06-000164RP Washington County Kennel Club, Inc.; Hartman-Tyner, Inc.; Southwest Florida Enterprises, Inc.; And St. Petersburg Kennel Club, Inc. vs. Department Of Business And Professional Regulation, Division Of Pari-Mutuel Wagering Status: Closed DOAH Final Order on Friday, May 12, 2006.

Summary: Repeal of the rule was not an invalid exercise as the agency articulated valid reasons for its repeal.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WASHINGTON COUNTY KENNEL CLUB, )

INC.; HARTMAN - TYNER, INC.; )

SOUTHWEST FLORIDA ENTERPRISES, )

INC.; AND ST. PETERSBURG KENNEL )

CLUB, INC. , )

)

Petitioner s , )

)

vs. ) Case No. 06 - 0164RP

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL RE GULATION, )

DIVISION OF PARI - MUTUEL )

WAGERING , )

)

Respondent . )

)

FINAL ORDER

Pursuant to notice a formal hearing was held in this case

on February 14, 2006, in Ta llahassee, Florida, before J. D.

Parrish, a designated Administrative Law Judge of the Division

of Administrative Hearings.

APPEARANCES

For Petitioners: Harold F. X. Purnell, Esquire

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

Post Office Box 551

Tallahassee, Florida 32302 - 0551

For Respondent: Ralf E. Michels, Esquire

Stefan Thomas Peavey Hoffer, Esquire

Department of Business and

Professional Regulation

Division of Pari - Mutuel Wagering

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

STATEMENT OF THE ISSUE

Whether the proposed r epeal of Rule 61D - 11.027, Florida

Administrative Code, is an invalid exercise of delegated

legislative authority because the repeal has the effect of

creating or implementing a new rule or policy.

PRELIMINARY STATEMENT

The Petitioners, Washington County Kennel Club, Inc. ;

Hartman - Tyner, Inc. ; Southwest Florida Enterprises, Inc. ; and

St. Petersburg Kennel Club, Inc., (Petitioners) filed a petition

challenging the repeal of Rule 61D - 11.027, Florida

Administrative Code, on January 13, 2006. The Petitioners have

alleged that the repeal of Rule 61D - 11.027, Florida

Administrative Code, entitled “Tournaments,” constitutes the

creation or implementation of a new agency rule or policy.

Accordingly, as a matter of law, the Petitioners claim such

repeal must be set aside as a contravention of the provisions of

law originally implemented by the rule. See Federation of

Mobile Owners of Florida, Inc. v. Florida Manufactured Housing ,

683 So. 2d 58 6 (Fla. 1 st DCA 1996); Osterback v. John O.

Agwunobi, as Secretary of the Department of Health , 873 So. 2d

437 (Fla. 1 st DCA 2004).

To the contrary, the Respondent, Department of Business and

Professional Regulation, Division of Pari - Mutuel Wagering,

(Respondent or Agency) maintains that the repeal of the rule was

necessary to resolve the issue of how to conduct tournaments

within the statutory guidelines. It is unclear as to whether

the Respondent will engage in additional rule - making or not.

The Respondent asserts that the Agency has broad authority to

promulgate rules an d must ensure that cardroom operations

conform to the dictates of Florida law. The Respondent contends

that the Agency must take additional measures to evaluate the

effects of the Final Order entered in DOAH Case No. 04 - 2950RX

(affirmed by the Florida Fir st District Court of Appeal) to

assure that the cardroom activities conform to statutory

mandates regarding bets and raises.

At the hearing, the Petitioners presented testimony from

David Tiano and Royal Logan. The deposition testimony of Jim

Hakemolle r was also submitted on behalf of the Petitioners. The

Petitioners’ Exhibits (a) through (j), (q),(v), and (x) (as

identified on the parties’ Prehearing Stipulation) and 1, 2, and

3 were admitted into evidence. The Respondent’s Exhibit (a) has

been admit ted into evidence. The transcript of the proceedings

was filed with the Division of Administrative Hearings on

March 6, 2006. Thereafter , the parties timely filed Proposed

Final Orders that have been fully considered in the preparation

of this order.

FIN DINGS OF FACT

1. The Florida Legislature enacted Section 849.086,

Florida Statutes, in 1996. The law authorized the establishment

of “cardrooms” at licensed pari - mutuel facilities and dictated

the parameters by which games may be conducted at such

facili ties.

