Findings Of Fact Based upon the evidence adduced at hearing, the stipulations of the parties, matters officially recognized 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 (hereinafter referred to as the "industry 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 a routine audit (Audit No. 90-19801486) of Petitioner's records. The audit covered the period from January 1, 1988, to September 30, 1990 (referred to herein as the "audit period"). The Department's auditors are, for the most part, college-trained accountants. While they receive Department-sponsored training in the general procedures and standards they are expected to adhere to in conducting their audits, they are not provided with training and information regarding the trade customs and practices that are unique to particular industries or businesses they audit. The Department auditors who conducted the audit of Petitioner's records reviewed, among other things, those agreements between Petitioner and location operators that were reduced to writing. Based upon their reading of these agreements, the auditors erroneously, yet not unreasonably given the imprecise contractual language used, believed 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, in light of then existing provisions of Rule 12A-1.044, Florida Administrative Code (hereinafter referred to as the "Rule"), 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. In March of 1991, the Department sent Petitioner a Notice of Intent to Make Sales and Use Tax Audit Changes for the audit period based upon the auditors' findings. The Notice advised Petitioner of its right to meet with the Department and discuss these findings made by the auditors. Petitioner requested such a meeting. The meeting was held on May 7, 1991, in Tallahassee. Petitioner's attorney, Marie A. Mattox, Esquire, represented Petitioner at the meeting. Mattox was accompanied by Robert Matthews, one of Petitioner's officers. The Department was represented by the head of the its Bureau of Hearings and Appeals and several other employees. Mattox and the Department representatives discussed the contents of the written agreements the auditors had reviewed. During the discussion, Mattox reminded the Department representatives of the "industry custom." 2/ In addition, she brought to their attention that the agreements under review involved amusement and game, not vending, machines. The meeting lasted only approximately ten minutes. Mattox and Matthews left the meeting with the impression, based upon the comments made by the Department representatives, that the matter would be resolved in Petitioner's favor. To their surprise, on May 23, 1991, the Department issued a Notice of Proposed Assessment in which it announced its intention, based upon Audit No. 90-19801486, to issue an assessment against Petitioner in the amount of $238,780.06 for taxes owed (plus penalty and interest) for Petitioner's alleged use, during the audit period, of real property in connection with its coin- operated machine business. The Notice of Proposed Assessment contained a statement advising Petitioner of its right to protest the Department's proposed action. Mattox, on behalf of Petitioner, responded to the Notice of Proposed Assessment by sending a letter, dated July 22, 1991, to the Department's General Counsel. In her letter, Mattox advised the General Counsel that Petitioner was contesting the proposed assessment and made the following argument in support of Petitioner's position that the Department had made "an error:" This tax has been assessed apparently because of a misunderstanding on the part of the auditors as to the arrangements under which Lauren, Inc. conducts business. As I am sure you are aware, under Rule 12A-1.004, Florida Administrative Code, there are various arrange- ments and agreements through which amusement and game machine owners conduct business. The first arrangement is where the machine owner rents the real property upon which the machine is located from the location owner. Under this arrangement, the machine owner pays a "lease fee" to the location owner, which fee is subject to sales and use tax. Under this arrangement, the location owner collects tax upon the lease fee and remits said tax to the state. The second arrangement through which amusement and machine owners conduct business is where the machine is rented by the location owner. Under this scenario, the machine owner acts as tax collector for the State and submits sales and use tax paid on the "rental fee" paid to the machine owner by the location owner. On March 25, 1991, Carmen R. Cordoba, C.P.N., Audit Group Supervisor with the Department of Revenue, wrote to Mr. Matthews indicating that the Department was construing the arrangement under which Mr. Matthews operated to be a lease of real property as opposed to the rental of personal property. Specifically, the Department stated the following: "we found them to be agreements to lease space to place the vending machines." To the contrary, Mr. Matthews' agreements are not for the rental of real property. Instead, he rents his personal property (the amusement and game machines) to the various locations. Under this scenario, Mr. Matthews is responsible for collecting sales and use tax on the rental fee paid to him and transmitting the sales and use tax thereon to the Department of Revenue. Apparently, the Department of Revenue has assessed an additional use tax on the payments made to the location owners where the Department has construed that Lauren, Inc. "rents space" for the machines. An additional tax has been assessed on the purchase of the machines, purchases of parts, etc... because the Department found that he was not renting these machines. This is simply in error. The Department has specified that Lauren, Inc. must refund all taxes collected from the location owners where Lauren, Inc., purportedly "rents space." At that point, Lauren, Inc. can apply for a refund on the taxes paid by Lauren, Inc. on the rental of the personal property. It is my opinion that this is a simple misunderstanding by the Department of Revenue staff as not under- standing the arrangements made by Lauren, Inc. in conducting its business with various location owners. On July 25, 1991, Mattox sent a copy of this letter to the Disposition Section of the Department's Bureau of Hearings and Appeals. By letter dated September 6, 1991, the Administrator of the Sales Tax Appeals Section of the Department's Bureau of Hearings and Appeals gave notice that Mattox's July 22, 1991, letter, had "been accepted for review as a qualifying protest." On November 13, 1991, a Notice of Decision was issued denying the protest. The nature of the protest was described in the Notice of Decision as follows: Lauren, Inc. is protesting the assessment of use taxation for the rental of real property involving the following situations: Taxation of purchases of vending machines, repairs and purchasers [sic] of parts; and Tax erroneously collected to be reimbursed to customers/landlords and taxpayer to request a refund from D.O.R. The following were set forth in the Notice of Decision as the "facts" pertinent to the protest: This is a first time audit of the taxpayer. The taxpayer is a full service vending machine business. The taxpayer has furnished representative con- tracts between his business and the location owners where his machines are placed. The specifics of the contracts are discussed below. According to the agreement, the taxpayer "installs, operates, services, and maintains coin operated machines on the proprietor's premises." The taxpayer has collected tax from location owners on their share of the proceeds, which he refers to as "rentals of the machine" to the location owners. The contract provides for the location owner to provide a space for the vending machines. It makes no reference whatsoever to a lease of the machine to the location owner. The taxpayer collects the money from the machines, and when applicable, also provides and owns the merchandise. The Notice of Decision contained the following discussion and analysis of the "law and [Petitioner's] argument:" You argue in the letter of protest that the Lauren, Inc. lease agreements are for the rental of personal property (the vending machines) to various locations. You state that "Mr. Matthews is responsible for collecting sales and use tax on the rental fee paid to him and transmitting the sales and use tax thereon to the Department of Revenue." You also state "an additional tax has been assessed on the purchase of the machine, purchases of parts, etc.... because the Department found that he was not renting these machines. This is simply in error." A tax is imposed on the privilege of engaging in the business of coin operated vending and amusement machines by Rule 12A-1.044(2)(A), F.A.C., which is written as follows: "(a) When coin-operated vending and amusement machines or devices dispensing tangible personal property are placed on location by the owner of the machines under a written agreement, the terms of the agreement will govern whether the agreement is a lease or license to use tangible personal property or whether it is a lease or license to use real property." Rule 12A-1.044(4), F.A.C., states..."the purchase of amusement machines or merchandise vending machines and devices is taxable, unless purchased for exclusive rental." The effect of the agreement is utterly clear. Lauren, Inc. provides the food and cigarette items to be sold. The sales revenues belong to Lauren, Inc. Sales tax is due the state from Lauren, Inc. on the entire amount of those sales revenues. A share of the sales revenues is paid to the location owner by Lauren, Inc. as consideration for what the location owner has provided, a license to use his realty by placing the vending machines on the premises. NO RENT WHATSOEVER FOR THE MACHINES IS PAYABLE BY THE LOCATION