08-001310RP Hartman And Tyner, Inc., D/B/A Mardi Gras Gaming vs. Department Of Business And Professional Regulation, Division Of Pari-Mutuel Wagering Status: Closed DOAH Final Order on Friday, May 30, 2008.

Summary: Proposed Rule 61D-11.012(5)(d) contravened provisions of Section 849.086(7)(b) and is arbitrary. The proposed rule is, therefore, an invalid exercise of delegated legislative authority.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HARTMAN AND TYNER, INC., d/b/a )

MARDI GRAS GAMING, )

)

Petitioner, )

)

vs. ) Case No. 08-1310RP

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF PARI-MUTUEL )

WAGERING, )

)

Respondent, )

)

and )

)

GULFSTREAM PARK RACING )

ASSOCIATION, INC., )

)

Intervenor. )

_________________________________)

FINAL ORDER

Pursuant to notice, a formal hearing was held in this case

on April 10, 2008, in Tallahassee, Florida, before Patricia M.

Hart, a duly-designated Administrative Law Judge of the Division

of Administrative Hearings.

APPEARANCES

For Petitioner: John M. Lockwood, Esquire

Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Tallahassee, Florida 32301

For Respondent: Charles T. "Chip" Collette, Esquire

Earl B. Christy, Jr., Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-2202

For Intervenor: Cynthia S. Tunnicliff, Esquire

Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

215 South Monroe Street, Second Floor

Post Office Box 10095

Tallahassee, Florida 32302-2095

STATEMENT OF THE ISSUE

Whether the Respondent's Proposed Rule 61D-11.012(5)(d)

constitutes an invalid exercise of delegated legislative

authority pursuant to Section 120.52(8)(c) and (e), Florida

Statutes, as set forth in the Petition Challenging the Validity

of Proposed Rule 61D-11.012(5)(d) filed March 14, 2008.

PRELIMINARY STATEMENT

On March 14, 2008, Hartman and Tyner, Inc., d/b/a/ Mardi

Gras Gaming ("Hartman and Tyner"), filed a Petition Challenging

the Validity of Proposed Rule 61D-11.012(5)(d), which originated

with the Division of Pari-Mutuel Wagering of the Department of

Business and Professional Regulation, ("Division"). Proposed

Rule 61D-11.012(5)(d) limits the hours of operation of a

cardroom at a pari-mutuel facility to a cumulative 12 hours per

day regardless of the number of pari-mutuel wagering

permitholders and cardroom licensees operating at the pari-

mutuel facility. In the Petition, Hartman and Tyner asserted

that Proposed Rule 61D-11.012(5)(d) is an invalid exercise of

delegated legislative authority pursuant to Section 120.52(8)(d)

and (e), Florida Statutes, because it enlarges, modifies, or

contravenes Section 849.086(7)(b), Florida Statutes, the law

purportedly implemented by the proposed rule, and because it is

arbitrary or capricious.

On March 19, 2008, Gulfstream Park Racing Association,

Inc., ("Gulfstream Park") filed a Petition to Intervene,

asserting that it was substantially affected by the proposed

rule. Gulfstream Park sought to intervene on the side of the

Division. Hartman and Tyner objected to the Petition to

Intervene, arguing that Gulfstream Park did not have standing to

intervene in this proceeding, as required by Florida

Administrative Code Rule 28-106.205. The Petition to Intervene

was granted in an Order entered March 24, 2008.

Pursuant to notice, the final hearing in this case was held

on April 10, 2008. At the final hearing, Hartman and Tyner

offered into evidence the transcript of the deposition of Joseph

M. Helton, Jr., taken April 7, 2008. The deposition transcript

was received into evidence as Petitioner's Exhibit 1. The

Division presented Mr. Helton's testimony at the hearing, but

did not offer any exhibits into evidence. Prior to the hearing,

however, the Division filed three requests for official

recognition; Hartman and Tyner objected to each of the requests.

The requests were granted in part and denied in part, as set

forth in the Order entered April 22, 2008. The parties

submitted a Pre-Hearing Stipulation containing a number of

agreed facts, which have been incorporated into the Findings of

Fact herein.

