DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF PARI-MUTUEL WAGERING,
vs.
Case No. 16-1009
Respondent.
A final hearing was conducted in this case on May 31 and June 1, 2016, in Tallahassee, Florida, before Suzanne Van Wyk, an Administrative Law Judge with the Division of Administrative Hearings.
For Petitioner: William D. Hall, Esquire
For Respondent: John M. Lockwood, Esquire
Thomas J. Morton, Esquire Kala Kelly Shankle, Esquire The Lockwood Law Firm
Whether Jacksonville Kennel Club violated section 849.086(12)(a), Florida Statutes (2015), by conducting unauthorized card games in its cardroom, and section 849.086(6)(c), by allowing unlicensed persons to work in its cardroom; and, if so, whether the Division should be estopped from prosecuting Jacksonville Kennel Club. Also at issue is whether the allegations of the Administrative Complaint constitute an unadopted rule in violation of section 120.57(1)(e)1., Florida Statutes.
On or about January 25, 2016, Petitioner, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (“Petitioner” or “Division”), served its Administrative Complaint in Case No. 2015-053213 on Respondent, Jacksonville Kennel Club, Inc. (“Respondent” or “Jacksonville”). The 18- count Administrative Complaint alleged that, on December 7, 2015, Respondent operated unauthorized card games at several of its gaming tables, and allowed persons to work in its cardroom without an occupational license.
On February 15, 2016, Respondent filed its Petition for Formal Administrative Hearing by which it disputed the facts alleged in the Administrative Complaint, and alleged that the allegations in the Administrative Complaint constitute an
unadopted rule (presumably in violation of section 120.57(1)(e)1.). The matter was referred to the Division of Administrative Hearings on February 19, 2016.
The case was originally assigned to Administrative Law Judge Bruce McKibben, but was transferred to the undersigned on February 29, 2016.1/ The final hearing was scheduled for May 31 through June 3, 2016, and commenced as scheduled.2/ The parties timely filed a Joint Prehearing Stipulation which clarified Respondent’s allegation that the Division had relied on an unadopted rule in violation of section 120.57(1)(e)1.
Respondent contemporaneously filed a Motion in Limine to exclude evidence or argument related to California law on the subject of gaming, which was denied.
At the final hearing, the Division presented the testimony of David Journey, a Jacksonville cardroom dealer. Jacksonville presented the testimony of its president, Jamie Shelton, and Noah Carbone, cardroom manager for the Palm Beach Kennel Club. The parties jointly introduced the testimony of Charles Wayne Taylor, a Division investigator, and Deborah Giardina, Jacksonville’s vice president of poker operations, who was accepted as an expert in cardroom management and cardroom operations.
Petitioner’s Exhibits P1 through P12 were admitted in evidence. Petitioner’s 12, the deposition transcript of
Arley Johnson, Jacksonville’s cardroom manager, has been given the evidentiary weight as if the deponent offered live testimony at the final hearing.
Respondent’s Exhibits R1 through R26 were admitted in evidence. Respondent’s Exhibit 20, the deposition transcript of the Department’s Secretary, Ken Lawson, has been given the evidentiary weight as if the deponent offered live testimony at the final hearing.
The parties’ Joint Exhibits J1A through J1I, and J2 through J7 were also admitted in evidence. Exhibit J3 is the deposition transcript of Jonathan Zachem, the Division Director; J4 is the deposition transcript of Daniel J. Dillmore, the Deputy Division Director; J5 is the deposition transcript of Lisa Helms, Division Operations Review Specialist; J6 is the deposition transcript of Steve Kogan, the Division’s Chief of Investigations; and J7 is the deposition transcript of
Mr. Taylor. Each of these transcripts has been given the evidentiary weight as if the deponent offered live testimony at the final hearing.
In addition, the undersigned took official recognition of specified Notices of Development of Rulemaking for Florida Administrative Code Rules 61D-11.001 and 11.002,3/ and of United States District Court Case No. 4:15-CV-00516-RH--CAS in the Northern District of Florida.
A three-volume Transcript of the proceedings was filed on June 14, 2016. On June 27, 2016, the undersigned granted Jacksonville’s unopposed request for an extension of time to file proposed recommended orders, giving the parties until July 15, 2016, to make said filings. The parties timely filed Proposed Recommended Orders, which have been duly considered in the preparation of this Recommended Order.
All references herein to the Florida Statutes are to the 2015 version, unless otherwise noted.
The Division is the state agency charged with regulating pari-mutuel wagering activities in Florida pursuant to chapter 550 and section 849.086, Florida Statutes.
At all times material to the Administrative Complaint, Jacksonville held a permit from the Division to conduct pari- mutuel wagering, and operated a cardroom under license
number 145-1002.
Gambling in Florida is historically disfavored, to the extent of criminalizing casino-type gambling. The keeping of “gambling houses” is a third-degree felony. See § 849.01, Fla. Stat. Playing or engaging in any game of chance, including cards, for money or “other thing of value” is a second-degree misdemeanor. See § 849.08, Fla. Stat.
The Florida Legislature has carved out a narrow exception to these criminal statutes by allowing certain card games to be played only in cardrooms at licensed pari-mutuel facilities strictly regulated by the State. See § 849.086(3), Fla. Stat. “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.” § 894.086(1), Fla. Stat.
(emphasis added).
In Florida, an “authorized game” is “a game or series of games of poker or dominoes which are played in a non-banking manner.” § 849.086(2)(a), Fla. Stat. A “banking game” is 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.” § 849.086(2)(b), Fla. Stat. (emphasis added). Thus, in
Florida, only non-banking games are authorized games.
The Division has the sole authority to issue cardroom and employee licenses for cardroom operations, collect fees and taxes imposed by statute, and adopt rules for cardroom recordkeeping and reporting requirements. See § 849.086(4)(a),
Fla. Stat. The Division is authorized to monitor the operation of cardrooms and the playing of authorized games, to investigate any alleged violation of the statute, and to suspend or revoke
any license or permit for said violation. See §§ 849.086(4)(b)
and (d), Fla. Stat.
Applicants for a cardroom license must submit a complete set of written internal controls to the Division for approval. See Fla. Admin. Code R. 61D-11.019(1). The internal
controls must include “a list of all authorized games offered for play and a description of the rules of play and wagering requirements for each game.” Fla. Admin. Code R. 61D- 11.019(4)(i). Subsequent changes to the internal controls, including the addition or deletion of authorized games, must be submitted to the Division for approval.
In 2014, the Division adopted rule 61D-11.012(5), governing “designated-player games,”4/ which provides as follows:
Card games that utilize a designated player that covers other players’ wagers shall be governed by the cardroom operator’s house rules. The house rules shall:
Establish uniform requirements to be a designated player;
Ensure that the dealer button rotates around the card table in a clockwise fashion on a hand by hand basis to provide each player desiring to be the designated player an equal opportunity to participate as the designated player; and
Not require the designated player to cover all potential wagers.