OWNER TO LAUREN, INC. UNDER THE AGREEMENT. Generally, whether an agreement is a lease or a license depends upon the intent of the parties as determined from the entire agreement. In determining the intent of the parties, the fact that the parties may use terms such as "lease," "lessor," "lessee," or "rent" will not be determinative of whether an agreement is a lease. In Napoleon v. Glass, supra, 224 So.2d 883 (3d Dist. Ct. App. 1968), the court, at 884-885 states: "Although the parking concession agreement was called a Concession Lease and provided for the payment of 'rent,' the document unquestionably created a licensor-licensee relationship rather than a landlord-tenant relationship." The "conclusion" that the Department reached by applying the foregoing principles of "law" to the pertinent "facts" in Petitioner's case was articulated as follows in the Notice of Decision: It is the Department's position that based upon the terms of the agreements provided by Lauren, Inc. that this is a license to use the location owner's real property rather than a lease of Lauren, Inc.'s tangible personal property to the location owners. Likewise, absent a re-rental of the vending machines, the sales tax is due from, Lauren, Inc. on its purchases of and repairs to its vending machines. Likewise, the taxes collected in error by the taxpayer from his customers should be reimbursed to the taxpayer's customers. The audit findings shall, therefore, remain as assessed. The Notice of Decision advised Petitioner of its right to file a Petition for Reconsideration. Such a Petition for Reconsideration was subsequently submitted on or about December 10, 1991, by Mattox on Petitioner's behalf. In the Petition for Reconsideration, Mattox made the following argument: The Notice of Decision is flawed in all respects. With respect to issue No. 1, which the Tax Conferee [the author of the Notice] has entitled "Vending Machines," even the situations set forth are incorrect. Lauren, Inc. does not contest nor is there any issue related to any finding regarding its vending machines. There is simply no issue regarding vending machines. There is also no issue regarding the taxation of purchases of vending machines, repairs, and/or purchases or parts. Lauren, Inc., purchases its machines and performs repairs for machines that are rented to various locations. Therefore, under Rule 12A-1.044, Florida Admini- strative Code, these purchases and repairs are exempt from taxation. The only issue in this case is the factual scenario with which Lauren, Inc. conducts business. Under Rule 12A-1.044, Florida Administrative Code, there are several instances in which the rental of tangible personal property are recognized. The Tax Conferee has apparently ignored the industry standards in this regard and has misinterpreted the manner and method in which Lauren, Inc., conducts business. As I originally stated in my July 22, 1991 correspondence to the Department protesting the assessment of Sales and Use Tax, Lauren, Inc. has agreements with various location owners to place amusement and game machines at any particular location and the location owner rents Lauren, Inc.'s personal property (amusement and game machines). Even under the Location Lease Agreements that Lauren, Inc. has with its customers, they specify that the company (Lauren, Inc.) is in "the business of leasing, renting, servicing, operating, maintaining and repairing... coin operated machines..." I am absolutely confounded as to why the Department has determined that Lauren, Inc., owes the above- stated tax and penalty. There has never been any question that Lauren, Inc. collected tax from the various locations and remitted this tax to the Department of Revenue. It appears that Lauren, Inc. is now to apply for a refund to the Department of Revenue, pay all sums already paid to the Depart- ment of Revenue to the various locations where its machines are located, for the various locations to remit this same amount back to the Department of Revenue. This simply does not make sense to me. With respect to the statement made in the Notice of Decision that the "effect of the agreement is utterly clear," Mattox continued: We are in complete agreement with the Tax Conferee in this regard, except for the fact that our conclusions are utterly inapposite. Lauren, Inc. does provide food and cigarette items to be sold out of the various machines, however, in this audit and protest, there is no issue regarding food and cigarette items or the tax paid thereon. The only issue is the [e]ffect of the agreement between Lauren, Inc. and the location owners. If the Tax Conferee had characterized this relationship correctly, a completely different result would have been reached. Lauren, Inc. does have vending machines as well as amusement and game machines. The Tax Conferee may have confused the vending arrangements with location owners with the amusement and game agreements. There is a recognized difference industry wide in the method and manner within which vending businesses and amusement and game business are conducted. There has been no such recognition by the Tax Conferee and we would sincerely appreciate the opportunity to present additional evidence, if necessary, to the Department of Revenue for its reconsideration of the issues raised herein. Sometime after it received the Petition for Reconsideration, the Department, through one of its employees, Vicki Allen, telephoned Mattox and asked her to provide the Department with any additional materials she wanted the Department to consider. Mattox responded to this request by letter dated February 19, 1992, in which she stated the following: You have requested that I provide additional information regarding Lauren, Inc. however, in lieu of providing this information through the mails, I would like the opportunity to sit down and explain in person our position regarding the sales and use tax assessments set forth in the recent assessment. Moreover, I am not certain as to whether any additional documentation or information exists or the nature of the documentation that will be helpful to you. Upon your receipt of this correspondence, please contact me to discuss this matter further. We are more than willing to provide additional information, but truly believe that the issues involved in this assessment could be resolved through a meeting between all parties concerned. Please advise accordingly. Allen never responded to Mattox's letter. On April 21, 1992, the Department issued a Notice of Reconsideration sustaining an assessment against Petitioner in the amount of $206,017.85 for taxes owed (plus penalty and interest). Allen was the author of the Notice of Reconsideration. The following were set forth in the Notice of Reconsideration as the "facts" upon which the sustained assessment was based: Lauren, Inc. is in the business of owning and operating coin-operated vending machines. The corporation entered into various agreements under which it received permission to install, place, operate, service and maintain its coin-operated vending machines on the premises of various location owners in return for an agreement to pay the location owners a percentage of the gross receipts from the machines. The corporation interpreted the agreements to be transactions involving the rental of tangible personal property and not for the license to use real property. Therefore the corporation collected and remitted tax on the gross receipts taken from the machines and from the location owners on the rental of the machines as provided under Rule 12A- 1.044(2)(b), F.A.C. The auditor determined that the agreements between Lauren, Inc. and the location owners, involving the placement of vending machines at the various location owner's premises, were agreements made for the license to use real property and not for the rental of tangible personal property. Therefore, the auditor assessed use tax on these transactions. In addition, the auditor assessed use tax on the purchases made by Lauren, Inc. for the coin-operated machines, parts, and accessories. The only issue maintained by you is whether or not the agreements between Lauren, Inc. and the location owners were agreements for the license to use real property or whether the agreements constitute the rental of tangible personal property and would therefore, exempt the purchases of the coin operated vending machines, parts, and accessories as provided under Rule 12A-1.044(2)(B), F.A.C. In the Notice of Reconsideration, the Department cited Section 66 of Chapter 86-152, Laws of Florida, which, the Department stated in the Notice, "amended Section 212.031, Florida Statutes, (F.S.), effective July 1, 1986, to make licenses to use real property, as well as leases, subject to tax." The Notice of Reconsideration also contained the following excerpt from Rule 12A-1.070, Florida Administrative Code: "(g) An agreement whereby the owner of real property grants another person permission to install and maintain a full service coin-operated vending machine, coin-operated amusement machine, coin-operated laundry machine, or any like items, on the premises is a taxable use of real property. The consideration paid by the machine owner to the real property owner is taxable." [Emphasis in original.] In addition, the provisions of subsections (2)(a), (b) and (c) of the Rule were recited in the Notice of Reconsideration. Allen stated her "conclusion" as follows in the Notice of Reconsideration: A review of the agreements presented in the audit file was made by this writer and the following conclusion was made: The agreements clearly reflect that Lauren, Inc. is installing, placing, operating and maintaining the coin-operated vending machines on the various location owner's realty for a percentage of the gross proceeds. Nowhere in the agreements does it state that Lauren, Inc. is leasing or renting the coin- operated