CALDER RACE COURSE, INC., ) A FLORIDA CORPORATION, AND ) DANIA JAI ALAI, A DIVISION OF ) THE AARGON GROUP, INC., A ) FLORIDA CORPORATION, )
vs. )
Respondent. )
Case No. 04-2950RX
Pursuant to notice, a formal hearing was held on September 21, 2004, in Tallahassee, Florida, before the Division of Administrative Hearings, by its designated Administrative Law Judge, Barbara J. Staros.
For Petitioners: Wilbur E. Bruton, Esquire
Kelly B. Plante, Esquire Roetzel & Andress, LPA
For Respondent: Joseph M. Helton, Jr., Esquire
Ralf E. Michels, Esquire Department of Business and
Whether Florida Administrative Code Rules 61D-11.001(8) and (13), 61D-11.002(1), 61D-11.005(2) and (9), and 61D-
11.027(1)(b), (1)(e), (2)(a) and (2)(b), are invalid exercises of delegated legislative authority pursuant to Subsection 120.52(8), Florida Statutes (2004).
Petitioners, Calder Race Course, Inc., and Dania Jai Alai, filed a Petition for Administrative Hearing challenging the validity of Florida Administrative Code Rules 61D- 11.001(8) and (13), 61D-11.002(1), 61D-11.005(2) and (9), and
61D-11.27(1)(b), (1)(e), (2)(a) and (2)(b) with the Division of Administrative Hearings on August 18, 2004, and was assigned to the undersigned on August 19, 2004.
A Notice of Hearing was issued on August 20, 2004, scheduling a formal hearing for September 17, 2004. On August 24, 2004, the parties filed a Stipulation agreeing to waive the 30-day requirement in Subsection 120.56(3), Florida Statutes, and further agreeing to a hearing date of September
21, 2004. The hearing was rescheduled for September 21, 2004. The parties filed a Pre-Hearing Stipulation on September 20, 2004.
H. Logan, Stanley Sludikoff, and Daniel R. "John" Knox.
Petitioners' Exhibits numbered 1 through 4 were admitted into evidence. Respondent did not present any witnesses.
Respondent's Composite Exhibit numbered 1 was admitted into evidence. The parties' Joint Exhibits numbered 1 through 7 were admitted into evidence.
A Transcript consisting of two volumes was filed on October 5, 2004. On October 13, 2004, the parties filed a Motion for Extension of Time to File Proposed Final Orders, which was granted. The parties timely filed Proposed Final Orders, which have been considered in the preparation of this Final Order.1/
Petitioner, Calder Race Course, Inc., a Florida Corporation, is a pari-mutuel permitholder permitted and licensed by the Division of Pari-Mutuel Wagering (Division) pursuant to Chapter 550 and Section 849.086, Florida Statutes.
Petitioner, Dania Jai Alai, a division of The Aragon Group, a Florida Corporation, is a pari-mutuel permitholder permitted and licensed by the Division pursuant to Chapter 550, and Section 849.086, Florida Statutes.
As cardroom operators, Florida Administrative Code Chapter 61D-11 governs the activities of Petitioners in the
operation of their respective cardrooms, pursuant to their cardroom licenses at their pari-mutuel facilities.
The challenged rules have the effect of directly regulating the operation of Petitioners' cardrooms.
Petitioners are substantially affected by the challenged rules and have standing to bring this rule challenge.
A tournament is a series of games.
Multi-table tournaments eliminate players until there are only enough remaining players to play at one table before the tournament concludes.
Tournaments which consist of nine players at a single table, often referred to as mini-tournaments, are commonly used by Florida Native-American cardrooms as a form of poker tournament play.
Pari-mutuel pools, operated by pari-mutuel permitholders and the rules regulating pari-mutuel wagering, currently allow jackpots.
Facts based upon the evidence of record History of the Rules
The Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, is the state agency responsible for administering Section 849.086, Florida
Statutes, and regulating the operation of cardrooms in the state.
