Bally's LeMan's Family Fun Centers, Inc. v. Director of Revenue

ROBERTSON, Justice.

The issue in this case is whether fees paid for the operation of coin-operated games in places of amusement are subject to sales tax under Section 144.020.1(2), RSMo 1986. Bally’s LeMan’s Family Fun Center, Inc. (“Bally”) challenges the Director of Revenue’s assessment of sales tax on the proceeds of its coin-operated games. The Administrative Hearing Commission upheld the Director’s assessment. Because this case involves the construction of the revenue laws of this state, we have jurisdiction. Mo. Const. art. V., § 3. Affirmed.

I.

The facts are stipulated. Bally operates eight fun centers in shopping malls or “strip” shopping centers throughout Missouri. Each such fun center occupies approximately 4000 square feet of geographically separated space at each location. Each location contains only coin-operated games, the majority of which are video-type games. Each location houses more than forty such games. No admission is charged for entry into a fun center. The Director assessed a sales tax on Bally’s proceeds from the operation of the coin-operated devices.

The Administrative Hearing Commission found that Bally’s fun centers were places of amusement. The Commission upheld the Director’s sales tax assessment. Bally sought review in this Court.

*684II.

Section 144.020.1(2) provides:

A tax is hereby levied and imposed upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state. The rate of tax shall be as follows:
♦ * * * * *
(2) A tax equivalent to four percent of the amount paid for admission and seating accommodations, or fees paid to, or in any place of amusement, entertainment or recreation, games and athletic events....

[Emphasis added].

As an interpretation of Section 144.020.1(2), the Director promulgated 12 C.S.R. 10-3.176, which provides in pertinent part:

(6) No sales tax shall be imposed upon receipts derived from coin-operated amusement devices unless such devices are located within places of amusement, entertainment or recreation.
(7) A place of amusement, entertainment or recreation is defined as any place where any facilities are provided (not including coin-operated amusement devices, except as indicated in this rule) for entertainment, amusement or sports.
* * * * * *
(9) Some examples of places which would not normally be treated as a place of amusement include laundromats, restaurants, taverns, hotel and motel lobbies, department stores, airport lobbies and gas station lobbies, etc. However, if a location which would not normally be treated as a place of amusement has a department, room or similar area which is geographically separated and set aside from the rest of the location through the use of walls, partitions, screens, fences or other such partitioning, for the conduct of amusement, recreation, entertainment or athletic events, then such geographically separate place only may be treated as a place of amusement. However, no such geographically separated or set aside area shall be treated as a place of amusement, recreation or entertainment by reason of its containing coin-operated amusement devices, unless such geographically separated area contains more than fifteen (15) coin-operated amusement devices.

Bally argues that Section 144.020.1(2) is “ambiguous or clearly excludes sales tax on coin-operated machines ...”, that 12 C.S.R. 10-3.176(7) cures the ambiguity by defining a place of amusement “as any place where any facilities are provided (not including coin-operated amusement devices) ...” and that nevertheless, 12 C.S.R. 10-3.176(9) violates equal protection by defining a place of amusement as only those geographically separated areas containing more than fifteen coin-operated devices.

Bally’s argument, of course, depends on the existence of an ambiguity in Section 144.020.1(2). In the absence of such ambiguity, the intent of the legislature is found from the clear language of the statute. And in the absence of an ambiguity, construction of the statute to seek the contrary legislative intent urged by Bally is not warranted.

In L & R Distributing Co. v. Missouri Dep’t of Revenue, 648 S.W.2d 91, 95 (Mo.1983) {L & R Distributing Co. II), this Court said:

The language of Section 144.020.1(2) is clear and unambiguous when applied to the facts stipulated in this case. As held in Blue Springs Bowl [v. Spradling, 551 S.W.2d 596, 599 (Mo. banc 1977)], the statute plainly provides for a sales tax to be imposed: (1) on sums paid for admission to places of amusement, etc.; (2) on amounts paid for seating accommodations therein; and (3) on all fees paid to, or in places of amusement, etc.

[Emphasis in original]. Bally’s fun centers are places of amusement; amusement is the raison d’etre of the enterprise. Moneys paid to Bally to operate its coin-operated devices are, therefore, “fees paid to, or in places of amusement.” The circumstances here are no different from those found in either Blue Springs Bowl or L & R Distributing II. Under the stipulated facts here, Section 144.020.1(2) is not ambiguous.

*685'Because we find no ambiguity in Section 144.020.1(2) under these facts and because that statute expresses a legislative intent to tax all fees paid in places of amusement, 12 C.S.R. 10-3.176 adds nothing to our consideration of the validity of the tax assessed. We, therefore, need not address Bally’s attack on the constitutional validity of the regulation.

The decision of the Administrative Hearing Commission is affirmed.

BILLINGS, C.J., and BLACKMAR, RENDLEN and HIGGINS, JJ., concur. DONNELLY, J., concurs in result. WELLIVER, J., dissents in separate opinion filed.