Findings Of Fact Petitioner is a horse trainer licensed in the State of Florida, and holds Occupational License No. L-25378. Respondent is a division of the Department of Business Regulation, and is charged by law with regulatory authority over Florida's pari-mutuel wagering industry. On May 5, 1979, Respondent issued an administrative complaint, seeking to fine, suspend or revoke Petitioner's occupational license, alleging that Petitioner had violated Rules 7E-4.25(16) and 7E-4.02(17)(a), Florida Administrative Code. The administrative complaint alleges that on December 7,1 979, a search of Petitioner's automobile, conducted pursuant to Rule 7E-4.02(3), Florida Administrative Code, revealed certain prohibited drugs and other items including Didrex, Narcan, Levophed, cannabis or marijuana, and hypodermic syringes and needles. The facts alleged in the administrative complaint presently are pending before the Division of Administrative Hearings in Division of Administrative Hearings Case no. 80-1147.
The Issue The issues for disposition in this case are whether Hamilton Downs violated section 550.01215(3), Florida Statutes (2013), by failing to operate all performances specified on its license on the date and time specified, and whether the Division should be estopped from prosecuting Hamilton Downs.
Findings Of Fact The Division is the state agency charged with regulating pari-mutuel wagering activities in Florida pursuant to chapter 550, Florida Statutes. At all times material to the Amended Administrative Complaint, Hamilton Downs held a Quarter Horse Racing pari- mutuel permit issued by the Division, number 0000547-1000, that authorized Hamilton Downs to conduct pari-mutuel wagering on quarter horse races pursuant to chapter 550. On or about March 15, 2013, the Division issued a Permitholder Annual License & Operating Day License (the “operating license”), number 0000547-1001, to Hamilton Downs, which authorized Hamilton Downs to perform 20 regular quarter horse performances from June 18 through 22, 2014, at a rate of four performances a day. Each performance consisted of eight individual races. Thus, the operating license authorized a total of 160 races. In 2012 and 2013, Hamilton Downs conducted licensed quarter horse barrel match races at its facility. When the 2014 operating license was issued, Hamilton Downs intended to conduct a meet consisting of barrel match races. As a result of litigation that culminated several months before the commencement of the Hamilton Downs 2014 racing meet, the Division advised Hamilton Downs that it would not be able to conduct barrel match racing under its quarter horse racing operating permit. However, Hamilton Downs was permitted to conduct “flag-drop” racing during that period of time. From June 18 through 22, 2014, Hamilton Downs conducted the quarter horse “flag drop” racing meet pursuant to its operating license. Flag drop racing as performed at Hamilton Downs involved two horses racing2/ simultaneously on a crude dirt “track” approximately 110 yards in length. The track was straight for about 100 yards, with a pronounced rightward turn to the finish line, and was haphazardly lined with white stakes. The race was started by a person who waved a red cloth tied to a stick whenever it appeared that both horses were in the general vicinity of what the starter perceived to be the “starting line.” There was no starting box or gate. The track was in the middle of an open field. There was no grandstand, though there was a covered viewing area on “stilts” from which the state steward and track stewards could observe the races. The track had one betting window and tote machine in an on-site shed. The only window in the shed was, mercifully, occupied by a window-unit air conditioner. As stated by Mr. Haskell, “nothing about Hamilton Downs is real in terms of racetrack standards.” For several years prior to the 2014 meet, Hamilton Downs shared horses and riders with the racetrack in Gretna, Florida, and the North Florida Horsemen’s Association. Several weeks prior to the commencement of the Hamilton Downs 2014 meet, a schism developed between the groups. As a result, the Gretna racetrack and North Florida Horsemen’s Association prohibited its horses and riders from competing in Hamilton Downs meets. That action stripped Hamilton Downs of most of the horses and riders that it was relying upon to perform in its meet. Mr. Richards had the permitted dates, and was required to race on those dates to remain in compliance. He was able to make arrangements for horses “way down on the eligible list.” They were, for the most part, older horses of lesser quality. Nonetheless, Hamilton Downs did its best to fulfill its permitted slate of races. The pool from which the races were set included 19 horses and six riders. The horses and riders were supplied to Hamilton Downs by the Hamilton Downs Quarter Horse Association (HDQHA). The HDQHA believed it could provide enough horses to handle the meet. The horses, and their owners, were: Precious N Fritz -- Stardust Ranch, LLC Skippers Gold Tupelo -- Stardust Ranch, LLC Business Official -- Stardust Ranch, LLC Cutter With A Twist -- Stardust Ranch, LLC Dun It Precious Gal -- Stardust Ranch, LLC Heavens Trick -- Stardust Ranch, LLC Dancer Blue Ghost -- Amie Peacock Starpion N Skip -- Amie Peacock Twist N to Stardust -- Amie Peacock Docs Lil Jose -- Amie Peacock Dandees Bay Apache -- Amie Peacock Kings Hollywood Moon -- Amie Peacock Lassies Last Chance -- Elaine Tyre Sugars Daisy Bar -- Elaine Tyre Touch of Leaguer -- Elaine Tyre Joys Winning Touch -- Elaine Tyre Jazz Potential -- Emma McGee Sonney Dees Diamond -- Emma McGee Royal King Princess -- Richard McCoy The riders were: Amie Peacock Elaine Tyre Emma McGee Richard McCoy Nicholas McCoy Christine Bradley Each of the owners was licensed by the Division. The riders were mainly local riders. The breeds of the horses complied with state law regarding horses allowed to run in quarter horse races.3/ The horses had their ownership records and identifying tattoos, and their current Coggins forms, which are required to substantiate that they have tested negative for diseases. Mr. Stallings testified that there were no problems regarding the ages of the horses since “that is not something DBPR worries about.” The animal detention areas checked out and were secure. Mr. Taylor inspected the track and found no violations of track setup under the current rules. The horses and riders had access to the track for the three days prior to the meet for purposes of training and acclimating the horses to the track. The races at Hamilton Downs during June 2014 were conducted in the presence of a state steward. The races must be seen to be believed. The 14 events for which video evidence was received show a series of races involving -- as a rule -- tired, reluctant, skittish, or disinterested horses moving at a slow pace down the dust-choked path. There was no marked starting line or finish line. The horses were often yards apart when the red rag-on-a-stick was waved. With one exception (performance 2, race 7), the gait of the “racing” horses ranged between a slow walk and a canter. Horses often simply stood at the starting line before slowly plodding down the track. In one instance, a horse actually backed up, until a bystander took it by the lead, thereafter giving the horse a congratulatory slap on the rump when it began to move in a forward direction. Mr. Haskell noted races in which riders fell off of their horses, or in which a horse left the course. He described numerous races, aptly, as non- competitive because one or both of the entrants walked, including one race (day 3, card 3, race 5) in which the racing steed took 1 minute and 45 seconds to cover the 110-yard course. The overall quality of the videotaped races was about what one would expect of an entry-level campers’ horse show held at the conclusion of a two-week YMCA summer camp. The interest in the series of races by the betting public was commensurate with the quality of the races. Wagers were of the $2.00 variety. Over the course of the 160-race meet, a total of 10 bets were placed, with two of those reportedly placed by a representative of a competing facility in an effort to substantiate wrongdoing on the part of Hamilton Downs. Given the competitive level of the races, a $20 handle seems about right. Mr. Haskell testified that the same horses just kept racing over and over. However, his steward’s report noted that he “refer[ed] to the ‘rule book’ numerous times in the five days pertaining to ages of horses, number of races a horse may race in a limited time, etc., but the rules just didn’t exist.” Mr. Taylor expressed similar concerns with the failure of the horses to “break” at the start of the races, their slow pace, and other issues. He did not make a point of them or bring them to the attention of Hamilton Downs because there was “no rule violation.” Despite the bemused, occasionally embarrassed expressions on the faces of the riders as their horses ambled slowly down the track, the witnesses, including Mr. Haskell and Mr. Taylor, uniformly testified that the riders tried to make sure the races were competitive. Thus, the poor quality of the races cannot