17-005872RU Florida Horsemen&Apos;S Benevolent And Protective Association, Inc., A Florida Nonprofit Corporation vs. Department Of Business And Professional Regulation, Division Of Pari-Mutuel Wagering Status: Closed DOAH Final Order on Tuesday, September 4, 2018.

Summary: Petitioner failed to establish that the agency's renewal of Intervenor's slot machine license was an unadopted rule.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA HORSEMEN'S BENEVOLENT

AND PROTECTIVE ASSOCIATION,

INC., A FLORIDA NONPROFIT

CORPORATION,

Petitioner,

vs. Case No. 17 - 5872RU

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION,

DIVISION OF PARI - MUTUEL

WAG ERING,

Respondent,

and

CALDER RACE COURSE, INC.,

Intervenor.

_______________________________/

FINAL ORDER

Pursuant to notice, Lawrence P. Stevenson, Administrative

Law Judge, Division of Administrative Hearings, conducted a

formal hearing in the above - styled case on May 22, 2018, in

Tallahassee, Florida.

APPEARANCES

For Petitioner: Bradford J. Beilly, Esquire

Beilly & Strohsahl, P.A.

1144 Southeast Third Avenue

Fort Lauderdale, Florida 33316

For Respondent: Louis Trombetta, Esquire

James A. Lewis, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

For Intervenor: Wilbur E. Brewton, Esquire

Kelly Plante, Esquire

Brewton Plante, P.A.

215 South Monroe Street, Suite 825

Tallahassee, Flor ida 32301

STATEMENT OF THE ISSUE S

Whether Respondent, Department of Business and Professional

Regulation, Division of Pari - Mutuel Wagering (ÐDivisionÑ),

relied on an unadopted rule when it renewed a license to operate

slot machines to Intervenor Calder R ace Course, Inc. (ÐCalderÑ)

for the 2017 - 2018 fiscal year, and whether Petitioner , Florida

HorsemenÓs Benevolent and Protective Association, Inc.

(ÐPetitionerÑ or ÐFHBPAÑ) , has standing to bring the instant

action.

PRELIMINARY STATEMENT

On May 9, 2017, Cal der submitted its application to renew

its Florida license for slot machine operations. On July 6,

2017, the Division issued Calder Ós renewal license. On

October 25, 2017, Petitioner filed at the Division of

Administrative Hearings (ÐDOAHÑ) a Petition Ch allenging an

Agency Statement as a Rule (the ÐPetitionÑ). The Petition

alleges that the DivisionÓs issuance of the renewal license

constituted an unadopted rule in violation of section

120.54(1)(a), Florida Statutes. Specifically, Petitioner

contends tha t changes to CalderÓs physical plant have resulted

in its slot machine gaming area no longer being Ðcontiguous and

connectedÑ to its live gaming facility as required by section

551.114(4), Florida Statutes. Petitioner also alleges that

Calder no longer ha s a Ðlive gaming facilityÑ within the meaning

of section 551.114(4).

On November 2, 2017, Calder filed a Petition to Intervene,

which was granted by Order dated November 3, 2017.

The case was scheduled for hearing on November 20, 2017, in

Tallahassee. The hearing was continued twice pursuant to joint

motions. On January 25, 2018, the parties filed a joint motion

to abate, stating that their informal settlement discussions had

proved fruitful and requesting time to negotiate further without

the pressure of a pending hearing. By Order dated January 25,

2018, the hearing scheduled for January 31, 2018 , was canceled

and the case placed in abeyance.

On March 15, 2018, the parties filed a status report

stating that they had been unable to informally resolve t he case

and requesting that the final hearing be rescheduled. By Order

dated March 16, 2018, the case w as scheduled for hearing on

May 22, 2018, on which date it was convened and completed.

The parties submitted a Joint Pre - hearing Stipulation. The

sti pulated facts from that document are included in the Findings

of Fact in this Final Order.

At the outset of the hearing, the parties stipulated to

entry of their exhibits. PetitionerÓs Exhibits 1 through 23 and

CalderÓs Exhibits 1 through 20 were admitted into evidence. The

Division adopted all of CalderÓs exhibits as its own.