vending machines to the location owner for a percentage of the gross proceeds. The agreements do, however, specifically state that the location owner will provide a space for Lauren, Inc. to install, operate, service, and maintain a coin-operated vending machine on the location owner's premises. The agreements made between Lauren, Inc., the owner of the machines[,] is and has been since July 1, 1986, a taxable license to use real property. Before that date, amounts paid for leases of real property were taxable, but licenses to use were not. Black's Law Dictionary defines a license to use real property as: "a privilege to go on premises for a certain purpose, but does not operate to confer on, or vest in a licensee any title, interest, or estate in such property." The agreements did not confer to Lauren, Inc. any "title, interest, or estate" in the location owner's realty, but, instead, only permitted Lauren, Inc. to come onto the property and place the coin- operated vending machines on the property for the purpose of making the machines available to those who wanted to use them. It is the Department's decision that the subject tax was assessed correctly pursuant to Rule 12A- 1.070(1)(g), F.A.C. and 12A-1.044(2)(a) and (c), F.A.C. and in accordance with Departmental policies and procedures. The audit findings shall remain as assessed in the enclosed closing statement. Particularly in light of the provision of Rule 12A-1.070, Florida Administrative Code, set forth in the Notice of Reconsideration, the agreements that Petitioner had provided the Department were reasonably susceptible to the interpretation that they were, as Allen had concluded, "taxable license[s] to use real property," notwithstanding that the parties to these agreements had intended that they be interpreted otherwise. The Notice of Reconsideration advised Petitioner of its right "to file a petition for a Chapter 120 administrative hearing with the Department." Petitioner filed such a petition with the Department on May 8, 1992. The Department referred the matter to the Division of Administrative Hearings on June 18, 1992, for the assignment of a Hearing Officer to conduct the hearing Petitioner had requested. The hearing was held on October 6, 1992. Two witnesses testified at the hearing, Matthews and Manley Lawson, a member of the Board of Directors of the Florida Amusement and Vending Association. In addition to the testimony of these two witnesses, a total of 11 exhibits were offered and received into evidence. The evidence presented at hearing was supplemented by a stipulation into which the parties had entered prior to hearing. On November 23, 1992, the Hearing Officer issued a Recommended Order recommending that the Department "enter a final order withdrawing the assessment that is the subject of the instant proceeding." The Hearing Officer's recommendation was based upon the following Conclusions of Law set forth in his Recommended Order: The instant case is governed by the version of Rule 12A-1.044, Florida Administrative Code, that was in effect during the audit period (referred to herein as the "Rule"). It read in pertinent part as follows: "(2) Vending and amusement machines, machine parts, and locations. When coin-operated vending and amusement machines or devices dispensing tangible personal property are placed on location by the owner of the machines under a written agreement, the terms of the agreement will govern whether the agreement is a lease or license to use tangible personal property or whether it is a lease or license to use real property. If machines are placed on location by the owner under an agreement which is a lease or license to use tangible personal property, and the agreement provides that the machine owner receives a percentage of the proceeds and the location operator receives a percentage, the percentage the machine owner receives is rental income and is taxable. The tax is to be collected by the machine owner from the location operator. The purchase of the records, needles, tapes, cassettes, and similar items, machines, machine parts and repairs, and replacements thereof by the machine owner is exempt. If machines are placed on location by the owner under an agreement which is a lease or license to use real property, and the agreement provides that the machine owner receives a percentage of the proceeds and the location operator receives a percentage, the percentage the location operator receives is income from the lease or license to use real property and is taxable. The tax is to be collected by the location operator from the machine owner. The purchase of the records, needles, tapes, cassettes, and similar items, machines, machine parts, and repairs and replacements thereof by the machine owner is taxable. * * * (4) The purchase of amusement machines or merchandise vending machines and devices is taxable, unless purchased for exclusive rental. * * * The following examples are intended to provide further clarification of the provisions of this section: Example: The owner of Town Tavern enters into a lease agreement with Funtime Company. Under the terms of the agreement, Funtime will provide coin-operated video game machines to Town Tavern, with Funtime retaining title to the machines and providing repairs or replacement parts as necessary. As consideration for the rental of the machines, Town Tavern will give Funtime 60 percent of the proceeds from the machine. By the terms of the agreement, this arrangement is a lease of tangible personal property and Funtime, as the lessor, must collect tax from Town Tavern on the portion of the proceeds it receives. The purchase of the video game machines, machine parts, and repairs thereof by Funtime Company is exempt. The portion of the proceeds retained by Town Tavern is not taxable. Example: An amusement and vending machine owner enters into a license agreement with City Airport, which grants the machine owner the right to place amusement and vending machines in Concourse A. The amusement machines consist of several electronic games and a pinball machine. The vending machines consist of soft drink, snack food, and candy machines. City Airport has the right to designate the areas within the concourse where the machines will be located; the machine owner and owner's employees are to stock the machines and provide repairs as needed. As consideration under the agreement, City Airport will receive 15 percent of all proceeds from the machines. By the terms of the agreement, this arrangement is a license to use real property, and City Airport, as the licensor, must collect tax from the machine owner." 3/ At issue in the instant case is whether the agreements Petitioner entered into with location operators during the audit period were, as claimed by Petitioner, leases or licenses to use tangible personal property, within the meaning of subsection (2)(b) of the Rule, or whether they were, as asserted by Respondent, leases or licenses to use real property, within the meaning of sub- section (2)(c) of the Rule. After having carefully examined the record in the instant case, particularly the stipulations and evidence regarding the contents of the agreements in question, how the agreements were interpreted by Petitioner and the other parties to the agreements, and the trade customs prevailing at the time, the Hearing Officer finds that the agreements were leases or licenses to use tangible personal property, within the meaning of subsection (2)(b) of the Rule, and that therefore the assessment issued against Petitioner, which was predicated upon a contrary finding, is not valid. See Blackhawk Heating & Plumbing Co., Inc., v. Data Lease Financial Corp., 302 So.2d 404, 407 (Fla. 1974)("[i]n the construction of written contracts, it is the duty of the court, as near as may be, to place itself in the situation of the parties, and from a consideration of the surrounding circumstances, the occasion, and apparent object of the parties, to determine the meaning and intent of the language employed;" "[w]here the terms of a written agreement are in any respect doubtful or uncertain, or if the contract contains no provisions on a given point, or if it fails to define with certainty the duties of the parties with respect to a particular matter or in a given emergency, and the parties to it have, by their own conduct, placed a construction upon it which is reasonable, such construction will be adopted by the court, upon the principle that it is the duty of the court to give effect to the intention of the parties where it is not wholly at variance with the correct legal interpretation of the terms of the contract"); Oakwood Hills Company v. Horacio Toledo, Inc., 599 So.2d 1374, 1376 (Fla. 3d DCA 1992)("[i]t is a recognized principle of law that the parties' own interpretation of their contract will be followed unless it is contrary to law;" "the court may consider the conduct of the parties through their course of dealings to determine the meaning of a written agreement"); International Bulk Shipping, Inc. v. Manatee County Port Authority, 472 So.2d 1321, 1323 (Fla. 2d DCA 1985)("[w]hile we agree that the language of Item 220 [of the tariff] does not clearly cover the shifting charges at issue, we observe that a court may consider trade customs and prior dealings between the parties to give meaning to the provision"); Bay Management, Inc., v. Beau Monde, Inc., 366 So.2d 788, 793 (Fla. 2d DCA 1978)("where a contract fails to define with certainty the duties of the parties, and the parties by their conduct have placed a reasonable construction on it, . . . such construction should be adopted by the court"). Accordingly, the assessment should be withdrawn. The Department, on January 15, 1993, issued a Final Order adopting the Hearing Officer's Findings of Fact and Conclusions of Law and his recommendation that the subject assessment be withdrawn.