In a game of standard poker (or player-pool poker), all players play against each other, and the player with the winning
hand is paid out of the “pot,” the total of all players’ bets. In a designated-player game, each player plays solely against the designated player, his or her hand being compared to the designated player’s hand. Payment to players with a winning hand is made from the designated player’s chips and players’ losses are taken by the designated player.
In a designated-player game, the designated player has a mathematical advantage over the other players. In order to balance the odds, the opportunity to be the designated player typically passes from player to player in a clockwise fashion on a hand-to-hand basis. This rotation of the designated player is referred to as “passing the button,” and usually involves placement of a circular disk or other object at the designated player’s position for the particular hand.
Designated-Player Games at Jacksonville
Jacksonville became interested in offering designated- player games subsequent to adoption of rule 61D-11.002(5). During the summer of 2015, Jacksonville began preparing to offer one-card poker, two-card poker, three-card poker, Ultimate Texas Hold’em (also known as Florida Hold’em), and Pai Gow poker (collectively, the “designated-player games” or “the games”) to its customers. Jacksonville investigated how other facilities offered and played the games, obtained information on leasing the games, developed internal controls to describe the rules of
play and wagering requirements for the games, and created a new floor plan for the tables at which the games would be offered.
Jacksonville began offering the games on September 17, 2015, with six designated-player tables. In December 2015, Jacksonville added 12 designated-player tables.
Prior to opening its designated-player tables, Jacksonville submitted its revised cardroom floorplan to the Division for approval. The Division inspected the cardroom in September, and approved the arrangement of gaming tables and the placement of security cameras.
On October 23, 2015, Jacksonville submitted its internal controls to the Division for approval. The internal controls were approved by the Division, but the record does not reflect the date of approval.
Jacksonville’s Internal Controls
In one-card poker, each player must make a primary wager (ante bet), then is dealt one card. Each player’s card is compared to the designated player’s card. If the player’s card is ranked higher than the designated player’s card, he or she wins. If the player’s card is ranked lower than the designated- player’s card, he or she loses. If the player’s card is of the same rank as the designated player’s card, the player has the option to “extend the hand” (or go to “war” with the designated player) by making a tie wager equal to his or her ante bet.
With regard to one-card poker, Jacksonville’s internal controls read as follows:
Both the player and the [d]esignated [p]layer also have the option to decline extending the hand . . . . If . . . the player or the [d]esignated [p]layer chooses not to extend the hand he or she has the option to surrender half their primary wager.
* * *
The [d]esignated [p]layer option will be rotated in a clockwise fashion around the table at the completion of every hand.
* * *
After the collection of all losing wagers and the payment of all winning wagers, the dealer shall collect all cards, offer the rotation of the [d]esignated [p]layer position, and begin a new hand.
In two-card poker, each player must make an ante bet and may also make a bonus bet. Each player is then dealt four cards to make the best two-card poker hand. After inspecting his or her hand, each player may choose to fold, forfeiting both the ante and the bonus bets; or make a call bet equal to the ante bet. If a player makes a call bet, he or she discards the two unused cards. Each player’s hand is then compared to the designated player’s hand to determine the winner. The winning hand between the player and designated player is the higher- ranked hand.
The designated player pays the ante bet and call bets.
If the player’s hand wins over the designated player’s hand, the player is eligible to be paid on the bonus bet, as long as the player’s hand is one of the ranked hands on the bonus bet payout table (e.g., two red aces pay at 30:1, mixed aces at 10:1). A chart listing all payout amounts must be posted at the gaming table.
Of note, Jacksonville’s internal controls for two-card poker read, “[e]ach player, including the designated player, will be dealt four cards to make the best two card poker
hand . . . . The player may inspect their hand and then choose” whether to fold or make a call bet. The internal controls also provide that “[t]he designated player’s hand . . . rotates on a hand-by-hand basis unless there are no eligible designated players or the eligible designated players waive their turn[.]”
Three-card poker is very similar to two-card poker.
Each player makes an ante bet and may make a “pair plus” bet, then is dealt three cards. After each player inspects his or her cards, he or she may choose to either fold, forfeiting the ante bet and, if applicable, the pair plus bet, or make a call bet equal to the ante bet. Each hand is then compared to the designated player’s hand and the higher hand wins based on the following poker hand rankings (lowest to highest): high card, pair, flush, straight, three of a kind, and straight flush.
The designated player pays both the ante bet and call bets. If the player’s hand wins over the designated player’s hand, the player is eligible to be paid on the pair plus bet, if the player’s hand is one of the ranked hands on the pair plus payout table (e.g., mini royal pays at 200:1, three-of-a-kind at 30:1). A chart listing all payout amounts must be posted at the gaming table.
Of note, Jacksonville’s internal controls for three- card poker state that “[e]ach player, including the designated player, will be dealt three cards. The players may inspect their hand and then choose” whether to fold or make a call bet. Further, the internal controls provide that “[t]he designated player’s hand . . . rotates on a hand-by-hand basis unless there are no eligible designated players or the eligible designated players waive their turn[.]”
In Pai Gow poker, each player makes a minimum ante bet, then is dealt seven cards. Each player inspects his or her cards and arranges them into two-card and five-card hands, the goal being to make the highest possible two-card and five-card poker hands. Players have the option to have their hand played “the house way,” a default arrangement made by the dealer. Positions in which the player has chosen the house way are marked with a “house way button.”
After all players’ hands are arranged, the designated player’s hand will be opened, and, according to the internal controls, “the designated player will inspect and arrange the hand to their liking.” Each of the player’s hands are then compared to the designated player’s hands, and wins and losses are determined as follows: If both of the player’s hands are ranked higher than the designated player’s hands, the player wins and is paid on his or her wager; if both of the player’s hands are ranked lower than the designated player’s hands, the player loses and the designated player is paid; if the player wins one hand and loses the other, it is a “push” (the bet receives no action and is pushed back to the player). If one of the player’s hands is of equal rank to the designated player’s hand, the designated player’s hand is considered higher ranking.
Of note, Jacksonville’s internal controls for Pai Gow poker state, “[t]he designated player position rotates in a systematic and continuous way unless all players eligible to be the [d]esignated [p]layer pass the designated player position.”
In Florida Hold’Em, each player makes an ante bet and a blind bet equal to the ante bet, and may make an additional bonus, or trips, bet. Each player is then dealt two cards, which they inspect, then decide whether to check or make a play bet of three or four times the ante bet. At this stage, three community cards are dealt in the middle of the table (the flop
cards). The players inspect their two-card hand and the flop cards, then choose whether to check or make a play bet of two times the ante bet. Next, two community cards are dealt in the middle of the table (the turn/river cards). Players then inspect their two-card hand, along with the flop and turn/river cards, and choose whether to fold (forfeiting the ante bet, blind bet, and trips bet) or make a play bet equal to the ante bet.