The transcript of the proceedings was filed with the

Division of Administrative Hearings on April 16, 2008, and the

parties timely filed Proposed Final Orders, which have been

considered in the preparation of this Final Order.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the

final hearing, the Agreed Facts included in the parties' Pre-

Hearing Stipulation, and on the entire record of this

proceeding, the following findings of fact are made:

The Parties

1. The Division is authorized to administer cardrooms; to

regulate the operation of cardrooms; and to adopt rules

governing the operation of cardrooms. See § 849.086(4), Fla.

Stat. (2007). 1

2. Hartman and Tyner owns a pari-mutuel facility doing

business as Mardi Gras Racetrack and Gaming Center, located at

831 North Federal Highway, Hallandale Beach, Florida 33009.

3. Hartman and Tyner holds two pari-mutuel permits to

conduct greyhound racing at this pari-mutuel facility, the BET

Miami permit and the Mardi Gras permit.

4. Pursuant to these permits, the Division issued Hartman

and Tyner two current licenses to conduct pari-mutuel wagering

at this pari-mutuel facility: License #141, which was issued

under the BET Miami permit; and License #144, which was issued

under the Mardi Gras permit.

5. Pursuant to Section 849.086(5), Florida Statutes,

Hartman and Tyner applied for, and the Division issued on

June 28, 2007, two cardroom licenses allowing the operation of a

cardroom with a maximum of 40 tables during the 2007/2008 season

at its pari-mutuel facility. One cardroom license was issued in

conjunction with the BET Miami permit, and the other cardroom

license was issued in conjunction with the Mardi Gras permit.

6. Hartman and Tyner computes the monthly gross receipts

separately for the BET cardroom license and for the Mardi Gras

cardroom license in calculating the 10 percent monthly tax

imposed by Section 849.086(13)(a), Florida Statutes, and for

purposes of the four percent monthly greyhound purse supplement

imposed by Section 849.086(13)(b), Florida Statutes.

7. Gulfstream Park holds two pari-mutuel permits to

conduct thoroughbred and quarter horse racing at a pari-mutuel

facility located in Broward County, Florida.

8. Pursuant to Section 849.086(5), Florida Statutes,

Gulfstream Park applied for, and the Division issued, a cardroom

license in conjunction with its permit to conduct thoroughbred

horse racing.

9. Both Hartman and Tyner and Gulfstream Park are subject

to regulation by Proposed Rule 61D-11.012(5)(d).

The challenged proposed rule, relevant statutes, and legislative

history.

10. Section 849.086, Florida Statutes, which was first

enacted in 1996, authorizes a person holding a pari-mutuel

wagering permit to obtain a license to operate a cardroom at a

pari-mutuel facility and sets forth the conditions under which

such cardrooms are to operate. 2

11. The legislative intent in enacting Section 849.086,

Florida Statutes, is set forth as follows:

(1) LEGISLATIVE INTENT.--It is the intent

of the Legislature to provide additional

entertainment choices for the residents of

and visitors to the state, promote tourism

in the state, and provide additional state

revenues through the authorization of the

playing of certain games in the state at

facilities known as cardrooms which are to

be located at licensed pari-mutuel

facilities. To ensure the public confidence

in the integrity of authorized cardroom

operations, this act is designed to strictly

regulate the facilities, persons, and

procedures related to cardroom operations.

Furthermore, the Legislature finds that

authorized games as herein defined are

considered to be pari-mutuel style games and

not casino gaming because the participants

play against each other instead of against

the house.

12. Section 849.086(2), Florida Statutes, contains the

following definitions which are pertinent to this proceeding:

(c) "Cardroom" means a facility where

authorized games are played for money or

anything of value and to which the public is

invited to participate in such games and

charged a fee for participation by the

operator of such facility. Authorized games

and cardrooms do not constitute casino

gaming operations.

* * *

(f) "Cardroom operator" means a licensed

pari-mutuel permitholder which holds a valid

permit and license issued by the division

pursuant to chapter 550 and which also holds

a valid cardroom license issued by the

division pursuant to this section which

authorizes such person to operate a cardroom

and to conduct authorized games in such

cardroom.

13. Proposed Rule 61D-11.012 sets forth the duties of

licensed cardroom operators at pari-mutuel facilities and is one

of a number of proposed rules dealing with cardrooms at pari-

mutuel facilities included in the Notice of Proposed Rule

published by the Division on March 14, 2008, in Volume 34,

Number 11, of the Florida Administrative Weekly. These rules

were intended to implement changes to Section 849.086, Florida

Statutes, enacted during the 2007 legislative session and

effective July 1, 2007.