Petitioner and the Division offered the testimony of Jamie

Pouncey, a Senior Management Analyst II for the Division ; Casey

Smith, the DivisionÓs Chief of Slot Operations; Steven Cog an,

the DivisionÓs Chief of Investigations; and Noel Haynes, a

Division investigator. Calder offered the testimony of its

President and General Manager, Maureen Adams ; and of its Senior

Director of Finance, Jason Stroess.

A one - volume Transcript of the he aring was filed at the

DOAH on June 18, 2018. On June 22, 2018, the parties filed a

Joint Motion for Extension of Time in which they requested until

July 23, 2018, to file their proposed final orders. An Order

Granting Extension was entered on June 25, 2 018. In compliance

with the Order Granting Extension, all of the parties filed

their P roposed F inal O rders on July 23, 2018.

Unless otherwise indicated, all statutory references in

this Final Order are to the 2018 version of the Florida Statutes

and all r eferences to Rules are to the current version of the

Florida Administrative Code.

FINDING S OF FACT

Based on the oral and documentary evidence adduced at the

final hearing and the entire record in this proceeding,

including the partiesÓ Joint Pre - hearing St ipulation, the

following F indings of F act are made:

1. The FHBPA is a Florida not - for - profit corporation

representing licensed horse trainers and horse owners in

Florida. The FHBPAÓs stated purpose is to advance and promote

the sport of thoroughbred hors e racing and the thoroughbred

horse racing industry in the state of Florida, and to assist its

members in all matters that affect their interests in the racing

industry.

2. The Division is the state agency responsible for

implementing and enforcing Florid aÓs pari - mutuel laws, including

the licensing and regulation of all pari - mutuel activities

conducted in the state. The DivisionÓs regulatory duties

include the adoption of Ðreasonable rules for the control,

supervision, and direction of all applicants, pe rmittees, and

licensees and for the holding, conducting, and operating of all

racetracks, race meets, an d races held in this state.Ñ

§ 550.0251(3), Fla. Stat. The Division is also responsible for

the administration and regulation of slot machine gaming i n

Florida. § 551.103, Fla. Stat.

3. Calder is the holder of a thoroughbred horse racing

pari - mutuel permit and a slot machine license in Miami - Dade

County, Florida. Calder is one of eight Florida pari - mutuel

facilities authorized to operate slot machin es and has

continuously held a slot machine license since 2009.

4. 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 permit holders by authorizing

the operation of slot machi nes at pari - mutuel facilities.

5. Article X, section 23 of the Florida Constitution,

adopted in 2004, allows the governing bodies of Miami - Dade and

Broward Counties to hold a county - wide referendum Ðon whether to

authorize slot machines within existing, licensed parimutuel

facilities (thoroughbred and harness racing, greyhound racing,

and jai - alai) that have conducted live racing or games in that

county during each of the last two calendar years before the

effective date of this amendment.Ñ Article X, s ection 23 also

requires the Legislature to adopt implementing legislation.

6. Chapter 551, Florida Statutes, originally enacted in

2005, is the implementing legislation for Article X, section 23.

7. Section 551.104(10)(a)1. requires slot machine

licens ees , who are also thoroughbred racing permit holders to

enter into a Ðbinding written agreementÑ with the FHBPA

governing the payment of purses on live thoroughbred races

conducted at the licenseeÓs pari - mutuel facility, and to file

that agreement with the Division. The statute provides that the

agreement may direct the payment of purses Ðfrom revenues

generated by any wagering or gaming the applicant is authorized

to conduct under Florida law.Ñ

8. Calder has filed with the Division a binding written

agre ement with the FHBPA governing the payment of purses on live

thoroughbred races conducted at CalderÓs pari - mutuel facility.

The agreement provides for direct payment of purses from

revenues generated from CalderÓs pari - mutuel wagering activities

and Calde rÓs slot machine gaming activities. 2/

9. Calder operated its first live thoroughbred horse

racing meet on May 6, 1971, at the current location of the pari -

mutuel facility. The facilityÓs legal description is unchanged

since CalderÓs initial racing permi t was issued in 1969.

10. A race meet has been conducted at the Calder pari -

mutuel facility every year from 1971 through 2017. Since at

least 1992, Calder has been operating live pari - mutuel

activities on the racetrack apron, in front of the grandstand.

11. In July 2009, Calder filed for and obtained a slot

machine license, pursuant to the provisions of Article X,

Section 23, and sections 551.101 and 5 51.102(4). Section

550.105(1) provides that a slot machine license is effective for

one year after issu ance and must be renewed annually. Calder

has renewed its slot machine license every year since 2009.