In 1996, the Florida Legislature created Section 849.086, Florida Statutes, authorizing cardrooms to be located at licensed pari-mutuel facilities. § 20, Chap. 96-364, Laws of Florida.
In response to this legislation, Florida Administrative Code Chapter 61D-11 was adopted, governing the operation of cardrooms at pari-mutuel facilities.
Section 849.086, Florida Statutes, was amended in 2003 by Section 4, Chapter 2003-295, Laws of Florida. Of particular significance to this case, the 2003 amendments eliminated a $10.00 limit on winnings and imposed a $2.00 bet limitation, with a maximum of three raises per round of betting.
In response to this legislation, the Division began the process of amending Florida Administrative Code Chapter 61D-11.
During this rule amendment process, the Joint Administrative Procedures Committee (JAPC) sent two letters to the Division expressing concerns with respect to provisions of the proposed rules regarding the Division's approval of authorized games and lack of criteria for such approval, a requirement for submission of a form, the Division's authority
to approve a series of games (tournaments), and the Division's authority to prohibit jackpots.
As part of the rule adoption process, the Division responded to these letters and informed JAPC that the Division was filing a Notice of Change regarding certain adjustments to the proposed rules.
As part of the rule adoption process, the Division also conducted a rule development workshop on September 16, 2003, and a public hearing on January 7, 2004.
The amendments were adopted May 9, 2004. Some of these rules amendments are the subject matter of the instant proceeding.
Concerns of the Division
Royal Logan is the chief operations officer for the Division. He has held that position for a total of approximately ten years. He was a member of a committee established in the Division as part of the process of amending Florida Administrative Code Chapter 61D-11 as a result of the 2003 amendments.
According to Mr. Logan, the committee was concerned with several issues including compliance with the legislative intent of strict regulation of gambling, the Division's manpower in regulating cardrooms, and tax reporting concerns relating to auditing. More specifically, the Division was
concerned that jackpots and re-buys have the potential of violating the $2.00 bet and raise limitations, the potential opportunity for collusion in single-game tournaments, and pose difficulties for accurate tax reporting.
The Division does not have a group of employees specifically devoted to cardrooms. The Division has employees designated as chief inspectors at racetracks. The chief inspector has many duties including monitoring cardrooms to ensure compliance with statutes and rules. Monitoring cardroom compliance comprises no more than 10 to 12 percent of their time, as that person is the primary licensing official at the site. Not all racetracks have chief inspectors.
The Game of Poker
Poker is a card game using a single deck of 52 cards. Poker consists of a ranking system. The person holding the highest-ranking hand at the end of the game wins the pot.
The traditional ranking system consists of the highest-ranking hand to the lowest.
Hoyle’s Modern Encyclopedia of Card Games, by Walter
B. Gibson, April 1974 Edition, contains an accurate description of the traditional ranking system in poker. Stanley Sludikoff is an expert in the game of poker, the rules of the game, and how poker is played in the United States.
Mr. Sludikoff considers Hoyle's not to be the most authoritative book on the game of poker and that it applies primarily to home games as opposed to games played in gamerooms. Hoyle's does not address the subjects of tournaments or jackpots.
Because Hoyle's contains an accurate description of the traditional ranking system in poker, the undersigned is not persuaded that the reference to Hoyle's in Florida Administrative Code Rule 61D-11.002(1) is inappropriate or arbitrary.
In Mr. Sludikoff's opinion, tournaments are appealing because there is a low fixed risk with the potential for higher gain. They allow participants to build up to a higher limit game and potentially win entry into larger tournaments, such as the World Series of Poker. Single table tournaments are common in the United States in both large and small properties. Multi-table tournaments eliminate players until there are only enough remaining players to play at one table before the tournament concludes. Regular (non- tournament) games are played at single tables.
According to Mr. Logan, the Division determined that the entry fee for a tournament should be calculated based upon the $2.00, three-raise limitation. The Division determined
that "re-buys" are not consistent with the wagering limitations of Section 849.086, Florida Statutes.