2. In essence, the cardrooms conduct games wherein the

players compete against one another. The participants do not

wager against “the house.” Instead, the house, that is, the

pari - mutuel facility, conducts the games in a non - banking

manner. This means the house does not have a financial interest

in the outcome of the game(s). For purposes of this case, it is

determined that the players who win share fractions of the “pot”

created by the entry fees paid to participate in the game(s).

3. The Peti tioners in this cause are licensed facilities

that have operated cardrooms. Each Petitioner holds a pari -

mutuel wagering permit and a valid cardroom license.

4. The Respondent is the state agency charged with the

responsibility of administering Section 8 49.086, Florida

Statutes (2005).

5. Section 849.086, Florida Statutes, was amended in 2003

by Section 4, Chapter 2003 - 295, Laws of Florida. The 2003

amendment imposed a $2.00 bet limitation, with a maximum of

three raises per round of betting. This chan ge to the statute

required the Respondent to revisit the rules governing cardrooms

and, more specifically, the concept of poker “tournaments” being

conducted at pari - mutuel facilities.

6. To that end, and after extensive rule - making

proceedings, the Res pondent adopted rules that were incorporated

in Florida Administrative Code Chapter 61D - 11. The Respondent

intended for the rules to address concerns regarding the $2.00

bet and raise limitations as well as how “re - buys” might affect

or potentially allow a violation of such provisions. A “re - buy”

describes when a card player is allowed to purchase more chips

from the house during a game(s).

7. Florida Administrative Code Rule 61D - 11.027 was adopted

on May 9, 2004. It was then challenged by pari - mutuel

f acilities who alleged the rule encompassed more than the

statute authorized. Such challenge (DOAH Case No. 04 - 2950RX),

was granted. The Final Order found that the rule (Florida

Administrative Code Rule 61D - 11.027(2)(a)) exceeded the Agency’s

grant of rul emaking authority, modified the specific law

implemented, and was arbitrary. Accordingly, the Final Order

(DOAH Case No. 04 - 2950RX) determined that the rule violated

Subsections 120.52(8)(b), (c), and (e), Florida Statutes.

8. The Florida First Distric t Court of Appeal affirmed the

Final Order by a Per Curiam decision issued on October 28, 2005.

9. Thereafter, the Respondent proceeded with the emergency

repeal of the tournament rule in its entirety and issued an

advisory letter to all cardroom licens e holders. The Respondent

represented that it cannot reconcile the holding of the court

with the explicit language of Section 849.086(8), Florida

Statutes (2005). At the hearing, the Respondent represented

that additional rulemaking will be necessary.

10 . The Respondent does not dispute that tournaments are

permissible under the statute. Moreover, the parties agree that

prior to the rule , repeal tournaments were conducted using

tokens or chips that did not have value.

11. Tournaments were played at l icensed cardroom

facilities during the period commencing in May 2004 through

November 9, 2005. During that time (the period the rule was in

effect) counties, cities, and the state received income from the

monies remitted by the cardroom facilities. Addit ionally, the

cardrooms employed persons to work the facilities to conduct the

various games.

12. After the repeal of the rule, revenues from the

cardrooms decreased substantially. Similarly, the cardrooms did

not need the number of employees as games wer e not being

conducted. Tournaments at the St. Petersburg Kennel Club have

not been conducted since January 17, 2006.

13. From November 2005 through January 17, 2006, the

tournaments at the St. Petersburg Kennel Club were conducted

using chips or tokens t hat had “fractional value.” The

“fraction” did not correspond to the entry fee charged for the

tournament. It is not known whether or not re - buys during the

tournaments were allowed.

14. The Respondent issued a Memorandum to Pari - Mutuel

General Managers at Cardroom Facilities and Cardroom Managers on

January 12, 2006, that provided in part:

In light of the recent ruling by the First

District Court of Appeals, the Division’s

administrative rules regarding tournaments

have been repealed on an emergency bas is,

and are scheduled to be repealed

permanently. The Division distributed a

memorandum to all cardroom operators

regarding Clarification of Cardroom

Tournament Rules and Jackpots on November 9,

2005. The Division has also expressed on

numerous occasions a serious concern of

cardroom operators issuing chips in a

fashion that does not represent an even

value exchange for money in an attempt to

circumvent the $2 bet and three raise

limitation outlined in Chapter

849.086(8)(b), Florida Statutes.

[Italics in original.]

