STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WASHINGTON COUNTY KENNEL CLUB, ) INC.; HARTMAN-TYNER, INC.; ) SOUTHWEST FLORIDA ENTERPRISES, ) INC.; AND ST. PETERSBURG KENNEL ) CLUB, INC., )

)

Petitioners, )

)

vs. )

) DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, )

DIVISION OF PARI-MUTUEL )

WAGERING, )

)

Respondent. )

Case No. 06-0164RP

)

FINAL ORDER

Pursuant to notice a formal hearing was held in this case on February 14, 2006, in Tallahassee, Florida, before J. D. Parrish, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A. Post Office Box 551

Tallahassee, Florida 32302-0551

For Respondent: Ralf E. Michels, Esquire

Stefan Thomas Peavey Hoffer, Esquire Department of Business and

Professional Regulation Division of Pari-Mutuel Wagering 1940 North Monroe Street Tallahassee, Florida 32399-2202

STATEMENT OF THE ISSUE

Whether the proposed repeal of Rule 61D-11.027, Florida Administrative Code, is an invalid exercise of delegated legislative authority because the repeal has the effect of creating or implementing a new rule or policy.

PRELIMINARY STATEMENT

The Petitioners, Washington County Kennel Club, Inc.; Hartman-Tyner, Inc.; Southwest Florida Enterprises, Inc.; and St. Petersburg Kennel Club, Inc., (Petitioners) filed a petition challenging the repeal of Rule 61D-11.027, Florida Administrative Code, on January 13, 2006. The Petitioners have alleged that the repeal of Rule 61D-11.027, Florida Administrative Code, entitled “Tournaments,” constitutes the creation or implementation of a new agency rule or policy.

Accordingly, as a matter of law, the Petitioners claim such repeal must be set aside as a contravention of the provisions of law originally implemented by the rule. See Federation of Mobile Owners of Florida, Inc. v. Florida Manufactured Housing, 683 So. 2d 586 (Fla. 1st DCA 1996); Osterback v. John O. Agwunobi, as Secretary of the Department of Health, 873 So. 2d

437 (Fla. 1st DCA 2004).

To the contrary, the Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, (Respondent or Agency) maintains that the repeal of the rule was

necessary to resolve the issue of how to conduct tournaments within the statutory guidelines. It is unclear as to whether the Respondent will engage in additional rule-making or not. The Respondent asserts that the Agency has broad authority to promulgate rules and must ensure that cardroom operations conform to the dictates of Florida law. The Respondent contends that the Agency must take additional measures to evaluate the effects of the Final Order entered in DOAH Case No. 04-2950RX (affirmed by the Florida First District Court of Appeal) to assure that the cardroom activities conform to statutory mandates regarding bets and raises.

At the hearing, the Petitioners presented testimony from David Tiano and Royal Logan. The deposition testimony of Jim Hakemoller was also submitted on behalf of the Petitioners. The Petitioners’ Exhibits (a) through (j), (q),(v), and (x) (as identified on the parties’ Prehearing Stipulation) and 1, 2, and

3 were admitted into evidence. The Respondent’s Exhibit (a) has been admitted into evidence. The transcript of the proceedings was filed with the Division of Administrative Hearings on

March 6, 2006. Thereafter, the parties timely filed Proposed Final Orders that have been fully considered in the preparation of this order.

FINDINGS OF FACT

1. The Florida Legislature enacted Section 849.086,

   Florida Statutes, in 1996. The law authorized the establishment of “cardrooms” at licensed pari-mutuel facilities and dictated the parameters by which games may be conducted at such facilities.

2. In essence, the cardrooms conduct games wherein the players compete against one another. The participants do not wager against “the house.” Instead, the house, that is, the pari-mutuel facility, conducts the games in a non-banking manner. This means the house does not have a financial interest in the outcome of the game(s). For purposes of this case, it is determined that the players who win share fractions of the “pot” created by the entry fees paid to participate in the game(s).

3. The Petitioners in this cause are licensed facilities that have operated cardrooms. Each Petitioner holds a pari- mutuel wagering permit and a valid cardroom license.

4. The Respondent is the state agency charged with the responsibility of administering Section 849.086, Florida Statutes (2005).