In Mr. Sludikoff's opinion, when the rules of the tournament allow, a re-buy is available to all players during a specified period of time. The rules are set by the cardroom operators, and each player in a tournament is aware of the ability to re-buy, how much the re-buys cost, and when it may be exercised. Re-buys are not the same thing as re-entering a tournament because participants are not permitted to re-buy unless he or she is a participant in the tournament at the time such re-buy is made available. A participant is not out of a tournament unless he or she is out of chips and there is no re-buy available to such participant. Allowing players to re-buy additional chips is a common practice in poker tournaments. Re-buys are easily recorded as a type of revenue received, thereby not presenting an accounting or auditing problem.
Mr. Sludikoff's opinion in this regard persuades the
undersigned that the agency's rationale regarding the entry fee and re-buy limitations are not supported by the necessary facts and are arbitrary.
Most cardrooms in the United States have jackpots.
Florida's statutory limitation of a $2.00 bet and raise limitation is a restrictive form of wagering. Under
this limitation, the most that a participant can bet is $8.00 in any round.
"Pari-mutuel" is a French term meaning wagering among ourselves, in that the participants are not wagering against the "house." Section 849.086, Florida Statutes, characterizes games authorized pursuant to that section to be "pari-mutuel style" games.
Playing a game in a non-banking manner means that the "house", the cardroom operator, does not participate in the game at all and that the game participants are not playing against the house.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding pursuant to Subsections 120.56(1) and (3), Florida Statutes.
Petitioners have standing to challenge the rules which are the subject of this dispute.
The Division is the agency responsible for administering Section 849.086, Florida Statutes, and regulating the operation of cardrooms in the state. Rule Challenge Analysis
The party attacking an existing agency rule has the burden to prove by a preponderance of the evidence that the
rule constitutes an invalid exercise of delegated legislative authority as to the objections raised. § 120.56(3)(a), Fla. Stat. Cortes v. State Board of Regents, 655 So. 2d 132 (Fla. 1st DCA 1995). The challenger's burden is a stringent one.
Id.; Charity v. Florida State University, 680 So. 2d 463 (Fla. 1st DCA 1996).
The Petition for Administrative Hearing, which challenges the validity of Florida Administrative Code Rules 61D-11.001(8) and (13), 61D-11.002(1), 61D-11.005(2) and (9), 61D-11.027(1)(a), 61D-11.027(1)(e), (2)(a) and (2)(b), alleges that the Rules are an invalid exercise of delegated legislative authority within the context of Subsections 120.52(8)(b),(c),(d) and (e), Florida Statutes, in that the Rules exceed Respondent's rulemaking authority; enlarge, modify or contravene the specific provisions of law implemented; are vague and fail to establish adequate standards for agency decisions; and are arbitrary and capricious.2/
Subsection 120.52(8), Florida Statutes, reads, in pertinent part, as follows:
(8) 'Invalid exercise of delegated legislative authority' means action which goes beyond the powers, functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one of the following applies:
* * *
The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(3)(a)1.;
The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(3)(a)1,;
The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency;
The rule is arbitrary or capricious. A rule is arbitrary if it is not supported by logic or the necessary facts; a rule is capricious if it is adopted without thought or reason or is irrational; or
* * *
A grant of rulemaking authority is necessary but not sufficient to allow an agency to adopt a rule; a specific law to be implemented is also required. An agency may adopt only rules that implement or interpret the specific powers and duties granted by the enabling statute. No agency shall have authority to adopt a rule only because it is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious or is within the agency's class of powers and duties, nor shall an agency have the authority to implement statutory provisions setting forth general legislative intent or policy. Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no
further than implementing or interpreting the specific powers and duties conferred by the same statute. (Emphasis supplied)
The Division's rulemaking authority regarding cardrooms has previously come under court scrutiny. Petitioners cite St. Petersburg Kennel Club v. Department of Business and Professional Regulation, 719 So. 2d 1210 (Fla. 2d DCA 1998) (statutes did not grant specific rule-making authority to the Division to define poker in rule).