be attributed to a lack of effort on their part. “Coupled entries” are those in which horses owned by the same owner compete against one another in the same race. On the second race of the meet, it was discovered that the two horses scheduled to race were both owned by Amie Peacock. Although the racing program had been distributed to all race officials involved, including the state steward, no one noticed the coupled entry. The preponderance of the evidence indicates that the coupled entry was discovered immediately before the start of the race. The racing secretary attempted to alert the starter, but was unsuccessful. Therefore, the race was run.4/ When the coupled entry was discovered, and before the race was made official, a post-race meeting of roughly 30 minutes was held to determine how to proceed. A preponderance of the evidence indicates that the meeting participants included, among others, the state steward, the track stewards, the state investigative specialist, the racing secretary, and the track owner. During the meeting, Mr. Richards offered that the race could be “re-run,” an option that was rejected since there is no authority for re-running a race. Mr. Richards also proposed calling a “no-contest,” which would allow Hamilton Downs to request an additional race from the Division. An additional race is not a re-run of the disputed race, but is a replacement race to be conducted at a different time during the meet. Mr. Richards was familiar with the procedure for requesting an additional replacement race, and was fully prepared to do so. It is not uncommon for such requests to be made in all types of pari-mutuel activities. Mr. Haskell acknowledged the possibility of declaring a no-contest for the coupled entry, and agreed that if he had declared a no-contest, Hamilton Downs could have requested a “make-up date” to be approved by the Division. At the conclusion of the meeting, Mr. Haskell did not declare a no-contest. Rather, he decided to make the race “official.” As a result, Hamilton Downs could not request a make-up race. Mr. Taylor discussed the incident with management of Hamilton Downs, and promised to keep an eye out to make sure a coupled entry did not recur. After the second race of the meet, there were no further instances of coupled entries. Over the course of the meet, Mr. Haskell declared all of the 160 races, including the coupled entry race, to be official, whereupon the winner of the race was determined and results were entered by an Amtote employee into the computer and transmitted to the “hub.” At that point, wagers (if any) were paid out, and the tote was allowed to roll over to the next race. During the June 2014 races at Hamilton Downs, a purse, stake, or reward was offered for the owner of each horse to cross the finish line first. Mr. Richards was frank in his admission that the 2014 race season was important because it allowed Hamilton Downs to qualify for a cardroom license and, if ultimately allowed, slot machines. However, the reason for conducting the meet is of no consequence to the outcome of this proceeding. Hamilton Downs has, subsequent to the 2014 meet, conducted flag drop races at its facility pursuant to operating permits issued by the Division. Within the past five years, the Division has never filed an administrative complaint, suspended a pari-mutuel permitholder, or fined a pari-mutuel permitholder due to a failure to conduct a race at any particular speed. Within the past five years, the Division has never suspended a pari-mutuel permitholder for a violation of section 550.01215 that pertained to a race or races that were made official by a state steward.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED that a final order be entered dismissing the Amended Administrative Complaint. DONE AND ENTERED this 26th day of May, 2016, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of May, 2016.
The Issue Whether Petitioners are entitled to exceed the twenty percent cap on simulcasts.
Findings Of Fact The Department is the state agency charged with the responsibility of regulating pari-mutuel facilities within the State of Florida. The Department also regulates, pursuant to Chapter 550, Florida Statutes, simulcast broadcasts of pari-mutuel events which are imported into the state at pari-mutuel facilities located within Florida. Such broadcasts are permissible and are subject to statutory taxes depending on the type of event and the applicable percentages of tax on the wagers received. Such amounts may vary depending on facility and type of event. Thoroughbred racing permit holders may simulcast thoroughbred races conducted at out-of-state thoroughbred tracks. Similarly, a harness racing facility may simulcast harness races conducted at out-of-state harness tracks. Theoretically, greyhound clubs may simulcast greyhound races conducted out-of- state and jai alai may simulcast jai alai matches from out-of-state. In each instance, the Florida pari-mutuel permit holder may send the simulcast signal to any pari-mutuel permit holder within the state. Historically, the number of the races which could be imported from out- of-state to be broadcast at a Florida permit holder location was capped at twenty percent. A permit holder could exceed this limitation with approval from the Department when it was in the best interests of racing and would promote live racing and purse distribution. Petitioner, Calder Race Course, Inc. (Calder), is a thoroughbred racing pari-mutuel permit holder fully authorized by the Department to conduct live races during its racing meet. Its racing facility is located in Miami, Florida. In June, 1995, Calder first requested permission to conduct full card simulcasting pursuant to Section 550.3551(6), Florida Statutes. That request, covering racing dates remaining for the 1995-1996 racing season, was denied. Moreover, Calder's request for an administrative hearing to challenge the denial was also denied. Calder's successful appeal to the district court of appeal ultimately resulted in this matter, DOAH case no. 95-6180, being referred to the Division of Administrative Hearings for formal proceedings. In December, 1995, Calder again filed an application to exceed the twenty percent full card simulcast limitation for its 1996-1997 racing season. Again, the Department denied the request. Having the benefit of the appellate decision, the Department referred the matter, DOAH case no. 96-1348, to the Division of Administrative Hearings for formal proceedings. Petitioner, Tampa Bay Downs, Inc. (TBD), is a thoroughbred racing pari-mutuel permit holder fully authorized to conduct live races during its racing season. Its racing facility is located in Oldsmar, Florida. In September, 1995 and January, 1996, TBD applied for full card simulcasting for its racing meet. Consistent with its response to Calder's request, the Department denied the TBD applications and referred the matter to the Division of Administrative Hearings for formal proceedings, DOAH case nos. 96-0025 and 96-1351. Petitioner, Tropical Park, Inc. (Tropical), is a thoroughbred racing pari-mutuel permit holder that is fully authorized to conduct live races during its racing season. It shares the Calder facility in Miami but has a different racing meet. Like Calder, Tropical filed for full card simulcasting for its 1996- 1997 racing meet and was denied by the Department. Its petition for formal proceedings has been designated DOAH case no. 96-1349. Petitioner, Gulfstream Park Racing Association, Inc. (Gulfstream) is a thoroughbred racing pari-mutuel permit holder fully authorized to conduct live races during its racing season. Gulfstream is located in Hallandale, Florida. On or about January 3, 1996, Gulfstream filed an application with the Department for authorization to exceed the twenty percent limitation on simulcasts. This application was for the 1996-1997 racing season with a race meet running from January 3, 1997 through March 16, 1997. The Department denied Gulfstream's application. Such denial, DOAH case no. 96-1350, was timely opposed by Gulfstream. Petitioner, PPI, Inc., d/b/a Pompano Park Racing (Pompano), is a harness racing pari-mutuel permit holder that is fully authorized to conduct live harness races during its racing season. Pompano is located in Pompano Beach, Florida. On or about December 20, 1995, Pompano filed an application with the Department for authorization to exceed the twenty percent limitation on simulcasts. This application was for Pompano's 1996-1997 racing season. The Department denied Pompano's application. Such denial, DOAH case no. 96-1392, was timely opposed by Pompano. Petitioner, the Florida Thoroughbred Breeders' Association, d/b/a the Florida Thoroughbred Breeders' and Owners' Association (Breeders), is a nonprofit corporation with its principal place of business located in Ocala, Florida. This Petitioner represents Florida owners and breeders of thoroughbred race horses. The Breeders maintain that denying simulcasting in excess of the twenty percent limitation adversely impacts the amounts which must be paid as the breeder's percentage of the wagers made at pari-mutuel facilities. Thus, Florida breeders lose income which simulcasting in excess of the cap would