12. At the time Calder sought its initial slot machine

license, and just prior to constructing its slot machine

facility, CalderÓs pari - mutuel facility included:

a. a large main dirt race track, and a

smaller turf course;

b. a paddock area, including a patron

viewing area of the paddock, and a walking

ring in the paddock area;

c. 1,850 stables and a barn area (the

backside);

d. a detention barn;

e . state veterinary offices;

f. a totalizator board;

g. a winnerÓs circle;

h. outdoor pari - mutuel wagering areas;

i. a large grandstand building built in

1971 which housed: a grandstand seating

area, which had a capacity in excess of

10,000 seats; several restaurants and

lounges; pari - mutuel wagering betting areas;

freestanding pari - mutuel machines; stewardsÓ

offices; state offices; a money room;

restrooms; and elevators to access the

various floors of the building;

j. outdoor concessions (tiki h uts), outdoor

patron seating, and an outdoor pari - mutuel

wagering area to accommodate patrons who sat

outside the grandstand building; and

k. parking lots, sidewalks to connect to

the various areas, and other physical

components associated with the condu ct of

live thoroughbred racing.

13. All of the above - mentioned areas combined to support

the live pari - mutuel wagering activities conducted by Calder and

together constituted CalderÓs pari - mutuel facility as defined in

section 550.002(23).

14. CalderÓs designated slot machine gaming area was built

in a separate building, hereinafter referred to as the ÐCasino,Ñ

located within the boundaries of CalderÓs facility. The Casino

opened for business in 2010.

15. Calder built a covered sidewalk between the gra ndstand

and the Casino to facilitate the movement of patrons between the

two parts of the property.

16. While the indoor grandstand was a dedicated location

for patrons to watch the races and place bets, patrons were also

able to watch the races and place bets outside on the racetrack

apron, in front of the grandstand.

17. As noted above, Florida law currently authori zes

eight licensed pari - mutuel facilities to operate slot machine

gaming facilities. These facilities consist of two thoroughbred

permit ho lders (Calder Race Course and Gulfstream Park); one

harness horse track permit holder (Pompano Park); one quarter

horse permit holder (Hialeah Race Track); two dog track permit

holders (Hollywood and Flagler dog tracks); and two jai alai

permit holders (Da nia and Miami Jai Alai).

18. Section 551.114(4), Florida Statutes, provides:

Designated slot machine gaming areas may be

located within the current live gaming

facility or in an existing building that

must be contiguous and connected to the live

gaming f acility. If a designated slot

machine gaming area is to be located in a

building that is to be constructed, that new

building must be contiguous and connected to

the live gaming facility.

19. Calder is the only one of the eight slot machine

licensees that chose to locate its slot machine facility in a

separate, newly constructed building. All seven of the other

licensees operate their slot machine facilities within the same

buildings as their previously existing pari - mutuel facilities.

20. When it issued Calder Ós initial slot machine license,

the Division determined that CalderÓs newly built Casino was in

compliance with the statuteÓs requirement that it be Ðcontiguous

and connectedÑ to the existing pari - mutuel facility. This

determination was not challenged by the FHBPA or any other

entity.

21. The Casino has remained in the same location on the

Calder property since it opened in 2010.

22. CalderÓs grandstand was built in 1971 and was

approximately 420,000 square feet, seven stories tall, and

sea ted approximately 15,575 people.

23. CalderÓs live thoroughbred racing attendance and

revenues began to decline in 2004 and continued to drop

throughout the next decade. By 2013, attendance at Calder for

thoroughbred racing had dropped to a total of 118, 000 patron

visits, or an average of 439 patrons per day. This contrasts

with 2004, when total attendance was 841,000, for an average

daily attendance of 3,351.

24. HorsemenÓs purses similarly declined, from $26,707,755

in 2004 to $7,751,215 in 2013.

25. In an effort to cut costs, Calder began closing off

floors of its grandstand in 2008. By the 2013 and 2014 seasons,

only about half the grandstand remained in use.

26. CalderÓs grandstand building did not have a

traditional central air conditioning sys tem; rather, it had

cooling towers at either end of the building. The design of the

air conditioning system was such that it continued to cool all

seven floors even when some had been closed off f rom use.