Respondent cites PPI, Inc. v. Department of Business and Professional Regulation, 698 So. 2d 306 (Fla. 3rd DCA 1997) (Division acted within its authority in requiring that cardrooms install electronic surveillance devices to oversee cardroom operations).
"The authority to adopt an administrative rule must be based on an explicit power or duty identified in the enabling statute . . . [T]he authority for an administrative rule is not a matter of degree. The question is whether the statute contains a specific grant of legislative authority for the rule, not whether the grant of authority is specific enough." (Emphasis in original.) Florida Board of Medicine, supra at 253, quoting Southwest Florida Water Management District v. Save the Manatee Club, Inc., 773 So. 2d 594, 599 (Fla. 1st DCA 2000).
In this instance, the Division's grant of rulemaking authority is found in Subsection 849.086(4), Florida Statutes, which reads as follows:
AUTHORITY OF DIVISION.--The Division of Pari-mutuel Wagering of the Department of Business and Professional Regulation shall administer this section and regulate the operation of cardrooms under this section and the rules adopted pursuant thereto, and is hereby authorized to:
Adopt rules, including, but not limited to: the issuance of cardroom and employee licenses for cardroom operations; the operation of a cardroom; recordkeeping and reporting requirements; and the collection of all fees and taxes imposed by this section.
Conduct investigations and monitor the operation of cardrooms and the playing of authorized games therein.
Review the books, accounts, and records of any current or former cardroom operator.
Suspend or revoke any license or permit, after hearing, for any violation of the provisions of this section or the administrative rules adopted pursuant thereto.
Take testimony, issue summons and subpoenas for any witness, and issue subpoenas duces tecum in connection with any matter within its jurisdiction.
Monitor and ensure the proper collection of taxes and fees imposed by this section. Permitholder internal controls are mandated to ensure no compromise of state funds. To that end, a roaming division auditor will monitor and verify the cash flow and accounting of cardroom revenue for any given operating day. . . . (Emphasis supplied.)
Section 550.0251, Florida Statutes, also addresses the Division’s rulemaking authority and reads, in pertinent part, as follows:
(12) The division shall have full authority and power to make, adopt, amend, or repeal rules relating to cardroom operations, to enforce and to carry out the provisions of s. 849.086, and to regulate the authorized cardroom activities in the state. The division is authorized to adopt emergency rules prior to January 1, 1997, to implement the provisions of s. 849.086.
In addition to granting the Division rulemaking authority, Section 849.086, Florida Statutes, reads, in pertinent part, as follows:
1) LEGISLATIVE INTENT.--It is the intent of the Legislature to provide additional entertainment choices for the residents of and visitors to the state, promote tourism in the state, and provide additional state revenues through the authorization of the playing of certain games in the state at facilities known as cardrooms which are to be located at licensed pari-mutuel facilities. To ensure the public confidence in the integrity of authorized cardroom operations, this act is designed to strictly regulate the facilities, persons, and procedures related to cardroom operations. Furthermore, the Legislature finds that authorized games as herein defined are considered to be pari-mutuel style games and not casino gaming because the participants play against each other instead of against the house.
DEFINITIONS.--As used in this section:
"Authorized game" means a game or series of games of poker which are played in a nonbanking manner.
"Banking game" means a game in which the house is a participant in the game, taking on players, paying winners, and collecting from losers or in which the cardroom establishes a bank against which participants play.
* * *
CARDROOM AUTHORIZED.-- Notwithstanding any other provision of law, it is not a crime for a person to participate in an authorized game at a licensed cardroom or to operate a cardroom described in this section if such game and cardroom operation are conducted strictly in accordance with the provisions of this section.
