The Issue Whether Respondent violated Sections 849.01, 849.15, and 849.09(1)(k), Florida Statutes, and if so what penalty should be imposed pursuant to Section 561.29, Florida Statutes.
Findings Of Fact Respondent, Christina Market Corporation, d/b/a Christina Sandwich Shop, is located at 4085 East Eighth Avenue, Hialeah, Florida. At all times relevant to this proceeding, Respondent held a Series II, COP license, number 23-2039. Gladys Rodriguez is the president and 100 percent stockholder of Respondent. A Series II, COP license is a license issued by the Division of Alcoholic Beverages and Tobacco to sell beer and wine for consumption on the premises. On March 10, 1992, Leonard H. Delmonte, an investigator for the Miami office of the Division of Alcoholic Beverages and Tobacco conducted an inspection of Respondent's premises. Mr. Delmonte observed five coin-operated poker machines and issued a Notice, warning that the poker machines were in violation of Rule 7A-3.004, Florida Administrative Code. On March 24, 1992, Respondent's premises were again inspected. The poker machines had been removed. Phillip Bidart, a sergeant with the organized crime section of the Hialeah Police Department, investigates violations of Chapter 849, Florida Statutes, as part of his duties with the police department. During the last two years he has investigated approximately 45 to 47 premises for gambling violations. Based on these investigations and professional training, Sergeant Bidart has developed expertise in the identification of devices commonly used in gambling and the investigations of violations of Chapter 849. In September, 1992, Sergeant Bidart observed video game machines at Respondent's premises. Later in September or October, 1992, he went in the establishment and saw a Bosconian video game machine which displayed an El Dorado Super Seven game on the screen and saw patrons playing the machine. In December, 1992, Sergeant Bidart sent two detectives to Respondent's establishment. They observed remote control type video game machines. One of the detectives played one of the machines and lost. In January, 1993, the Hialeah police raided an establishment near Respondent and found gambling machines. Shortly thereafter, the police visited Respondent's business and the video games machines previously observed in the fall of 1992 were gone. In late January or early February 1993, Sergeant Bidart observed people playing the video game machines at the Respondent's establishment. He believed that they were gambling because they were adults and were playing after nine o'clock at night. On February 6, 1993, Sergeant Bidart and other Hialeah police officers raided Respondent's business. There were no patrons in the establishment at the time of the raid. The police found and seized three video game machines: a Bosconian, a Mario Brothers, and a Chop-Lifter. Each machine had a coin slot and a paper currency slot which was located on the side of the machine and not in the same area as the coin slot. It is a common characteristic of gambling devices to contain such currency slots. A video gambling machine usually has a meter on the machine which shows the number of credits accumulated by a player. The owners can reset the machine by hitting a button which zeroes out the credit. The El Dorado Super Seven game found on Respondent's premises had such a reset button. During the raid the police also found a remote control on a shelf behind the counter. When one of the top three buttons was pushed, the Bosconian game screen turned into an El Dorado screen and the Mario Brothers screen turned into a Winner's Circle screen. The Chop-Lifter machine was not working; however Ms. Rodriguez advised Sergeant Bidart that the Chop-Lifter screen could be changed to a Cherry Bonus screen by the use of the remote control. A remote control is a device that is commonly used in gambling establishments to change the screens on video machines in order to mask game screens that are used for gambling. When an El Dorado Super Seven game is being played, three columns each containing three items will form three rows, each row containing three items. If three of the same items come up, vertically, horizontally, or diagonally, the player gets credits. El Dorado Super Seven games also have a high-low game which can be played as a bonus. Sergeant Bidart tested the El Dorado game by putting $20 in the machine and playing up to 110 credits. No skill was involved in playing the game. Sergeant Bidart turned on the Winner's Circle game and tested it by putting money in the currency slot. The game is a horse race with eight horses which run across the screen, and the player is supposed to bet on a horse. Sergeant Bidart was not certain how a player was supposed to win so he did not play the game. Based on his experience and training, he concluded that the Winner's Circle is a game of chance commonly used in gambling establishments, and that the screen on the Winner's Circle game was consistent with other Winner's Circle games that he had observed. At the time of the raid, the Bosconian/El Dorado machine contained $1.50 and the Mario Brothers/Winners Circle contained $8.00. There was no money in the Chop-Lifter machine. Ms. Rodriguez told Sergeant Bidart that she had emptied the money from the machines just prior to the raid. During the raid, the police found a blue bank deposit bag containing $1,116.00 in Ms. Rodriguez's purse. Ms. Rodriguez told the police that she had collected the money from the video game machines and that