14. Proposed Rule 61D-11.012(5), which contains the

subsection that is the subject of this challenge, provides as

follows: 3

(5) The cardroom operator must display

the hours of operation in a conspicuous

location in the cardroom subject to the

following terms and conditions:

(a) Days and hours of cardroom

operation shall be those set forth in the

application or renewal of the cardroom

operator. Changes to days and hours of

cardroom operation shall be submitted to the

division at least seven days prior to

proposed implementation;

(b) Pursuant to Section 849.086(7)(b),

F.S., a cardroom operator may operate a

licensed facility any cumulative 12-hour

period within the day;

(c) Activities such as the buying or

cashing out of chips or tokens, seating

customers, or completing tournament buy-

insurance or cash-outs may be done one hour

prior to or one hour after the cumulative

12-hour designated hours of operation;

(d) The playing of authorized games

shall not occur for more than 12 hours

within a day, regardless of the number of

pari-mutuel permitholders operating at a

pari-mutuel facility.

Subsection(5)(d) was added to Proposed Rule 61D-11.012(5) at the

end of February 2008, to "fix the Mardi Gras 24 hour cardroom

issue." 4

15. In the Notice of Proposed Rule for Proposed Rule 61D-

11.012, the Division identified its rulemaking authority as

Section 550.0251(12) Florida Statutes, and Section 849.086(4)

and (11), Florida Statutes. Sections 550.0251(12)

and 849.086(4), Florida Statutes, both give the Division the

authority to adopt rules governing, among other things, the

operation of cardrooms at pari-mutuel facilities. 5 These grants

of rulemaking authority are sufficient to authorize the Division

to promulgate Proposed Rule 61D-11.012.

16. The Division stated in the Notice of Proposed Rule

that Section 849.086, Florida Statutes, is the law implemented

by Proposed Rule 61D-11.012. The only section of Proposed

Rule 61D-11.012 challenged by Hartman and Tyner is

Section (5)(d), which reflects the Division's interpretation of

Section 849.086(7)(b), Florida Statutes.

17. Section 849.086(7)(b), Florida Statutes, provides:

"Any horserace, greyhound race, or jai alai permitholder

licensed under this section may operate a cardroom at the pari-

mutuel facility on any day for a cumulative amount of 12 hours

if the permitholder meets the requirements under paragraph

(5)(b)."

18. Prior to the 2007 amendment, Section 849.086(7)(b),

Florida Statutes (2006), provided in pertinent part:

A cardroom may be operated at the facility

only when the facility is authorized to

accept wagers on pari-mutuel events during

its authorized meet. A cardroom may operate

between the hours of 12 noon and 12 midnight

on any day a pari-mutuel event is conducted

live as a part of its authorized meet. . . .

Application to operate a cardroom under this

paragraph must be made to the division as

part of the annual license application.

This version of the statute was enacted in 2003 and amended the

original Section 849.086(7)(b), Florida Statutes (1997), which

provided:

A cardroom may be operated at the facility

only when the facility is authorized to

accept wagers on pari-mutuel events during

its authorized meet. A cardroom may begin

operations within 2 hours prior to the post

time of the first pari-mutuel event

conducted live at the pari-mutuel facility

on which wagers are accepted and must cease

operations within 2 hours after the

conclusion of the last pari-mutuel event

conducted live at the pari-mutuel facility

on which wagers are accepted.

19. Section 849.086(7)(b), Florida Statutes, requires that

a pari-mutuel wagering permitholder must meet "the requirements

under paragraph (5)(b)." Section 849.086(5), Florida Statutes,

governs the issuance of cardroom licenses and provides that

cardrooms may be operated only by persons holding valid cardroom

licenses and that these licenses may be issued only to licensed

pari-mutuel wagering permitholders. Section 849.086(5)(b),

Florida Statutes, 6 provides in pertinent part:

After the initial cardroom license is

granted, the application for the annual

license renewal shall be made in conjunction

with the applicant's annual application for

its pari-mutuel license. If a permitholder

has operated a cardroom during any of the

3 previous fiscal years and fails to include

a renewal request for the operation of the

cardroom in its annual application for

license renewal, the permitholder may amend

its annual application to include operation

of the cardroom. In order for a cardroom

license to be renewed the applicant must

have 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 application is for a

harness permitholder cardroom, the applicant

must have requested authorization to conduct

a minimum of 140 live performances during

the state fiscal year immediately prior

thereto. If more than one permitholder is

operating at a facility, each permitholder

must have applied for a license to conduct a

full schedule of live racing.