The Issue This is a disciplinary proceeding in which the Petitioner seeks to take disciplinary action against the Respondent on the basis of alleged violations of Section 849.094, Florida Statutes, set forth in a two-count Administrative Complaint.
Findings Of Fact At various times during early 1993, the Respondent, Set-Tel Marketing, Incorporated (hereinafter "Set-Tel"), arranged through a marketing company in Florida by the name of MRG for certificates to be mailed to people in various other states. The certificates evidenced participation in a game promotion known as "Celebrate America." Set-Tel paid MRG an agreed amount for each certificate that was mailed with Set-Tel's name, address, and telephone number. The certificates arranged for through MRG were ultimately mailed by Celebrate America, a game promotion located in New York. The subject certificates offered prizes to the certificate holder. The total value of the prizes was greater than $5,000.00. The subject certificates stated that the certificate holder was guaranteed one of the five listed prizes, which ranged in value from a brand new automobile to a 27-inch color television. Set-Tel's name, address, and telephone number were displayed on the front of the certificates. No other telephone numbers appeared anywhere on the certificates. The fine print on the back of the certificates included the following information: "To enter the sweepstakes automatically and receive additional details on the sweepstakes prizes and the values offered, call the telephone number indicated on the reverse side." Inasmuch as Set-Tel's telephone number was the only telephone number on the certificates, all telephone calls from certificate holders seeking to enter the sweepstakes and obtain prize information were made to Set-Tel. When certificate holders would call, Set-Tel would try to sell vacation packages to them. Certificate holders who were only interested in sweepstakes and prize information were told to contact Celebrate America directly. The subject game promotion was not registered in Florida. Set-Tel did not have any liability insurance, bond, or trust account.
Recommendation Inasmuch as the Department of State lacks statutory authority to issue a final order imposing any penalty for violation of Section 849.094, Florida Statutes, it is RECOMMENDED that the Department of State issue a Final Order in this proceeding dismissing the Administrative Complaint in its entirety. DONE AND ENTERED this 29th day of March 1995 in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 March 1995.
The Issue The factual issues in this unadopted-rule challenge relate to whether Respondent, in connection with the administration of the state’s gaming laws, has formulated statements of general applicability that have the effect of giving each slot machine licensee the rights (i) to maintain and operate an outdoor live gaming facility for the conduct of pari-mutuel wagering activities, wherein slot machine gaming areas could not lawfully be located, so long as its slot machines are housed elsewhere, in an enclosed building; and (ii) to locate slot machine gaming areas in a separate, stand-alone building having no integral systems, structures, or elements, provided the building is located on the same parcel, and on the same side of the street, river, or similar obstacle, as the live gaming facility. If Respondent has developed such a statement or statements, then the ultimate issue is whether such statements meet the statutory definition of an unadopted rule.
Findings Of Fact PARTIES SCF is a Florida corporation whose principal place of business is located in Marion County. SCF has been in the business of breeding thoroughbred racehorses since 1996. The company also owns racehorses and, as an owner of racing animals, holds a Pari-Mutuel Wagering Business Occupational License, #PBU476648, from the Division. See § 550.105(2), Fla. Stat. As a licensed business owning racing animals, SCF is under the regulatory jurisdiction of the Division. In the three years preceding this action, SCF’s horses won approximately $120 thousand in purses from performing in race meets held at Florida pari-mutuel facilities.1 1 Although SCF is a licensed owner of racing animals, it is not a member of the Florida Horsemen’s Benevolent and Protective Association, Inc. (the “FHBPA”), a nonprofit corporation that advocates in support of Florida’s thoroughbred racing industry and represents the interests of the licensed owners and trainers who comprise its membership. This fact is relevant only to the question of whether SCF is precluded from maintaining this action, under the doctrine of administrative finality, by the Final Order entered in a case brought by the FHBPA in 2018 to challenge agency statements, similar to those at issue here, which the association alleged—but ultimately failed to establish—were unadopted Continued on next page... The Division is the state agency responsible for implementing and enforcing Florida’s gaming laws. It licenses and regulates pari-mutuel and slot machine gaming activities in Florida, as well as the professionals and businesses, such as SCF, that supply necessary goods and services to the gaming economy. The only places in Florida, in fact, where SCF’s thoroughbreds can legally perform in races upon which bets may be made are the several permitted pari-mutuel facilities, which are also subject to the Division’s regulatory jurisdiction; such tracks comprise the exclusive medium for live gaming activities. Calder is the holder of a pari-mutuel wagering permit and, in that capacity, owns a track called Calder Race Course, also known as Gulfstream Park West. As a permitholder, Calder must apply for an annual license to conduct pari-mutuel operations. See § 550.0115, Fla. Stat. This annual license gives the permitholder authority to conduct the pari-mutuel wagering activity authorized under its permit on the dates identified in the license. At all times relevant to this case, Calder has held a license to conduct thoroughbred horseracing performances, and SCF-owned horses have raced at Calder Race Course. In addition to its license to conduct pari-mutuel operations, Calder has held, at all times relevant hereto, a license to conduct slot machine gaming. SLOT MACHINE GAMING In 2004, voters approved an amendment to the Florida Constitution, which opened the door to the installation of slot machines at licensed pari- mutuel facilities in Miami-Dade and Broward counties. See Art. X, § 23, Fla. Const. During its next regular session, the legislature enacted chapter 551 to implement the constitutional amendment. Under the original definition of rules. For reasons discussed much later in this Final Order, the undersigned concludes that the previous Final Order, while favorable to the Division on similar issues, is not a bar to SCF’s claims in this proceeding, because SCF was neither a party to the FHBPA case, nor in privity with the FHBPA. “eligible facility” set forth in section 551.102(4), seven pari-mutuel permitholders potentially qualified for slot machine licensure; a later statutory amendment increased that number to eight. A slot machine license may be issued only to a permitted pari-mutuel facility. That is, to become and remain a slot machine licensee, an eligible facility must operate a pari-mutuel facility in accordance with the provisions of chapter 550, Florida Statutes. So, as a condition of initial slot-machine licensure, a permitholder must demonstrate its compliance with chapters 551 and, as applicable, chapter 550. § 551.104(4), Fla. Stat. To renew, which must be done annually, a slot machine licensee must “[c]ontinue to be in compliance with” chapter 551; “[c]ontinue to be in compliance with chapter 550, where applicable[;] and maintain [its] pari-mutuel permit and license in good standing pursuant to the provisions of chapter 550.” Id. In short, slot machine gaming is secondary to pari-mutuel wagering operations because it cannot exist, lawfully, in the absence of such operations. This means, among other things, that an applicant for a slot machine license is required to have a “current live gaming facility,” in which pari- mutuel wagering occurs in the physical presence of real-time races or games, and that a live gaming facility (“LGF”) must be maintained at the permitholder’s pari-mutuel facility during the life of the slot machine license, if issued. See § 551.114(4), Fla. Stat. In 2005, when chapter 551 was enacted, all seven of the facilities initially eligible for slot machine licensure had large existing grandstands or other buildings that created indoor, conditioned spaces; these “conditioned environments,” in other words, were separated from the outdoor elements and conditions (wind, rain, heat, cold, etc.) by sheltering walls and roofs. Simply put, each of these facilities had a building envelope or exterior shell and, thus, each such facility fell within the definition of a “building” under the common usage of that term. It is