5. Section 849.086, Florida Statutes, was amended in 2003 by Section 4, Chapter 2003-295, Laws of Florida. The 2003 amendment imposed a $2.00 bet limitation, with a maximum of three raises per round of betting. This change to the statute required the Respondent to revisit the rules governing cardrooms

   and, more specifically, the concept of poker “tournaments” being conducted at pari-mutuel facilities.

6. To that end, and after extensive rule-making proceedings, the Respondent adopted rules that were incorporated in Florida Administrative Code Chapter 61D-11. The Respondent intended for the rules to address concerns regarding the $2.00 bet and raise limitations as well as how “re-buys” might affect or potentially allow a violation of such provisions. A “re-buy” describes when a card player is allowed to purchase more chips from the house during a game(s).

7. Florida Administrative Code Rule 61D-11.027 was adopted on May 9, 2004. It was then challenged by pari-mutuel facilities who alleged the rule encompassed more than the statute authorized. Such challenge (DOAH Case No. 04-2950RX), was granted. The Final Order found that the rule (Florida Administrative Code Rule 61D-11.027(2)(a)) exceeded the Agency’s grant of rulemaking authority, modified the specific law implemented, and was arbitrary. Accordingly, the Final Order (DOAH Case No. 04-2950RX) determined that the rule violated Subsections 120.52(8)(b), (c), and (e), Florida Statutes.

8. The Florida First District Court of Appeal affirmed the Final Order by a Per Curiam decision issued on October 28, 2005.

9. Thereafter, the Respondent proceeded with the emergency repeal of the tournament rule in its entirety and issued an

   advisory letter to all cardroom license holders. The Respondent represented that it cannot reconcile the holding of the court with the explicit language of Section 849.086(8), Florida Statutes (2005). At the hearing, the Respondent represented that additional rulemaking will be necessary.

10. The Respondent does not dispute that tournaments are permissible under the statute. Moreover, the parties agree that prior to the rule, repeal tournaments were conducted using tokens or chips that did not have value.

11. Tournaments were played at licensed cardroom facilities during the period commencing in May 2004 through November 9, 2005. During that time (the period the rule was in effect) counties, cities, and the state received income from the monies remitted by the cardroom facilities. Additionally, the cardrooms employed persons to work the facilities to conduct the various games.

12. After the repeal of the rule, revenues from the cardrooms decreased substantially. Similarly, the cardrooms did not need the number of employees as games were not being conducted. Tournaments at the St. Petersburg Kennel Club have not been conducted since January 17, 2006.

13. From November 2005 through January 17, 2006, the tournaments at the St. Petersburg Kennel Club were conducted using chips or tokens that had “fractional value.” The

    “fraction” did not correspond to the entry fee charged for the tournament. It is not known whether or not re-buys during the tournaments were allowed.

14. The Respondent issued a Memorandum to Pari-Mutuel General Managers at Cardroom Facilities and Cardroom Managers on January 12, 2006, that provided in part:

    In light of the recent ruling by the First District Court of Appeals, the Division’s administrative rules regarding tournaments have been repealed on an emergency basis, and are scheduled to be repealed permanently. The Division distributed a memorandum to all cardroom operators regarding Clarification of Cardroom Tournament Rules and Jackpots on November 9, 2005. The Division has also expressed on numerous occasions a serious concern of cardroom operators issuing chips in a fashion that does not represent an even value exchange for money in an attempt to circumvent the $2 bet and three raise limitation outlined in Chapter 849.086(8)(b), Florida Statutes.

    [Italics in original.]

    
    

15. The November 9, 2005, Memorandum referred to in paragraph 14 above provided, in pertinent part:

    This memorandum is intended to clarify issues regarding the recent ruling by the First District Court of Appeals which affirmed an earlier ruling of the Division of Administrative Hearings (DOAH). The DOAH ruling found that various cardroom rules, which were challenged by Dania Jai Alai and Calder Race Course, are invalid. These rules addressed tournaments, jackpots, the Division’s approval of games, and gifts that enable play in an authorized game. As a

    result of the ruling, today the Division filed emergency rules to ensure that tournaments are played in compliance with the bet limitation of Section 849.086(8)(b), Florida Statutes.