contribute to breeders' awards. The Intervenors are greyhound pari-mutuel permit holders who opposed full card simulcasting in excess of the statutory twenty percent limitation. Such Intervenors did not oppose the importation of the broadcast signals to a specific pari-mutuel location, but opposed its unbridled rebroadcast to pari- mutuel facilities within the state as allowed by law. Before the hearing in this cause was completed and on the last day of the 1996 regular session, the Legislature enacted CS/HB 337. Such bill became law without the Governor's signature and went into effect on July 1, 1996. The new law made numerous amendments to Chapter 550, Florida Statutes. Among the changes was the removal of the twenty percent limitation on simulcast wagering for pari-mutuel permit holders. On May 16, 1996, the Department issued a letter to all pari-mutuel wagering permit holders that provided, in pertinent part: In light of this omnibus legislation which addressed the concerns of the entire pari- mutuel industry including the issues surrounding full-card simulcasting, the Division of Pari-Mutuel Wagering (Division) believes it is in the best interest of Florida racing to immediately allow full- card simulcast wagering until June 30, 1996 pursuant to the Division's discretion set forth in subsection six of Section 550.3551, Florida Statutes. Accordingly, any pari-mutuel wagering permitholder whose annual license currently authorizes them to conduct live performances at any time during the period of May 17, 1996 through June 30, 1996 may receive broadcasts of like-kind events conducted at facilities outside this State at the race- track, dog track, or jai-alai enclosure of the licensee during any live performance authorized by the permitholder's annual license. On June 30, 1996 the privilege granted by this letter terminates; thereby, ending any authorization to exceed the twenty-percent limitation on simulcast wagering for all permitholders within the State. Full-card simulcast wagering authorized and regulated pursuant to the provisions in the Committee Substitute for House Bill 337 becomes effective on July 1, 1996. Thereafter, the Department filed a motion to dismiss Petitioners' requests for formal administrative hearing due to mootness. The Intervenors have supported the Department's motion to dismiss. The Petitioners, with the exception of Gulfstream which wanted the hearing and the administrative process to be completed, filed a motion to abate so that the 1996-1997 racing season may be completed before a determination is made as to the mootness of the issue.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, enter a final order approving all full card simulcasting applications for which days remain in the Petitioner's racing meet. All other applications are deemed moot as the racing meets have expired. DONE AND ENTERED this 30th day of October, 1996, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 30th day of October 1996. COPIES FURNISHED: Alexander H. Twedt, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Harry R. Detwiler, Jr., Esquire John M. Alford, Esquire ALFORD & DETWILER 1106-6 A Thomasville Road Tallahassee, Florida 32303 Wilbur E. Brewton, Esquire Lee M. Killinger, Esquire Gray, Harris & Robinson, P.A. 225 South Adams Street, Suite 250 Tallahassee, Florida 32301 (Attorneys for Calder Race Course, Inc. and Tropical Park, Inc.) Howell L. Ferguson, Esquire Cindy L. Bartin, Esquire LANDERS & PARSONS Post Office Box 271 Tallahassee, Florida 32302 (Attorneys for Tampa Bay Downs, Inc.) Gary R. Rutledge, Esquire Harold F.X. Purnell, Esquire Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32302 (Attorneys for the Intervenors) David S. Romanik, Esquire ROMANIK, LAVIN, HUSS & PAOLI 1901 Harrison Street Hollywood, Florida 33020 (Attorneys for Gulfstream Park Racing Association, Inc.) Warren H. Husband, Esquire Messer, Caparello, Madsen, Goldman & Metz, P.A. Post Office Box 1876 Tallahassee, Florida 32302-1876 (Attorneys for Florida Thoroughbred Breeders' Association) Alan B. Koslow, Esquire David H. Reimer, Esquire BECKER & POLIAKOFF, P.A. Post Office Box 9057 Fort Lauderdale, Florida 33310-9057 (Attorneys for PPI, Inc.) Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Royal H. Logan Acting Director Pari-Mutuel Wagering Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Should Petitioner impose discipline against Respondent's Pari-Mutuel Wagering Occupational License, and other relief for alleged violation of Section 550.2415(1)(a), Florida Statutes (2005)?
Findings Of Fact Between May 24, 2005 and June 18, 2005, Respondent held a Pari-Mutuel Wagering Occupational License, number 1102016- 1021, issued by Petitioner. On May 25, 2005, Respondent was the trainer of record of a racing greyhound named "Lips Are Sealed." On May 25, 2005, "Lips Are Sealed" was entered, and finished first (1st), in the second (2nd) race of the performance at Pensacola Greyhound Track. Immediately following the second (2nd) race of the performance at Pensacola Greyhound Track on May 25, 2005, urine sample number 129287 was collected from "Lips Are Sealed." The University of Florida Racing Laboratory tested urine sample number 129287 and found it to contain Benzoylecgonine (a metabolite of Cocaine), and/or a derivative thereof. Benzoylecgonine (a metabolite of Cocaine), and/or a derivative thereof, is an impermissible substance, that was carried in the body of "Lips Are Sealed" while participating in the second (2nd) race of the performance at Pensacola Greyhound Track on May 25, 2005. On June 1, 2005, Respondent was the trainer of record of a racing greyhound named "Red Eyed Fever." On June 1, 2005, "Red Eyed Fever" was entered, and finished first (1st), in the fourth (4th) race of the performance at Pensacola Greyhound Track. Immediately following the fourth (4th) race of the performance at Pensacola Greyhound Track on June 1, 2005, urine sample number 129348 was collected from "Red Eyed Fever." The University of Florida Racing Laboratory tested urine sample number 129348 and found it to contain Benzoylecgonine (a metabolite of Cocaine), and/or a derivative thereof. Benzoylecgonine (a metabolite of Cocaine), and/or a derivative thereof, is an impermissible substance, that was carried in the body of "Red Eyed Fever" while participating in the fourth (4th) race of the performance at Pensacola Greyhound Track on June 1, 2005. On June 16, 2005, Respondent was the trainer of record of a racing greyhound named "Stubborn Kind." On June 16, 2005, "Stubborn Kind" was entered, and finished first (1st), in the first (1st) race of the performance at Pensacola Greyhound Track. Immediately after the first (1st) face of the performance at Pensacola Greyhound Track on June 16, 2005, urine sample number 129469 was collected from "Stubborn Kind." The University of Florida Racing Laboratory tested urine sample number 129469 and found it to contain Benzoylecgonine (a metabolite of Cocaine), and/or a derivative thereof. Benzoylecgonine (a metabolite of Cocaine), and/or a derivative thereof, is an impermissible substance, that was carried in the body of "Stubborn Kind" while participating in the first (1st) race of the performance at Pensacola Greyhound Track on June 16, 2005. On June 17, 2005, Respondent was the trainer of record of a racing greyhound named "Drinktil Hescute." On June 17, 2005, "Drinktil Hescute" was entered, and finished first (1st), in the fifth (5th) race of the performance at Pensacola Greyhound Track. Immediately following the fifth (5th) race of the performance at Pensacola Greyhound track on June 17, 2005, urine sample number 129479 was collected from "Drinktil Hescute." The University of Florida Racing Laboratory tested urine sample number 129479 and found it to contain Benzoylecgonine (a metabolite of Cocaine), and/or a derivative thereof. Benzoylecgonine (a metabolite of Cocaine), and/or a derivative thereof, is an impermissible substance, that was carried in the body of "Drinktill Hescute" while participating in the fifth (5th) race of the performance at Pensacola Greyhound Track on June 17, 2005.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is RECOMMENDED: That a final order be entered revoking the occupational license held by Respondent, imposing a $5,000.00 fine and requiring the return of the race purses. DONE AND ENTERED this 27th day of June, 2006, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of June, 2005. COPIES FURNISHED: Stefan Thomas Hoffer, Esquire Department of Business and Professional Regulation Division of Pari-Mutuel Wagering 1940 North Monroe Street Tallahassee, Florida 32399-2202 Thomas M. Dudley, Sr. 327 Northeast 434 Street Old Town, Florida 32680 David J. Roberts, Director Division of Pari-Mutuel Wagering Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Josefina Tamayo, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue This is a case in which the Petitioner, for reasons set forth in an Amended Administrative Complaint and Notice of Intent to Deny License, seeks to impose administrative fines against the Respondent, seeks to suspend or revoke the Respondent’s thoroughbred racing permit, and seeks to deny the Respondent’s application for another thoroughbred racing license.