reasonable to infer, if not presume, that when section 551.114(4) was being written, the legislature, or at least the drafters of the legislation who coined the term “live gaming facility,” had in mind the buildings then currently in use as “live gaming facilities” at the relatively few eligible facilities that would be subject to the law. At the time chapter 551 took effect, moreover, the Division, in fact, considered these buildings to be the permitholders’ LGFs. A slot machine licensee must have a designated slot machine gaming area (“SMGA”) where “slot machine gaming may be conducted in accordance with the provisions of” chapter 551. §§ 551.102(2), 551.114, Fla. Stat. Section 551.114(4) specifies where the licensee is allowed to locate its SMGA: Designated slot machine gaming areas may be located within the current live gaming facility or in an existing building that must be contiguous and connected to the live gaming facility. If a designated slot machine gaming area is to be located in a building that is to be constructed, that new building must be contiguous and connected to the live gaming facility. For ease of reference, the term “slot machine building,” or “SMB,” will be used herein to refer to any building besides the LGF in which a licensee optionally locates its SMGA. As the statute makes clear, every SMB, whether previously existing, newly constructed, upgraded, refurbished, retrofitted, or freshly painted, must be “contiguous and connected to” the LGF. This will be called the “CCT Requirement.” THE DIVISION’S INTERPRETATION OF THE STATUTE Over time as it implemented section 551.114(4), the Division interpreted the text in ways which SCF alleges constitute unadopted rules. The circumstances surrounding the development of these interpretations are interesting, and a good deal of evidence was adduced in this proceeding establishing them, but it is not necessary, for present purposes, to make detailed findings concerning these historical facts. Readers who would like to know more about the events leading to this rule challenge may read the Recommended Order (“Calder RO”) that the undersigned issued in The Florida Horsemen’s Benevolent & Protective Association, Inc. v. Calder Race Course, Inc., et al., DOAH Case No. 18-4997, 2019 Fla. Div. Admin. Hear. LEXIS 283 (Fla. DOAH May 24, 2019) (the “License Challenge”). If the undersigned were to make extensive findings of historical fact in this Final Order, such findings would be substantially the same as, if not identical to, the findings set forth in the Calder RO. The primary relevance, to the instant case, of the historical facts relating to the Division’s approvals of SMBs at Calder and another track (Pompano Park/Isle of Capri), respectively, would be to show that, despite the absence of rulemaking or other written evidence of its statutory interpretations, the agency has formulated (but not formally adopted) governing principles for making regulatory decisions—”nonrule policies,” in other words—whose existence and contents can be deduced from the agency’s actions, namely the issuance of slot machine licenses or renewals manifesting underlying determinations that this SMB or that one is compliant, as a matter of ultimate fact, with the provisions of chapter 551, including the CCT Requirement. Recently, however, on February 3, 2020, the Division issued the Calder FO, wherein the agency expressed very clearly not only its understanding of what the relevant words of section 551.114(4) mean (the semantic content), but also what law is made thereby (the legal content). It is, therefore, no longer necessary to deduce the Division’s statutory interpretations from its actions; that these statements exist, and have specific linguistic content, are matters now beyond genuine dispute, the statements having been communicated in writing by the agency itself.2 2 This is what the undersigned meant when he wrote in the Order Regarding Official Recognition that, based on the Calder FO, the Division’s interpretive statements relating to section 551.114(4) “appear to be not genuinely disputable.” In other words, to be clear, the existence and contents of the Division’s interpretive statements are now beyond reasonable Continued on next page... From the Calder FO, the Division’s interpretive statements can be fairly, accurately, and concisely described.3 The first statement of interest dispute, although there might be some relatively insignificant disagreements at the margins regarding the meaning of the agency statements. Independent of all that, the question of whether the Division’s interpretation of section 551.114(4) is the best interpretation, or even a reasonable one, is sharply disputed. While the correctness of the Division’s interpretive statements is a matter of continued conflict, that particular dispute need not be decided in this proceeding, whose focus, instead, is on whether the statements meet the definition of a rule, a question that has little to do with whether the statements reflect the best, or correct, reading of the statutory text. (A statement that expresses nothing but a literal comprehension of the statutory text, reflecting only such meaning as is readily apparent without reading between or beyond the lines of the codified language, is not a rule by definition; nor, however, is it an “interpretation,” strictly speaking. Such a literal paraphrase could be called “correct,” though, and so, to the extent a decision is required regarding whether a statement adds legal content to the underlying statute’s straightforward semantic content, some consideration must be given to the correctness, in this narrow sense, of the statement at issue.) 3 So that no one can misinterpret what the undersigned is doing here, let it be clear. First, the undersigned is not implying that the Calder FO is itself an unadopted rule. The Calder FO is, of course, an order, which determines the substantial interests of specifically named parties, subject to judicial review. The undersigned is saying, however, because it is indisputably true, that the Calder FO contains statements that communicate—expressly, unambiguously, and in specific language (not by implication or through interpretation)— the Division’s interpretation of section 551.114(4). In fact, the Calder FO includes a section titled “Interpretation of Section 551.114(4), F.S.” Thus, while the Calder FO is not, per se, an unadopted rule, it is evidence of the Division’s interpretation of a section 551.114(4); indeed, it is convincing evidence thereof. (The agency’s interpretive statements are not hearsay because what makes them relevant is their existence and contents, not the “truth” of the matters asserted. See § 90.801(1)(c), Fla Stat.) Further, the Division’s interpretation of the statute is, obviously, highly relevant because agency statements that interpret law fall within the definition of a rule when, as SCF alleges here, they do so in ways which give the law meaning not readily apparent from the raw semantic content of the statutory text being implemented. It should also be noted that it makes no difference where or how an agency communicates a statement of general applicability that meets the definition of a rule. There is no “final order immunity” that somehow shields statements contained in a final order from examination in a section 120.56(4) proceeding. We are concerned here with three basic questions: (i) does the statement exist; (ii) if so, what is the content of the statement; and (iii) does the statement’s content meet the definition of a rule? The Calder FO persuasively proves both the existence of the statements at issue and the contents of the statements issue. Second, in describing the Division’s interpretive statements, the undersigned is not attempting to summarize the entire Calder FO. Nor is he purposefully adding to, or subtracting from, the agency’s statements. This is not an exercise in straw-man argumentation. To the extent possible, the undersigned is using the agency’s exact words; his intent, again, is to express the Division’s statutory interpretation accurately and fairly. The Calder FO is available for anyone to read, and the undersigned invites everyone who is interested to do just that and decide for him or herself whether the descriptions herein of the Continued on next page... concerns the CCT Requirement. As the undersigned reads the Calder FO, the Division has interpreted the statute to mean that a licensee’s SMB is “contiguous and connected to” its LGF if the SMB and LGF: (i) “share a common boundary,” for which simply “being located on the same piece of property” is sufficient; (ii) are no more than a “short distance” from one another; (iii) are not on opposite sides of “a public roadway, waterway, or any [similar] barrier”; and (iv) are “connected” by a walkway between the two, for which an outdoor sidewalk is sufficient. In its Response in Opposition to the Order Regarding Official Recognition, however, the Division stated that and (iv) “may