15. The November 9, 2005, Memorandum referred to in

paragraph 14 above provided, in pertinent part:

This memorandum is intended to clarify

issues regarding the recent ruling by the

First District Court of Appeals which

affirmed an earlier ruli ng of the Division

of Administrative Hearings (DOAH). The DOAH

ruling found that various cardroom rules,

which were challenged by Dania Jai Alai and

Calder Race Course, are invalid. These

rules addressed tournaments, jackpots, the

Division’s approval of games, and gifts that

enable play in an authorized game. As a

result of the ruling, today the Division

filed emergency rules to ensure that

tournaments are played in compliance with

the bet limitation of Section 849.086(8)(b),

Florida Statutes.

* * *

Th e Final Order that was affirmed by the

First District Court of Appeals invalidated

the Division’s rules regarding entry fees,

re - buys and single table tournaments. The

judge held that tournament play is

authorized by the cardroom statute.

Therefore, card rooms may set their own entry

fees and allow re - buys in tournaments and

hold single table tournaments.

* * *

Unauthorized activity, such as conducting

wagering on tournaments that does not

conform with the wagering restrictions found

in Section 849.086(8 )(b), Florida Statutes,

or offering of jackpots or gifts that do not

comply with the requirements that cardrooms

be operated in strict conformity with the

statute as required by Section 849.086(3),

Florida Statutes, may result in disciplinary

action.

16. The memorandums identified above did not change or

modify the Respondent’s position regarding whether tournaments

are legal or permitted by the statute. To the contrary, the

memorandums merely advised the cardroom facilities that they

would be held to th e statutory standard regarding wagering and

that jackpots and gifts would be prohibited.

17. Prior to the appeal of the rule, the Respondent

routinely approved tournaments that were based upon the

following scheme: A participant paid a $32 buy - in and pai d the

house $13 for the fee to conduct the tournament. Then the

participant received a number of no - value chips that were used

to play a multiple number of games of poker. At the end of the

designated time, number of games, or whenever the designated end

occurred (on the same day of play), winners were announced based

upon the number of chips they held. Participants were “ranked”

and awarded cash prizes from the pot of entry fees.

18. The $32 entry fee was a mathematical calculation

thought to assure th at no participant would violate the

statute’s bet and raise limitations. Whether or not the “all

in” concept violated the statute was not considered as the chips

were deemed to have no value in and of themselves. This “no

value” chip was a fiction that t he Respondent supported as, in

theory, the $32 player buy - in comported with a mathematical

calculation that was within the statutory guideline. The

payouts were determined based upon the number of participants

and were set by percentage with the first pla ce person receiving

the largest payout.

19. Additionally, participants under the approved scheme

were not allowed re - buys. That assured that all participants

started with the same number of chips and had the same “betting”

potential.

20. Finally, winne rs were not paid or could not receive

prizes outside the “pot” created by the entry fees. A nominal

gift (such as a T - shirt) was not considered a violation. Prizes

such as giant television sets or vacations were not acceptable.

All winnings were to be p aid from the buy - in fees and all buy - in

fees were to be returned to the players in winnings.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. §§ 120.56, and 120.57(1), Fla. Stat. (2005).

22. The Petitioners have standing to bring this challenge

(Prehearing Stipulation).

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

pertinent part:

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

of the Legislature to provide additional

entertainment choices for the residents of

and visitors to the state, promote tourism

in the state, and provide additional state

revenues through the authorization of the

playing of certain games in the state at

facilities known as card rooms 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 ope rations.

Furthermore, the Legislature finds that

authorized games as herein defined are

considered to be pari - mutuel style games and

not casino gaming because the participants

play against each other instead of against

the house .

(2) DEFINITIONS. -- As us ed in this section:

(a) "Authorized game" means a game or

series of games of poker which are played in

a nonbanking manner.

(b) "Banking game" means a game in which

the house is a participant in the game,

taking on players, paying winners, and

collecting from losers or in which the

cardroom establishes a bank against which

participants play.

(c) "Cardroom" means a facility where

authorized card games are played for money

or anything of value and to which the public

is invited to participate in such games and

charged a fee for participation by the

operator of such facility. Authorized games

and cardrooms do not constitute casino

gaming operations.

* * *

(g) "Division" means the Division of Pari -

mutuel Wagering of the Department of

Business and Professi onal Regulation.

* * *

(i) "House" means the cardroom operator and

all employees of the cardroom operator.