Each player’s hand is then compared to the designated player’s hand, and the player is paid on his or her ante bet and play bet if the player’s hand outranks the designated player’s hand (based on the standard five-card poker hand rankings). If the player’s hand wins over the designated player’s hand, the player is eligible to be paid on the blind bet, if the player’s hand is one of the ranked hands on the blind bet payout chart (e.g., full house pays at 3:1; straight flush at 50:1). Likewise, if the player’s hand is ranked higher than the designated player’s hand, he or she is eligible to be paid on the trips bet if the player’s hand is one of the hands ranked on the trips payout table (e.g., full house pays at 10:1; royal flush at 50:1). A chart listing all payout amounts must be posted at the gaming table. All ties will result in a push for the ante, blind, and play bets.
Of note, Jacksonville’s internal controls for Florida Hold’em provide that “[e]ach player, including the designated player, will be dealt two cards” and that “the players may inspect their hand and then choose” whether to fold, or make a play bet. Similarly, after the flop cards are dealt, “the players may inspect their two card hand with the three flop cards and then choose” whether to check the hand or make a play bet. Again, after the turn/river cards are dealt, the internal controls provide, “the players may inspect their two card hand, the three flop cards and two turn/river cards then choose” whether to fold or make a play bet. The internal controls specifically state that “each player and the designated player will make their best five card hand out of seven cards.”
The Rake
Licensed cardrooms in Florida derive a fee from each hand played at open card tables. The fee is known as the “rake,” and is determined based on the total of all players’ bets. In standard card games, the dealer takes the rake from the pot. In a designated-player game, the dealer calculates the rake based on total players’ bets, but takes the rake from the designated player’s chips.
Jacksonville has established a separate rake schedule for games with more than one designated player. The house rake for games with more than one designated player is five times the
rake amount for single designated-player games. For example, if there is one designated player and the total bet at the table is between five and 49 dollars, the house takes $1. If there are two designated players at the table, the house takes $5 based on the same range of total bets.
The dual-rake structure is included in Jacksonville’s dealer training manual, not in its internal controls. The dealer training manual was not submitted to the Division for approval.
Having more than one designated player at a table would slow the game play. The slower the play, the fewer hands are completed. The fewer hands completed, the less rake is taken by the house.
The dual rake structure dissuades a designated player from joining a table that already has a designated player. Designated Players at Jacksonville
Prior to opening its designated-player games, Jacksonville established uniform requirements and an application form for a person to become a designated player.
The basic requirements for a designated player at Jacksonville are successful completion of employment, criminal, and credit background checks. In addition, each designated player must wire to Jacksonville $30,000 from a “legitimate bank.” Each designated player is required to have a minimum of
$30,000 available at the table to cover other players’ bets. However, the designated player is not required to cover all bets.
Corporate entities are eligible to become designated players. Each corporate applicant (including limited liability companies and partnerships) is required to disclose all direct and indirect owners of more than five percent interest in the business, each of whom is also subject to an employment, criminal, and credit background check.
The evidence conflicted as to which persons or entities were approved designated players at Jacksonville as of December 7, 2015--the relevant date for the Administrative Complaint. In response to a subpoena duces tecum from the Division, Jacksonville produced only one designated-player application form executed prior to December 7, 2015--that of Dr. James Joyner, M.D. However, Deborah Giardina, Jacksonville’s vice president of poker operations, testified that Elevated, LLC, d/b/a Knighted Gaming (“Elevated”), applied in September 2015 and became an approved designated player at Jacksonville in September 2015. Ms. Giardina testified that failure to include Elevated’s original application in response to the subpoena request was an “oversight” on her part.5/
Regardless of whether Elevated was approved by Jacksonville through its application process prior to
December 7, 2015, Elevated began providing designated players at Jacksonville in September 2015, and was providing designated players on December 7, 2015. Every designated player in the cardroom at Jacksonville on December 7, 2015, was an Elevated employee.
Game Play: December 7, 2015
Jacksonville has 12 designated player tables, numbered
71 through 82, which are arranged in an elliptical pattern.
Ropes and stanchions are used to block access to the oblong “internal” area between and behind the tables. The internal area between the tables is not open to the general public.
Each designated-player table is a semi-circle, and the dealer stands or sits at the back of the table facing the players. Each table contains player spots on the curved side numbered one through eight clockwise from the left of the dealer.
Joint Exhibits J1A through J1I are videos from Jacksonville surveillance cameras of tables 71 through 79. Each video shows one hour of play at each table, from 8:00
to 9:00 p.m., on December 7, 2015.
Tables 71 and 72 are three-card poker tables.
Throughout the video, the designated player sat at seat eight, the seat to the right of the dealer. The designated player maintained multiple racks of chips in a variety of
denominations. The designated player at table 72 had approximately $50,000 in chips during play.
At one point in play at table 72, a third person who was not a player at the table, stood beside the designated player and reached into his chip racks, and, according to the credible testimony of a Jacksonville dealer, began making change from those chips. In each game, each winning player was paid from the designated-player’s chips. The wager of each losing player was placed by the dealer in front of the designated player’s chip racks.
Throughout play at tables 71 and 72, the designated player never looked at, or even touched, his cards. Thus, contrary to the internal controls, the designated player did not inspect his hand and choose whether to fold or make a call bet. Nor did the designated player make a wager to initiate the hand. The designated player was not actually dealt a hand of cards, but rather the dealer played the designated player’s cards.
At neither table 71 nor table 72 did the “button” pass to any player other than the designated player. Contrary to the internal controls, no player other than the player in seat eight was offered the button. In the video, the location of the button was sometimes indiscernible.
Tables 75, 77, and 79 are one-card poker tables. As with the three-card poker games, the designated player sat in
seat eight, to the right of the dealer. During play at table 75, an unidentified person appeared in the secured area behind the table and handled the designated player’s chips.
At approximately 19 minutes into the video of table 75, the designated player stood up and was replaced by
another designated player in front of the same racks containing substantial quantities of chips. At approximately 31 minutes in, the designated player stood up and was again replaced by another designated player at the same chip racks. At approximately 52 minutes in, an unidentified individual appeared next to the designated player and placed an entire tray of chips in front of the designated player and removed a row of chips from one of the trays (appearing to, once again, make change for the designated player).
Activity at the designated player’s position at
table 77 followed suit. The designated player got up at around
47 minutes in and was replaced by another designated player.
Throughout play, the button at table 77 remained at seat eight.
As with the three-card poker games, the designated players at the one-card poker tables never touched their cards. Contrary to the approved internal controls, the designated player did not have the option to decline extending the hand. Contrary to the approved internal controls, the designated- player option did not rotate around the table at the completion
of each hand. Contrary to the approved internal controls, the dealer did not offer the rotation of the designated-player position at the end of each hand.