not be required” in every instance and, thus, are not necessary conditions. In other words, the SMB and LGF might be farther than a “short distance” from each other and still be “contiguous”; and the two structures, if respectively self-contained, might be “connected” other than by a “walkway” between them. Making this correction, the agency statement becomes: A licensee’s SMB is “contiguous and connected to” the LGF if the SMB and LGF: (i) “share a common boundary,” for which “being located on Division’s interpretive statements are accurate and fair. (The Division expressed some minor disagreements with the undersigned’s original descriptions of the agency interpretations at issue, and these disagreements will be addressed in the text above.) Third, relatedly, the undersigned emphatically disclaims any intention of using unfair descriptions of the Calder FO to turn “narrow issues” into “more general” statements having a “broader scope of applicability” than the agency intends. The fact is, however, that there is nothing “fact-specific” about the Division’s interpretation of section 551.114(4), and the Division’s insisting otherwise will not make it so. This point will be discussed further above, but let it be emphasized in this footnote that a statement’s relative applicability is determined based upon the level of generality expressed by the statement’s language, that is, by the inclusiveness or exclusiveness of the semantic content of the text. The more inclusive the statement, the more generally applicable it is. A statement of general applicability, so framed, is not rendered “fact-specific” simply because it has been applied to the facts of a specific case in determining the substantial interests of a particular party. the same piece of property” is sufficient;4 and (ii) are not on opposite sides of “a public roadway, waterway, or any [similar] barrier.”5 What cannot be disputed, bottom line, is that the Division, in its own words, interprets “the plain statutory language” of section 551.114(4) as “contemplat[ing]” that the SMB may be “a stand-alone separate building” from the LGF. See Calder FO at 42. From this interpretation, it follows logically that having structural elements in common with the LGF, or sharing integrated systems therewith (e.g., exterior envelope, HVAC, electric, and plumbing), is not a necessary condition of an SMB’s satisfying the CCT Requirement; that is, even without such integration, the SMB and LGF may be deemed statutorily “contiguous and connected to” each other, according to the Division. The undersigned will call this the “nonintegration principle.” The nonintegration principle is the Division’s seminal insight regarding the meaning of section 551.114(4); if the nonintegration principle were deemed false (incorrect), such determination would guarantee the falsity (incorrectness) of the Division’s statement that “the plain statutory language” of section 551.114(4) “contemplate[s]” that the SMB may be “a stand-alone separate building” from the LGF. This is because, to state the obvious, “a stand-alone separate building” is, by that description, a self- 4 Because it is necessary that all of the permitholder’s pari-mutuel facilities be located on the property “specified in the permit,” see section 550.0115, Florida Statutes, and because slot machines must be located “within the property of the [permitholder’s] facilities,” see sections 551.101 and 551.114(1), part (i) of the agency statement makes “shar[ing] a common boundary” practically a given, and certainly a gimme. 5 It is usually unhelpful to define anything by describing what the thing being defined is not, which entails a process of elimination. Saying that being “contiguous and connected” means being not separated by a public roadway, etc., tells us nothing that we didn’t already know; it is the answer to a question that no one would ask, akin to saying that the CCT Requirement prohibits a permitholder from locating its SMB in a different city or state from the LGF. Like part (i) of the agency statement, part (ii) imposes a “requirement” that is a gimme, if not a given. Taken together, the two parts, (i) and (ii), comprising the agency statement under consideration, come very close to eliminating the CCT Requirement altogether, reducing it to the ineffectual status of “requirement in name only.” As the Division sees it, the CCT Requirement has little practical effect, if any, other than ensuring that the SMB and LGF have the same address, which is already assured. contained structure that is not integrated with another structure. So, the Division’s statement that the statute allows the use of a nonintegrated SMB is true only if SMB/LGF integration is not a necessary condition of compliance with the CCT Requirement. In its Response in Opposition to the Order Regarding Official Recognition, the Division states that the Calder FO “does not comment on whether it is ever necessary, to satisfy the [CCT] requirement, that the SMB and LGF ‘have any common structural elements or integrated systems, e.g., exterior envelope, HVAC, lighting, etc.’“ This is trivially true inasmuch as the Calder FO does not specifically describe the nonintegration principle as such. But the point is irrelevant because, as just explained, if section 551.114(4) permits locating an SMGA in a separate, stand-alone building, as the Division maintains, then the nonintegration principle must exist, and it must be true, regardless of whether the Division actually utters the words that communicate the concept. If the Division meant to say more, i.e., to imply that there might be an as-yet unrevealed exception or exceptions to the nonintegration principle, this possibility, whatever else might be said about it,6 does not negate the nonintegration principle itself. This is because the principle does not hold that nonintegration is a necessary condition of compliance with the CCT Requirement; that is, integration does not guarantee failure. Nor does it hold 6 One thing that can be said if there exists an exception to the nonintegration principle is that an SMB’s “being located on the same piece of property” as the LGF would not be a sufficient condition for finding that the two “share a common boundary,” contrary to what the Division has said elsewhere. If there were an exception, then sometimes (when the exception applies) integration would be required in order for the two structures to share a common boundary and be deemed contiguous to one another. To explain, locating a self- contained SMB on the same piece of property as the LGF guarantees compliance with the “common boundary” requirement—i.e., is a sufficient condition therefor—only if the nonintegration principle has no exceptions. (The undersigned takes for granted that integration would never be required to meet the only other identified requirement, namely that the SMB and LGF not be separated by a public roadway, waterway, or similar barrier, because that condition would be so easily met by putting the two structures on the same side of the street or river.) that nonintegration is a sufficient condition of compliance with the CCT Requirement; that is, nonintegration does not guarantee success. Rather, the nonintegration principle holds that integration is not a necessary condition of compliance with the CCT Requirement; or, put another way, that nonintegration is statutorily permissible. Why is this significant? Because if section 551.114(4) literally requires an integrated SMB/LGF in all cases where the SMGA is located outside the current LGF, then the Division’s interpretation of the CCT Requirement is not readily apparent from what is actually stated in the statutory text, even if it might conform to the legislature’s communicative intent,7 which would mean that the agency has declared what the law shall be (a legislative power), as opposed to applying the law as it is (an executive power). And, as we know, an agency is authorized to exercise delegated legislative authority only through formal rulemaking. The second statement concerns the meaning of the term LGF, which the Division defines as being any area, including an “open-aired, unenclosed place” or “space,” from which patrons can “view … and/or [be] within the physical presence of” contests occurring in real time, and at which they may engage in pari-mutuel betting on such contests using equipment designed to facilitate these “live gaming activities.” In its Response in Opposition to the Order Regarding Official Recognition, the Division asserts that the foregoing description of its definition of the term LGF is too narrow, because the Division defines LGF to include the racetrack as well. The undersigned accepts this assertion to be true, and revises his original description accordingly. 