    
    

    * * *

    
    

    The Final Order that was affirmed by the First District Court of Appeals invalidated the Division’s rules regarding entry fees, re-buys and single table tournaments. The judge held that tournament play is authorized by the cardroom statute.

    Therefore, cardrooms may set their own entry fees and allow re-buys in tournaments and hold single table tournaments.

    
    

    * * *

    
    

    Unauthorized activity, such as conducting wagering on tournaments that does not conform with the wagering restrictions found in Section 849.086(8)(b), Florida Statutes, or offering of jackpots or gifts that do not comply with the requirements that cardrooms be operated in strict conformity with the statute as required by Section 849.086(3), Florida Statutes, may result in disciplinary action.

    
    

16. The memorandums identified above did not change or modify the Respondent’s position regarding whether tournaments are legal or permitted by the statute. To the contrary, the memorandums merely advised the cardroom facilities that they would be held to the statutory standard regarding wagering and that jackpots and gifts would be prohibited.

17. Prior to the appeal of the rule, the Respondent routinely approved tournaments that were based upon the

    following scheme: A participant paid a $32 buy-in and paid the house $13 for the fee to conduct the tournament. Then the participant received a number of no-value chips that were used to play a multiple number of games of poker. At the end of the designated time, number of games, or whenever the designated end occurred (on the same day of play), winners were announced based upon the number of chips they held. Participants were “ranked” and awarded cash prizes from the pot of entry fees.

18. The $32 entry fee was a mathematical calculation thought to assure that no participant would violate the statute’s bet and raise limitations. Whether or not the “all in” concept violated the statute was not considered as the chips were deemed to have no value in and of themselves. This “no value” chip was a fiction that the Respondent supported as, in theory, the $32 player buy-in comported with a mathematical calculation that was within the statutory guideline. The payouts were determined based upon the number of participants and were set by percentage with the first place person receiving the largest payout.

19. Additionally, participants under the approved scheme were not allowed re-buys. That assured that all participants started with the same number of chips and had the same “betting” potential.

20. Finally, winners were not paid or could not receive prizes outside the “pot” created by the entry fees. A nominal gift (such as a T-shirt) was not considered a violation. Prizes such as giant television sets or vacations were not acceptable. All winnings were to be paid from the buy-in fees and all buy-in fees were to be returned to the players in winnings.

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings. §§ 120.56, and 120.57(1), Fla. Stat. (2005).

22. The Petitioners have standing to bring this challenge (Prehearing Stipulation).

23. Section 489.086, Florida Statutes (2005), provides, in pertinent part:

    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.

       
       

    2. DEFINITIONS.--As used in this section:

       1. "Authorized game" means a game or series of games of poker which are played in a nonbanking manner.

       2. "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.

       3. "Cardroom" means a facility where authorized card games are played for money or anything of value and to which the public is invited to participate in such games and charged a fee for participation by the operator of such facility. Authorized games and cardrooms do not constitute casino gaming operations.

       
       

       * * *

       
       

       (g) "Division" means the Division of Pari- mutuel Wagering of the Department of Business and Professional Regulation.

       
       

       * * *

       
       

       (i) "House" means the cardroom operator and all employees of the cardroom operator.

       
       

       * * *

       
       

    3. 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.

       
       

    4. 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:

       1. 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.

       2. Conduct investigations and monitor the operation of cardrooms and the playing of authorized games therein.

       3. Review the books, accounts, and records of any current or former cardroom operator.

       4. 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.

       5. Take testimony, issue summons and subpoenas for any witness, and issue subpoenas duces tecum in connection with any matter within its jurisdiction.

       6. 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.

* * *

(8) METHOD OF WAGERS; LIMITATION.-- (a) 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.

(b) 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.

* * *

(12) PROHIBITED ACTIVITIES.--

(a) No person licensed to operate a cardroom may conduct any banking game or any game not specifically authorized by this section. [Emphasis Added.]

1. Section 120.52, Florida Statutes (2005), provides in part:

   (2) "Agency action" means the whole or part of a rule or order, or the equivalent, or the denial of a petition to adopt a rule or issue an order. The term also includes any denial of a request made under s.120.54(7).

   
   

   * * *

   
   

   1. "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:

      1. The agency has materially failed to follow the applicable rulemaking procedures or requirements set forth in this chapter;

      2. The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(3)(a)1.;

      3. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(3)(a)1.;

      4. The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency;

      5. 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;

   
   

   * * *

   
   

   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.