approximately $100 represented the receipts from the music machine. At the time of the raid Ms. Rodriguez said that Tokyo Video owned the machines and collected the money from the machines each week. She gave 40 percent of the receipts to Tokyo Video and kept the remaining 60 percent. She admitted that she had had the machines for three months and that her average net receipt was $300 per week. The police also found yellow slips of paper in Ms. Rodriguez's purse. Ms. Rodriguez told Mr. Bidart that the slips were some of the slips that Tokyo Video gives to her to show how much money she makes on the machines. She gives the slips to her accountant who records the take from the machines as sales. She pays the appropriate tax and normally destroys the slips after reporting the amounts to her accountant. One of the slips is dated 9-29-92 and the other is dated 12-15-92. The other slip is undated. Based on Ms. Rodriguez's admission that the slips show her split with Tokyo Video on the machines, it is concluded that the names under the heading "Modelo Equipo," "Caballo", "Dorado" and "C. Bonus" refer to the Winner's Circle game, the El Dorado game, and the Chop-Lifter game. The slips show that credits were deducted from the amounts that were put in the machines to arrive at the net amounts that would be due Respondent and Tokyo Video. Tally sheets are used in gambling establishments to record payouts to the owners. In the video game gambling business a credit usually represents 25 cents. Tally sheets record the number of credits and games played on the machine. The net due the owners is calculated by dividing the total credits by four. The yellow slips of paper found in Ms. Rodriguez' purse at the time of the raid are tally sheets. Normally, owners of bars with gambling machines will keep records on the premises which show how much they have paid out to players on a particular day or show specific wins. The police also found three sales books. The books contain some pages with names and dates written at the top and had cash entries from 5 to 200. Most of the entries are for 200. Several entries are for an individual named Felix showing cash payments to him. One of the books shows a drawing resembling an El Dorado Super Seven screen when all 7's come up, with the exclusion of the two side scores from the center. The drawing shows three 7's horizontally across the top and across the bottom and three 7's vertically in the center. Above the drawing are the words, "Pago a Felix $2,812.50 Cash." Underneath the drawing is the notation "32 Bet" and underneath that is "11,250 Credit" with an arrow going from the 11,250 to the $2,812.50 above the drawing. The police also found a composition book which contains one page with dollar amounts in two columns titled "pago" and "calro maq." Ms. Rodriguez told Sergeant Bidart that she knew the machines were illegal but that since numerous bars in Hialeah and Opalocka had them she was going to have them too.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding Respondent guilty of violating Sections 849.01, 849.15, and 849.09(1)(k), Florida Statutes and revoking Respondent's alcoholic beverage license No. 23-02039, series 2-COP. DONE AND ENTERED this 29th day of November, 1993, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of November, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-2969 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the Petitioner's proposed findings of fact: Petitioner's Proposed Findings of Fact. Paragraphs 1, 2, and 3 accepted in substance. Paragraph 4 accepted in substance with the exception of the last sentence. The evidence did not show that Sgt. Bidart testified as an expert witness in the six trials. Paragraphs 5 and 6 accepted in substance. Paragraph 7 accepted in substance with the exception of the third to last sentence. Sgt. Bidart stated that he was not exactly sure how a winner is determined in the Winner's Circle game and that is why he did not play the game. Paragraph 8 accepted in substance with the exception of the proposed finding that an El Dorado game would become a poker game. Sgt. Bidart testified that an El Dorado game would become a High-Low game as a bonus. Paragraph 9 accepted in substance with the exception of the title of the game as "Cherry Blossom." Sgt. testified that Ms. Rodriguez admitted the machine could display a Cherry Bonus game. Paragraphs 10, 11 and 12 accepted in substance. Paragraph 13 accepted in substance with the exception of the next to last sentence which is rejected to the extent that it infers that the method of calculation described Sgt. Bidart was admitted by Ms. Rodriguez. She admitted the slips were used to show how much money she received, but not how her 60 percent share was calculated. Paragraphs 14, 15 and 16 accepted in substance. COPIES FURNISHED: Miguel Oxamendi, Esquire Assistant General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Emmanuel Perez 2121 Ponce de Leon Boulevard, Suite 240 Coral Gables, Florida 33134 Jack McRay Acting General Counsel Department of Business Regulation 1940 North Monroe Street Tallahassee, Florida 32399 John J. Harris Acting Director Department of Business Regulation 1940 North Monroe Street Tallahassee, Florida 32399