7 The legislature might have intended, for example, to communicate meaning beyond the plain semantic content of the statutory text, whose full linguistic content thus could not be understood without an appreciation of pragmatic considerations, such as programmatic goals, arguably better known to the agency than to the citizenry. If so, the necessary and proper, lawful agency response would be to take quasi legislative action and adopt a rule. The track, of course, is the “field of play” for live horse racing performances, analogous to the three-walled court (or cancha) on which jai alai players perform. Clearly, there can be no LGF without a track or cancha; this practically goes without saying. Including the live performance site, definitionally, as an element of the LGF, however, is inconsequential to this case because neither a track nor a cancha, by itself, could constitute an LGF; there must be something to accommodate patrons, who obviously cannot watch, or place wagers on, live contests while sitting or standing upon the track or jai alai court. The relevant question in this case is whether the statute literally requires that something to entail conditioned space within an enclosed building shell.8 Reduced to its undisputed essentials, the Division’s position is that while an LGF may be an enclosed building, it needn’t necessarily be. An open- air, unenclosed place or space will suffice, if properly equipped to facilitate wagering. It is this “open-air option” to which SCF objects as the instantiation of a policy that exceeds the raw semantic meaning of the term LGF and thus constitutes an unadopted rule. SCF alleges that the Division has formulated a third unadopted rule, extrinsic to the Calder FO, which is not interpretive in nature but rather is a prescriptive statement to the effect that certain ultimate facts are conclusively determinable as a matter of law if the basic facts are undisputed. To the point, SCF contends that the Division has decided that, if a hearing is requested to determine whether an SMB satisfies the CCT Requirement, the proceeding will be governed by section 120.57(2) unless the objective facts on 8 At times, the Division appears to imply that the LGF comprises entire pari-mutuel complex, so desirous is the agency to get across the idea that the term LGF must be read expansively. While warning of the dangers of defining LGF too narrowly, the Division seems unconcerned about the opposite problem, namely reading LGF so broadly that the term ceases to have relevant meaning. If the LGF is everything on the permitted premises, then it is nothing specifically identifiable. For the LGF to have discernible boundaries—a necessary condition of contiguity with another structure, by the way—there must be a limiting principle or Continued on next page... the ground are genuinely disputed. SCF contends that the Division is using this “gatekeeper mechanism” to deny SCF (and another party) the formal hearings they have requested, pursuant to sections 120.569 and 120.57(1), to challenge the renewal of Calder’s slot machine license, based on allegations that Calder does not have a statutorily compliant LGF and that its SMB fails to meet the CCT Requirement. The Division has not published a notice of rulemaking under section 120.54(3)(a) relating either to the open-air option, the nonintegration principle, or the gatekeeper mechanism. Nor has the Division presented evidence or argument on the feasibility or practicability of adopting any of these alleged statements of general applicability as a de jure rule. THE DIVISION’S IMPLEMENTATION OF THE ALLEGED UNADOPTED RULES As mentioned above, the historical facts giving rise to the agency interpretations at issue are not only, for the most part, undisputed, but also, more importantly, largely irrelevant for purposes of determining the merits of this action under section 120.56(4). The Division’s implementation of the alleged unadopted rules does have some bearing, however, on the question of SCF’s standing, which is a hotly contested issue in this case. Therefore, an abridged history follows. Of the eight pari-mutuel facilities eligible for slot machine licensure, only Pompano Park/Isle of Capri (“PPI”) and Calder have chosen the option contained in section 551.114(4) to erect a new building in which to locate their respective SMGAs. All of the other eligible permitholders opted to locate their SMGAs within their current LGFs; these were buildings, enclosing conditioned environments, not open-air places exposed to the elements. Because Broward County satisfied the local referendum requirement before Miami-Dade County did, PPI’s application for slot machine licensure was the principles to delimit the definitional scope. The Division has been reluctant to commit to such limiting principles. first to require the Division’s decision as to whether an SMB that was to be constructed would meet the CCT Requirement. The physical configuration of PPI’s SMB, as planned and built, was not “contiguous” to its existing LGF under any ordinary understanding of the word “contiguous,” which denotes actual contact along a common boundary; the buildings were in “reasonably” close proximity, but they did not communicate in the sense of opening into each other. Nor was PPI’s SMB “connected to” its LGF in accord with the image that readily comes to mind when thinking about how two contiguous structures would be connected to each other. The two separate, stand-alone buildings were “connected,” not physically, through any sort of direct contact, but figuratively, by basic transport infrastructure—i.e., a covered walkway between them.9 This apparent departure from the plain meaning of section 551.114(4) resulted from the Division’s desire to give the eligible permitholders some “leeway” in satisfying the strict statutory requirement that an SMB be “contiguous and connected to” the current LGF, according to David Roberts, who headed the Division from 2001 through 2009, and who was involved in making the decision.10 After Miami-Dade County satisfied the local referendum requirement in 2009, Calder applied for its initial slot machine license. Because Calder, 9 They were connected, that is to say, in the same way Tallahassee is connected to Jacksonville via Interstate 10. 10 On October 17, 2019, the agency head of DOAH began systematically reviewing every final order and recommended order prior to, and as a prerequisite of, its issuance. Pursuant to this review, the director makes written “comments and suggested edits” on some, but not all, orders. Although the presiding officer is not required to accept the director’s suggested edits, he is not given the option of declining the director’s review. As a result, the undersigned received two comments, one on the paragraph above and the other on paragraph 30 of this Final Order, which are, at least arguably, “relative to the merits,” and hence which are, or might be, ex parte communications prohibited by section 120.66(1)(a), Fla. Stat. (no “ex parte communication relative to the merits” shall be made to the presiding officer by “[a]n agency head,” among others). Erring on the side of caution and disclosure, the undersigned hereby places on the record the director’s comment concerning paragraph 24: “This is the crux of Continued on next page... like PPI, intended to place its SMGA in a self-contained casino, which would be newly constructed, Calder sought and received the Division’s permission to build a separate, stand-alone SMB pursuant to the same informal policy that had relaxed the strict CCT Requirement for PPI. The Division’s issuance to Calder of its initial slot machine license manifested the Division’s determination that Calder’s SMB and LGF, as initially configured after construction of the new SMB, were compliant with all of the statutory requirements for slot machine gaming licensure, including the CCT Requirement. In 2016, Calder demolished its grandstand building; as of this hearing, Calder has not replaced its former LGF with a new building of any kind. The demolition of the grandstand was one of several actions taken in furtherance of a business decision by Calder to distance itself from live racing activities at Calder Race Course. Other actions included slashing the number of annual performances during the race meet, from an average of 250 performances per year to 40 performances per year; the entry into a contract with Gulfstream Park to operate and manage Calder’s abbreviated race meet; and a reduction in the number of stalls available for the stabling and training of racehorses. There is an ongoing dispute as to whether Calder, without an enclosed building for live gaming, has a legally sufficient LGF. See License Challenge. What is not disputed is that Calder lacks an LGF capable of housing an SMGA in compliance with chapter 551, because an SMGA must be housed in a building. Calder’s “LGF,” such as it is, currently consists of open-air viewing areas where patrons can watch, and place wagers on, live races. The primary viewing area is located in front of the final stretch of the racetrack, at a spot called the “apron.” There are some outdoor seats and tiki huts on the apron, and, during the race meet, Calder