Therefore, the only savings Calder could realize from closing

off floors was in labor costs. CalderÓs air conditioning costs

for the grandstand were around $55,000 per month. Calder was

also required by law to maintain elevator service to all floors,

at a maintenance cost of about $140,000 per year. T hese costs

were incurred whether or not the track was conducting a race

meet.

27. A further blow to CalderÓs thoroughbred racing

fortunes came when Gulfstream Park decided to race year - round,

thereby coming into direct competition with CalderÓs winter rac e

meet. By 2013, Calder was losing more than $5 million per year

on its pari - mutuel activities.

28. In 2014, Calder decided to cut its losses by

demolishing the grandstand building.

29. Calder did not request permission from the Division to

tear down th e grandstand. However, Division personnel visited

Calder regularly and were well aware of CalderÓs plans. No one

from the Division advised Calder that tearing down the

grandstand would create a slot machine compliance issue.

30. Also in 2014, Calder ent ered into a contract with

Gulfstream Park to outsource the operation of its race meets.

Since July 1, 2014, Gulfstream Park and its racing personnel

have conducted CalderÓs full schedule of live racing at the

Calder facility.

31. Gulfstream ParkÓs first season of operating the Calder

race meet began in October 2014. Gulfstream Park initially

intended to operate the race meet from the racetrack apron,

thereby foregoing a lease on CalderÓs still - standing grandstand.

However, due to the short time between execution of the lease

and commencement of the race meet, Gulfstream Park was forced to

lease the first floor of the grandstand to run the meet and part

of the seventh floor to house the race officials. The 2014 race

meet was the last time that patrons pl aced bets in the Calder

grandstand building.

32. In 2015, CalderÓs race meet was conducted exclusively

on the apron. In addition to the outdoor areas Calder has

historically maintained on the apron, a tent was erected to

house the wagering machines, vide o screens , and seating for

patrons. The grandstand was being prepared for demolition and

was not used during the 2015 Calder race meet.

33. Demolition of the grandstand began in 2015 and was

completed in 2016.

34. At present, CalderÓs live viewing loca tions include

areas in front of where the former grandstand building stood, as

well as to the east of the former grandstand area. These areas

still contain outdoor seating and tiki huts where patrons can

get food and drinks, view the race track, and wager on live

racing events.

35. The distance a patron must travel from the Casino to

the pari - mutuel wagering area is roughly the same as it was when

the grandstand building existed. The difference is that prior

to closure of the grandstand, patrons could ex it the Casino,

walk a short distance on the covered walkway, and then enter the

air - conditioned grandstand building, through which they could

proceed the hundred yards or so to the wagering area. Now,

patrons wishing to go from the Casino to the outdoor p ari - mutuel

wagering area must take a walkway that proceeds around the

fenced - off footprint of the old grandstand building. For a

portion of the path, the walkway is not covered.

36. The Casino remains where it was in 2010. The wagering

area on the racet rack apron has not moved. The only change in

the Calder facility is the demolition of the grandstand

building. CalderÓs plan is to convert the former grandstand

area into a greenspace.

37. The entire property remains under the control of

Calder. Nothin g obstructs passage between the Casino and any

other portion of the Calder property.

38. Since Calder opened the Casino in 2010, the Division

has renewed its slot machine license annually, without objection

from any third party, through the renewal for th e fiscal year

commencing July 1, 2016. Even the instant case is not a direct

challenge to CalderÓs 2017 - 2018 license renewal.

39. Commencing on October 5, 2016, the FHBPA began writing

to various Division personnel complaining that the demolition of

the grandstand caused the Calder Casino to no longer be

Ðcontiguous and connected to a live gaming facilityÑ as required

by section 551.114(4), and requesting the Division to commence

enforcement action against Calder.

40. In October 2016, the DivisionÓs Offi ce of

Investigations conducted an inspection of Calder and did not

find any violation related to section 551.114(4). Finding no

violations during its inspection, the Office of Investigations

saw no need to make a written report and did not initiate a

form al investigation.

41. Calder applied for its 2017 - 2018 slot machine license

renewal on May 9, 2017.

42. On June 20, 2017, the FHBPA served the Division with a

30 - day notice of its intention to file an unadopted rule

challenge against the Division Ðfor i ts willful failure to

to allow [Calder], as a Division licensee, to maintain its

license while it clearly operates its Slots Building in

violation of said statute.Ñ

43. On July 9, 2017, the Di vision renewed CalderÓs slot

machine license for the license year commencing July 1, 2017,

without any further analysis as to whether the Casino was in

compliance with section 551.114(4).

