destroyed after notice and hearing.
In addition to the above statutory provisions, the South Dakota Commission on Gaming is authorized to promulgate rules concerning the licensure of slot machine manufacturers or distributors and the examination of all gaming devices or equipment which are located, sold, distributed or stored pursuant to the chapter. Under the above statutory scheme, it is my opinion it is clearly permissible for the South Dakota Commission on Gaming to promulgate rules that would allow a manufacturer/distributor or operator to store or display, for sale or rent, slot machines within the confines of their business if they are appropriately licensed in accordance with SDCL 42-7B-22 and other relevant statutes and regulations of the Commission.
In my opinion, however, in order for these stored or displayed machines not to be subject to the numerical limitations contained in SDCL 42-7B-16 or 42-7B-18 and the annual licensing provisions contained in SDCL 42-7B-23 the machines must be rendered inoperable. Finally, it is my opinion that the Commission may adopt rules that allow slot machine manufacturers, distributors or operators to store slot machines in locations other than within the city limits of Deadwood. Any rules, however, must be consistent with SDCL 42-7B-38 and 42-7B-39 and the slot machines must be rendered inoperable and remain so as long as the machines are outside the Deadwood city limits.
Respectfully submitted,
ROGER A. TELLINGHUISEN
ATTORNEY GENERAL
RAT/cfc