erects a collapsible canopy tent, your most defensible finding.” Any party desiring to rebut this communication shall be allowed to do so in accordance with section 120.66(2). which, despite the absence of walls, provides a bit of shelter for wagering machines, video screens, and, of course, patrons, for whom additional outdoor seating is provided. The casino is at least 100 yards from the temporary “big tent.” It is possible to walk from the casino to the big tent, and return, on a concrete walkway, but the walkway is only partially covered, which means, when it rains, that patrons cannot go back and forth between the SMB and the “LGF” without getting wet. The walls of the SMB do not touch or abut the areas where patrons can view the live horse races and place bets. Indeed, a patron can walk into the main entrance of the casino, play the slot machines, and then leave, without once seeing, or being within a football field’s length of, an area that allows the viewing of live horse racing. At the time of the hearing, Gulfstream Park’s general manager was William Badgett. (Gulfstream Park, recall, operates Calder’s race meet pursuant to contract.) Mr. Badgett testified as follows regarding the decline in attendance and wagering after the demolition of Calder’s grandstand: [W]hat I’ve seen is—it’s, pretty much, in black and white. The numbers over the year—year to year to year[—]have declined mostly because this is the best that we can offer at the facility without building a permanent structure. … When it rains the water comes down the hill and people just leave. And what I’ve seen from the owners is they’ll come to watch a race. After the race they’ll leave. … [I]t has declined year to year to year in the handle and the amount of people that we see there. When asked whether, based upon his many years of experience in the horseracing industry as a trainer and as a track manager, he believed that the lack of a grandstand and of any protection from the elements has negatively affected the amount of live handle at the race meets at Calder Race Course, Mr. Badgett answered, “Yes, absolutely.” Describing the experience of watching a race at ground level on the apron, Mr. Badgett testified: What we do is we put televisions in the tent because it’s not as—You, more or less, have to walk down the apron if you want to see it live. There’s a structure in the middle of the—of the in-field, which is the tote board, which doesn’t work anymore. So, it’s a little bit of an obstruction. You can see [the race], but you’re better off watching it on television. The undersigned credits Mr. Badgett’s testimony on these points. DETERMINATIONS OF ULTIMATE FACT It is determined as a matter of ultimate fact that both the open-air option and the nonintegration principle have the effect of law because the Division, if unchecked, intends consistently to follow them in carrying out its responsibilities to administer chapters 550 and 551 generally, and section 551.114(4) specifically. Each statement creates rights (in the form of expanded locational options for SMBs and architectural options for LGFs) that are exercisable by slot machine licensees.11 While directly regulating the physical plant of a permitted pari-mutuel facility, these statements collaterally regulate live gaming licensees, including businesses owing racing animals such as SCF, whose licensed occupations require access to, and the use of, the permitholders’ LGFs and other pari-mutuel facilities. From the perspective of a licensed racehorse owner, the LGF (which it neither owns nor controls) is the environment for its audience, the spectators whose money (wagered on races) helps fund the purses and awards that compensate the licensee for its services. A law that allows an LGF to be an open-air place as opposed to a climate controlled 11 The undersigned hereby places on the record the director’s comment regarding paragraph 30: “Finding the agency’s future intent as a matter of fact is troubling.” Any party desiring to rebut this communication shall be allowed to do so in accordance with section 120.66(2). Continued on next page... building is detrimental to the interests of a business licensee whose success in a pari-mutuel occupation depends upon the continued presence of a large, paying audience, for the obvious reasons that an open-air place is unlikely to be as comfortable, or as amenity-rich, as a building; and, taken together, less comfort and fewer amenities, relatively speaking, are more likely to discourage potential customers from showing up.12 Similarly, the nonintegration principle negatively affects the interests of live gaming licensees such as SCF because it allows the permitholder literally to draw patrons away from the live gaming activities upon which the live gaming licensees depend, to a “nearby,” but physically separate and independent, SMB. The relative draw of the SMB, moreover, which must be an enclosed building, is enhanced if the LGF, pursuant to the open-air option, does not afford patrons a conditioned environment. That is, when the nonintegration principle works in tandem with the open-air option at the same pari-mutuel facility, the result is even more disadvantageous to live gaming licensees, because the disequilibrium in patron comfort, as between slot machine players and live game spectators, ratchets up as the LGF becomes more stripped-down. The bottom line is that the nonintegration principle and the open-air option are unadopted rules because, in the Division’s hands, they create legally protected opportunities for permitholders to design, configure, and construct their physical plants, in ways that predictably and substantially affect live gaming licensees. 12 The undersigned regards this as self-evident. Common, everyday experience informs the undersigned—who doubts that any reasonable person can genuinely deny—that an enclosed, dry, heated or cooled environment, separated from the outdoors, where a spectator can sit and watch a race without being exposed to direct sunlight, wind, or insects, is more attractive to potential customers, in the main, than an open-air place where the spectator might be uncomfortably hot or cold, windswept, and bitten by mosquitoes; thus, a building is a relatively stronger draw. Continued on next page... The gatekeeper mechanism, in contrast, while perhaps having some of the characteristics of a general principle, is primarily a quasi-judicial ruling, operative only in the context of a quasi-judicial administrative proceeding, and lacking any broad regulatory effect. While such a ruling plainly affects the interests of the party or parties to the particular proceeding, it is judicially reviewable without the mediation of yet another administrative proceeding (unlike an intended regulatory decision, which becomes final unless a hearing is requested).13 To be sure, the question of whether an agency statement to the effect that “formal hearings shall not be granted if the historical facts are undisputed, leaving for determination only the ultimate fact of compliance” (whose level of generality is somewhat higher than the gatekeeper mechanism at issue) could be deemed an unadopted rule is fairly debatable. Yet, even that apparently rule-like statement, which arguably “describes the procedure or practice requirements of an agency,”14 would be actionable only as an interlocutory order in a quasi-judicial proceeding, because only such a proceeding would give the agency an opportunity to use the statement. It is hard, therefore, to distinguish between 13 In other words, if a party disagrees with the agency’s decision under section 120.569(2)(a) to deny the party’s request for a formal hearing, that party does not need to request another administrative hearing to contest the decision. The agency’s decision to deny a formal hearing and proceed under section 120.57(2) is a nonfinal order, which may be immediately appealed under section 120.68(1)(b), see United States Service Industries-Florida v. Department of Health and Rehabilitative Services, 383 So. 2d 728 (Fla. 1st DCA 1980), or reviewed on plenary appeal from an adverse final order, see Spuza v. Department of Health, 838 So. 2d 676 (Fla. 2d DCA 2003). If the agency refuses to discharge its duty under section 120.569(2)(a), mandamus will lie. See Cmty. Health Charities v. Dep’t of Mgmt. Servs., 961 So. 2d 372 (Fla. 1st DCA 2007). 14 See § 120.52(16), Fla. Stat. (definition of “rule”). “policy” and “reversible error” in this instance.15 Ultimately, the undersigned determines that the gatekeeper mechanism is not a rule by definition.
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 abetting bookmaking on its licensed premises. If so, what disciplinary action
Recommendation Based on the foregoing, it is RECOMMENDED: That the charges against Rickey's Restaurant and Bar, Inc., be DISMISSED. DONE AND RECOMMENDED this 5th day of February, 1982, in Tallahassee, Florida. R. L. Caleen, Jr. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675