44. The FHBPA contends that it has standing to challenge

the Divisi onÓs purported unadopted rule because a substantial

number of its members would be substantially affected by the

DivisionÓs regulatory actions. The FHBPA notes that it is

specifically named in the statutes at issue in this proceeding

and is itself substan tially affected by agency decisions

regarding CalderÓs compliance with regulatory statutes because

the FHBPA receives a percentage of the total horse racing purse

pools awarded at Calder. The Legislature has enacted specific

conditions to be met by applic ants for slot machine licenses to

ensure the promotion of horse racing in Florida. The FHBPA

concludes that compliance with the relevant statutes, which is

intended to promote horse racing in the state, directly affects

it and its members.

45. The Petiti on states that the necessary effect of

compliance with section 551.114(4) is to expose slot machine

players to the live thoroughbred racing being conducted

elsewhere on the premises. This exposure necessarily increases

the chance of patrons wagering on ho rseracing, thereby

increasing the monies being directed to the purse pool for the

benefit of FHBPA members. The Petition alleges that the current

configuration at CalderÓs premises fails to expose the slot

machine patrons to the horseracing being conducte d and decreases

the chances those patrons will wager on horseracing.

46. In contrast, the Division observes that this

proceeding relates to a slot machine license and neither the

FHBPA nor its members are licensed or regulated under c hapter

551, nor do th ey promote or participate in the slot machine

industry. The Division concedes the FHBPAÓs interest in

CalderÓs thoroughbred horseracing activities under c hapter 550,

and the slot machine revenues the FHBPA receives to supplement

racing purses pursuant to c hapter 551. However, the Division

points out that if the FHBPA receives the relief it seeks, the

prospective effect would be to deprive its members of the

revenues they derive from CalderÓs slot machine operations. The

Division suggests that the FHBPA l acks standing because its

asserted scope of interest and activity -- the maximization of

purses to be paid out to its members -- is irreconcilably adverse

to the relief its requests in this proceeding.

47. In the Petition, the FHBPA asserted that its interest

in the agency statement is lost revenues. The alleged lack of

Ðcontiguity and connectednessÑ will fail to expose the slot

machine patrons to the horseracing being conducted elsewhere on

the Calder premises, thereby decreasing the chance that these

slot m achine players will wager on horseracing. The FHBPA did

not directly address the loss of slot machine revenues its

members would suffer if CalderÓs slot machine license were not

renewed.

48. The FHBPAÓs chief concern is that slot machine

wagering was ori ginally approved only as an adjunct to existing,

licensed pari - mutuel facilities, with the promise that slot

machine revenues would support and enhance FloridaÓs

horseracing, greyhound racing, and jai alai industries. Now, at

least at Calder, the tail is wagging the dog: casino revenues

far outstrip live thoroughbred racing revenues. Calder is

actively disinvesting in its thoroughbred racing business,

outsourcing its operation to Gulfstream and tearing down its

grandstand. Maureen Adams, CalderÓs presid ent and general

manager, candidly testified that Calder would get out of the

live horseracing business altogether if the Legislature would

ÐdecoupleÑ the slot machine operations from the pari - mutuel

operations.

49. It is found that the FHBPA has articulat ed a

sufficient interest to establish standing to bring this

unadopted rule challenge as part of its effort to preserve what

it contends is the purpose of the constitutional amendment and

implementing legislation establishing slot machine operations in

Mia mi - Dade and Broward Counties: the promotion of and economic

support for the pari - mutuel gaming industry, including

thoroughbred horseracing. The FHBPAÓs asserted interest in this

proceeding is consistent with the organizationÓs stated purpose.

50. As to whether the DivisionÓs action constituted an

unadopted rule, the Petition alleged:

The Division's approval and issuance of a

renewed slot machine gaming license to

Calder reflects and implements a statement

of agency policy interpreting the "connected

and contiguous" requirement of Fla. Stat.

551.114 so as to allow the issuance of slot

machine gaming license to permitholders

whose designated slot machine gaming area is

contained at a location that is a distance

from and physically apart from the area

where a live gaming facility is located.

This new policy, which has not been

promulgated as a rule, is a statement of

general applicability because it announces

an inclusive interpretation of the term

"connected and contiguous" that will serve

as the basis for other pari - mutuel wagering

permitholders to operate a slot machine

gaming facility.