Tables 76 and 78 are Florida Hold’em tables. The designated player at both tables sat at seat eight. Approximately 25 minutes in, the designated player at table 76 stood up and was replaced by another player in front of the same racks of chips. At approximately 37 minutes into the video of table 78, the designated player stood up and was replaced by the designated player who had earlier left table 76. At 44 minutes into the video of table 78, an unidentified person appeared at the back of the table next to the designated player and removed entire chip trays from the designated players stack and left the table.
Throughout play at tables 76 and 78, the button remained in front of the dealer’s imprest tray (a tray with rows of chips in varying denominations from which the dealer makes change for players and sells chips to players), except when the designated player’s cards were dealt. The dealer “capped” the designated player’s cards (placed the button on top of the designated player’s cards while face down), then moved the button to the side when he revealed the designated player’s cards. The designated player’s hand did not rotate “on a hand- by-hand basis,” as referenced in the internal controls.
The designated player never looked at his cards, thus, contrary to the internal controls, did not inspect the cards and “make his best five card hand out of the seven cards.” The designated player made no decisions regarding play of the game, despite the specific internal controls as to the decisions to be made by the players after the initial cards, flop cards, and turn/river cards are dealt. Rather than the designated player, the dealer played the designated player’s cards.
Table 74 is a Pai Gow poker table. The designated player was seated at seat eight. Approximately nine minutes into the video of table 74, the designated player stood up and left the table and was replaced by another designated player. About 28 minutes in, an unidentified person reached around the designated player and moved around the trays of chips, as well as the chips therein. Again, at about 49 minutes in, the designated player left the table and was replaced by another designated player. A hand was still in play when the second designated player left the table.
Throughout play, the dealer used the button the same way as the dealer at the Florida Hold’em tables--capped the designated player’s cards, then placed it in front of the imprest tray to reveal the designated player’s cards. Contrary to the internal controls, the designated-player position did not “rotate in a systematic and continuous way.” Because only one
designated player was present at the table at any one time, there was no point in offering the button to other players.
Contrary to the internal controls, the designated player did not “inspect and arrange [his] hand to [his] liking.” Nor did the designated player use the house way button. His cards were played by the dealer. According to the credible testimony of a Jacksonville dealer, the dealers are trained to always set the designated player’s cards the house way. The internal controls do not reference this practice.
Table 73 is a two-card poker table. At approximately nine minutes in, the designated player stood up and left the table, although a hand was still in play. He was replaced by another designated player. At approximately 17 minutes in, an unidentified person reached into one of the designated player’s chip trays, then picked up chips in front of the designated player and placed them into a row in the chip tray. That person subsequently removed chips from another tray in front of the designated player and placed them on the table. At approximately 47 minutes in, an unidentified person approached the designated player from the back of the table and handed her two empty chip racks, which she added to her stacks.
Throughout the video, the designated player never looked at the four cards dealt him or her by the dealer. Thus, contrary to the internal controls, neither he nor she inspected
the cards and decided which two cards to keep and which to discard, or whether to make a call bet based on those cards.
The designated player made no wagers at all. The dealer decided which two cards were the designated player’s best cards, and then proceeded to compare each player’s cards to the designated player’s cards, beginning with the player to the dealer’s left. Each winning hand was paid from the chips in front of the designated player. Losing players wagers were placed in front of the designated player.
Throughout play, the dealer used the button the same as the dealers in Florida Hold’em and Pai Gow poker. Contrary to the internal controls, the designated player’s hand did not rotate on a hand-by-hand basis.
The operation of the designated-player tables on December 7, 2015, was typical of the operation of the games on most days. The Jacksonville cardroom opens at 10:00 a.m. and the facility usually opens six designated-player tables.
Ms. Giardina testified that the number of designated players who enter the facility always corresponds with the number of tables opened by the management. The designated players always sit at seat eight, always operate with at least $30,000 in chips, and always rotate with frequency among the designated player tables. According to David Journey, a Jacksonville poker dealer, the designated players are always the same people.
The videos clearly show that the designated players’ involvement in the games is limited. The designated players make no ante bet, do not handle their cards, do not make any decisions regarding arrangement of their cards, and do not instruct the dealer with regard to any of those decisions. Indeed, the only action observed on the part of the designated players was placing various denominations of chips on the table for the dealer’s convenience in obtaining the rake, and organizing chips paid out to the designated player into stacks at the table and into the trays at seat eight. To characterize those actions as playing the game is a stretch, at best. The banker in a game of monopoly takes a more active role. Clearing Hands
Cardroom dealers are trained to “clear their hands” by turning their outstretched palms up toward the ceiling, then back down to the table. Dealers clear their hands when they first come to a table as well as when they leave. During play, they clear their hands after placing cards into the shuffler (or shoe), after taking the rake, after placing a winning player’s chips in front of him or her, and when exchanging a player’s cash for chips from the imprest tray. It appears to be habit with the dealers observed in the video.
Without exception, the designated players frequently cleared their hands, especially after handling and organizing
chips in the trays in front of them. Some of them cleared their hands upon taking their seat at the table.
The designated players at Jacksonville are industry insiders, perhaps as dealers at other facilities.
Approval of the Games
Jacksonville argues that the Division approved the games and is, thus, estopped from bringing the instant Administrative Complaint.
The Division did approve Jacksonville’s internal controls for each of the games, but the games were not being played according to those internal controls.6/
Jacksonville argues that, in addition to its internal controls, the Division approved the games in the specific manner in which they were being played on December 7, 2015.
Jacksonville is not the first or only cardroom in Florida to offer designated-player games. Jacksonville modeled its games after other cardrooms which were offering the games before Jacksonville began offering the games.
Jacksonville leased the games from SHFL Entertainment (formerly known as Shuffle Master), a manufacturer of casino game products. Infrastructure obtained from SHFL Entertainment (also known as “collateral on the floor”) included the tables and shuffling machines.
Along with its games, SHFL Entertainment provides written rules and procedures. Respondent introduced in evidence a letter from Daniel Russell, an attorney for SHFL Entertainment, dated February 8, 2013, to Dewayne Baxley, the Division’s then-chief of auditing. The letter reads as follows:
On behalf of my client, SHFL Entertainment, attached hereto please find (1) a detailed description of a cardroom game entitled ‘Three Card Poker’ and (2) a computer disk containing a video which documents the method by which the game ‘Three Card Poker’ is played.
If you have any questions or require additional information, please do not hesitate to contact me at your earliest convenience.
Attached to the letter is a three-page document with the
SHFL Entertainment logo titled “Three Card Poker: Florida Card Room Version Rules & Procedures.”
The procedures include the following notable provisions:
The player/dealer position rotates in a systematic and continuous way so the deal does not constantly remain with a single person.
Player/dealer’s [sic] are never required to cover all opposing players’ wagers. The house never participates as a player/dealer. The house never takes a percentage of the wagers placed in the game.