Findings Of Fact The parties The Petitioner is the State of Florida, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (Division), which is created by Section 20.165(2)(f), Florida Statutes. The Respondent has been the holder of a permit to conduct pari-mutuel wagering upon thoroughbred horse racing in Dade County, Florida, since 1978. Background facts The Respondent has between 1250 and 1350 stable stalls. Gulfstream, a nearby thoroughbred horse racing facility, has about 1450 stable stalls. Calder, another nearby thoroughbred horse racing facility, has about 1750 stable stalls. This larger number of stalls allows Calder to run races when other South Florida thoroughbred tracks are not running. The racing season of 1989-1990 was the first Florida thoroughbred horse-racing season after the statutory deregulation of racing dates. The 1989-1990 racing season was the first racing season during which the Respondent had other South Florida thoroughbred races competing with it on every date on which it was scheduled to race during that season. During the 1989-1990 racing season, the Respondent ran in direct competition with Tropical Park, which was a separate permit- holder owned by Calder. The Respondent’s annual license for the 1989-1990 racing season called for it to race on 141 days during that racing season, but it only raced on 28 days. The Respondent’s decision to cancel the remainder of its racing dates during the 1989-1990 season was due primarily to an insufficient number of available horses to field a full program of horses on a day-to-day basis on all of the days on which the Respondent was supposed to have races. Although the matter is not entirely free from doubt, it was believed by some horsemen at that time that the lack of a sufficient number of horses at Hialeah during the 1989-1990 racing season was due, at least in part, to alleged threats by functionaries of Calder to the effect that horses stabled at Calder that raced at the Respondent's race track that season would be evicted from the Calder stables.2 In 1989, Calder was owned by an individual named Bert Firestone. In 2002, Calder was owned by, and is still owned by, Churchill Downs, a public company. In 1989, Gulfstream was owned by the Donn family. In 2002, Gulfstream was owned by, and is still owned by, Magna Entertainment Corporation. In 1991, the deregulation legislation that permitted the competitive racing dates that first occurred during the 1989-1990 racing season was modified. The modification imposed tax penalties on race tracks that ran more than one of the three designated racing periods. The modification was, however, written to sunset in 2001. The effect of this modification was to give the Respondent a ten-year reprieve from head-to-head competition with Gulfstream and Calder. The Respondent lobbied for the passage of legislation that would, in effect, have forgiven the Respondent for failing to run its licensed race dates in March, April, and May of 2002. The legislation was enacted into law in 2002. Gulfstream filed a lawsuit challenging the constitutionality of that legislation. The legislation that would have forgiven the Respondent’s failure to run its races was eventually found to be unconstitutional. In 2003, the Respondent proposed additional legislation that would have forgiven the Respondent for not operating in the future. Gulfstream successfully lobbied against the passage of the legislation. The Respondent has a very large and very high quality turf course. Horsemen prefer the quality of the turf at the Respondent’s track, but they run at Gulfstream because of the better purses. Gulfstream and Calder both enter into revenue sharing contracts (called “50-50 contracts”) with the horsemen. The Respondent has never agreed to revenue sharing and typically paid only the statutory minimums. The 2001-2002 thoroughbred racing season On December 12, 2000, the Respondent filed an application for an annual license to conduct pari-mutuel operations at a thoroughbred racing meet during the 2001-2002 thoroughbred racing season. On February 13, 2001, the Division issued Respondent License Number 1300, for the 2001-2002 thoroughbred racing season. This license required Respondent to conduct 58 matinee thoroughbred performances from March 17, 2002, through May 22, 2002. The Respondent did not conduct any of the licensed thoroughbred performances from March 17, 2002, through May 22, 2002. The Respondent’s failure to conduct any of the licensed thoroughbred performances from March 17, 2002, through May 22, 2002, was not the direct result of a fire. The Respondent’s failure to conduct any of the licensed thoroughbred performances from March 17, 2002, through May 22, 2002, was not the direct result of a strike. The Respondent’s failure to conduct any of the licensed thoroughbred performances from March 17, 2002, through Mary 22, 2002, was not the direct result of a war. The Respondent’s failure to conduct any of the licensed thoroughbred performances from March 17, 2002, through May 22, 2002, was not the direct result of a disaster beyond the ability of Respondent to control. Annual licenses to conduct pari-mutuel operations at thoroughbred racing meets during the 2001-2002 thoroughbred racing season were also issued to Gulfstream and to Calder. The racing dates in these two racing licenses did not compete with each other, but they did compete with the racing dates in the annual license issued to the Respondent. The effect of the licenses issued by the Division for the 2001-2002 racing season was that the Respondent faced competing dates from Gulfstream from March 17 through April 24, 2002, and then faced competing dates from Calder from April 25 through May 22, 2002. The Respondent learned of the competing date applications filed by Gulfstream and Calder for the 2001-2002 racing season shortly after January 4, 2001. Upon discovering that the competing licenses had been requested, representatives of the Respondent attempted to contact representatives of Gulfstream and Calder to negotiate non-competing dates. Representatives of the Respondent also contacted race tracks outside of Florida to attempt to create a circuit comprised of northern horses that did not traditionally race in South Florida. Representatives of the Respondent did not make a significant effort to contact horsemen to obtain horses for the Respondent’s 2002 race dates. After learning that Gulfstream and Calder were not willing to change their dates, the Respondent’s Chairman of the Board, John J. Brunetti, asked the Respondent’s racing secretary, Sam Abbey, to inquire as to what horses could reasonably be expected to be shipped down to the Respondent’s stables for the 2001-2002 racing season. Mr. Abbey made only a half-hearted effort at such inquiries because it seemed to be pretty much a foregone conclusion that Hialeah was not going to race on its dates in the 2001-2002 season, and the few horsemen contacted by Mr. Abbey expressed no interest in coming to Hialeah for the 2001-2002 racing season. At all times material to this case, Kent H. Stirling has been the executive director of the Florida Horsemen's Benevolent and Protective Association. In that position, Mr. Stirling acts as a liaison between the race tracks and the horsemen, representing the interests of the horsemen. Among other things, Mr. Stirling negotiates purse contracts with the race track owners. Neither Mr. Brunetti nor Mr. Abbey contacted Mr. Sirling regarding the negotiation of a purse contract for the 2001-2002 racing season. In the normal course of events, purse contracts are negotiated six or seven months in advance of the race dates. Mr. Brunetti and the other people involved in the management of Hialeah never made a serious effort to conduct any races during the 2001-2002 racing season. Shortly after learning that they would have to run their races with direct competition that season, it appeared to be a foregone conclusion that Hialeah would not race that season because it did not want to race with direct competition.3 As early as May 22, 2001, Mr. Brunetti advised race fans in the program for Hialeah’s last racing day of the 2000-2001 season: “By now you have heard that Hialeah Park will probably end its racing career with our last racing day, May 22. This is sad, but true.” An early decision to not run any races during the 2001-2002 racing season is also evidenced by the fact that Mr. Brunetti never contacted Mr. Stirling to negotiate a purse contract for the 2001-2002 racing season. Mr. Brunetti’s decision not to race during the 2001- 2002 racing season appears to have been based largely on the notion that, because the 1989-1990 racing season with direct competition on race dates had been a total disaster, racing in 2001-2002 with direct competition would probably also be a disaster, so it was not worth doing.4 During the 2001-2002 and the 2002-2003 thoroughbred racing seasons, by reducing the number of horses per race to 8 or 9, or by reducing the number of races per day to 8 or 9, and by racing 5 days per week, the Respondent could have accommodated a sufficient number of horses in its own stables to have run all of its race dates during those two seasons.5 In the past, the Respondent has had racing programs where it ran only 8 races per day. With the exception of the opening and the closing days, the last year the Respondent ran its authorized dates, it ran 8 races each day. The 2002-2003 thoroughbred racing season On December 20, 2001, the Respondent filed an application for an annual license to conduct pari-mutuel operations at a thoroughbred racing meet during the 2002-2003 thoroughbred racing season. On February 14, 2002, the Division issued the Respondent License Number 1300 for the 2002-2003 thoroughbred racing season. This license required the Respondent to conduct 89 matinee thoroughbred performances from February 1, 2003, through May 14, 2003. On March 28, 2002, the Respondent filed an application to amend License Number 1300 for the 2002-2003 thoroughbred racing season requesting a change of the number of performances and dates. On April 12, 2002, the Division issued the Respondent an amended license, Number 1300-Amendment A, to conduct pari- mutuel operations for the 2002-2003 thoroughbred racing season. The amended license required the Respondent to conduct 73 matinee thoroughbred performances from January 3, 2003, through April 13, 2003. The Respondent did not conduct any of the licensed thoroughbred performances from January 3, 2003, through April 13, 2003. The Respondent’s failure to conduct any of the licensed thoroughbred performances from January 3, 2003, through April 13, 2003, was not the direct result of a fire. The Respondent’s failure to conduct any of the licensed thoroughbred performances from January 3, 2003, through April 13, 2003, was not the direct result of a strike. The Respondent’s failure to conduct any of the licensed thoroughbred performances from January 3, 2003, through April 13, 2003, was not the direct result of a war. The Respondent’s failure to conduct any of the licensed thoroughbred performances from January 3, 2003, through April 13, 2003, was not the direct result of a disaster beyond the ability of the Respondent to control. The circumstances during the 2002-2003 were similar to those of the prior racing season. Racing licenses for the 2002- 2003 thorough bred racing season were again also issued to Gulfstream and to Calder. These two licenses did not compete with each other, but one of them did compete with the license issued to the Respondent. The effect of the combined racing licenses issued by the Division for the 2002-2003 racing season was that the Respondent faced competing dates from Gulfstream from January 3 through April 13, 2003. The Respondent’s racing dates did not compete directly with Calder in 2003. For essentially the same reasons as the season before, Mr. Brunetti made an early decision not to race during the 2002- 2003 thoroughbred racing season. Mr. Brunetti never contacted Mr. Stirling to negotiate a purse contract for the 2002-2003 racing season. Mr. Brunetti never made any serious efforts to attempt to attract horses to race at the Respondent's facility during the 2002-2003 season. The 2003-2004 thoroughbred racing season On January 2, 2003, the Respondent filed its application for an annual license to conduct pari-mutuel operations at a thoroughbred-racing meet during the 2003-2004 thoroughbred racing season. The Respondent’s application that was filed on January 2, 2003, seeks 81 thoroughbred performances from January 3, 2003, through April 24, 2004. On February 14, 2003, the Division issued an Administrative Complaint and Notice of Intent to Deny License based upon Respondent’s failure to conduct thoroughbred performances in the 2001-2002 and 2002-2003 thoroughbred racing seasons. On March 31, 2003, the Respondent filed a request to amend its application for an annual license to conduct pari- mutuel operations at a thoroughbred racing meet during the 2003- 2004 thoroughbred racing season.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be issued in this case revoking the Respondent’s thoroughbred racing permit and denying the Respondent’s application for a racing license for the 2003- 2004 thoroughbred racing season. DONE AND ENTERED this 30th day of September, 2004, in Tallahassee, Leon County, Florida. S MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of September, 2004.