51. The evidence presented at the hearing established that

the operation of slot machines is limited to the eight pari -

mutuel facilities in Broward and Miami - Dade Counti es that were

in existence at the time of and had conducted live racing or

games in the two calendar years p rior to the adoption of

Article X, Section 23. Absent a further constitutional

amendment, the class of slot machine licensees cannot expand

beyond t hese eight pari - mutuel facilities. Even if it were

conceded that the DivisionÓs statement is one of general

applicability, its potential application would be limited to

these eight entities.

52. Section 550.114(4) provides three options for the

location of Ðdesignated slot machine gaming areas.Ñ 3/ First, the

slot machine gaming area may be located Ðwithin the current live

gaming facility.Ñ Second, the slot machine gaming area may be

placed Ðin an existing building that must be contiguous and

connected t o the live gaming facility.Ñ Third, the slot machine

gaming area may be located in a newly constructed building,

provided that new building is contiguous and connected to the

live gaming facility.

53. The evidence presented at the hearing established tha t

seven of the eight eligible pari - mutuel facilities chose option

one for their slot machine gaming areas; that is, they located

the slot machine gaming area within their current live gaming

facilities. No one chose option two. Only Calder chose option

t hree and constructed a new building to house its slot machine

gaming area.

54. As matters stood at the time of the hearing, Calder

was the only licensee that could possibly be affected by a

Division interpretation of the Ðcontiguous and connectedÑ

require ment of the statute. Unless another pari - mutuel facility

in the future undertakes to construct a new building for its

slot machine gaming area or to move its slot machine gaming area

to a different existing building, the alleged unadopted rule is

applicab le only to Calder.

55. The evidence indicated that the Division did not give

much thought to the question whether demolishing the grandstand

could affect CalderÓs slot machine licensure until the FHBPA

began complaining about it. The Division then consid ered the

FHBPAÓs objections and concluded that CalderÓs slot machine

license should be renewed. 4/

56. The DivisionÓs reasoning was essentially that the

Casino had n o t moved, the racetrack had n o t moved, and no

impediment had been placed between them. T he demolition of the

grandstand had the effect of forcing patrons to take a slightly

different path between the Casino and the pari - mutuel facility,

and to walk part of the way in the elements rather than briefly

under a covered walkway and then through an enclosed air

conditioned grandstand.

57. The Casino has never been physically attached to the

pari - mutuel facility; it has always been linked by a sidewalk.

The demolition of the grandstand did nothing to change the

position of the Casino in relation to the pari - mut uel facility.

Both facilities are on the Calder property and are still linked

by a sidewalk. The loss of the grandstand only made the passage

from the Casino to the racetrack less comfortable for those who

prefer air conditioning to a walk outdoors. The Division

concluded that the Casino is now as Ðcontiguous and connectedÑ

to CalderÓs pari - mutuel facility as it ever was.

58. The FHBPA contends that the absence of an air

conditioned grandstand building is critical. Because section

551.11 4(4) states that a designated slot machine gaming area may

be located within the current live gaming facility, the

Legislature Ðis necessarily stating that a Òlive gaming

facilityÓ is a structure that is able to house the operation of

a slot machine gaming area.Ñ If an area cannot house a slot

machine gaming area, then it cannot be a Ðlive gaming facilityÑ

within the terms of the statute.

59. The FHBPA next points to the testimony of Casey Smith,

the DivisionÓs Chief of Slot Operations, who stated that a tent

on the apron of a racetrack would not be a viable option for a

slot machine operation because Ðslot machines would be sensitive

to temperature, humidity, stuff like that, so you know, doing

anything long term in a tent like that probably is not some thing

thatÓs going to work.Ñ Mr. Smith also noted the necessity of

security and a surveillance system.

