In a nutshell, Video Zone's owners are concluding that their operation is exempt from the requirement to have an arcade license and a zoning variance in Eastview. Their evidence is the fact that they are a retail outlet. To connect this evidence to this conclusion, they must assume that no "retail outlet" is required to obtain either the license or the variance, which is choice (E).
(A) Rather than assume (A), the owners have implicitly accepted the community's zoning and other regulations; although they interpret the ordinances in a manner that might be open to question, they are not criticizing the regulations themselves.
(B) We can surmise that the contrary is the case; i.e., that at least five video games are in operation at some time. Otherwise, the Video Zone would simply not fall under the community's definition of "video parlor," and the issue of the possible need for an arcade license would not have arisen.
(C) There is no suggestion in the owners' argument that they believe, or expect others to believe, that the business can be viewed as performing a social function. Their argument concerns classification, not social value.
(D) A less off-the-wall assumption, perhaps, is outlined in (D), but, attractive as this line of reasoning might be in certain legal situations, we have no evidence here that Video Zone's owners have considered the issue of when the zoning laws were written.