   * * *

   
   

   (15) "Rule" means each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency and includes any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule. The term also includes the amendment or repeal of a rule. [Emphasis Added.]

   
   

2. Section 120.54, Florida Statutes (2005), provides in part:

   1. GENERAL PROVISIONS APPLICABLE TO ALL RULES OTHER THAN EMERGENCY RULES.--

      1. Rulemaking is not a matter of agency discretion. Each agency statement defined as a rule by s. 120.52 shall be adopted by the rulemaking procedure provided by this section as soon as feasible and practicable.

         1. Rulemaking shall be presumed feasible unless the agency proves that:

            1. The agency has not had sufficient time to acquire the knowledge and experience reasonably necessary to address a statement by rulemaking;

            2. Related matters are not sufficiently resolved to enable the agency to address a statement by rulemaking; or

            3. The agency is currently using the rulemaking procedure expeditiously and in good faith to adopt rules which address the statement.

         2. Rulemaking shall be presumed practicable to the extent necessary to provide fair notice to affected persons of relevant agency procedures and applicable principles, criteria, or standards for agency decisions unless the agency proves that:

            1. Detail or precision in the establishment of principles, criteria, or standards for

               agency decisions is not reasonable under the circumstances; or

            2. The particular questions addressed are of such a narrow scope that more specific resolution of the matter is impractical outside of an adjudication to determine the substantial interests of a party based on individual circumstances.

      2. Whenever an act of the Legislature is enacted which requires implementation of the act by rules of an agency within the executive branch of state government, such rules shall be drafted and formally proposed as provided in this section within 180 days after the effective date of the act, unless the act provides otherwise.

      3. No statutory provision shall be delayed in its implementation pending an agency's adoption of implementing rules unless there is an express statutory provision prohibiting its application until the adoption of implementing rules.

      4. In adopting rules, all agencies must, among the alternative approaches to any regulatory objective and to the extent allowed by law, choose the alternative that does not impose regulatory costs on the regulated person, county, or city which could be reduced by the adoption of less costly alternatives that substantially accomplish the statutory objectives.

      5. No agency has inherent rulemaking authority, nor has any agency authority to establish penalties for violation of a rule unless the Legislature, when establishing a penalty, specifically provides that the penalty applies to rules.

      6. An agency may adopt rules authorized by law and necessary to the proper implementation of a statute prior to the effective date of the statute, but the rules may not be effective until the statute upon which they are based is effective. An agency may not adopt retroactive rules, including retroactive rules intended to clarify existing law, unless that power is expressly authorized by statute.

      7. Each rule adopted shall contain only one subject.

      8. In rulemaking proceedings, the agency may recognize any material which may be judicially noticed, and it may provide that materials so recognized be incorporated into the record of the proceeding. Before the record of any proceeding is completed, all parties shall be provided a list of these materials and given a reasonable opportunity to examine them and offer written comments or written rebuttal.

      9. 1. A rule may incorporate material by reference but only as the material exists on the date the rule is adopted. For purposes of the rule, changes in the material are not effective unless the rule is amended to incorporate the changes. A rule may not be amended by reference only. Amendments must set out the amended rule in full in the same manner as required by the State Constitution for laws. The Department of State may prescribe by rule requirements for incorporating materials by reference pursuant to this paragraph.

         
         

         * * *

         
         

         5. After a rule has become effective, it may be repealed or amended only through the rulemaking procedures specified in this chapter.

         
         

         * * *

         
         

         (4) EMERGENCY RULES.--

         1. If an agency finds that an immediate danger to the public health, safety, or welfare requires emergency action, the agency may adopt any rule necessitated by the immediate danger. The agency may adopt a rule by any procedure which is fair under the circumstances if:

            1. The procedure provides at least the procedural protection given by other statutes, the State Constitution, or the United States Constitution.

            2. The agency takes only that action necessary to protect the public interest under the emergency procedure.

            3. The agency publishes in writing at the time of, or prior to, its action the specific facts and reasons for finding an immediate danger to the public health, safety, or welfare and its reasons for concluding that the procedure used is fair under the circumstances. In any event, notice of emergency rules, other than those of educational units or units of government with jurisdiction in only one or a part of one county, including the full text of the rules, shall be published in the first available issue of the Florida Administrative Weekly and provided to the committee. The agency's findings of immediate danger, necessity, and procedural fairness shall be judicially reviewable.