The rules and procedures are similar in some respects to Jacksonville’s internal controls for three-card poker which
were approved by the Division. But, they differ in some regards. For example, the SHFL Entertainment rules specify the game is to be played with an automatic card shuffling device with two standard 52-card decks. Jacksonville’s internal controls specify dealing from a 52-card deck.
No credible evidence was introduced on which the undersigned could find that the Three-Card Poker rules and procedures submitted on February 8, 2013, by SHFL Entertainment, were ever approved in any manner by the Division.
Next, Jacksonville introduced two email exchanges between John Lockwood, Respondent’s counsel,7/ and Jason Maine, the Division’s then-chief attorney.
The first email exchange was initiated on May 21, 2015, by Mr. Lockwood, and reads, “Jason, I have attached rules of play for pai gow poker. This is a designated player game we would like to offer in Florida. Please let me know when you have time to discuss.” The exhibit did not include the attachment.
Mr. Maine responded to Mr. Lockwood’s email on
June 23, 2015, as follows: “John, [p]lease review these issues identified in your Pai Gow Poker game submission.”
The exhibit includes the referenced attachment, which reads, as follows:
A dice cup is used to determine the first active position and all action proceeds clockwise from this position.
The designated player position rotates in a systematic and continuous way unless all players pass the designated player position. The house never participates as a designated player.
There is no jackpot component to this game-please verify all wagers imposed.
Because the exhibit does not include the rules of play reviewed by Mr. Maine (and other Division staff), it is impossible to conclude that they correspond with the approved internal controls for Jacksonville’s Pai Gow poker games. However, the email exchange is evidence that the Division was on notice that Florida cardrooms would be “passing the button” only to eligible designated players at Pai Gow tables.8/ Further, Jacksonville’s approved internal controls for Pai Gow poker state, “[t]he designated player position rotates in a systematic and continuous way unless all players eligible to be the
Designated Player pass the designated player position.”
The second email exchange is in reference to the rules of game play for Florida Hold’em, and was originated by
Mr. Lockwood on June 23, 2015. The email reads, “Jason, I made some minor revisions. Ultimately, I don’t think we need the sentence referencing ‘in action.’ It is duplicative based upon the existing rules governing qualification and the player’s hand exceeding the designated player’s hand.”
The exhibit does not include the particular rules of play which are being revised, but the inference is that the rules provided by SHFL Entertainment were being reviewed.
Mr. Maine responded to Mr. Lockwood’s email on July 7, 2015, as follows:
I have had the opportunity to review your submission of rules of game play for ‘Florida Hold’em.’ The game, as described, appears to be in compliance with present law from section 849.086, Florida Statutes, and Chapter 61D-11, Florida Administrative Code.
‘Florida Hold’em’ may be played only in a licensed cardroom, operated by a pari-mutuel permitholder, pursuant to section 849.086, Florida Statutes. If a licensed cardroom operator elects to offer your cardroom game, the Division will need notification of such through the cardroom operator’s internal control procedures, in accordance with Chapter 61D-11, Florida Administrative Code.
The email is insufficient to establish that the Division pre-approved the particular way the game of Florida Hold’em was played at Jacksonville when the game opened in
September 2015. The email reiterates that the facility’s internal controls would govern operation of the game at a particular cardroom.
Game Demonstrations/Training
In August 2015, what was alternately referred to at final hearing as a “meeting” and a “training,” took place at Jacksonville. This gathering was requested by Senator Robert Bradley, chair of the Senate Committee on Regulated Industries.
The gathering was attended by Senator Bradley and some Senate staff members; Jamie Shelton, Jacksonville’s president; Ms. Giardina; Mr. Journey; Jonathan Zachem, the Division director; Lou Trombetta, Division counsel; and Mr. Taylor.
The participants toured the Jacksonville cardroom floor, then proceeded to a training room in the back where a training table was set up. At least some of the participants played two to three hands of each of the designated-player games. Ms. Giardina recalled discussing the rules of play, the wagers and odds, the seat position of the designated player, and “taking chips from that person seated at the table.”9/
Jacksonville management also explained the process for approving designated players, including background checks.
In September 2015, the Division conducted a training on designated-player games for Division investigators. The training was conducted by Mr. Trombetta. Mr. Taylor attended
with his partner, Tony McDowell. The participants played a hand or two of each of the designated-player games to familiarize the investigators with the games being played in the cardrooms in their region. Mr. Taylor consistently described the training as a “general overview” of the games.
Mr. Taylor is the Division investigator whose territory includes Jacksonville. He visits Jacksonville roughly once a week and observes games in play at the cardroom. Thus, Mr. Taylor visited Jacksonville and observed the games in play approximately 11 times between the date Jacksonville began offering the games and December 7, 2015.
Mr. Taylor was in the Jacksonville cardroom on December 7, 2015, and obtained the surveillance videos which formed the basis of the instant Administrative Complaint.
While Mr. Taylor testified that the designated-player games he observed at Jacksonville on December 7, 2015, were played “in the same manner” as the games were played in the training sessions in August and September 2015, he admitted on cross-examination that the play was not identical. One key difference was that during training, the designated player did not get up and leave during play only to be replaced by a different designated player. When discussing the rules of game play, there was no mention of charging a rake five times greater for a second designated player to participate.
The designated-player games introduced as Joint Exhibits A through I, were not operated in a manner in which the players play against each other. The designated players were not playing the games at all. The designated players merely served as a warm body to do no more than watch over the chips from which winnings were paid and to which losses were credited. Mr. Journey testified, credibly, that the designated players’ only role is to watch the money. In essence, the designated players were the keepers of the bank against which the other players were playing.
Ms. Giardina pointedly highlighted how little difference there is between the way a house-banked game is played in Las Vegas and the way designated-player games are played at Jacksonville, as follows: “The difference is the dealer is reaching over and paying out of a different stack. So it’s different.”10/
CONCLUSIONS OF LAW
Authority
The Division of Administrative Hearings has jurisdiction of the subject matter and the parties to this proceeding. §§ 120.569 and 120.57(1), Fla. Stat.
“[I]t is well established that the legislature has broad discretion in regulating and controlling pari-mutuel wagering and gambling under its police powers.” Div. of Pari-
Mutuel Wagering, Dep't of Bus. Reg. v. Fla. Horse Council, Inc.,
464 So. 2d 128, 130 (Fla. 1985). Thus, the Division has the authority to “conduct investigations and monitor the operation of cardrooms and the playing of authorized games therein,” as well as “[s]uspend or revoke any license or permit, after hearing, for any violation of the provisions of this section[.]”
§§ 849.086(4)(b) and (d), Fla. Stat.
Legal Standards
Section 849.086(12)(a), which forms the basis for the violations alleged in Counts One through Nine of the Administrative Complaint, provides that “[n]o person licensed to operate a cardroom may conduct any banking game or any game not specifically authorized by this section.”
A “banking game” is defined in section 849.086(2) as “a game in which the house is a participant in the game, taking on players, paying winners, collecting from losers, or in which
the cardroom establishes a bank against which participants
play.” (emphasis added).