20. Section 849.086(5)(b), Florida Statutes, was not

changed by the 2007 amendments to Section 849.086, Florida

Statutes, but, pertinent to this proceeding, the final sentence

of the subsection was added by amendment in 2003. The effect of

this amendment was described in the 2003 House of

Representatives and Senate Staff Analyses as follows: "If more

than one permitholder operates at a shared cardroom facility,

each permitholder must apply for a license to conduct a full

schedule of live racing."

21. When introducing the bill that contained the 2007

amendment to Section 849.086(7)(b), Florida Statutes, to the

Florida House of Representatives Jobs & Entrepreneurship

Council, Representative Holloway, the sponsor of the House of

Representatives bill, explained that the "cardroom bill . . .

allows cardrooms to operate during live events, and the hours

have changed from 12 hours a day . . . from a, from 12 Noon to

12 Midnight to 12 hours a day cumulative." In response to a

question, Representative Holloway stated that the bill did not

expand gambling in Florida, "[i]t is just re-arranging current

provisions."

22. In a similar vein, Senator Fasano, when he submitted a

floor amendment to the Senate bill containing an amendment to

Section 849.086(7)(b), Florida Statutes, stated that his

amendment "limits the hours of operation of a cardroom to a

cumulative amount equal to 12 hours in any day if the permit

holder has met the requirements for licensure to operate a

cardroom."

23. Based on this legislative history and on the various

iterations of the statute, the Division enacted Proposed

Rule 61D-11.012(5)(d) to reflect its interpretation of the 2007

amendment to Section 849.086(7)(b), Florida Statutes, as

limiting the operation of a cardroom at a pari-mutuel facility

to a "cumulative amount of 12 hours." In the Division's view,

the Legislature did not intend for the 2007 amendment to expand

the number of hours a cardroom could operate but was intended

only to allow a cardroom operator greater flexibility in setting

the hours of operation. In promulgating Proposed Rule 61D-

11.012(5)(d), the Division made explicit its rejection of an

interpretation of the 2007 amendment that would allow two pari-

mutuel wagering permitholders licensed to operate a cardroom and

sharing a pari-mutuel facility both to operate the cardroom at

the pari-mutuel facility for a "cumulative amount of 12 hours" a

day. The Division rejects such an interpretation because it

could result in the operation of a cardroom at a pari-mutuel

facility for 24 hours per day, exceeding what the Division

considers the limitation on cardroom operation at a pari-mutuel

Fla. Stat.

CONCLUSIONS OF LAW

24. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and of

the parties thereto pursuant to Sections 120.56, 120.569, and

120.57(1), Florida Statutes.

Standing

25. Section 120.56(1)(a), Florida Statutes, provides that

"any person substantially affected by a rule or a proposed rule

may seek an administrative determination of the invalidity of

the rule on the ground that it is an invalid exercise of

delegated legislative authority." The Division does not

question Hartman and Tyner's standing to challenge Proposed Rule

61D-11.012(5)(d), and the parties have agreed that Gulfstream

Park is regulated by the challenged proposed rule. This is

sufficient to establish that its substantial interests would be

affected by Proposed Rule 61D-11.012(5)(d), and Gulfstream Park,

therefore, has standing to appear as a party-intervenor in this

proceeding. See Coalition of Mental Health Professions, v.

Department of Business and Professional Regulation, Board of

Clinical Social Work, Marriage, and Family Therapy and Mental

Health Counseling, et al. , 546 So. 2d 27, 28 (Fla. 1st DCA

1989)(fact that members of the Coalition of Mental Health

Professions would "be regulated by the proposed rule is alone

sufficient to establish that their substantial interests will be

affected.").

Validity/invalidity of Proposed Rule 61D-11.012(5)(d).