* * *
CONDITIONS FOR OPERATING A CARDROOM.--
* * *
(d) Each cardroom operator shall conspicuously post upon the premises of the cardroom a notice which contains a copy of the cardroom license; a list of authorized games offered by the cardroom; the wagering limits imposed by the house, if any; any additional house rules regarding operation of the cardroom or the playing of any game; and all costs to players to participate, including any rake by the house. In addition, each cardroom operator shall post at each table a notice of the minimum and maximum bets authorized at such table and the fee for participation in the game conducted.
* * *
METHOD OF WAGERS; LIMITATION.—
No wagering may be conducted using money or other negotiable currency. Games may only be played utilizing a wagering system whereby all players' money is first converted by the house to tokens or chips which shall be used for wagering only at that specific cardroom.
The cardroom operator may limit the amount wagered in any game or series of games, but the maximum bet may not exceed
$2 in value. There may not be more than three raises in any round of betting. The fee charged by the cardroom for participation
in the game shall not be included in the calculation of the limitation on the bet amount provided in this paragraph.
* * *
(10) FEE FOR PARTICIPATION.--The cardroom operator may charge a fee for the right to participate in games conducted at the cardroom. Such fee may be either a flat fee or hourly rate for the use of a seat at a table or a rake subject to the posted maximum amount but may not be based on the amount won by players. The rake- off, if any, must be made in an obvious manner and placed in a designated rake area which is clearly visible to all players. Notice of the amount of the participation fee charged shall be posted in a conspicuous place in the cardroom and at each table at all times.
* * *
PROHIBITED ACTIVITIES.—
No person licensed to operate a cardroom may conduct any banking game or any game not specifically authorized by this section.
No person under 18 years of age may be permitted to hold a cardroom or employee license, or engage in any game conducted therein.
No electronic or mechanical devices, except mechanical card shufflers, may be used to conduct any authorized game in a cardroom.
No cards, game components, or game implements may be used in playing an authorized game unless such has been furnished or provided to the players by the cardroom operator. . . .
Florida Administrative Code Rule 61D-11.001(8) and
reads as follows:
"Jackpot" – A jackpot occurs when the cardroom operator or the cardroom management company deducts from each hand, round, or game played a certain amount or charges a certain amount which is accumulated and placed in a separate fund from the pot and paid out when a desired result is achieved by a player or players. The term "jackpot" does not include any game authorized under Section 849.086, F.S.
* * *
(13) "Tournament" means any competition involving a series of games of poker, consisting of more than one betting round involving more than one table, where the winner of the competition and runners-up may receive a prize or cash award.
Florida Administrative Code Rule 61D-11.002 reads, in pertinent part, as follows:
Cardroom Games.
Those games authorized by Section 849.086(2)(a), F.S., are the only games
authorized for play at pari-mutuel facilities licensed to conduct cardroom operations. In order to assure only authorized games are played, the division shall review and approve authorized games as follows:
For each game of poker that a cardroom operator desires to conduct, it must submit BPR Form 16-001 to the division. The form shall include the name of the game of poker, the rules specifying how the game is to be played, the procedures for wagering during the conduct of the game, and the charge to each player for participating in the game. BPR Form 16-001 is adopted and incorporated by Rule 61D-12.001, F.A.C.
All poker card games in Hoyle's Modern Encyclopedia of Card Games, by Walter B. Gibson, published by Doubleday and Company, Inc., April 1974 1st Edition hereinafter (Hoyle's) incorporated herein by reference, are authorized when played in a non-banking manner and shall be approved by the division. All other card games played in a non-banking manner in which the determination of the winner is based upon a traditional poker ranking system as referenced in Hoyle's shall be approved by the division.
Any series of games of poker that are played for a single pot shall consist of poker games approved under this section. The cardroom operator shall clearly notify the participants of the number of games in the series that will be necessary to win the pot and the cardroom operator's participation fee that will be charged.
Florida Administrative Code Rule 61D-11.005(2) and
reads as follows:
No cardroom operator or licensee shall extend credit, make a loan or grant a gift to any person which would enable that person to play in an authorized card game. The consideration required to participate in any card game shall be collected in full, by
cash or check, in exchange for chips or tokens prior to participation at a licensed facility.