An “authorized game” is defined as “a game or series of games of poker or dominoes which are played in a nonbanking manner.”
The Division alleges, in Counts One through Nine of the Administrative Complaint, that, on December 7, 2015, Jacksonville
operated banking games or games not specifically authorized by section 849.086.
Section 849.086(6)(c), which forms the basis for Counts 10 through 18 of the Administrative Complaint, provides, in pertinent part, that “[n]o licensed cardroom operator may employ or allow to work in a cardroom any person unless such person holds a valid occupational license.”
A “cardroom operator” is defined in section 849.086(2)(f) as follows:
[A] licensed pari-mutuel permitholder which holds a valid permit and license issued by the division pursuant to chapter 550 and which also hold a valid cardroom license issued by the division pursuant to this section which authorizes such person to operate a cardroom and to conduct authorized games in such cardroom.
Section 849.086(6)(a) requires that
[A] person employed or otherwise working in a cardroom as a cardroom manager, floor supervisor, pit boss, dealer, or any other activity related to cardroom operations while the facility is conducting card playing or games of dominoes must hold a valid cardroom employee occupational license issued by the division. Food service, maintenance, and security employees with a current pari-mutuel occupational license and a current background check will not be required to have a cardroom employee occupational license. (emphasis added).
The Division alleges, in Counts 10 through 18 of the Administrative Complaint, that, on December 7, 2015, Jacksonville
allowed the person in seat eight at tables 71 through 79 to work in Respondent’s cardroom without a valid occupational license.
Burden of Proof
The Division bears the burden of proving the specific allegations of fact that support the charges alleged in the Administrative Complaint by clear and convincing evidence.
§ 120.57(1)(j), Fla. Stat.; Dep’t of Banking & Fin., Div. of Sec. and Inv. Prot. v. Osborne Stern & Co., 670 So. 2d 932 (Fla.
1996); see also Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); Fox v. Dep’t of Health, 994 So. 2d 416 (Fla. 1st DCA 2008); Kany
v. Fla. Eng'rs Mgmt. Corp., 948 So. 2d 948 (Fla. 5th DCA 2007);
Dieguez v. Dep’t of Law Enf., Crim. Just. Stds. & Training Comm’n, 947 So. 2d 591 (Fla. 3d DCA 2007); Pou v. Dep’t of Ins.
and Treas., 707 So. 2d 941 (Fla. 3d DCA 1998).
Clear and convincing evidence “requires more proof than a ‘preponderance of the evidence’ but less than ‘beyond and to the exclusion of a reasonable doubt.’” In re Graziano,
696 So. 2d 744, 753 (Fla. 1997). The clear and convincing evidence level of proof:
entails both a qualitative and quantitative standard. The evidence must be credible; the memories of the witnesses must be clear and without confusion; and the sum total of the evidence must be of sufficient weight to convince the trier of fact without hesitancy.
Clear and convincing evidence requires that the evidence must be
found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.
In re Davey, 645 So. 2d 398, 404 (Fla. 1994) (quoting, with
approval, Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983)); see also In re Henson, 913 So. 2d 579, 590 (Fla. 2005).
“Although [the clear and convincing] standard of proof may be met where the evidence is in conflict, it seems to preclude evidence that is ambiguous.” Westinghouse Elec. Corp. v. Shuler Bros.,
590 So. 2d 986, 989 (Fla. 1st DCA 1991).
Section 849.086(12) is penal in nature, and must be strictly construed, with any ambiguity construed against the Division. Penal statutes must be construed in terms of their literal meaning, and words used by the Legislature may not be expanded to broaden the application of such statutes. Elmariah v. Dep’t of Bus. & Prof’l Reg., 574 So. 2d 164, 165 (Fla. 1st
DCA 1990); see also Beckett v. Dep’t of Fin. Servs., 982 So. 2d
94, 100 (Fla. 1st DCA 2008); Whitaker v. Dep’t of Ins., 680 So. 2d 528, 531 (Fla. 1st DCA 1996); Dyer v. Dep’t of Ins. &
Treas., 585 So. 2d 1009, 1013 (Fla. 1st DCA 1991); Davis v. Dep't
of Prof'l Reg., 457 So. 2d 1074, 1076 (Fla. 1st DCA 1984).
Counts One through Nine of the Administrative Complaint
The Division proved the facts underlying Counts One through Nine of the Administrative Complaint by clear and convincing evidence. Jacksonville’s operation of designated- player games is no more than a systematic banking of games in the cardroom. The corporate application requirements, combined with the dual-rake structure, are disincentives to the rotation of the button and participation in the game by truly interested designated players. The result is game play in which employees from an outside corporate designated player sit either idly at racks of chips, or, alternately, organize the chips for the convenience of the dealer in taking the rake and place chips into the racks according to denomination.
Estoppel
Having concluded that the Division proved Jacksonville operated games in a banking manner in violation of section 849.086(12), the issue of estoppel, as raised by Jacksonville, must be addressed.
In its Petition for Formal Administrative Hearing, Jacksonville alleged that “[t]he Division is estopped from prohibiting the Respondent from offering designated player games that were previously approved by the Division.” Respondent’s
argument is that the Division approved the designated-player games before Jacksonville began offering the games, and is thus estopped from changing its position.
It is well established that:
The elements which must be present for application of estoppel are: ‘(1) a representation as to a material fact that is contrary to a later-asserted position;
reliance on that representation; and
a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon.’ As a general rule, estoppel will not apply to mistaken statements of the law, but may be applied to erroneous representations of fact.
Equitable estoppel will apply against a governmental entity ‘only in rare instances and under exceptional circumstances’. . . .
The reasonable expectation of every citizen ‘that he will be dealt with fairly by his government,’ can form the basis for application of equitable estoppel against a governmental entity.
Council Bros. v. City of Tallahassee, 634 So. 2d 264, 266 (Fla. 1st DCA 1994).
Jacksonville must establish more than the usual elements of estoppel. “[A] party seeking to invoke estoppel against the government must establish affirmative conduct by the government going beyond mere negligence; that the government’s act will cause serious injustice; and the imposition of estoppel will not unduly harm the public interest.” Alachua Cnty. v.
Cheshire, 603 So. 2d 1334, 1337 (Fla. 1st DCA 1992) (citations
omitted).
“A positive act on the part of some officer of the state upon which the aggrieved party had a right to rely and did rely to its detriment” must be established by clear and convincing evidence. Assoc. Indus. Ins. Co. v. Dep’t of Labor & Emp. Sec., 923 So. 2d 1252, 1256 (Fla. 1st DCA 2006)(citations
omitted).