* * *

(3) CARDROOM AUTHORIZED. -- Notwithstanding

any other provision of law, it is not a

crime for a person to participate in an

authorized game at a licensed cardroom or to

operate a cardroom described in this section

if such game and cardroom operation are

conducted strictly in accordance with the

provisions of this section.

(4) AUTHORITY OF DIVISION. -- The Division of

Pari - mutuel Wagering of t he Department of

Business and Professional Regulation shall

administer this section and regulate the

operation of cardrooms under this section

and the rules adopted pursuant thereto, and

is hereby authorized to:

(a) Adopt rules, including, but not limited

to: the issuance of cardroom and employee

licenses for cardroom operations; the

operation of a cardroom; recordkeeping and

reporting requirements; and the collection

of all fees and taxes imposed by this

section.

(b) Conduct investigations and monitor th e

operation of cardrooms and the playing of

authorized games therein.

(c) Review the books, accounts, and records

of any current or former cardroom operator.

(d) Suspend or revoke any license or

permit, after hearing, for any violation of

the provisions of this section or the

administrative rules adopted pursuant

thereto.

(e) Take testimony, issue summons and

subpoenas for any witness, and issue

subpoenas duces tecum in connection with any

matter within its jurisdiction.

(f) Monitor and ensure the prope r

collection of taxes and fees imposed by this

section. Permitholder internal controls are

mandated to ensure no compromise of state

funds. To that end, a roaming division

auditor will monitor and verify the cash

flow and accounting of cardroom revenue f or

any given operating day.

* * *

(8) METHOD OF WAGERS; LIMITATION. --

(a) No wagering may be conducted using

money or other negotiable currency. Games

may only be played utilizing a wagering

system whereby all players' money is first

converted by the house to tokens or chips

which shall be used for wagering only at

that specific cardroom.

(b) The cardroom operator may limit the

amount wagered in any game or series of

games, but the maximum bet may not exceed $2

in value. There may not be more than three

raises in any round of betting. The fee

charged by the cardroom for participation in

the game shall not be included in the

calculation of the limitation on the bet

amount provided in this paragraph.

* * *

(10) FEE FOR PARTICIPATION. -- The cardroom

operator may charge a fee for the right to

participate in games conducted at the

cardroom. Such fee may be either a flat fee

or hourly rate for the use of a seat at a

table or a rake subject to the posted

maximum amount but may not be based on the

amount won by players. The rake - off, if

any, must be made in an obvious manner and

placed in a designated rake area which is

clearly visible to all players. Notice of

the amount of the participation fee charged

shall be posted in a conspicuous place in

the car droom and at each table at all times.

* * *

(12) PROHIBITED ACTIVITIES. --

(a) No person licensed to operate a

cardroom may conduct any banking game or any

game not specifically authorized by this

section. [Emphasis Added.]

22. Section 120.52, Flori da Statutes (2005) , provides in

part:

(2) "Agency action" means the whole or part

of a rule or order, or the equivalent, or

the denial of a petition to adopt a rule or

issue an order. The term also includes any

denial of a request made under s.120.54(7) .

* * *

(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:

(a) The agency has materially failed to

follow the applicable rulemaking procedures

or requirements set forth in this chapter;

(b) The agency has exceeded its grant of

rulemaking authority, citation to which is

required b y s. 120.54(3)(a)1.;

(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.;

(d) The rule is vague, fails to establish

adequate standards for agency decisions, or

v ests unbridled discretion in the agency;

(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 gra nt 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 enab ling 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 hav e 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 th an implementing or

interpreting the specific powers and duties

conferred by the same statute.

* * *

(15) "Rule" means each agency statement of

general applicability that implements,

interprets, or prescribes law or policy or

describes the procedure or p ractice

requirements of an agency and includes any

form which imposes any requirement or

solicits any information not specifically

required by statute or by an existing rule.

The term also includes the amendment or

repeal of a rule. [Emphasis Added.]

23 . Section 120.54, Florida Statutes (2005), provides in

part:

(1) GENERAL PROVISIONS APPLICABLE TO ALL

RULES OTHER THAN EMERGENCY RULES. --

(a) Rulemaking is not a matter of agency

discretion. Each agency statement defined

as a rule by s. 120.52 shall b e adopted by

the rulemaking procedure provided by this

section as soon as feasible and practicable.