         2. Rules pertaining to the public health, safety, or welfare shall include rules pertaining to perishable agricultural commodities or rules pertaining to the interpretation and implementation of the requirements of chapters 97-102 and chapter

            105 of the Election Code.

         3. An emergency rule adopted under this subsection shall not be effective for a period longer than 90 days and shall not be renewable, except during the pendency of a challenge to proposed rules addressing the subject of the emergency rule. However, the agency may take identical action by the rulemaking procedures specified in this chapter.

         4. Subject to applicable constitutional and statutory provisions, an emergency rule becomes effective immediately on filing, or on a date less than 20 days thereafter if specified in the rule, if the adopting agency finds that such effective date is necessary because of immediate danger to the public health, safety, or welfare.

         
         

         * * *

         (7) PETITION TO INITIATE RULEMAKING.--

         1. Any person regulated by an agency or having substantial interest in an agency rule may petition an agency to adopt, amend, or repeal a rule or to provide the minimum public information required by this chapter. The petition shall specify the proposed rule and action requested. Not later than 30 calendar days following the date of filing a petition, the agency shall initiate rulemaking proceedings under this chapter, otherwise comply with the requested action, or deny the petition with a written statement of its reasons for the denial.

         2. If the petition filed under this subsection is directed to an existing rule which the agency has not adopted by the rulemaking procedures or requirements set forth in this chapter, the agency shall, not later than 30 days following the date of filing a petition, initiate rulemaking, or provide notice in the Florida Administrative Weekly that the agency will hold a public hearing on the petition within 30 days after publication of the notice. The purpose of the public hearing is to consider the comments of the public directed to the agency rule which has not been adopted by the rulemaking procedures or requirements of this chapter, its scope and application, and to consider whether the public interest is served adequately by the application of the rule on a case-by-case basis, as contrasted with its adoption by the rulemaking procedures or requirements set forth in this chapter.

         3. Within 30 days following the public hearing provided for by paragraph (b), if the agency does not initiate rulemaking or otherwise comply with the requested action, the agency shall publish in the Florida Administrative Weekly a statement of its reasons for not initiating rulemaking or otherwise complying with the requested action, and of any changes it will make in the scope or application of the unadopted rule. The agency shall file the statement

         with the committee. The committee shall forward a copy of the statement to the substantive committee with primary oversight jurisdiction of the agency in each house of the Legislature. The committee or the committee with primary oversight jurisdiction may hold a hearing directed to the statement of the agency. The committee holding the hearing may recommend to the Legislature the introduction of legislation making the rule a statutory standard or limiting or otherwise modifying the authority of the agency.

         
         

3. Section 120.56, Florida Statutes (2005), provides in part:

   1. GENERAL PROCEDURES FOR CHALLENGING THE VALIDITY OF A RULE OR A PROPOSED RULE.--

      1. Any person substantially affected by a rule or a proposed rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority.

      2. The petition seeking an administrative determination must state with particularity the provisions alleged to be invalid with sufficient explanation of the facts or grounds for the alleged invalidity and facts sufficient to show that the person challenging a rule is substantially affected by it, or that the person challenging a proposed rule would be substantially affected by it.

         
         

4. As the party asserting the affirmative, the Petitioners bear the burden of proof in this matter to establish that the repeal of the rule is an invalid exercise of delegated legislative authority. See 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). As defined, “an invalid exercise of legislative authority” requires that the Petitioners assert and prove that the Agency has materially failed to follow one of the standards set forth in the statute.

5. In this case, the Petitioners did not allege or prove that the applicable rulemaking procedures or requirements were not followed. Thus, whether the Agency followed the applicable rulemaking criteria is not at issue.

6. Similarly, whether the Agency exceeded its grant of rulemaking authority by repealing the tournament rule was not alleged or established.

7. Thirdly, the repeal of the rule did not enlarge, modify, or contravene the specific provisions of law governing tournaments as the Agency has continued to acknowledge that tournaments are permitted under the statute. The repeal of the rule did nothing to alter that position.