The only affirmative conduct on behalf of a representative of the Division to which Respondent can point is the email exchanges between Mr. Lockwood and Mr. Maine regarding the submission of Florida Hold’em and Pai Gow poker to the Division for review in April and May 2015, respectively. In July, Mr. Maine emailed Mr. Lockwood that he had reviewed the rules of game play for the two games and that the games “as described” appear to be in compliance with section 849.086. The emails are insufficient evidence that the games Florida Hold’em and Pai Gow poker, as played on December 7, 2015, were approved by the Division such that it should be estopped from filing the instant Administrative Complaint. The emails do not include the attachments for the undersigned to discern the rules of play described therein.
Even if the rules of play were introduced in evidence and proved to be identical to Jacksonville’s internal controls
approved by the Division for those games, the email representations would not establish affirmative conduct approving the games as they were played on December 7, 2015. The games played on December 7, 2015, were not played consistently with the approved internal controls.
Furthermore, the representations by Mr. Maine that the games “as described” appear to be in compliance with the statute were made in July 2015, prior to Jacksonville’s implementation of its designated-player house rules, dual-rake structure, and approval of any designated-player applications. Thus, the Division had no knowledge at that time that the games would be operated with a single corporate designated player at each table, with no opportunity for the designated-player position to rotate, and with a built-in disincentive for the position to rotate. All of these facts are material to the allegations contained in the Division’s Administrative Complaint. Thus, the emails are not evidence of a representation of material fact that is contrary to the later- asserted position set forth in the Administrative Complaint.
Next, Respondent argues that the Division was well- aware of how the games were being operated throughout Florida (not just at Jacksonville) and was, at least, complicit therein. As such, Respondent argues the Division is estopped from asserting that the operation of the games is contrary to the
statute. Respondent’s argument is based on the totality of the circumstances: (1) the Division’s familiarity with the games being played at other cardrooms under its regulatory authority;
(2) the Division training presented to its inspectors in September; and (3) the Division’s participation in the October “demonstration” of the games at Jacksonville. In essence, Respondent asks the undersigned to connect the dots to reveal a complete picture of estoppel. If the evidence were clear and convincing, connection of the dots would be unnecessary.
Based on the foregoing, the undersigned concludes that the Division made no affirmative representation to Jacksonville that the designated-player games, as played on December 7, 2015 (and, evidently, consistently since it opened the games in September 2015), were approved pursuant to section 849.086. At the most, Respondent proved that the Division was negligent in failing to stop the games as soon as it became apparent that Jacksonville was operating the games in a banking manner. Negligence on the part of the government is insufficient for estoppel to lie. See Cheshire, 603 So. 2d at
1337.
Assuming, arguendo, Respondent proved the Division affirmatively approved the operation of the designated-player games as conducted on December 7, 2015, Respondent would still have to prove that the Division’s change of position would cause
serious injustice, and that the imposition of estoppel would not unduly harm the public. See Id.
As to the issue of injustice, Jacksonville established that it made economic investments of at least
$300,000 and hired 85 employees to get the games up and running at the cardroom. Mr. Shelton established that he would lose
$1 million gross monthly income if the games are shut down.
Respondent’s argument assumes that Jacksonville could not operate designated-player games per se, rendering all the collateral on the floor and personnel involved in designated- player games of no economic value to Jacksonville. That assumption misconstrues the issue. The issue in this case is not whether designated-player games can be played at Jacksonville, but whether the games can be operated specifically as they were being operated at Jacksonville. The evidence does not establish that Jacksonville could not operate designated- player games in a manner consistent with its approved internal controls. No evidence was introduced to demonstrate that operating them in that manner would have a serious negative economic impact on Jacksonville, much less cause a serious injustice.11/
Finally, and more importantly, imposition of estoppel in the instant case would be contrary to the public interest. The cardroom statute provides for strict regulation of
procedures “[t]o ensure the public confidence in the integrity of the cardroom operations.” § 849.086(1), Fla. Stat. Given the strict statutory prohibition against gambling, the intricate regulatory scheme imposed, and the narrow carve out for cardrooms, the games cannot be allowed to continue to operate in the current manner. The basic tenant of the cardroom statute is that authorized games are not casino gaming because the participants “play against each other.” As currently operated, the designated player is a player in name only. The existing operation of the games does no more than establish a bank against which participants play.
Based on the foregoing, the undersigned concludes that the Division is not estopped from maintaining the instant action against Jacksonville based on the allegation that it has allowed the designated-player games to be played in a banking manner.
Counts 10 through 19 of the Administrative Complaint
In counts 10 through 19 of the Administrative Complaint, the Division contends Jacksonville allowed the person in seat eight at tables 71 through 79 to work in Respondent’s cardroom without a valid occupational license.
The Division did not carry its burden with respect to these counts.
The Division contends that the designated players must be licensed pursuant to section 849.086(6)(a), which requires that “a person employed or otherwise working in a cardroom as a
cardroom manager, floor supervisor, pit boss, dealer, or any other activity related to cardroom operations while the facility
is conducting card playing or games of dominoes must hold a valid cardroom employee occupational license issued by the division.” (emphasis added).
The Division has adopted Florida Administrative Code Rule 61D-11.001 to implement section 849.086. The rule defines “activity related to cardroom operations” as
[A]ny and all activities related to the operation of the cardroom, including activities that require a person to come in contact with or work within the cardroom gaming area, all aspects of management, all aspects of recordkeeping, all aspects of administration, all aspects of supervision, and all activities that support the cardroom operation in any way, unless such activity is specifically excluded from this definition.
The definition is broad in scope, but it is not limitless. For an activity to be subject to licensing pursuant to the rule, the activity must be related to, or support, the operation of the cardroom.
The Division proved that the designated players are industry insiders, likely dealers at other locations. However, the role of the designated players at Jacksonville was passive--
not actually playing the games, but rather watching over the chip racks belonging to their corporate employer.
While the Division did prove that, mysteriously, the same number of designated players walk through the door each morning as the number of designated-player tables Jacksonville opens, it is a stretch to conclude those individuals12/ support the “operation of the cardroom,” or otherwise relate to that operation. On the contrary, the evidence supports a conclusion that the designated players themselves are unnecessary for the operation of the games. The evidence cannot support contradictory conclusions that the individual designated players’ activity is both vital to the operation of the cardroom and meaningless to the operation of the games within the cardroom.
Unadopted Rule Pursuant to Section 120.57(1)(e)1.
Finally, Respondent alleged that the Division’s position opposing the designated-player games, as stated in the Administrative Complaint, are agency statements defined as rules in section 120.52(16), which have not been adopted as rules, pursuant to section 120.54(1)(a).13/ If proven, pursuant to section 120.57(1)(e)1., the Division would not be able to rely upon those statements in the instant action determining Jacksonville’s substantial interests.
To prevail on this defense, Respondent must prove that the allegations are “statements of general applicability
which implements, interprets, or prescribes law or policy.”
§ 120.52(16), Fla. Stat.