Findings Of Fact Petitioner designs, manufactures, and sells the "Little Casino" video game machine. The machine is designed to enable a player, through the insertion of either one or two quarters, to play one of four games: poker, high-low, blackjack, or craps. The machine contains two switches which enable the owner to control the cost per game, whether 25 cents or 50 cents per game. Upon deposit of the appropriate amount of money, the player of the game receives 10,000 points to play the selected game. If the operator utilizes the entire 10,000 points in less than four hands or rolls, the game is over. If, however, the operator earns or wins 100,000 points by the conclusion of the fourth hand or roll, a free fifth hand or roll is allowed. If the operator earns 200,000 points by the conclusion of the fifth hand or roll, a free sixth hand or roll is allowed. The player of the game is allowed no more than six hands or rolls in the chosen game, regardless of the number of points scored. Depending upon the game option selected, cards or dice appear on the video screen. So far as can be determined from the record in this cause, the dealing of the cards or roll of the dice is entirely determined by the programming of the machine, and the player is wholly unable to control or influence the initial selection of cards or the roll of the dice. Little Casino does not allow free replays, does not accumulate free replays, and makes no permanent record of free replays. The game is not classified by the United States as requiring a federal gambling tax stamp under any applicable provisions of the Internal Revenue Code. The machine can be set to eliminate what Respondent considers to be the objectionable fifth and sixth hands.
The Issue The issues for disposition in this case are whether proposed rules 61D-11.001(17) and 61D-11.002(5), Florida Administrative Code, which consist of the repeal of said rules, constitute an invalid exercise of delegated legislative authority as defined in section 120.52(8), Florida Statutes; and whether the Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering’s (Respondent), failure to prepare a statement of estimated regulatory costs constituted a material failure to follow the applicable rulemaking procedures or requirements set forth in chapter 120.
Findings Of Fact Respondent is the state agency charged with regulating pari-mutuel wagering pursuant to chapter 550, Florida Statutes, and cardrooms pursuant to section 849.086, Florida Statutes. Each Petitioner currently holds a permit and license under chapter 550 to conduct pari-mutuel wagering and a license under section 849.086 to conduct cardroom operations. Petitioners offer designated player games at their respective cardrooms. The rules proposed for repeal, rules 61D-11.001(17) and 61D-11.002(5), relate to the play of designated player games. Rule 61D-11.001(17) provides that “‘[d]esignated player’ means the player identified by the button as the player in the dealer position.” Rule 61D-11.002(5) provides that: Card games that utilize a designated player that covers other players’ potential 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 table in a clockwise fashion on a hand to 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. Both rules were adopted on July 21, 2014. Both rules list sections 550.0251(12), and 849.086(4) and (11) as rulemaking authority, and section 849.086 as the law implemented. Designated Player Games A designated player game is a subset of traditional poker games in which a designated player plays his or her hand against each other player at the table, instead of all players competing against each other. The term “designated player game” is used synonymously with “player banked games.”3/ However, a designated player is not a cardroom operator. In traditional “pool” poker games, each player bets into a central pool, with the winning hand(s) among all of the players collecting from the pool of bets, minus the cardroom rake. In designated player games, each player at the table makes an individual bet, and compares their hand against the designated player’s hand. If the player’s hand is better than the designated player’s hand, then the designated player pays the player from the designated player’s stack of chips. If the designated player’s hand is better than the player’s hand, then the designated player collects the player’s wager. At an eight- seat table, it is as though there are seven separate “player versus designated player” games. Designated player games were first played at the Ebro (Washington County Kennel Club) cardroom in 2011. The game, known as “double hand poker,” was demonstrated to Respondent, and subsequently approved for play. Though the internal control that describes the rules of game play was not offered in evidence, a preponderance of the evidence demonstrates that the game used a designated player. After Respondent’s approval of Ebro’s double hand poker, Respondent entered an order rescinding its approval due to concerns that the use of a designated player resulted in the establishment of a banking game. That decision was challenged, and subsequently withdrawn, with the result being that “Ebro may immediately resume play of Double Hand Poker as approved by the division.” In 2012, the Palm Beach Kennel Club cardroom began offering “tree card poker” with a designated player. Although tree card poker had been approved by Respondent, the designated player element had not. Thus, since the game was not being played in accordance with the approved internal control, it was unauthorized. Respondent investigated the playing of tree card poker at Palm Beach Kennel Club. A video demonstration was provided that showed two hands of tree card poker being played with a designated player. The video depicted a single designated player