1. Rulemaking shall be presumed feasible

unless the agency proves that:

a. The agency has not had sufficient time

to acquire the knowledge and experienc e

reasonably necessary to address a statement

by rulemaking;

b. Related matters are not sufficiently

resolved to enable the agency to address a

statement by rulemaking; or

c. The agency is currently using the

rulemaking procedure expeditiously and in

g ood faith to adopt rules which address the

statement.

2. Rulemaking shall be presumed practicable

to the extent necessary to provide fair

notice to affected persons of relevant

agency procedures and applicable principles,

criteria, or standards for agenc y decisions

unless the agency proves that:

a. Detail or precision in the establishment

of principles, criteria, or standards for

agency decisions is not reasonable under the

circumstances; or

b. The particular questions addressed are

of such a narrow s cope that more specific

resolution of the matter is impractical

outside of an adjudication to determine the

substantial interests of a party based on

individual circumstances.

(b) Whenever an act of the Legislature is

enacted which requires implementatio n of the

act by rules of an agency within the

executive branch of state government, such

rules shall be drafted and formally proposed

as provided in this section within 180 days

after the effective date of the act, unless

the act provides otherwise.

(c) No statutory provision shall be delayed

in its implementation pending an agency's

adoption of implementing rules unless there

is an express statutory provision

prohibiting its application until the

adoption of implementing rules.

(d) In adopting rules, a ll agencies must,

among the alternative approaches to any

regulatory objective and to the extent

allowed by law, choose the alternative that

does not impose regulatory costs on the

regulated person, county, or city which

could be reduced by the adoption of less

costly alternatives that substantially

accomplish the statutory objectives.

(e) No agency has inherent rulemaking

authority, nor has any agency authority to

establish penalties for violation of a rule

unless the Legislature, when establishing a

pen alty, specifically provides that the

penalty applies to rules.

(f) An agency may adopt rules authorized by

law and necessary to the proper

implementation of a statute prior to the

effective date of the statute, but the rules

may not be effective until th e statute upon

which they are based is effective. An

agency may not adopt retroactive rules,

including retroactive rules intended to

clarify existing law, unless that power is

expressly authorized by statute.

(g) Each rule adopted shall contain only

one subject.

(h) In rulemaking proceedings, the agency

may recognize any material which may be

judicially noticed, and it may provide that

materials so recognized be incorporated into

the record of the proceeding. Before the

record of any proceeding is com pleted, all

parties shall be provided a list of these

materials and given a reasonable opportunity

to examine them and offer written comments

or written rebuttal.

(i)1. A rule may incorporate material by

reference but only as the material exists on

the d ate the rule is adopted. For purposes

of the rule, changes in the material are not

effective unless the rule is amended to

incorporate the changes. A rule may not be

amended by reference only. Amendments must

set out the amended rule in full in the same

manner as required by the State Constitution

for laws. The Department of State may

prescribe by rule requirements for

incorporating materials by reference

pursuant to this paragraph.

* * *

5. After a rule has become effective, it

may be repealed or am ended only through the

rulemaking procedures specified in this

chapter.

* * *

(4) EMERGENCY RULES. --

(a) If an agency finds that an immediate

danger to the public health, safety, or

welfare requires emergency action, the

agency may adopt any rule nece ssitated by

the immediate danger. The agency may adopt

a rule by any procedure which is fair under

the circumstances if:

1. The procedure provides at least the

procedural protection given by other

statutes, the State Constitution, or the

United States Co nstitution.

2. The agency takes only that action

necessary to protect the public interest

under the emergency procedure.

3. The agency publishes in writing at the

time of, or prior to, its action the

specific facts and reasons for finding an

immediate da nger to the public health,

safety, or welfare and its reasons for

concluding that the procedure used is fair

under the circumstances. In any event,

notice of emergency rules, other than those

of educational units or units of government

with jurisdiction i n only one or a part of

one county, including the full text of the

rules, shall be published in the first

available issue of the Florida

Administrative Weekly and provided to the

committee. The agency's findings of

immediate danger, necessity, and procedu ral

fairness shall be judicially reviewable.

(b) Rules pertaining to the public health,

safety, or welfare shall include rules

pertaining to perishable agricultural

commodities or rules pertaining to the

interpretation and implementation of the

requireme nts of chapters 97 - 102 and chapter

105 of the Election Code.