The Administrative Complaint essentially contains only two allegations. First, in Counts One through Nine, that Respondent “operated a banking game or a game not specifically authorized by [s]ection 849.086, Florida Statutes” at each respective table. Second, in Counts 10 through 18, that “Respondent allowed the person seated in seat 8 at the corner of [each] table . . . to work in Respondent’s cardroom” without a valid occupational license.
At the final hearing, Respondent’s counsel lamented the conclusory nature of the Division’s allegations in the Administrative Complaint.14/ He complained that “they’re saying, you add up all this minutia, and all of a sudden you have a banking game. But none of the minutia is set forth in their administrative complaint.” The Administrative Complaint does not specify that operating the games with a single corporate designated player, who is required to bring a minimum of $30,000 to each table, and who takes no active role in the game, constitutes operating a banking game in violation of 849.086. Perhaps such an allegation would meet the definition of a rule, but that is not the allegation in the operative Administrative Complaint. The allegations can hardly be characterized as
Division statements. They are merely conclusions that Respondent violated the statute on the date in question.
Further, the operative allegations do not implement, interpret, or prescribe law or policy. Having reviewed all the testimony and documentary evidence introduced at final hearing, the undersigned found clear and convincing evidence that the way in which the games were operated did indeed violate 849.086 by establishing a bank against which participants play.
To the extent that the allegations constitute an agency statement, they do not interpret or implement the law. The statements simply reiterate the narrow statutory exemption from the prohibition against casino gambling--card games in which participants play against each other instead of the house. See § 849.086(1), Fla. Stat.
As stated by the First District Court of Appeal in State Board of Administration v. Huberty, 46 So. 3d 1144, 1147
(Fla. 1st DCA 2010):
As we said in St. Francis Hospital, Inc. v. Department of Health and Rehabilitative Services, 553 So. 2d 1351, 1354 (Fla. 1st
DCA 1989):
It is well established that an agency interpretation of a statute which simply reiterates the legislature’s statutory mandate and does not place upon the statute an interpretation that is not readily apparent from its literal reading, nor in and of
itself purport to create certain rights, or require compliance, or to otherwise have the direct and consistent effect of the law, is not an unpromulgated rule, and actions based upon such an interpretation are permissible without requiring an agency to go through rulemaking.
See North Star Assoc., Inc. v. Dep’t of Fin. Servs., Case
No. 11-2433RU (Fla. DOAH July 1, 2011)(agency’s statement that registrations as a claimant’s representative are licenses is apparent from a literal reading of the statute); My Friend Home Care, Inc. v. Ag. for Health Care Admin., Case No. 10-2657RU
(Fla. DOAH July 6, 2010)(agency’s denial of licensee’s renewal application based upon actions occurring within two years of the renewal application date was readily apparent from the plain language of the statute and, thus, not an unadopted rule); cf.
Leonard v. Dep’t of Mgmt. Servs., Case No. 11-1529 (Fla. DOAH Sept. 8, 2011; Fla. DMS Nov. 10, 2011)(agency’s definition of the phrase “active” employment as synonymous with perfect attendance is an interpretation not readily apparent from a literal reading of the statute); Vazquez v. Dep’t of Health,
Case No. 08-0490RU (Fla. DOAH Apr. 9, 2008); aff’d, 11 So. 3d
994 (Fla. 1st DCA 2009)(agency statement that statute imposes a “rebuttable presumption” and establishes what will be considered a “prima facie case” was not a simple reiteration of the
statutory mandate and was, in fact, “contrary to any reasonable interpretation of the statute.”).
Based upon the foregoing, the allegations in the Administrative Complaint are founded upon the literal statutory prohibitions and, thus, Respondent failed to carry its burden with respect to this affirmative defense.
Conclusion
As set forth in the Findings of Fact herein, the Division proved by clear and convincing evidence that, on December 7, 2015, Jacksonville operated cardroom games in a banking manner, or unauthorized games in violation of section
849.086. Thus, the Division proved the allegations in Counts One through Nine of the Administrative Complaint that Jacksonville violated section 849.086.
As set forth in the Findings of Fact herein, the Division failed to prove by clear and convincing evidence that, on December 7, 2015, Jacksonville allowed persons to work at the facility without required occupational licenses. Thus, the Division failed to prove the allegations in Counts 10 through 18 of the Administrative Complaint, which must be dismissed.
The Division seeks an administrative fine of $500 for each count of the Administrative Complaint which is proven by clear and convincing evidence. Due to the precedential nature
of the case, the Division asks the undersigned not to impose any penalty beyond that amount.
Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED that a final order be entered:
DONE AND ENTERED this 1st day of August, 2016, in Tallahassee, Leon County, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 1st day of August, 2016.
1/ The instant case was transferred to the undersigned when it was consolidated with DOAH Case Nos. 16-1008, 16-1010, and 16- 1839, administrative complaints against other pari-mutuel
facilities in Florida. The cases were subsequently severed from Case No. 16-1009 and closed.
2/ The time required to hear the case was significantly shorter than that scheduled because the related cases were severed and closed. The final hearing was conducted on May 31 and June 1, 2016.
3/ The rulemaking notices were also admitted in evidence as Respondent’s Exhibits R23 and R24.
4/ While cardrooms in Florida began offering designated player games prior to 2014, Florida had not previously adopted any rules governing those games.
5/ In response to the discovery request, Jacksonville included an application from Elevated dated December 29, 2015, which Ms. Giardina described as an amendment to its previous application.
6/ Further, as noted above, Jacksonville began offering the games prior to submitting its internal controls to the Division for approval.
7/ Mr. Lockwood represents other cardrooms in Florida in addition to Jacksonville.
8/ While the emails are hearsay, they supplement testimony that the games leased from SHFL Entertainment have to be adapted to meet Florida’s requirements. (T.135:18-136:5 and 187:20- 188:23).
9/ T.186:6-7.
10/ T.164:10-12.
11/ The evidence does suggest that operating the games as per the approved internal controls will likely have an economic impact on Elevated, but that consideration is irrelevant to the issue sub judice.
12/ Petitioner did establish that unidentified persons had access to the non-public elliptical area behind the designated- player tables, and those persons appeared to be making change for the designated players. However, the Administrative Complaint does not allege that Respondent allowed unidentified persons to work in the cardroom without a valid occupational
license. Counts 10 through 19 of the Administrative Complaint are limited to the “person seated in seat 8” at each table.
13/ Respondent did not address this issue in its Proposed Recommended Order, but the record does not establish that Respondent abandoned the issue. The undersigned addresses the issue in an abundance of caution.
14/ Respondent is correct that the allegations are conclusory, but Respondent neither moved for a more definite statement nor requested an order limiting introduction of evidence to specific factual allegations.
William D. Hall, Esquire Department of Business and
John M. Lockwood, Esquire The Lockwood Law Firm Suite 810
Thomas J. Morton, Esquire The Lockwood Law Firm Suite 810
Professional Regulation Capital Commerce Center 2601 Blair Stone Road Tallahassee, Florida 32309 (eServed)
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