Only cash shall be used to purchase chips or tokens at card tables.
The practice of playing "light", or drawing chips or tokens from the pot to show how much a player owes when out of chips
or tokens, is prohibited. The player shall be required to purchase additional chips or tokens in order to proceed playing.
* * *
(9) Jackpots are prohibited. . . .
Florida Administrative Code Rule 61D- 11.027(1)(a),(b), and (e), (2)(a) and (b) reads as follows:3/
A series of games of poker may include tournament play. Tournaments may only be conducted at licensed pari-mutuel facilities and must comply with the following criteria:
Cardroom operators must use for tournament play a game authorized for general cardroom play under Rule 61D- 11.002, F.A.C. Any authorized game used for tournament play must be listed on the cardroom operator's approved license application, or on any subsequent applications/amendments that may be submitted for approval;
No less than 9 players must be registered as participants at the start of play;
* * *
(e) Only one entry per player per tournament.
(2)(a) The tournament entry fee per participant shall be based upon a maximum of $2 per bet and three raises per betting round. The entry fee shall not exceed the maximum potential value wagered by a single player in an individual game that is being used for tournament play.
(b) The cardroom operator is prohibited from allowing a participant to pay any fee to re-enter the same tournament. A participant's elimination from a tournament is final. . . .
Florida Administrative Code Rules 61D-11.001(8) and 61D-11.11.005(9) (Jackpots)
Petitioners argue that the prohibition of "jackpots" is an invalid exercise of delegated legislative authority in that Section 849.086, Florida Statutes, does not prohibit jackpots and that subsection (12) of that statutory provision entitled, "Prohibited Activities" is silent as to jackpots. Petitioners argue that by prohibiting jackpots, the Division has exceeded its rulemaking authority by adding an additional prohibition not found in Subsection 849.086(12), Florida Statutes; that the prohibition of jackpots enlarges, modifies, or contravenes Section 849.086, Florida Statutes; and that the prohibition of jackpots is arbitrary and capricious.
Respondent argues that authorizing a jackpot creates the potential to exceed the statutory bet and raise limitations per game in Subsection 849.086(8), Florida Statutes.
The undersigned is not persuaded that the Legislature's silence as to any reference to jackpots, including the list of prohibitions enumerated in Subsection 849.086(12), Florida Statutes, results in the conclusion that jackpots are authorized by the Legislature. The authorization of gamerooms is an exception to the general prohibition against gambling in Florida and must be strictly construed. § 849.086(3), Fla. Stat., and see PPI, Inc. v. Department of Business and Professional Regulation, supra at 308.
However, the Division does not have specific rulemaking authority to adopt a definition of jackpots or the prohibition of jackpots. Accordingly, Florida Administrative Code Rules 61D-11.001(8) and 61D-11.005(9) constitute invalid exercises of delegated legislative authority in that they exceed the Division's specific grant of rulemaking authority and enlarge the specific provisions of law implemented.
Petitioners also assert that Florida Administrative Code Rules 61D-11.001(8) and 61D-11.005(9) are arbitrary and capricious. A rule is arbitrary if it is not supported by logic or the necessary facts; a rule is capricious if it is adopted without thought or reason or is irrational. §
120.52(8)(e), Fla. Stat. The evidence presented does not establish that these rules are arbitrary or capricious.
Florida Administrative Code Rule 61D-11.001(13) (one table tournament)
Petitioners argue that Subsection 849.086(4), Florida Statutes, does not authorize the Division to place limitations or requirements on "authorized games" as that term is defined in Section 849.086(2)(a), Florida Statutes. Petitioners argue that by imposing the one table limitation on tournaments, the Rule exceeds the Division's grant of rulemaking authority, enlarges, modifies, or contravenes the specific provision of law implemented, and is arbitrary and capricious.
"Authorized game" is defined as a game or series of games of poker which are played in a non-banking manner.