(c) An emergency rule adopted under this

subsection shall not be effective for a

period longer than 90 days and shall not be

renewable, except during the pendency of a

challenge to proposed rul es addressing the

subject of the emergency rule. However, the

agency may take identical action by the

rulemaking procedures specified in this

chapter.

(d) Subject to applicable constitutional

and statutory provisions, an emergency rule

becomes effective immediately on filing, or

on a date less than 20 days thereafter if

specified in the rule, if the adopting

agency finds that such effective date is

necessary because of immediate danger to the

public health, safety, or welfare.

* * *

(7) PETITION TO IN ITIATE RULEMAKING. --

(a) Any person regulated by an agency or

having substantial interest in an agency

rule may petition an agency to adopt, amend,

or repeal a rule or to provide the minimum

public information required by this chapter.

The petition shal l specify the proposed rule

and action requested. Not later than 30

calendar days following the date of filing a

petition, the agency shall initiate

rulemaking proceedings under this chapter,

otherwise comply with the requested action,

or deny the petitio n with a written

statement of its reasons for the denial.

(b) If the petition filed under this

subsection is directed to an existing rule

which the agency has not adopted by the

rulemaking procedures or requirements set

forth in this chapter, the agency s hall, not

later than 30 days following the date of

filing a petition, initiate rulemaking, or

provide notice in the Florida Administrative

Weekly that the agency will hold a public

hearing on the petition within 30 days after

publication of the notice. Th e purpose of

the public hearing is to consider the

comments of the public directed to the

agency rule which has not been adopted by

the rulemaking procedures or requirements of

this chapter, its scope and application, and

to consider whether the public int erest is

served adequately by the application of the

rule on a case - by - case basis, as contrasted

with its adoption by the rulemaking

procedures or requirements set forth in this

chapter.

(c) Within 30 days following the public

hearing provided for by para graph (b), if

the agency does not initiate rulemaking or

otherwise comply with the requested action,

the agency shall publish in the Florida

Administrative Weekly a statement of its

reasons for not initiating rulemaking or

otherwise complying with the requ ested

action, and of any changes it will make in

the scope or application of the unadopted

rule. The agency shall file the statement

with the committee. The committee shall

forward a copy of the statement to the

substantive committee with primary oversig ht

jurisdiction of the agency in each house of

the Legislature. The committee or the

committee with primary oversight

jurisdiction may hold a hearing directed to

the statement of the agency. The committee

holding the hearing may recommend to the

Legislat ure the introduction of legislation

making the rule a statutory standard or

limiting or otherwise modifying the

authority of the agency.

24. Section 120.56, Florida Statutes (2005), provides in

part:

(1) GENERAL PROCEDURES FOR CHALLENGING THE

VALIDITY O F A RULE OR A PROPOSED RULE. --

(a) Any person substantially affected by a

rule or a proposed rule may seek an

administrative determination of the

invalidity of the rule on the ground that

the rule is an invalid exercise of delegated

legislative authority .

(b) The petition seeking an administrative

determination must state with particularity

the provisions alleged to be invalid with

sufficient explanation of the facts or

grounds for the alleged invalidity and facts

sufficient to show that the person

chal lenging a rule is substantially affected

by it, or that the person challenging a

proposed rule would be substantially

affected by it.

25. As the party asserting the affirmative, the

Petitioners bear the burden of proof in this matter to establish

that t he repeal of the rule is an invalid exercise of delegated

legislative authority. See Cortes v. State Board of Regents ,

655 So. 2d 132 (Fla. 1 st DCA 1995). The challenger's burden is

a stringent one. Id. ; Charity v. Florida State University , 680

So. 2d 4 63 (Fla. 1st DCA 1996). As defined, “an invalid

exercise of legislative authority” requires that the Petitioners

assert and prove that the Agency has materially failed to follow

one of the standards set forth in the statute.

26. In this case, the Petitio ners did not allege or prove

that the applicable rulemaking procedures or requirements were

not followed. Thus, whether the Agency followed the applicable

rulemaking criteria is not at issue.

27. Similarly, whether the Agency exceeded its grant of

rulema king authority by repealing the tournament rule was not

alleged or established.

28. Thirdly, the repeal of the rule did not enlarge,

modify, or contravene the specific provisions of law governing

tournaments as the Agency has continued to acknowledge that

tournaments are permitted under the statute. The repeal of the

rule did nothing to alter that position.