playing his hand against each other player at the table, and paying or collecting wagers based on each individual hand. After having reviewed the demonstration video, Respondent ultimately determined that the use of a designated player did not violate the prohibition against banking games as defined. The Adoption of the Designated Player Rules As requests for approval of internal controls for games using designated players became more common, Respondent determined that it should adopt a rule to establish the parameters under which designated player games would be authorized. On December 16, 2013, after having taken public comment at a series of rulemaking workshops, Respondent published proposed rule 61D-11.002(5) which provided as follows: 61D-11.002 Cardroom Games. * * * Card games that utilize a designated player that covers other players’ wagers shall: Allow for only one designated player during any single hand; Not require the designated player to cover all wagers that could be made by the other players in the game; Not allow other players to cover wagers to achieve winnings that the designated player could have won had he or she covered the same wagers; Not allow or require a player to buy in for a different amount than any other player in the game in order to participate as the designated player; and Rotate a button or other object to designate which player is the designated player. The button or other object shall rotate clockwise around the table to give each player the opportunity to participate as the designated player. On February 14, 2014, a challenge to the proposed rule was filed that objected to restrictions on the manner in which designated player games could be conducted. The rule challenge hearing was continued, and the case placed in abeyance pending negotiations between the parties. On March 14, 2014, Respondent filed a Notice of Change to the proposed rule 61D-11.002, which added the following provisions to proposed rule 61D-11.002: The designated player shall: Cover the table minimum for each participating player; and Pay each player an amount above the table minimum equal to their pro rata share of the pot in the event the designated player cannot cover all wagers. A public hearing on the changes to the proposed rule was held on May 8, 2014. As to the designated player provisions of the proposed rule, Respondent received the following comment: [I]f we could modify this . . . taking the existing paragraph 5 and come up with three new criteria, one being uniform requirements for a designated player included within the house rules; allowing for the dealer button to rotate on a hand-by-hand basis for qualified designated players; also, not requiring the designated player to cover all potential wagers, but nonetheless allowing the house rules to set a designated minimum buy-in amount or just a chip count. I think if we had those particular parameters, we would allow the preservation of this game to continue in its current fashion . . . . And . . . we’re going to avoid [] any argument that the department has somehow created a banked card game, because the biggest thing here is that we’re not requiring that the designated player meet all the theoretical payouts of the game. On May 19, 2014, written comments were submitted on behalf of several pari-mutuel facilities. Those comments included proposed language that is identical to the rule that was ultimately adopted, and included the following: Multiple jurisdictions have determined a key element to banked card games is the house requiring all wagers be covered. We propose this language to distinguish between lawful games and impermissible banked games. On June 9, 2014, Respondent filed a Notice of Change that adopted the industry’s proposed language, and changed proposed rule 61D-11.002 to its present form. On June 13, 2014, the challenge to proposed rule 61D-11.002(5) was voluntarily dismissed, and the case was closed. On July 21, 2014, rule 61D-11.002(5) became effective. There can be little doubt that Respondent understood that it was, by its adoption of rule 61D-11.002(5), recognizing player banked games in which a designated player plays his or her hand against each other player at the table. The rule is substantial evidence that, as of the date of adoption, Respondent had determined that designated player games did not violate the prohibition against “banking games” as that term is defined in section 849.086. Internal Controls Over the course of several years, beginning generally in 2011 and extending well into 2015, Respondent was presented with internal controls from cardrooms around the state for playing designated player games. Internal controls are required before a particular game may be offered, and describe the rules of the game and the wagering requirements. The internal controls submitted by the Jacksonville Kennel Club; the Daytona Beach Kennel Club; the West Flagler Associates/Magic City Poker Room; and the Naples/Ft. Myers Greyhound Track Cardroom, described games in which designated players played their hand against those of the other players at the table, and paid and collected wagers from the designated player’s chip stack based on the rank of the designated player’s hand against the individual players. The games described did not involve pooled wagers, and clearly described player banked games. Respondent approved the internal controls for each of the four facilities. The process of approving internal controls occasionally included the submission of video demonstrations of