§ 849.086(2)(a), Fla. Stat. A tournament is a series of games. Thus, tournaments are authorized. Subsection 550.0251(12), Florida Statutes, specifically authorizes the Division to promulgate rules regulating "authorized activities," but does not grant the Division with specific authority to prohibit or limit the activities authorized by statute. Accordingly, the Rule exceeds the Division's grant of specific rulemaking authority and modifies the specific provisions of law implemented in violation of Subsections 120.52(8)(b) and (c), Florida Statutes.
The Division's concern that playing single table tournaments enhances the opportunity for collusion is not supported by facts. The Division's witness conceded that multi-table tournaments eliminate players until there are only enough remaining players to play at one table before the tournament concludes. Thus, the Rule is not supported by the necessary facts and is arbitrary in violation of Subsection 120.52(8)(e), Florida Statutes.
Florida Administrative Code Rules 61D-11.002(1) and 61D-11.027(1)(a) (authorization of games)
Petitioners argue that by requiring the Division's approval of games which already meet the definition of "authorized game" as defined in Subsection 849.086(2)(a), Florida Statutes, before such games are authorized for play at pari-mutuel facilities licensed to conduct cardroom operations, the Rule exceeds the Division's rulemaking authority, and enlarges, modifies, or contravenes the specific provisions of law implemented.
Further, Petitioners argue that the Rule does not specify criteria by which each game will be assessed for approval and is, therefore, vague, vests unbridled discretion on the Division, and is arbitrary or capricious.
By requiring Division approval in addition to the requirements specified in Subsection 849.086(2)(a), Florida
Statutes (which defines authorized game), the Rule enlarges the specific provision of law implemented and, therefore, violates Subsection 120.52(8)(c), Florida Statutes.
However,, while invalid for the above reason, the Rule sets forth sufficient criteria by which each game would be assessed for approval. Thus, the Rule does not vest unbridled discretion in the agency and is not in violation of Subsection 120.52(8)(d), Florida Statutes.
Florida Administrative Code Rule 61D-11.005(2) (prohibition of gifts)
Petitioners argue that Subsection 849.086(12), Florida Statutes, is silent as to gifts to players.4/ Thus, by adding an additional prohibition not enumerated in Section 849.086, Florida Statutes, the Rule exceeds the Division's rulemaking authority; enlarges, modifies, or contravenes the specific provisions of law implemented; and is arbitrary and capricious.
Further, Petitioners assert that the Rule is vague and fails to establish adequate standards for agency decisions and fails to define "gifts". A rule is invalid if the rule requires the performance of an act in terms that are so vague that persons of common intelligence must guess at its meaning. Southwest Florida Water Management District v. Charlotte County, 774 SO. 2d 903 (Fla. 2nd DCA 2001), citing Donoto v. American Telephone & Telegraph, 767 So. 2d 1146 (Fla. 2000).
Petitioners' sole argument that this Rule exceeds the Division's grant of rulemaking authority and enlarges the specific law implemented is that gifts are not included in the list of prohibitions enumerated in Subsection 849.086(12), Florida Statutes. Again, the undersigned is not persuaded that the Legislature's silence in regard to gifts within the list of prohibitions results in the conclusion that such gifts are authorized by the Legislature. See PPI, Inc. v. Department of Business and Professional Regulation, supra. Further, Petitioners' argument that gifts are commonly given in pari-mutuel events such as racing is immaterial to the analysis herein.
However, the Rule does not clearly define the meaning of the word "gifts" so as to allow a licensee to determine whether or not a promotional giveaway is permitted or prohibited. The Division's witness was not able to precisely draw the line as to what was a permissible gift and what was not. Thus, the Rule is vague, vests unbridled discretion to the agency to determine what constitutes a gift, and is arbitrary, therefore, in violation of Subsections 120.52(8)(d) and (e), Florida Statutes.
