STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DIGITAL CONTROLS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 83-2421RX

DIVISION OF ALCHOLIC BEVERAGES ) AND TOBACCO, DEPARTMENT OF )

BUSINESS REGULATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William E. Williams, held a final hearing in this cause on September 7, 1983, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Charles R. Gardner, Esquire

300 Lewis State Bank Building Tallahassee, Florida 32301

For Respondent: Harold F. X. Purnell, Esquire

General Counsel

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

On August 4, 1983, Petitioner, Digital Controls, Inc. ("Petitioner"), filed its Petition for Determination of the Invalidity of an Existing Rule, contending that Respondent's Rule 7A-3.04, Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority. Final hearing was scheduled for September 7, 1983, by Notice of Hearing dated August 16, 1983.

At the final hearing, Petitioner called Michael M. Macke as its only witness. The Respondent called no witnesses. Petitioner's Exhibits 1 through 4 were received into evidence. No exhibits were offered by Respondent.

Both Petitioner and Respondent have submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that those proposed findings of fact are not included in this order, they have been specifically rejected as either not having been supported by evidence of record, or as having been irrelevant to the issues presented for determination.

FINDINGS OF FACT

1. Petitioner designs, manufactures, and sells the "Little Casino" video game machine. The machine is designed to enable a player, through the insertion of either one or two quarters, to play one of four games: poker, high-low,

   blackjack, or craps. The machine contains two switches which enable the owner to control the cost per game, whether 25 cents or 50 cents per game. Upon deposit of the appropriate amount of money, the player of the game receives 10,000 points to play the selected game. If the operator utilizes the entire 10,000 points in less than four hands or rolls, the game is over. If, however, the operator earns or wins 100,000 points by the conclusion of the fourth hand or roll, a free fifth hand or roll is allowed. If the operator earns 200,000 points by the conclusion of the fifth hand or roll, a free sixth hand or roll is allowed. The player of the game is allowed no more than six hands or rolls in the chosen game, regardless of the number of points scored. Depending upon the game option selected, cards or dice appear on the video screen. So far as can be determined from the record in this cause, the dealing of the cards or roll of the dice is entirely determined by the programming of the machine, and the player is wholly unable to control or influence the initial selection of cards or the roll of the dice.

   
   

2. Little Casino does not allow free replays, does not accumulate free replays, and makes no permanent record of free replays. The game is not classified by the United States as requiring a federal gambling tax stamp under any applicable provisions of the Internal Revenue Code. The machine can be set to eliminate what Respondent considers to be the objectionable fifth and sixth hands.

   
   

   CONCLUSIONS OF LAW

   
   

3. The Division of Administrative Hearings has jurisdiction over the subject matter of, and the parties to, this proceeding. Section 120.56, Florida Statutes.

   
   

4. Rule 7A-3.04, Florida Administrative Code, which is challenged by Petitioner in this proceeding, provides as follows:

   
   

   No Licensee may maintain or operate any electric coin-operated machine for

   which the user, by reason of an element of chance unpredictable by the user, may become entitled to receive money, credit allowance, additional chances

   to use such device or any other thing of value. The maintenance or operation of any such machine or device on the licensed premises shall be grounds

   for administrative action against the licensee under Sections 849.15, 849.16, 561.29, Florida Statutes. (Emphasis added.)

   
   

5. Rule 7A-3.04, Florida Administrative Code, quoted above, was promulgated on December 19, 1974. The rule implements Section 849.16, Florida Situates, which, at the time the rule was adopted, provided, in pertinent part, as follows:

   
   

   1. Any `machine' or `device' is

      a slot machine or device within the pro- visions of this chapter if it is one that is adapted for use in such a way that, as a result of the insertion of

      any piece of money, coin, or other object,

      such machine or device is caused to operate or may be operated and, by reason of any element of chance or of other outcome of such operation unpre- dictable by him, the user may . . secure additional chances or rights

      to use such machine, apparatus, or device, even though it may, in addition to any element of chance or unpre- dictable outcome of such operation, also present some . . . entertainment,

      or other thing of value. (Emphasis added.)