the games described in the internal controls for which approval was being sought. Approval of internal controls was never done without the review and assent of Respondent’s legal department or the division director. With regard to the rules of the designated player games that underwent review and approval by Respondent, “all of them are about the same, few differences.” From 2011 through mid-2015, Respondent approved internal controls for playing one-card poker, two-card poker, three-card poker, Florida Hold ‘Em, and Pai Gow poker using designated players at numerous cardroom facilities. A preponderance of the evidence establishes that Respondent was aware of the fact that, for at least several facilities, “eligible” designated players were required to meet minimum financial criteria, which ranged from a minimum of $20,000 in chips, up to $100,000 in chips. In the case of the Daytona Beach Kennel Club cardroom, internal controls called for a designated player to submit an application, agree to a background check, and submit a deposit of $100,000. Respondent approved those internal controls. DBPR Training In August 2015, Mr. Taylor was invited by the Bestbet cardroom in Jacksonville4/ to participate in a training session it was offering for its employees. Mr. Taylor is an investigator for Respondent, and visited the pari-mutuel facilities at least once per week. Mr. Taylor was invited by the facility to get an overview of how the cardroom games that had been approved by Respondent, including designated player games, were played. The games that were the subject of the training were substantially similar to those depicted in the April 2012 training video, and those he had observed during his weekly inspections. The designated player games for which training was provided had been approved by Respondent. In September 2015, training in designated player games was provided at Respondent’s Tallahassee offices to several of its employees. Mr. Taylor perceived the training “as an overview to give us an idea of what we are going to see.” Neither Mr. Taylor nor any other participant in the training offered any suggestion that the training was being provided in anticipation of a shift in Respondent’s practice of approving the internal controls for designated player games. Current Rulemaking On September 23, 2014, Respondent published a Notice of Development of Rulemaking. The notice cited 15 of the 30 subsections of chapter 61D-11 as being the subject areas affected by the notice, and provided that “[t]he purpose and effect of the proposed rulemaking will be to address issues discovered in the implementation and practical application of cardroom rules adopted on July 21, 2014.” There is nothing in the notice to suggest that Respondent had modified its position on designated player games, and its continued approval of institutional controls approving such games is strong evidence that it had not. On August 4, 2015, Respondent published a Notice of Meeting/Workshop Hearing for a rule workshop to be held on August 18, 2015. The Notice listed each rule in chapter 61D-11 as the “general subject matter to be considered,” including those related to games of dominos. Respondent asserted that it had “posted a version of amended cardroom rules that included the [repeal of rule 61D-11.005] on its website,” though such was not published, nor did Respondent provide a record citation in support of its assertion. On October 29, 2015, Respondent published its proposed amendments to chapter 61D-11. Rule 61D-11.001(17), which defines the term “designated player” as “the player identified by the button as the player in the dealer position,” was proposed for repeal. Rule 61D-11.002(5), as set forth above, which had established the standards for designated player games, was proposed for repeal. Rule 61D-11.005 was proposed for amendment to add subsection (9), which provided that “[p]layer banked games, established by the house, are prohibited.” On December 2, 2015, the Division held a public hearing on the proposed amendments. During the public hearing, Mr. Zachem made it clear that the intent of the proposed amendments was to change the Division’s long-standing and consistently applied construction of section 849.086 as allowing designated player games to one of prohibiting designated player games, and in that regard stated that: The rules pertaining to designated player games are now going to be correlated with the statute that is the prohibition against designated player games. The statute does not allow designated player games. There has to be a specific authorization for a type of game in statute, and there is none in 849.086 pertaining to designated player games . . . . When some of these definitions in other areas were created, I don’t think that the concept of what these games could even become was fathomed by the division. Given the process by which internal controls for designated player games were approved by Respondent, including written descriptions and video demonstrations of play, the suggestion that Respondent could not “fathom” the effect of its rules and decisions is not accepted. On December 11, 2015, Petitioners individually filed petitions challenging the validity of the proposed rules. The cases were consolidated and ultimately placed into abeyance pending efforts to resolve the issues in dispute. Agency Action Concurrent with Rulemaking After the December 2015 public hearing, and prior to the adoption of any amendments to chapter 61D-11, Respondent filed a series of administrative