The Issue Whether Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (“Division”), relied on an unadopted rule when it issued a 2016-2017 annual operating license and cardroom license to the South Florida Racing Association, LLC, d/b/a Hialeah Park (“Hialeah”), and continued to authorize slot machine operations at Hialeah beyond June 30, 2016.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, including the parties’ Joint Prehearing Stipulation, the following Findings of Fact are made: The FQHRA is a Florida not-for-profit corporation located in Tallahassee. It comprises members in good standing of its parent organization, the American Quarter Horse Association. The FQHRA describes its mission as promoting the owning, breeding, and racing of Florida-bred quarter horses. The FQHRA represents 602 breeders, owners, and trainers of quarter horses, many of whom have participated in the annual quarter horse meet at Hialeah Park. During the 2015-2016 racing season, 535 members of the FQHRA participated at Hialeah Park in a full schedule of live racing. The FQHRA is named specifically in statutes related to quarter horse racing in Florida. It is the statutory “default” horsemen’s association for purposes of setting the schedule of racing at quarter horse racetracks and representing quarter horse owners in negotiating purse agreements with quarter horse permitholders pursuant to sections 550.002(11), 551.104(10)(a)2. and 849.086(13)(d), Florida Statutes. Hialeah is the holder of a horse racing permit that authorizes it to conduct quarter horse racing at its facility, Hialeah Park, in Miami-Dade County, Florida. The Division is the state agency responsible for implementing and enforcing Florida’s pari-mutuel laws, including the licensing and regulation of all pari-mutuel activities conducted in the state. The Division’s regulatory duties include the adoption of “reasonable rules for the control, supervision, and direction of all applicants, permittees, and licensees and for the holding, conducting, and operating of all racetracks, race meets, and races held in this state.” § 550.0251(3), Fla. Stat. Gambling is generally prohibited under Florida law. See chapter 849, Florida Statutes, establishing criminal penalties for many forms of gambling.1/ However, certain types of pari-mutuel activities, including wagering on horse racing, have been authorized. In recent years, the Legislature has expanded the gambling activities that may occur at the facilities of licensed pari-mutuel permitholders by authorizing the operation of slot machines and cardrooms at pari-mutuel facilities. These operations are conditioned upon licensing requirements that include having a “binding written agreement” with the FQHRA or “the association representing a majority of the horse owners and trainers at the applicant’s eligible facility” as to the payment of purses on live quarter horse racing conducted at the facility. §§ 551.104(10)(a)2. and 849.086(13)(d)3., Fla. Stat. These conditions are commonly referenced as “coupling” the expanded gambling operations with the promotion of horse racing in the state. The Legislature has enacted specific conditions to be met by applicants for slot machine and cardroom licenses to ensure that coupling occurs. Section 551.104, the slot machine licensing statute, sets forth conditions specific to thoroughbred racing and similar conditions specific to quarter horse racing. For purposes of this proceeding, the quarter horse provision at subsection (10)(a)2. is relevant: No slot machine license or renewal thereof shall be issued to an applicant holding a permit under chapter 550 to conduct pari- mutuel wagering meets of quarter horse racing unless the applicant has on file with the division a binding written agreement between the applicant and the Florida Quarter Horse Racing Association or the association representing a majority of the horse owners and trainers at the applicant’s eligible facility, governing the payment of purses on live quarter horse races conducted at the licensee’s pari-mutuel facility. The agreement governing purses may direct the payment of such purses from revenues generated by any wagering or gaming the applicant is authorized to conduct under Florida law. All purses shall be subject to the terms of chapter 550. Section 849.086(13)(d)3. contains a virtually identical condition for a quarter horse racing permitholder seeking to operate a cardroom at its facility: No cardroom license or renewal thereof shall be issued to an applicant holding a permit under chapter 550 to conduct pari-mutuel wagering meets of quarter horse racing unless the applicant has on file with the division a binding written agreement between the applicant and the Florida Quarter Horse Racing Association or the association representing a majority of the horse owners and trainers at the applicant’s eligible facility, governing the payment of purses on live quarter horse races conducted at the licensee’s pari-mutuel facility. The agreement governing purses may direct the payment of such purses from revenues generated by any wagering or gaming the applicant is authorized to conduct under Florida law. All purses shall be subject to the terms of chapter 550. Once a track obtains its initial permit from the Division to conduct a particular type of pari-mutuel wagering, it must thereafter apply annually to the Division and obtain a license to conduct pari-mutuel operations. The license authorizes the track to conduct pari-mutuel wagering performances under its permit on the specific dates identified on the license. A permitholder must file its application between December 15 and January 4, for a license to conduct performances during the next state fiscal year, i.e., July 1 through June 30. The permitholder is entitled to amend its application through February 28. § 550.01215(1), Fla. Stat. The Division is also responsible for issuing licenses for cardroom gaming at a licensed pari-mutuel permitholder's facility. "A cardroom license may only be issued to a licensed pari-mutuel permitholder and an authorized cardroom may only be operated at the same facility at which the permitholder is authorized under its valid pari-mutuel wagering permit to conduct pari-mutuel wagering activities." § 849.086(5)(a), Fla. Stat. After initial issuance, a cardroom operator must apply annually for renewal of its cardroom license, which must be submitted in conjunction with the annual application for the pari-mutuel license. § 849.086(5)(b), Fla. Stat. To maintain its eligibility to operate cardrooms, the licensee must: [h]ave requested, as part of its pari-mutuel annual license application, to conduct at least 90 percent of the total number of live performances conducted by such permitholder during either the state fiscal year in which its initial cardroom license was issued or the state fiscal year immediately prior thereto if the permitholder ran at least a full schedule of live racing or games in the prior year. § 849.086(5)(b), Fla. Stat. The Division is also responsible for authorizing slot machine operations through the issuance of annual licenses pursuant to sections 551.104 and 551.105. As with cardrooms, slot machines may only be operated at a permitholder's eligible facility identified in a valid pari-mutuel wagering permit. § 551.104(3), Fla. Stat. As a condition of licensure, the slot machine licensee must conduct "no fewer [sic] than a full schedule of live racing or games as defined in s. 550.002(11)." § 551.104(4)(c), Fla. Stat. Section 550.002(11) sets forth the definition of “full schedule of live racing or games.” As to quarter horse permitholders, the definition provides, in relevant part: “Full schedule of live racing or games” means . . . for a quarter horse permitholder at its facility unless an alternative schedule of at least 20 live regular wagering performances is agreed upon by the permitholder and either the Florida Quarter Horse Racing Association or the horsemen’s association representing the majority of the quarter horse owners and trainers at the facility and filed with the division along with its annual date application . . . for every fiscal year after the 2012-2013 fiscal year, the conduct of at least 40 live regular wagering performances. Hialeah began quarter horse racing in 2009, partnering with the FQHRA to obtain initial approval from the Division to operate slot machines at the Hialeah Park facility. The FQHRA provided the horses and trainers needed by Hialeah to conduct two quarter horse race meets, one at the end of 2009 and one at the beginning of 2010. These race meets were timed to meet the definition of “eligible facility” set forth in section 551.102(4), which provides in relevant part that a licensed pari-mutuel facility may apply for a slot machine license “provided such facility has conducted live racing for 2 consecutive calendar years immediately preceding its application.” Hialeah and FQHRA entered into exclusive horsemen's agreements,2/ hereinafter referred to collectively as the “FQHRA Agreement,” to govern the payment of purses on live quarter horse races conducted at Hialeah's pari-mutuel facility for the 2009-2010 racing season through the 2015-2016 racing season. The FQHRA Agreement was valid through June 30, 2016. The last quarter horse race at Hialeah for the 2015-2016 season was February 29, 2016. As noted above, section 550.01215(1) requires a pari- mutuel permitholder to file its license renewal application between December 15 and January 4 for the next state fiscal year, and permits the applicant