26. Hartman and Tyner challenges the validity of Proposed

Rule 61D-11.012(5)(d) on the grounds that it constitutes an

invalid exercise of delegated legislative authority pursuant to

Section 120.52(8)(c), and (e), Florida Statutes, which provides:

8) "Invalid exercise of delegated

legislative authority" means action which

goes beyond the powers, functions, and

duties delegated by the Legislature. A

proposed or existing rule is an invalid

exercise of delegated legislative authority

if any one of the following applies:

* * *

(c) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required

by s. 120.54(3)(a)1.;

* * *

(e) The rule is arbitrary or capricious. A

rule is arbitrary if it is not supported by

logic or the necessary facts; a rule is

capricious if it is adopted without thought

or reason or is irrational[.]

* * *

A grant of rulemaking authority is necessary

but not sufficient to allow an agency to

adopt a rule; a specific law to be

implemented is also required. An agency may

adopt only rules that implement or interpret

the specific powers and duties granted by

the enabling statute. No agency shall have

authority to adopt a rule only because it is

reasonably related to the purpose of the

enabling legislation and is not arbitrary

and capricious or is within the agency's

class of powers and duties, nor shall an

agency have the authority to implement

statutory provisions setting forth general

legislative intent or policy. Statutory

language granting rulemaking authority or

generally describing the powers and

functions of an agency shall be construed to

extend no further than implementing or

interpreting the specific powers and duties

conferred by the same statute.

See also § 120.536(1), Florida Statutes.

27. For purposes of this challenge to Proposed Rule 61D-

11.012(5)(d), Hartman and Tyner has the burden of going forward

and establishing with particularity its "objections to the

proposed rule and the reasons that the proposed rule is an

invalid exercise of delegated legislative authority."

§ 120.56(2)(a), Fla. Stat. The Division then must "prove by a

preponderance of the evidence that the proposed rule is not an

invalid exercise of delegated legislative authority as to the

objections raised." Id. The preponderance of the evidence

standard requires proof by "the greater weight of the evidence,"

Black's Law Dictionary 1201 (7th ed. 1999), or evidence that

"more likely than not" tends to prove a certain proposition.

See Gross v. Lyons , 763 So. 2d 276, 280 n.1 (Fla. 2000)(relying

on American Tobacco Co. v. State , 697 So. 2d 1249, 1254 (Fla.

4th DCA 1997) quoting Bourjaily v. United States , 483 U.S. 171,

175 (1987)).

A. Validity of Proposed Rule 61D-11.012(5)(d) pursuant to

Section 120.52(8)(c), Florida Statutes.

28. Hartman and Tyner challenges Proposed Rule 61D-

11.012(5)(d) as an invalid exercise of delegated legislative

authority on the grounds that it contravenes, modifies, or

enlarges Section 849.086(7)(b), Florida Statutes, which

provides: "Any horserace, greyhound race, or jai alai

permitholder licensed under this section may operate a cardroom

at the pari-mutuel facility on any day for a cumulative amount

of 12 hours if the permitholder meets the requirements under

paragraph (5)(b)." Proposed Rule 61D-11.012(5)(d) provides:

"The playing of authorized games shall not occur for more than

12 hours within a day, regardless of the number of pari-mutuel

permitholders operating at a pari-mutuel facility."

29. The "flush left" paragraph in Section 120.52(8) and

Section 120.536(1), Florida Statutes, require not only that an

agency promulgating a rule have a statutory grant of rulemaking

authority but that the rulemaking authority granted by statute

extend no further than the implementation or interpretation of

"the specific powers and duties granted by the same statute."

As stated by the court in Southwest Florida Water Management

District v. Save the Manatee Club, Inc. , 773 So. 2d 594, 599

(Fla. 1st DCA 2000), agencies have the

authority to "implement or interpret"

specific powers and duties contained in the

enabling statute. A rule that is used to

implement or carry out a directive will

necessarily contain language more detailed

than that used in the directive itself.

Likewise, the use of the term "interpret"

suggests that a rule will be more detailed

than the applicable enabling statute. There

would be no need for interpretation if all

details were contained in the statute

itself.

The focus of an agency's rulemaking authority is, therefore, on

interpreting the law by providing details that are not contained

in the law implemented by a rule.