complaints against cardrooms offering designated player games. Those administrative complaints were very broadly worded, and reflected Respondent’s newly-developed position that designated player games constituted “a banking game or a game not specifically authorized by Section 849.086, Florida Statutes.” In that regard, Mr. Zachem testified that a cardroom could have been operating in full compliance with its Respondent-approved internal controls and still have been the subject of an administrative complaint.5/ The position of Respondent was made clear by Mr. Zachem’s statement that if a cardroom has an approved designated player game “where a banker is using their table, their dealer, their facility they [the cardroom] are establishing a bank.”6/ Thus, there can be little doubt that Respondent now construes section 849.086 to mean that player banked games constitute prohibited “banking games” because, by allowing the player banked game in its facility, the cardroom “establishes” a bank against which participants play. After the December public hearing, Ms. Helms was instructed that she was to no longer approve internal controls if they included provisions regarding designated players. That blanket instruction came with no conditions. Since that instruction, the internal controls for at least one facility have been disapproved, despite their being “about the same” as internal controls that had been previously approved for other facilities. Ms. Helms testified that after the December 2015 rule hearing, “things kind of turned around” with regard to Respondent’s position on designated player games. She then rethought her selection of words, stating instead that “things changed.” Given the totality of the evidence in this case, Ms. Helms’ statement that the position of Respondent towards designated player games “turned around” is the more accurate descriptor. Notice of Change On January 15, 2016, the Division published a Notice of Change/Withdrawal of proposed rules. Through the issuance of this notice, the Division withdrew proposed rule 61D-11.005(9). The proposed repeal of rules 61D-11.001(17) and 61D-11.002(5) remained unchanged. Since that notice of change, the preponderance of the evidence demonstrates that Respondent has stopped approving internal controls that propose the offering of designated player games, and has continued to take action against facilities that offer designated player games. Respondent’s statements and actions, including those made in the course of this proceeding, demonstrate that Respondent intends the repeal of rules 61D-11.001(17) and 61D-11.002(5), to effectuate the prohibition of designated player games despite the withdrawal of proposed rule 61D-11.005(9). Lower Cost Regulatory Alternative When it proposed the subject amendments to rule 61D-11 on October 29, 2014, Respondent had not prepared a statement of estimated regulatory costs. Rather, the notice of proposed rule provided that: The agency has determined that this rule will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the agency. The agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: the economic review conducted by the agency. Any person who wishes to provide information regarding the statement of estimated regulatory costs, or to provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice. On November 19, 2015, in conjunction with the rulemaking process described above, a number of licensed cardroom operators, including some of the Petitioners, timely submitted a good faith proposal for a lower cost regulatory alternative (“LCRA”) to the proposed amendments to chapter 61D-11 that would have the effect of prohibiting designated player games, citing not only the creation of rule 61D-11.005(9), but the repeal of rule 61D-11.002(5). A preponderance of the evidence demonstrates that the LCRA indicated that the rule was likely to directly or indirectly increase regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. The LCRA, as described in the letter of transmittal, also concluded that regulatory costs could be reduced by not adopting the proposed rule amendments, thus maintaining Respondent’s previous long-standing interpretation of section 849.086, and thereby accomplishing the statutory objectives. Respondent employed no statisticians or economists, and there was no evidence to suggest that any such persons were retained to review the LCRA. Though Mr. Zachem did not “claim to be an expert in statistics,” he felt qualified to conclude that the LCRA was “a bit of a challenging representation.” Thus, Respondent simply concluded, with no explanation or support, that “the numbers that we received were unreliable.” Respondent did not prepare a statement of estimated regulatory costs or otherwise respond to the LCRA. Respondent argues that its abandonment of proposed rule 61D-11.005(9), which was the more explicit expression of its intent to prohibit designated player games, made the LCRA inapplicable to the rule as it was proposed for amendment after the January 15, 2016, notice of change. That argument is undercut by the fact that Respondent did not amend its statement of estimated regulatory costs as a result of the change in the proposed rule. Moreover, the evidence is overwhelming that Respondent, by its decision to disapprove internal controls that included designated player games, and its enforcement actions taken against cardrooms offering designated player games, specifically intended the amendments repealing the designated player standards to have the