to amend its application through February 28. Section 550.01215(2) requires the Division to issue the license no later than March 15. Cardroom licenses must also be renewed annually, in conjunction with the applicant’s annual application for its pari-mutuel license. § 849.086(5)(b), Fla. Stat. Slot machine licenses are valid for one year and must be renewed annually. § 551.105(1), Fla. Stat. Hialeah’s most recent slot machine license was issued on December 11, 2015. In September 2015, it was apparent that Hialeah might be looking for options other than entering into a horsemen’s agreement with the FQHRA for the 2016-2017 season. On or about September 15, 2015, Hialeah's legal counsel, Andrew Lavin, met with Jonathan Zachem, then the director of the Division, and Jason Maine, legal counsel for the Division, to discuss several issues, including the upcoming application process. In a follow-up letter to Mr. Maine and Mr. Zachem, Mr. Lavin wrote: During our meeting you confirmed that the Division has on file SFRA's purse agreement with the Florida Quarter Horse Racing Association, which expires on June 30, 2016 (the "SFRA/FQHRA Agreement"). You also confirmed that the SFRA/FQHRA Agreement serves as the requisite agreement for SFRA's applications for its upcoming slots license and cardroom license. SFRA shall file its application accordingly. You further explained that it is the Division's position that by the expiration date of the SFRA/FQHRA Agreement, SFRA is required to have a new agreement on file with the Division that is effective as of July 1, 2016, and that meets the requirements of § 551.104(10)(a)(2), Fla. Stat., and § 849.086(13)(d)(3), Fla. Stat. Mr. Zachem confirmed that the meeting occurred and did not dispute the substance of Mr. Lavin’s letter. Representatives of the FQHRA met independently with the Division's leadership, including Jonathan Zachem and Jason Maine, in mid-September 2015, to discuss FQHRA's concerns with respect to Hialeah's license applications and the negotiations with Hialeah for a new horsemen's agreement for the 2016-2017 fiscal year. FQHRA came away from this meeting with the understanding that the Division would rely on the FQHRA Agreement to allow Hialeah to continue slot machine operations until the agreement expired on June 30, 2016, and that a new horsemen’s agreement would have to be in place for Hialeah to renew its cardroom license. Hialeah received a renewal of its slot machine license on December 11, 2015. In issuing this license, the Division relied on the FQHRA Agreement that would expire on June 30, 2016. Hialeah electronically submitted its application for its 2016-2017 racing license and cardroom gaming license on December 23, 2015. On February 26, 2016, Hialeah electronically submitted an amended application for its annual racing license. At the time of Hialeah’s applications for its 2016-2017 racing and cardroom licenses, the FQHRA Agreement was the only purse agreement in the Division’s files for Hialeah. In its December 2015 filings, Hialeah requested a full schedule of live racing and renewal of its cardroom gaming license for the 2016-2017 race year. A "full schedule of live racing" for the 2016-2017 quarter horse meet at Hialeah Park would be 40 live regular wagering performances, absent an alternative schedule agreed to by Hialeah and either the FQHRA or the horsemen's association representing the majority of the owners and trainers at Hialeah. Jamie Pouncey is the Division employee responsible for reviewing license applications for completeness. Ms. Pouncey has no authority to approve or reject license applications. Only the Division director has approval authority. Ms. Pouncey testified that having a valid horsemen’s agreement on file is a requirement for purposes of processing the cardroom application and for issuing the operating license. In reviewing Hialeah’s racing license application, Ms. Pouncey utilized a Division checklist that enumerated the necessary forms and other requirements. One of the items on that checklist stated: “a copy of the binding written agreements between the facility and respective associations (horsemen’s agreement) as required by section 849.086(13)(d)(3), Florida Statutes (Quarter Horse Only).” Ms. Pouncey marked the checklist to indicate that Hialeah met this requirement. In so doing, Ms. Pouncey relied on the FQHRA Agreement, which remained valid until June 30, 2016. On February 25, 2016, Dr. Steven Fisch, a former president and current board member of the FQHRA, sent an email to Ms. Pouncey inquiring whether Hialeah had applied for its 2016-2017 quarter horse racing license and whether it had submitted a horsemen's agreement. Ms. Pouncey responded that "there is one on file valid through 06/30/2016," and later confirmed to Dr. Fisch that the FQHRA Agreement was the only one on file for Hialeah at that time. On February 26, 2016, Hialeah electronically transmitted its amended racing license application to the Division. The amended application requested to run a reduced schedule of 36 performances instead of the full schedule of 40 requested in the December 2015 filing. At the time the amended application was filed, the only horsemen’s agreement on file at the Division for Hialeah remained the FQHRA Agreement, which included no deviation from the 40-performance schedule. On March 8, 2016, Ms. Pouncey indicated on the Division's checklist that Hialeah's amended application for a racing license and its application for a cardroom gaming license were complete, with all the necessary documentation in place. She forwarded Hialeah's renewal applications to Mr. Zachem, along with draft licenses for his signature. Ms. Pouncey testified that in her application review, she does not look at the issue of whether the applicant is requesting less than a full schedule of live racing dates. She had no specific recollection of whether Hialeah requested less than a full schedule. She made no assessment of whether 36 dates constitutes less than a full schedule. Ms. Pouncey testified that she would “consult management” if the issue arose during her application review, but stated that she did not do so regarding Hialeah’s application. On March 15, 2016, Hialeah electronically submitted to the Division a horsemen’s agreement between Hialeah and the SFQHA (the “SFQHA Agreement”). It represented that the SFQHA would be the horsemen’s association representing the majority of the horsemen at Hialeah Park effective July 1, 2016. Also on March 15, 2016, the SFQHA’s articles of incorporation were filed with the Secretary of State. Regarding who would represent the majority of the horsemen at Hialeah, the preamble of the SFQHA Agreement states: WHEREAS, because only horses owned by members of SFQHA will be eligible to participate in races during the race meet, the SFQHA is the horsemen's association that represents all of the horse owners and trainers at SFRA's facility who will participate in the live quarter horse events that will be conducted by Hialeah at Hialeah Park during the race meet to which this Agreement is applicable. The substance of the SFQHA Agreement elaborates as follows: 13. For and in consideration of the purse payments that Hialeah has agreed to make as provided in paragraph 4 above, Hialeah agrees that it will accept entries during the Race Meet only from owners and/or trainers: (a) that appear on the membership roll of the SFQHA as a member in good standing; and (b) that have on file with Hialeah a photocopy of an executed original “Pledge Card” in the form attached as Exhibit A whereby said owner and/or trainer has appointed the SFQHA to represent said owner and/or trainer for the purposes stated in § 550.002(11); § 551.104(10); § 849.086(13); and the IHA [Interstate Horseracing Act of 1978]. The SFQHA shall maintain up to date membership information that it will provide to Hialeah in order for Hialeah to comply with the requirements of this paragraph. Furthermore, Hialeah and the SFQHA agree that all entries shall be horses from qualifying breeds that have either been bred in the State of Florida or have been permanently based in the State of Florida during the calendar year preceding the day on which the horse is entered to race at Hialeah Park. No exceptions will be granted to the requirements of this paragraph. Regarding whether Hialeah would be required to run a full schedule of 40 performances during the racing season, the SFQHA Agreement states: 3. The parties agree that Hialeah has the managerial prerogative to determine the dates and the number of operating performances for which Hialeah shall seek authorization when filing an application for an operating license. * * * 12. The SFQHA hereby authorizes Hialeah to file this Agreement with the Division evidencing compliance by Hialeah with the provisions of Chapters 550, 551 and 849 that require the filing of this Agreement with the Division of Pari-Mutuel Wagering as a condition precedent to annual operating, cardroom and/or slot machine licensure. Specifically with regard to the number of performances that Hialeah shall operate, the SFQHA hereby provides the consent required by § 550.002(11) to authorize Hialeah to operate 36 performances during the Race Meet. The authorizations, approvals and consents set forth in this Agreement shall remain in full force and effect through June 30, 2017. On March 15, 2016, the Division issued to Hialeah a permit to conduct quarter horse racing at Hialeah Park for the fiscal year 2016-2017. The license, signed by Mr. Zachem as director of the