Florida Administrative Code Rules 61D-11.027(1)(e), 61D-11.027(2)(a) and (b) (entry fees and re-buys)
Petitioners argue that the entry fee limitations exceed the Division's rulemaking authority in that it is the
cardroom operator who is authorized to set the participation or entry fee under Subsections 849.086(7)(d) and (10), Florida Statutes, and the Division has no statutory rulemaking authority to set or limit the participation fee or to set the rules for playing or entering an authorized game.
Further, Petitioners argue that the only limitation placed on the participation fee is contained in Subsection 849.086(8)(b), Florida Statutes, and that there is no prohibition in the statute on a player paying a fee to re- enter an authorized game. Therefore, Petitioners argue that the entry fee limitations in the rules enlarge, modify, or contravene the law implemented and are arbitrary and capricious.
Subsection 849.086(4)(a), Florida Statutes, authorizes the Division to adopt rules including the collection of all fees and taxes imposed by this statute. Subsection 849.086(10), Florida Statutes, authorizes the cardroom operator to charge a fee for the right to participate in the games and specifies that the fee may be either “a flat fee or hourly rate for the use of a seat at the table or a rake subject to the posted maximum amount but may not be based on the amount won by players.”
While the Division’s rulemaking authority addresses the collection of fees, it does not give the Division
authority to set fees, the parameters of which are described in Subsection 849.086(10), Florida Statutes. Thus, Florida Administrative Code Rule 61A-11.027(2)(a), exceeds the Division’s grant of rulemaking authority, modifies the specific law implemented, and is arbitrary, thereby violating Subsections 120.52(8)(b),(c), and (e) Florida Statutes.
As with jackpots, the Division was concerned with the potential of violating the statutory $2.00 bet and raise limitations. However, for the reasons explained in the preceding paragraph, Florida Administrative Code Rule 61A- 11.027(1)(e) and (2)(b), limiting one entry per play per tournament and fees for re-entry into a tournament, violates Subsections 120.52(8)(b) and (c), Florida Statutes.
for reasonable costs and attorney's fees pursuant to Subsection 120.595(3), Florida Statutes.
DONE AND ORDERED this 21st day of December, 2004, in Tallahassee, Leon County, Florida.
___________________________________ BARBARA J. STAROS
Filed with the Clerk of the Division of Administrative Hearings this 21st day of December, 2004.
1/ All references to the Florida Statutes will be to Florida Statutes 2004, unless otherwise indicated.
2/ Petitioners further argue that the challenged rules violate the legislative intent set forth in Section 849.086, Florida Statutes, regarding the promotion of tourism and the provision of additional state revenues, in that Florida Native-American Indian cardrooms are not subject to these rules giving them a competitive advantage. However, this argument ignores the language in Subsection 120.52(8), Florida Statutes, in which the Legislature instructs that agencies do not have the authority to implement statutory provisions setting forth general legislative intent. Accordingly, this issue is not one that is properly within the context of a rule challenge, and Petitioners' argument in this regard is rejected.
3/ The introductory paragraph of the Petition does not list Florida Administrative Code Rule 61D-11.027(1)(a) as one of
the challenged rules, but the body of the Petition clearly does.
4/ Petitioners' Proposed Final Order also discusses the language of Florida Administrative Code Rule 61D-11.005(2)(b) regarding "playing light." However, while quoted in paragraph
25 of the Petition, the body of the paragraph only discusses the introductory language of subsection (2) regarding gifts to players and makes no allegations regarding “playing light.” Accordingly, this was not a basis of challenge in the Petition and will not be addressed herein.
Wilbur E. Brewton, Esquire Kelly B. Plante, Esquire Roetzel & Andress, LPA
Joseph M. Helton, Jr., Esquire Ralf E. Michels, Esquire Department of Business and
David J. Roberts, Director Division of Pari-Mutuel Wagering Department of Business and
Liz Cloud, Program Administrator Bureau of Administrative Code Department of State
R.A. Gray Building, Suite 101 Tallahassee, Florida 32399-0250
A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of appeal with the Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