effect of prohibiting designated player games. Thus, despite the elimination of the specific prohibition on designated player games, there was no substantive effect of the change. Therefore, the LCRA remained an accurate expression of Petitioners’ estimated regulatory costs of the proposed rule. Ultimate Findings Respondent has taken the position that the repeal of rule 61D-11.005(9) was undertaken “[f]or clarity with the industry.” That position is simply untenable. Rather, Respondent has taken an activity that it previously found to be legal and authorized and, by repealing the rule and simply being silent on its effect, determined that activity to be prohibited. By so doing, Respondent has left it to “the industry” to decipher the meaning and effect of a statute that is, quite obviously, ambiguous and in need of the interpretive guidance that has been and should be provided by rule. The evidence is conclusive that, by its repeal of rule 61D-11.002(5), Respondent simply changed its mind as to whether playing with a designated player constituted the establishment of a prohibited banking game.7/ It previously determined that such games were lawful under the terms of section 849.086; it has now determined they are not. Though there is substantial evidence to suggest that the reason for the change was related to the renegotiation of the Seminole Compact, the reason is not important. What is important is that Respondent has taken divergent views of the statute in a manner that has substantially affected the interests of Petitioners. For Respondent to suggest that its repeal of the rules is a clarification, a simplification, or a reflection of the unambiguous terms of the statute, and that Petitioners should just tailor their actions to the statute without any interpretive guidance from Respondent, works contrary to the role of government to provide meaningful and understandable standards for the regulation of business in Florida. Respondent cannot, with little more than a wave and well-wishes, expect regulated businesses to expose themselves to liability through their actions under a statute that is open to more than one interpretation, when the agency itself has found it problematic to decipher the statute under which it exercises its regulatory authority.
The Issue The issue presented is whether Respondent is guilty of the allegations in the Administrative Complaint filed against him, and, if so, what disciplinary action should be taken against him, if any.
Findings Of Fact At all times material hereto, Respondent Clivalee Mundle was the holder of a slot machine occupational license issued by the State of Florida and numbered 7937616-1051. That license expired June 30, 2008, and has not been re-issued. At all times material hereto, Respondent was employed as a slot supervisor at The Isle Casino and Racing at Pompano Park, a licensed Florida pari-mutuel and slot machine facility located in Pompano Beach, Florida. On November 16, 2007, a senior attendant reported to the slot chip manager an incident involving Respondent. She reported that she had gone to the cage service window to use the computer. The cage is where the money is held in a casino. She reported that while she was there, Respondent came in and began assisting her. When he reached into his coat, a $100 bill fell out and onto the floor. She placed her foot next to the bill and asked Respondent if it were his. Respondent picked it up and acted, in her opinion, nervous. Employees at the casino are instructed to keep their own money in their wallets and to not have loose cash on them when they are on the casino floor. They are also instructed to keep any casino money in sight so that the money surveillance cameras can track it. Based upon the report he received, the slot chip manager contacted surveillance personnel and requested them to view the surveillance videos that recorded the incident. Upon doing so, those employees reported to him that Respondent had earlier obtained a $100 bill from the cage to pay out a jackpot on slot machine A-50-02 but that he subsequently never went to that machine to do so. Further, the videos showed that the jackpot on that machine had already been paid before Respondent obtained the $100 bill he obtained from the cage. Based upon that surveillance report, the slot chip manager viewed surveillance videos from prior dates. The review of the surveillance videos revealed the following transactions. On November 8, 2007, Respondent was at the cage service window filling out a paid-out cash slip to obtain a $100 bill when the slot chip manager came in. Rather than completing what he was doing, Respondent folded the form and put it in his pocket. Later that day, he turned in the paid-out slip and received a $100 bill. The form he filled out stated that he needed the money to settle a guest dispute. However, he never gave the money to anyone between the time he obtained it and the time he left the casino at the end of his shift. The surveillance videos for November 9, 2007, show Respondent filling out a paid-out slip at the cage, receiving a $100 bill, and concealing that bill inside a piece of paper in his coat pocket. The slip he filled out represented that he was obtaining the money for a guest dispute at machine A-15-05. Later that same day, he filled out another cage slip for a jackpot pay-out at machine A-50-08. When he received the $100 bill requested, he put it under a piece of paper on a clipboard. Surveillance videos showed that the jackpot on that machine had been paid