8. Next, the rule challenge standard of whether the repeal is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the Agency (not specifically alleged but implied by the evidence presented) remains at issue.

9. And lastly, whether the repeal is arbitrary or capricious, the cornerstone of the Petitioners’ argument,

   continues to be debated. These latter arguments are more fully addressed below.

10. First, as to whether the repeal of the rule is vague or fails to establish adequate standards for agency decisions or vests unbridled discretion in the Agency, the Petitioners have not shown that the Respondent has changed its position regarding the underlying statutory guidelines for tournaments. From its inception, the tournament rule was devised to allow cardroom facilities the opportunity to conduct tournaments. The entry fee was created and calculated to allow for a no-value tournament chip whereby the Agency could allow tournaments to be conducted without presuming a violation of the bet restrictions imposed by the statute. The Agency sought to allow tournaments that would provide structure and comply with the legislated mandates of the law. The no re-buy provision kept the calculated entry fees within a computed fiction that the bet restrictions would not be violated. When the re-buy provision was found to be invalid, the rule had to be revisited in order to clarify how the no value chips could work and still not defeat the intent and unambiguous language of the statute. The repeal of the tournament rule merely put the parties back where they had been prior to the invalidation of the rule. In this sense, the cardroom facilities have all the statutory authority to conduct games, including tournaments, that they had prior to

    the tournament rule. The burden now, however, is on the cardroom facilities to assure that the bet restrictions are met. In reality, the chips do have value if they are purchased, re- purchased, and continue to add to the pot. The $32 fiction established by the rule no longer applies. How the cardroom facilities might choose to structure the purchase of chips so that the bet restrictions can be met is unknown.

11. Secondly, the Agency has not acted arbitrarily or capriciously. To prevail on this claim, the Petitioners must establish that the decision was taken without thought or reason, or irrationally or despotically, or that it was not supported by facts or logic. See Agrico Chemical Co. v. Department of Environmental Regulation, 365 So. 2d 759 (Fla. 1st DCA 1978). The Agency has articulated a reasonable explanation for why the tournament rule was repealed. The Respondent does not assert that tournaments cannot be conducted. Tournaments may be conducted and, on a case by case basis, will have to be reviewed to assure the statutory guidelines regarding bets are not violated. Would a rule clarify the procedure? Undoubtedly. Is the repeal of the tournament rule that proved to be flawed (based upon the Final Order and appellate decision) arbitrary or capricious? Not under the circumstances of this case.

12. Finally, the remedy for all parties to this matter may be more appropriately found elsewhere. First, should the

Respondent adopt a policy of general applicability such that it constitutes a rule under Section 120.52, Florida Statutes (2005), such policy may be challenged pursuant to Section 120.56(4), Florida Statutes (2005). Additionally, should the Department seek to pursue an Administrative Complaint against a cardroom facility for conducting a tournament, the licensee has a Final Order affirmed on appeal to support the statutory authority for tournaments. Alternatively, pursuant to Section 120.54(7), Florida Statutes (2005), any person regulated by an agency or having a substantial interest in an agency rule may petition an agency to adopt, amend, or repeal a rule or to provide the minimum public information required by the chapter. Clearly, the Petitioners herein have just such an interest.

Rulemaking is presumed feasible unless the agency can show it has not had sufficient time to acquire the knowledge and experience reasonably necessary to address the matter. See

§ 120.54(1), Fla. Stat. (2005).

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the Petitioners’ challenge to the repeal of the tournament rule is denied.

S

DONE AND ORDERED this 12th day of May, 2006, in Tallahassee, Leon County, Florida.

J. D. PARRISH Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 12th day of May, 2006.

COPIES FURNISHED:

David J. Roberts, Director Division of Pari-Mutuel Wagering Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Josefina Tamayo, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Simone Marstiller, Secretary Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Harold F. X. Purnell, Esquire Rutledge, Ecenia, Purnell &

Hoffman, P.A. Post Office Box 551

Tallahassee, Florida 32302-0551

Ralf E. Michels, Esquire

Stefan Thomas Peavey Hoffer, Esquire Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-2202

NOTICE OF RIGHT TO JUDICIAL REVIEW

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.

Docket for Case No: 06-000164RP

Orders for Case No: 06-000164RP