      
      

6. The 1977 Florida Legislature enacted Chapter 77-275, Laws of Florida, which became effective June 20, 1977, and amended Section 849.16(1), Florida Statutes, by adding Subsection (1)(b), which provides, in pertinent part, as follows:

   
   

   Nothing in this subsection shall

   be taken or construed as applicable to a coin-operated game or device designed and manufactured only for bona fide amusement purposes which game or device may by application of skill entitle the player to replay the game or device at no additional cost, if the game or device can accumulate and react to no more than 15 free replays; can be dis- charged of accumulated free replays only by reactivating the game or device for one additional play for each accumulated

   free replay; can make no permanent record, directly or indirectly, of free replays; and is not classified by the United States as requiring a federal gambling tax stamp under applicable provisions of the Internal Revenue Code. (Emphasis added.)

   
   

7. Rule 7A-3.04, Florida Administrative Code, has not been amended since its promulgation in 1974 to include the exemption created by the 1977 Legislature and now included in Section 849.16(1)(h), Florida Statutes. By virtue of this omission, Petitioner contends that the rule is in conflict with Section 849.16, Florida Statutes, as amended, and should, therefore, be invalidated. Petitioner's contentions in this regard are without merit. First, it should be noted that Petitioner does not assert that the challenged rule is arbitrary or capricious, instead contending only that the rule conflicts facially with the statute which it purports to implement. However, where, as here, the challenged rule merely tracks the language of the enabling legislation, there is no basis for finding of invalidity. See, DeDakis v. Florida Real Estate Commission, 388 So.2d 22 (Fla. 1st DCA 1980). Petitioner contends that Respondent should he required to amend the challenged rule to incorporate the exemption language enacted by the 1977 Legislature. However, as pointed out by the court in Anheuser Busch, Inc. v. Department of Business Regulation, 393 So.2d 1177, 1181 (Fla. 1st DCA 1981):

   
   

   [H]aving rules which particularly define one sort of conduct within the

   reach of a regulatory statute does not foreclose [an agency's] application of the statute to other conduct through adjudication. If by promulgating a single set of interpretative rules an agency should lose power to further interpret the statute through adjudi cation, then not only the regulatory statute but APA processes as well will be frustrated. Agencies may expound statutes given in their charge by rules or by orders, or by both rules and orders. The model of responsible agency action under the APA is action faith-

   ful to statutory purposes and limitations, foretold to the public as fully as practicable by substantive rules, and refined and adapted to particular situ- ations through orders in individual cases.

   
   

8. Here, the challenged rule is clearly within the authority delegated to Respondent in Section 849.16(1)(a), Florida Statutes. The 1977 legislation amending Section 849.16, Florida Statutes, simply added an exemption from the operation of both the statute and the rule. In fact, Section 849.16(1)(a) of the statute and the challenged rule deal with entirely different subjects than Section 849.16(1)(b). The former prohibit machines which incorporate "an element of chance unpredictable by the user." The latter allows machines which operate "by application of skill." To require the agency to amend its rule to track the additional language in Section 849.16(1)(h) would be to exalt form over substance. The exemption contained therein is no less binding upon the agency in its statutory form than it would be if included in the challenged rule. The agency is free to address the statutory exemption by the issuance of orders in individually adjudicated cases pursuant to Section 120.57(1), Florida Statutes, without the necessity of rulemaking.

   
   

9. Accordingly, it is specifically concluded, as a matter of law, that Petitioner has failed to establish the invalidity of the challenged rule, and that the relief requested by Petitioner should he, and the same is hereby DENIED.

DONE AND ENTERED this 13th day of January, 1984, at Tallahassee, Florida.

WILLIAM E. WILLIAMS

Hearing Officer

Division of Administrative Hearings Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 13th day of January, 1984.

COPIES FURNISHED:

Charles R. Gardner, Esquire

300 Lewis State Bank Building Tallahassee, Florida 32301 Harold F.X. Purnell, Esquire General Counsel

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Carroll Webb, Executive Director

Joint Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32301

Liz Cloud, Chief

Bureau of Administative Code Department of State

Suite 1802, The Capitol Tallahassee, Florida 32301

Howard M. Rasmussen, Director Division of Alcoholic Beverages and Tobacco

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Gary R. Rutledge, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 83-002421RX

Orders for Case No: 83-002421RX