Division, authorized 36 regular performances, as requested by Hialeah’s amended application. The FQHRA contends that the Division's issuance of licenses to Hialeah is based on a new, unpromulgated policy that allows pari-mutuel permitholders to unilaterally control racing dates and purse decisions without the involvement of an independent horsemen's association. The FQHRA also alleges that the Division is operating pursuant to a new, unpromulgated policy of allowing amendments to license applications after February 28 of a given year. The FQHRA urges the conclusion that the Division's issuance of licenses to Hialeah represents a new policy and/or interpretation of the statutory requirements that have not been promulgated as required by chapter 120, Florida Statutes. The FQHRA alleges that the Division's actions and new interpretations effectively authorize "decoupling" by allowing pari-mutuel permitholders to unilaterally control racing dates and purse agreements. The FHQRA presented extensive testimony regarding the Legislature’s intent when it established the requirement of a horsemen’s agreement between a permitholder and a horsemen’s association as a condition of licensure to operate slot machines or cardrooms, and the need for arm’s length negotiations in establishing those agreements. Dr. Fisch was involved in the effort in the late 1990s and early 2000s to found the FQHRA and re-establish quarter horse racing in Florida. He testified that an independent horsemen's association, genuinely representing the interests of the horsemen in negotiations with the permitholder, is necessary to promote the stability of the industry. The purse payments from the track must be sufficient to entice the horsemen, who incur substantial expenses, to provide horses for the races. A single race meet can result in the horsemen collectively investing millions of dollars. Dr. Fisch stated that fewer horsemen will race and enter into the horse racing industry if horsemen are excluded from purse negotiations and the number of races is arbitrarily reduced. Racing and its purse payments drive the horse breeding industry, which is important to the economy of the state. Dr. Fisch testified that if the horsemen's association is not independent from the track, then the track can dictate the purse payments and racing dates without input from the horsemen, a situation contrary to the intent and purpose of coupling expanded gaming opportunities with the continued healthy operation of horse racing. Dr. Fisch testified that the FQHRA offers membership to any owner or trainer racing at Hialeah Park. The FQHRA issues membership cards stating that the member has chosen FQHRA to represent him in track negotiations and legislative endeavors. Membership can be obtained online, and is renewed automatically every year. Dr. Fisch stated that people may opt out of membership in the FQHRA and still race at the facility. The FQHRA contends that the SFQHA is a sham organization established and controlled by Hialeah as a means to effectively skirt the coupling requirement of the relevant statutes. At the hearing, it was established that the SFQHA had no members as of March 14, 2016, the date on which the SFQHA Agreement was submitted to the Division, or as of March 15, 2016, the date the racing and cardroom licenses were issued. In deposition testimony, Wesley Cox, a founding board member of the SFQHA (since resigned), testified that the SFQHA had no signed pledge cards from members as of September 20, 2016. The FQHRA asserts that, as of the dates of the SFQHA Agreement and Hialeah’s license issuance, it was the only horsemen’s association representing a majority of the owners and trainers at Hialeah, by virtue of the ongoing FQHRA Agreement. Therefore, the FQHRA was the only entity authorized to enter a valid horsemen’s agreement with Hialeah. The FQHRA points out that the Division was presented with plentiful reasons to inquire whether the SFQHA was a “captive” association created by Hialeah. Even though both Hialeah and the FQHRA had made several inquiries to the Division regarding the license renewal requirements and the recognized horsemen's association for Hialeah, the Division made no effort to establish whether the SFQHA actually represented a majority of the owners and trainers at Hialeah at the time the SFQHA Agreement was submitted on March 15, 2016. The Division’s position is that the date of Hialeah’s license issuance was the correct time to ascertain which horsemen’s association represented a majority of the owners and trainers at Hialeah Park, because no racing was occurring at that time. There were no owners or trainers at Hialeah Park as of March 15, 2016. When asked whether the Division checked for SFQHA membership cards upon receiving the SFQHA Agreement, Mr. Zachem stated that “it wouldn’t have been possible yet” because Hialeah had not “had performances since [the filing of the SFQHA Agreement] for us to be able to.” The Division reads the language of sections 551.104(10)(a)2 and 849.086(13)(d)3. in literal terms: a “binding written agreement between the applicant and the [FQHRA] or the association representing a majority of the horse owners and trainers at the applicant’s eligible facility” must be “on file with the division” at the time the license is issued. At all times pertinent to this proceeding, there was a binding written agreement on file with the Division: the FQHRA Agreement that expired on June 30, 2016, and the SFQHA Agreement that commenced on July 1, 2016. The Division’s position is that the agreement in effect at the time the license is issued need not be the same agreement that will be in effect at the time the race meet is underway. Nothing in the statutes gainsays the Division’s position. The Division has not here acted according to an unadopted rule but pursuant to the language found on the face of the statute. No new policy has been announced, no interpretation was necessary. The only novel aspect of this licensing determination is that Hialeah has changed horsemen’s associations, an event clearly contemplated by sections 551.104(10)(a)2. and 849.086(13)(d)3. The FQHRA’s position is that Hialeah should be required to run its 2016-2017 race meet using the horsemen’s association with which it had an agreement on file with the Division at the time of the application. In other words, Hialeah has no alternative but to enter a new horsemen’s agreement with the FQHRA, using the slot machine statute’s arbitration process if necessary. See § 551.104(10)(c), Fla. Stat. Acceptance of the FQHRA’s position would make it difficult, if not impossible, for a quarter horse permitholder to ever dislodge an incumbent horsemen’s association. The statutes’ provision of alternatives--“the Florida Quarter Horse Racing Association or the association representing a majority of the horse owners and trainers at the applicant’s eligible facility”--militates against the FQHRA’s position.3/ The Division concedes that FQHRA’s points regarding legislative intent and the need for an independent horsemen’s association may be valid as matters of policy. However, the Division argues that the statutes give it no authority to determine which is a “legitimate” and which is a “sham” or “puppet” horsemen’s association. The term “horsemen’s association” is undefined in statute. The Division’s position is that if it has on file a facially valid and binding horsemen’s agreement, the Division lacks any statutory ground not to issue the license. Both Dr. Fisch and William White, the president of the Florida Horsemen’s Benevolent and Protective Association, Inc. (“FHBPA”)(a thoroughbred horsemen’s association recognized in the slot machine statute, see § 551.104(10)(a), Fla. Stat.), repeatedly referred to the need for “legitimate” horsemen’s associations in the pari-mutuel industry. Mr. White defined a “legitimate” horsemen’s association as one that “can prove it’s the majority.” This statement led to the following colloquy with counsel for the Division, illustrating the difficulty of proving who is “legitimate”: Q. Okay. What about a situation like Dr. Fisch described, where not every member has cards? A. If you get proved as the majority, you wouldn't have to have everyone have the card. Q. How is that? A. Well, if you have 1,000 members and you have 600 cards, you're the majority. Q. Okay. But how do I know -- if you only have 600 cards, how do I know you've got 1,000 members? A. Well, in our particular case, our membership is anyone who has an owners or trainers license. Q. Sure. A. So if I have cards that are more than half of that number, then I've proven to you that we're the majority. Q. You understand we're not talking about your organization, though, right? A. Yes. Q. So talking about the quarter horse association, who, all members we've heard, do not have cards, how are we to know how many members they have? A. Well, how much time did you put into it to find out the answer to that question? Q. I think you misunderstand. You need to answer the question, not ask me questions. A. I cannot answer it because I do not know your effort that you put into it. Q. I'm asking how could we. A. Get on the phone and write some letters. Send some investigators out there, do some work. Q. To people who don't have cards? A. To get a pulse on what's going on out there. Q. Okay. And how would you suggest we get said pulse? A. It's--I'll give you the answer you guys usually give me. Q. Okay. A. It's not my job to tell you what to do. The FQHRA insists that the Division has a duty to investigate