29. Next, the rule challenge standard of whether the

repeal is vague, fails to establish adequate standards for

agency decisions, or vests unbridled discretion in the Agency

(not specifically alleged but implied by the evidence presented)

remains at issue.

30. And lastly, whether the repeal is arbitrary or

capricious, the cornerstone of the Petitioners’ argument,

continues to be debated. These latter arguments are more fully

addressed below.

31. First, as to whether the repeal of the rule is vague

or fails to establish adequate standards for agency decisions or

vests unbridled discretion in the Agency, the Petitioners have

not shown that the Responde nt has changed its position regarding

the underlying statutory guidelines for tournaments. From its

inception, the tournament rule was devised to allow cardroom

facilities the opportunity to conduct tournaments. The entry

fee was created and calculated t o allow for a no - value

tournament chip whereby the Agency could allow tournaments to be

conducted without presuming a violation of the bet restrictions

imposed by the statute. The Agency sought to allow tournaments

that would provide structure and comply with the legislated

mandates of the law. The no re - buy provision kept the

calculated entry fees within a computed fiction that the bet

restrictions would not be violated. When the re - buy provision

was found to be invalid, the rule had to be revisited in order

to clarify how the no value chips could work and still not

defeat the intent and unambiguous language of the statute. The

repeal of the tournament rule merely put the parties back where

they had been prior to the invalidation of the rule. In this

s ense , the cardroom facilities have all the statutory authority

to conduct games, including tournaments, that they had prior to

the tournament rule. The burden now, however, is on the

cardroom facilities to assure that the bet restrictions are met.

In rea lity, the chips do have value if they are purchased, re -

purchased, and continue to add to the pot. The $32 fiction

established by the rule no longer applies. How the cardroom

facilities might choose to structure the purchase of chips so

that the bet rest rictions can be met is unknown.

32. Secondly, the Agency has not acted arbitrarily or

capriciously. To prevail on this claim, the Petitioners must

establish that the decision was taken without thought or reason,

or irrationally or despotically, or that i t was not supported by

facts or logic. See Agrico Chemical Co. v. Department of

Environmental Regulation , 365 So. 2d 759 (Fla. 1 st DCA 1978).

The Agency has articulated a reasonable explanation for why the

tournament rule was repealed. The Respondent do es not assert

that tournaments cannot be conducted. Tournaments may be

conducted and, on a case by case basis, will have to be reviewed

to assure the statutory guidelines regarding bets are not

violated. Would a rule clarify the procedure? Undoubtedly. Is

the repeal of the tournament rule that proved to be flawed

(based upon the Final Order and appellate decision) arbitrary or

capricious? Not under the circumstances of this case.

33. Finally, the remedy for all parties to this matter may

be more appro priately found elsewhere. First, should the

Respondent adopt a policy of general applicability such that it

constitutes a rule under Section 120.52, Florida Statutes

(2005), such policy may be challenged pursuant to Section

120.56(4), Florida Statutes (20 05). Additionally, should the

Department seek to pursue an Administrative Complaint against a

cardroom facility for conducting a tournament, the licensee has

a Final Order affirmed on appeal to support the statutory

authority for tournaments. Alternative ly, pursuant to Section

120.54(7), Florida Statutes (2005) , any person regulated by an

agency or having a substantial interest in an agency rule may

petition an agency to adopt, amend, or repeal a rule or to

provide the minimum public information required by the chapter.

Clearly, the Petitioners herein have just such an interest.

Rulemaking is presumed feasible unless the agency can show it

has not had sufficient time to acquire the knowledge and

experience reasonably necessary to address the matter. See

§ 120.54(1), Fla. Stat. (2005).

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that the Petitioners’ challenge to the repeal

of the tournament rule is denied.

DONE AND ORDERED this 12th day of May , 2006 , in

Tallahas see, Leon County, Florida.

S

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Fil ing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 12th day of May , 2006 .

COPIES FURNISHED :

David J. Roberts, Director

Division of Pari - Mutuel Wagering

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Josefina Tamayo, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Simone Marstiller, Secretary

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Purnell &

Hoffman, P.A.

Post Office Box 551

Tallahassee, Florida 32302 - 0551

Ralf E. Michels, Esquire

Stefan Thomas Peavey Hoffer, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversel y 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 appea l with the Clerk of the

Division of Administrative Hearings and a copy, accompanied by

filing fees prescribed by law, with the District Court of

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

the Appellate District where the party resides. The notice of

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

be reviewed.