30. An agency is, however, limited in its rulemaking

authority to implementing and interpreting specific laws and may

not promulgate a rule simply because the subject matter of the

rule is within the scope of its powers and duties. The court in

Board of Trustees of the Internal Improvement Trust Fund v. Day

Cruise Ass'n , 794 So. 2d 696, 701 (Fla. 1st DCA 2001), observed

that "[u]nder Section 120.52(8)(c), Florida Statutes, "the test

is whether a (proposed) rule gives effect to a "specific law to

be implemented," and whether the (proposed) rule implements or

interprets "specific powers and duties." Pertinent to this

proceeding, the Division has a grant of rulemaking authority to

promulgate rules governing the operation of cardrooms. See

then, whether Proposed Rule 61D-11.012(5)(d) implements

Section 849.086(7)(b), Florida Statutes, which provides certain

conditions under which cardrooms must operate.

31. Hartman and Tyner asserts that, in plain and

unambiguous language, Section 849.086(7)(b), Florida Statutes,

grants a pari-mutuel wagering permitholder licensed to operate a

cardroom the right to operate a cardroom on any day for a

cumulative amount of time that does not exceed 12 hours a day.

Hartman and Tyner further contends that, in a case in which two

pari-mutuel wagering permitholders share a pari-mutuel facility

and are each licensed to operate a cardroom at the pari-mutuel

facility, Section 849.086(7)(b), Florida Statutes, allows each

permitholder to operate the cardroom at that facility for

12 hours a day, for a total of 24 hours of operation per day.

32. In promulgating Proposed Rule 61D-11.012(5)(d), the

Division makes explicit its interpretation that the effect of

the 2007 amendment to Section 849.086(7)(b), Florida Statutes,

was to eliminate the restriction on the hours of operation of a

cardroom to "between the hours of 12 noon and 12 midnight" in

the version of the statute enacted in 2003 and to permit the

operation of a cardroom for a "cumulative amount of 12 hours"

per day. This interpretation is based primarily on the

Division's understanding of the intent of the Legislature in

enacting the 2007 amendment to Section 849.086(7)(b), Florida

Statutes. The Division's interpretation of

Section 849.086(7)(b), Florida Statutes, as expressed in

Proposed Rule 61D-11.012(5)(d), further reflects its

understanding that the Legislature did not intend the 2007

amendment to Section 849.086(7)(b), Florida Statutes, to allow a

cardroom at a pari-mutuel facility to be operated 24 hours a

day, even when two pari-mutuel wagering permitholders licensed

to operate a cardroom share a pari-mutuel facility.

33. The Division's interpretation of the provisions of

Section 849.086(7)(b), Florida Statutes, as expressed in

Proposed Rule 61D-11.012(5)(d), focuses on the change allowing

operation of a cardroom for a cumulative number of hours. The

Division fails, however, to take into account two additional and

significant changes from the previous version of

Section 849.086(7)(b), Florida Statutes, included in the 2007

amendment.

34. First, the 2007 amendment eliminated the provision in

the 1997 and 2003 versions of Section 849.086(7)(b), Florida

Statutes, which limited a cardroom's operation to only those

days on which a pari-mutuel wagering permitholder conducted live

pari-mutuel events at the pari-mutuel facility. In addition to

specifying the times during which a cardroom could be operated,

Section 849.086(7)(b), Florida Statutes (1997), limited the

operation of a cardroom as follows: "A cardroom may be operated

at the facility only when the facility is authorized to accept

wagers on pari-mutuel events [conducted live at the pari-mutuel

facility] during its authorized meet." Section 849.086(7)(b),

Florida Statutes (2003), included the same limitation on the

operation of a cardroom to days on which live pari-mutuel events

were conducted at the pari-mutuel facility. In contrast to the

1997 and 2003 versions of the statute, Section 849.086(7)(b),

Florida Statutes, now allows the operation of a cardroom "on any

day," regardless of whether live pari-mutuel events are being

conducted.