the organization and membership of a horsemen’s association prior to issuing a license based on an agreement between the association and a permitholder, and that its failure to do so in this instance constitutes a change in policy. This insistence is based on the FQHRA’s reading of In re: Petition for Declaratory Statement of Florida Horsemen’s Benevolent & Protective Association, Inc., Case No. DS 99-025 (Mar. 22, 2000), issued by the Division in response to a request by the FHBPA, which sought a declaratory statement on how the Division “determines how a horsemen’s group, such as Petitioner, is ‘the horsemen’s group representing a majority of thoroughbred race horse owners and trainers in this state’ within the meaning of Section 550.3551(6)(a), Florida Statutes.” The FQHRA asserts that the declaratory statement “declared that a new horsemen’s association seeking to represent the majority of the horsemen at a facility to replace an existing representative group must demonstrate support through the presentation of membership cards evidencing that the new group actually represents the majority of the horsemen.” However, it is clear from the language of the declaratory statement that the Division was not declaring a general intent or duty on its part to investigate a new horsemen’s association prior to issuance of a license, or stating a specific requirement that membership cards be presented as proof. Rather, the Division was placing the onus on the permitholder to ensure that the horsemen’s group represents a majority of licensees: Recognizing that the state may impose penalties against the permitholder for violations of section 550.3551, Florida Statutes, the permitholder should make every reasonable means [sic] to verify that the horsemen’s group represents the majority of licensees.[4/] It is a reasonable summation that to determine which (if more than one horsemen’s group representing thoroughbred horserace owners and trainers exist) of the horsemen’s groups represent the majority of the thoroughbred horserace owners and trainers, one must examine the membership roster of each association. Signed enrollment cards should substantiate membership rosters. The permitholder should also receive confirmation that the membership roster is comprised of licensed thoroughbred racehorse owners or trainers maintaining a “current” status in contrast to an “expired” status. The membership roster must then be compared to the total number of licensed thoroughbred racehorse owners and trainers in the state on that race day. While section 550.2614(2), Florida Statutes, may have provided a mandatory verification process for the horsemen’s association to certify that it represented a majority of the owners and trainers of thoroughbred horses in the state, the Court in Florida Horsemen Benevolent & Protective Association v. Rudder, 738 So. 2d 449 (Fla. 1st DCA 1999), ruled all of section 550.2614, Florida Statutes, unconstitutional. Nevertheless, said ruling does not prohibit the permitholder from seeking verification, independently from the statute, from the horsemen’s groups. Such verification may be accomplished by several means, one [of] which may include state verification of the number of current licensed thoroughbred racehorse owners and trainers, supplemented by an affidavit by the horsemen’s association that it represents a majority of those licensees.[5/] The Division believes that the methodology outlined above is consistent with the legislative intent that the permitholder seek approval of the majority represented for holding less than eight live races on any race day. The Division’s actions in the instant case were not inconsistent with the declaratory statement as to the nature of the horsemen’s association. In the instant case, Hialeah submitted a horsemen’s agreement that on its face appeared to be valid and binding. The Division accepted Hialeah’s implicit representation that it had used all reasonable means to verify that the SFQHA represented (or would represent, at the time the new agreement took effect) a majority of the quarter horse owners and trainers at Hialeah Park. At the hearing, the Division stated that Hialeah’s representations could not be verified until the race meet begins. If events prove that the SFQHA does not represent a majority of the owners and trainers at Hialeah Park, then Hialeah will be subject to the disciplinary measures set forth in sections 551.014(10)(b) and 849.086(14). In the declaratory statement and in the instant case, the Division was consistent in claiming no duty or authority to investigate or take action against the permitholder prior to issuance of a license. The FQHRA also contends that the Division’s allowance of amendments to Hialeah’s application after February 28 constituted an unadopted rule. The Division counters that the filing of the SFQHA Agreement on March 14, 2016, was not an amendment of Hialeah’s application. Consistent with its position that the statute requires only that an agreement must be on file with the Division at the time an application is filed, and with the fact that the application form completed by the permitholder makes no reference to a horsemen’s agreement, the Division states that the agreement itself is not a part of the application. So far as this goes, the Division’s view is consistent with the statutes, none of which impose any deadline on the filing of a new horsemen’s agreement to take effect upon the expiration of the horsemen’s agreement already on file with the Division. However, the statutes in fact contemplate two agreements between the permitholder and a horsemen’s association. First, there is the mandatory “binding written agreement” regarding distribution of purses, for which the statutes provide no filing deadline. Second, there is the permissive agreement between the permitholder and the horsemen’s association regarding a reduction in the “full schedule of live racing” as defined by section 550.002(11). If the facility intends to run the full schedule of 40 racing performances, there is no need to file this agreement.6/ However, this second agreement does have a statutory deadline: it must be “filed with the division along with [the permitholder’s] annual date application.” This agreement is, in effect, part of the application if the permitholder is seeking approval of a reduced schedule for purposes of the cardroom and slot machine licensing requirements. The Division neglected to account for this deadline in concluding that Hialeah did not amend its application after February 28. Hialeah’s initial race dates and cardroom license application, filed December 23, 2015, requested a full schedule of 40 performances. Hialeah’s amended application, dated February 26, 2016, requested 36 performances, fewer than the statutory “full schedule” of 40. As of the application amendment deadline of February 28, 2016, Hialeah had not filed an agreement with any horsemen’s association for an “alternative schedule” reducing the statutory number of performances. Hialeah made such a filing only on March 15, 2016, when it submitted the SFQHA Agreement, which purported to “authorize Hialeah to operate 36 performances during the Race Meet” and generally consent to Hialeah’s “managerial prerogative” in determining the number of racing dates. The Division’s approval of Hialeah’s reduced operating schedule could only have been premised upon the SFQHA Agreement, which was not filed “along with . . . the annual date application,” even though in this respect it was part of the application. For purposes of the cardroom and slot machine license statutes, it is immaterial when the purse agreement has been filed so long as there is a valid agreement on file at the time the license is issued. Mr. Zachem accurately stated that the Division has no way of knowing whether the SFQHA is the majority horsemen’s association at Hialeah Park until the 2016-2017 race meet commences. The Division accepted the SFQHA Agreement on the premise that the SFQHA would represent, at the time of the race meet, a majority of the quarter horse owners and trainers at Hialeah Park, and that Hialeah would be subject to discipline against its license should that not come to pass. As to the purse agreement, the Division’s actions did not constitute an unadopted rule but a straightforward application of statutory language. However, the timing of the filing of the alternative schedule agreement is decisive. The deadline for filing the racing dates application was February 28, 2016. As of that date, the Division did know which horsemen’s association represented a majority of the owners and trainers at Hialeah Park because the 2015-2016 racing meet did not conclude until the following day, February 29, 2016. As of the filing deadline, the FQHRA was indisputably the majority horsemen’s association. As of the filing deadline, the SFQHA did not exist, even on paper. As of the filing deadline, no alternative schedule agreement had been filed with the Division.7/ Therefore, the Division’s action in approving Hialeah’s operating dates and cardroom licenses constituted either a waiver of the statutory deadline of February 28 for the filing of application amendments, or a waiver of the statutory requirement that a permitholder file an alternative schedule agreement in order to receive a license to run fewer than 40 live regular wagering performances. Such a waiver would perforce be generally applicable to any similarly situated applicant. The Division’s action in this respect constitutes an unadopted rule.