out before Respondent obtained the $100. Surveillance videos did not show Respondent giving either of those $100 bills he obtained on November 9 to anyone in the casino. The videos show that on November 13, 2007, Respondent paid a jackpot to a customer who then gave Respondent her player's card. Respondent took her player's card to the player's card window, had a discussion with the attendant, and then returned to the player and returned her card. He then went to the cage service area, filled out a cage paid-out slip for $100 for guest satisfaction, placed the $100 underneath papers on a clipboard, and left the cage area. Between that time and the end of his shift, Respondent did not give that money to anyone. None of the monies Respondent obtained from the casino cage as described in the above Findings of Fact was used for a legitimate business purpose. Respondent failed to complete the transactions for which he allegedly received the monies. Rather, Respondent retained these monies for his own use. Respondent admits to dropping the $100 bill on November 16, 2007. His explanation is that he had previously left the casino and had picked up some relatives and taken them to his home. He stated that the $100 bill was given to him by one of those relatives so he could pick up formula and diapers on his way home. The surveillance videos do not show Respondent leaving the casino or returning prior to the incident. On November 29, 2007, Respondent was terminated from his employment by the casino. On February 7, 2008, The Isle Casino and Racing at Pompano Park issued to Respondent a Notice of Barrment [sic], which barred Respondent from the premises of the casino permanently.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered (1) finding Respondent guilty of the allegations in the Administrative Complaint filed against him, (2) excluding Respondent from all facilities of all slot machine licensees in the State of Florida, and (3) finding Respondent ineligible for a slot machine occupational license. DONE AND ENTERED this 11th day of February, 2009, in Tallahassee, Leon County, Florida. S LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of February, 2009. COPIES FURNISHED: Clivalee Mundle 4689 Northwest 22nd Street Coconut Creek, Florida 33063 David Perry, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 40 Tallahassee, Florida 32399-2202 Ned Luczynski, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street, Suite 40 Tallahassee, Florida 32399-2202 David J. Roberts, Director Division of Pari-Mutuel Wagering Department of Business and Professional Regulation 1940 North Monroe Street, Suite 40 Tallahassee, Florida 32399-2202
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner is a Florida corporation that was at all times material to the instant case (but is no longer) in the coin-operated machine business. It owned various amusement and game machines that were placed at different locations pursuant to agreements with the location operators. Most of these agreements were not reduced to writing. In those instances where there was a written agreement, a "Location Lease Agreement" form was used, with insertions made where appropriate in the spaces provided. The form indicated, among other things, that Petitioner was "in the business of leasing, renting, servicing, maintaining and repairing of coin-operated machines" and that the agreement was "for the placement, servicing and maintaining of certain coin-operated machines" in the location specified in the agreement. In the coin-operated machine trade, the custom was for the parties to an oral or written agreement for the placement of an amusement or game machine on the property of another to treat such an agreement as involving the location operator's rental of the machine owner's tangible personal property rather than the machine owner's rental of the location operator's real property. Petitioner and the location operators with whom it contracted followed this custom of the trade in their dealings with one another. They construed their agreements as involving the rental of Petitioner's tangible personal property by the location operators and acted accordingly. Petitioner collected from the location operators the sales tax due on such rentals and remitted the monies collected to Respondent. 1/ It engaged in this practice for approximately a decade without challenge by Respondent. In late 1990 and early 1991, Respondent conducted an audit of Petitioner's records. The audit covered the period from January 1, 1988, to September 30, 1990 (referred to herein as the "audit period"). Among the records reviewed were those agreements between Petitioner and location operators that were reduced to writing. Based upon their reading of these agreements, the auditors were of the view that the agreements into which Petitioner had entered were actually for the rental of the location operators' real property, not the rental of Petitioner's machines. They therefore concluded that Petitioner, as opposed to the location operators, should have paid sales tax and that Petitioner's purchase of machines and parts should not have been treated as tax exempt. The assessment which is the subject of this proceeding thereafter issued.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Revenue enter a final order withdrawing the assessment that is the subject of the instant proceeding. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 23rd day of November, 1992. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of November, 1992.