35. The only connection between the operation of a

cardroom and the conduct of live pari-mutuel events currently in

effect is found in Section 849.086(5), Florida Statutes, which

governs the issuance of cardroom licenses. In order for a pari-

mutuel permitholder to qualify for the renewal of its cardroom

license, the permitholder must have included in its application

for an annual pari-mutuel license a request to conduct a certain

number of live performances at the pari-mutuel facility. See

§ 849.086(5)(b), Fla. Stat. Section 849.086(5)(b), Florida

Statutes, provides that, "[i]f more than one permitholder is

operating at a facility, each permitholder must have applied for

a license to conduct a full schedule of live racing." 7 There is

no requirement in Section 849.086(5), Florida Statutes, limiting

a permitholder's operation of a cardroom to only those days on

which the permitholder is conducting live pari-mutuel events.

36. Second, the 1997 and 2003 versions of

Section 849.086(7)(b), Florida Statutes, specified that "[a]

cardroom may operate" only during certain specified hours of the

day. (Emphasis added.) The 2007 amendment to

Section 849.086(7)(b), Florida Statutes, however, allows a

" permitholder " to operate a cardroom "for a cumulative amount of

12 hours" a day, as long as the permitholder is licensed

pursuant to Section 849.086 (5), Florida Statutes. (Emphasis

added.) It is, therefore, the permitholder that is now

restricted to operating a cardroom "for a cumulative amount of

12 hours" per day; the hours a cardroom may operate are no

longer restricted.

37. The two changes effected by the 2007 amendment to

Section 849.086(7)(b), Florida Statutes, have significantly

altered the conditions under which a permitholder may operate a

cardroom contained in the 1997 and 2003 versions of the statute.

Although the Division is granted the authority to promulgate

rules interpreting the statutes it is responsible for

implementing, the interpretation must give effect to the law

implemented. In promulgating Proposed Rule 61D-11.012(5)(d),

the Division has placed a restriction on the operation of

cardrooms that is not found in Section 849.086(7)(b), Florida

Statutes, or in any provision of Section 849.086, Florida

Statutes. And, contrary to the position taken by the Division,

there is nothing in the legislative history of the 2007

amendment to Section 849.086(7)(b), Florida Statutes, to support

the interpretation reflected in Proposed Rule 61D-11.012(5)(d).

Proposed Rule 61D-11.012(5)(d) is, therefore, an invalid

exercise of delegated legislative authority because it both

modifies and contravenes the provisions of

Section 849.086(7)(b), Florida Statutes.

B. Validity of Proposed Rule 61D-11.012(5)(d) pursuant to

Section 120.52(8)(e), Florida Statutes.

38. A proposed rule is invalid pursuant to Section

120.52(8)(e), Florida Statutes, if it is arbitrary, defined as

"not supported by logic or the necessary facts" or capricious,

defined as "adopted without thought or reason or [] irrational."

39. The Division has failed to prove by a preponderance of

evidence that its interpretation of the 2007 amendment to

Section 849.086(7)(b), Florida Statutes, as reflected in

Proposed Rule 61D-11.012(5)(d), is supported by logic or fact.

Nothing in Section 849.086(7)(b), Florida Statutes, or in the

legislative history of the 2007 amendment to

Section 849.086(7)(b), Florida Statutes, supports or gives any

basis for the restriction on the operation of cardrooms

contained in Proposed Rule 61D-11.012(5)(d). Proposed Rule 61D-

11.012(5)(d) is, therefore, an invalid exercise of delegated

legislative authority pursuant to Section 120.52(8)(e), Florida

Statutes, because it is arbitrary.

Attorneys' fees and costs.

40. Section 120.595, Florida Statutes, provides in

pertinent part:

(3) CHALLENGES TO EXISTING AGENCY RULES

PURSUANT TO SECTION 120.56(3).--If the court

or administrative law judge declares a rule

or portion of a rule invalid pursuant to s.

120.56(3), a judgment or order shall be

rendered against the agency for reasonable

costs and reasonable attorney's fees, unless

the agency demonstrates that its actions

were substantially justified or special

circumstances exist which would make the

award unjust. An agency's actions are

"substantially justified" if there was a

reasonable basis in law and fact at the time

the actions were taken by the agency. If

the agency prevails in the proceedings, the

court or administrative law judge shall

award reasonable costs and reasonable

attorney's fees against a party if the court

or administrative law judge determines that

a party participated in the proceedings for

an improper purpose as defined by

paragraph (1)(e). No award of attorney's

fees as provided by this subsection shall

exceed $15,000.

41. Hartman and Tyner is the prevailing party in this

proceeding brought pursuant to Section 120.56(3), Florida

Statutes, and is, therefore, entitled to an award of reasonable

attorneys' fees and costs, not to exceed $15,000.00, if the

Division is unable to prove "that its actions were substantially

justified or special circumstances exist which would make the

award unjust." § 120.595(3), Fla. Stat. Accordingly,

jurisdiction is retained so that an evidentiary hearing may be

conducted to determine if Hartman and Tyner is entitled to an

award of reasonable attorneys' fees and costs against the

Division, and, if so, the amount that should be awarded.

CONCLUSION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED

1. Proposed Rule 61D-11.012(5)(d) is an invalid exercise of

delegated legislative authority pursuant to Section 120.52(8)(c)

and (e), Florida Statutes.

2. Jurisdiction is retained to determine whether Hartman

and Tyner, Inc., d/b/a Mardi Gras Gaming, is entitled to an

award of attorneys' fees and costs against the Division of Pari-

Mutuel Wagering, and, if so, the amount of attorneys' fees and

costs to be awarded.

3. The parties shall file a joint status report with the

Division of Administrative Hearings on or before June 16, 2008,

in which they shall provide an estimate of the length of time

necessary to conduct an evidentiary hearing on the entitlement

to and amount of attorneys' fees and costs and several dates on

which the parties are available for hearing.

DONE AND ORDERED this 30th day of May, 2008, in

Tallahassee, Leon County, Florida.

___________________________________

PATRICIA M. HART

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 30th day of May, 2008.

ENDNOTES

1 / All references to the Florida Statutes herein are to the

2007 edition unless otherwise specified.

2 / Section 849.086(3), Florida Statutes, provides:

"Notwithstanding any other provision of law, it is not a crime

for a person to participate in an authorized game at a licensed

cardroom or to operate a cardroom described in this section if

such game and cardroom operation are conducted strictly in

accordance with the provisions of this section."

3 / Deletions from the previous rule have been omitted; additions

to the proposed rule are indicated by underscoring.

4 / See Exhibit 4 to Petitioner's Exhibit 1.

5 / Section 849.086(11), Florida Statutes, which is not pertinent

to this proceeding, gives the Division authority to enact rules

specifying the information that must be contained in records

kept by cardroom licensees.

6 / Hartman and Tyner's two cardroom operator licenses were

issued under Section 849.086(5), Florida Statutes (2006). The

relevant provisions of that statutory section remained unchanged

in the 2007 version of the statute.

7 / Pertinent to this proceeding, Section 550.002(11), Florida

Statutes, defines a "full schedule of live racing" for a

greyhound permitholder as

the conduct of a combination of at least 100

live evening or matinee performances during

the preceding year; for a permitholder who

has a converted permit or filed an

application on or before June 1, 1990, for a

converted permit, the conduct of a

combination of at least 100 live evening and

matinee wagering performances during either

of the 2 preceding years.

Section 550.002(11), Florida Statutes, also provides that "[a]

live performance must consist of no fewer than eight races or

games conducted live for each of a minimum of three performances

each week at the permitholder's licensed facility under a single

admission charge."

COPIES FURNISHED:

John M. Lockwood, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Tallahassee, Florida 32301

Charles T. "Chip" Collette, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-2202

Cynthia S. Tunnicliff, Esquire

Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

215 South Monroe Street, Second Floor

Post Office Box 10095

Tallahassee, Florida 32302-2095

David J. Roberts, Director

Division of Pari-Mutuel Wagering

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Chuck Drago, Interim Secretary

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Ned Luczynski, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

F. Scott Boyd, Executive Director

and General Counsel

Joint Administrative Procedures Committee

120 Holland Building, Room 120

Tallahassee, Florida 32399-1300

Liz Cloud, Program Administrator

Administrative Code

Department of State

R.A. Gray Building, Suite 101

Tallahassee, Florida 32399

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pursuant to Section 120.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing the original Notice of Appeal with the agency clerk of

the Division of Administrative Hearings and a copy, accompanied

by filing fees prescribed by law, with the District Court of

Appeal, First District, or with the District Court of Appeal in

the Appellate District where the party resides. The notice of

appeal must be filed within 30 days of rendition of the order to

be reviewed.