60. The FHBPA argues that Mr. SmithÓs testimony, read

together with the Ðlive gaming facilityÑ language of section

551.114(4), Ðmake it clear that a Ò live gaming facilityÓ must

necessarily be an air conditioned structure with enclosed walls,

a roof and electricity that is capable of having a surveillance

system installed.Ñ In the case of Calder, the Ðlive gaming

facilityÑ must be an air conditioned str ucture with enclosed

walls and a roof that allows the public to view and wager on

thoroughbred horseraces being conducted Ðlive and in plain

view.Ñ The FHBPA contends that to interpret Ðlive gaming

facilityÑ to mean anything less than an air conditioned

s tructure with enclosed walls and a roof would render the first

part of section 551.114(4) Ðmeaningless.Ñ

61. The FHBPAÓs argument would have some force if the

first part of section 551.114(4) stood alone, i.e., if a pari -

mutuel licenseeÓs only option were to place the slot machine

gaming area within the current live gaming facility. As noted

above, however, the plain language of the statute gives a

licensee two other options: to place the slot machine gaming

area in an existing building that is contiguou s and connected to

the live gaming facility, or to construct a new building that is

contiguous and connected to the live gaming facility. The

FHBPAÓs contention is that the statute requires a live gaming

facility to be fully capable of housing slot machin es, even

where the slot machines are in fact housed elsewhere. The

language of section 551.114(4) does not support this reading. 5/

62. It is found that the DivisionÓs action in approving

the renewal of CalderÓs slot machine license was based on facts

spe cific to Calder, applied only to Calder, and constituted an

order, not an unadopted rule.

63. ÐContiguous and connectedÑ is an undefined term in the

statute. Without belaboring the dictionary definitions of these

common words, the undersigned finds tha t the Division was

entitled to some exercise of discretion in applying the term

Ðcontiguous and connectedÑ to the unique facts on the ground at

Calder, without going through the process of adopting a rule

that would apply only to Calder. Because the Divis ionÓs

issuance of a slot machine license renewal to Calder was not an

unadopted rule, there is no need to further address the

correctness of the DivisionÓs interpretation of Ðcontiguous and

continuous.Ñ

CONCLUSIONS OF LAW

64. The Division of Administrat ive Hearings has

jurisdiction over the parties and the subject matter of this

proceeding pursuant to sections 120.56(4), 120.569, and

120.57(1), Florida Statutes.

65. The Division is an ÐagencyÑ within the meaning of

section 120.52(1). The DivisionÓs st atutory powers include

rulemaking pursuant to sections 550.0251(3) and 550.3511(10).

66. Section 120.52(16) defines a ÐruleÑ as:

each agency statement of general

applicability that implements, interprets,

or prescribes law or policy or describes the

proc edure or practice requirements of any

agency and includes any form which imposes

any requirement or solicits any information

not specifically required by statute or by

an existing rule.

67. An "unadopted rule" is defined as an agency statement

that meet s the definition of the term rule, but that has not

been adopted pursuant to the requirements of section 120.54.

§ 120.52(20), Fla. Stat.

68. Section 120.54(1) provides:

(1)(a) Rulemaking is not a matter of agency

discretion. Each agency statement defi ned

as a rule by s. 120.52 shall be adopted by

the rulemaking procedure provided by this

section as soon as feasible and practicable.

69. The Ðflush leftÑ language of section 120.52(8),

defining Ðinvalid exercise of legislative authority,Ñ provides:

A gr ant 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 ena bling 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 agencyÓs

class of powers and duties, nor shall an

agency ha ve 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 t han implementing or

interpreting the specific powers and duties

conferred by the enabling statute.

70. Section 120.56(4) provides a remedy for persons who

are substantially affected by an unadopted rule:

(a) Any person substantially affected by an

agency statement that is an unadopted rule

may seek an administrative determination

that the statement violates s. 120.54(1)(a).

The petition shall include the text of the

statement or a description of the statement

and shall state facts sufficient to show

that the statement constitutes an unadopted

rule.

* * *

(e) If an administrative law judge enters a

final order that all or part of an unadopted

rule violates s. 120.54(1)(a), the agency

must immediately discontinue all reliance

upon the unadopted rule or any substantially

similar statement as a basis for agency

action.

71. The FHBPA has standing for purposes of challenging an

unadopted rule pursuant to section 120.56(4), in that a

substantial number of its members would be substantially

affected by the DivisionÓs regulatory actions. NAACP, Inc. v.

Fla. Bd. of Regents , 863 So. 2d 294 (Fla. 2003); Rozenzweig v.

DepÓt of Transp. , 979 So. 2d 1050, 1053 - 54 (Fla. 1st DCA 2008).

The FHBPA is named specifically in chapter 551 as an entity with

which a thoroughbred racing licensee must contract in order to

obtain and r enew a slot machine license. § 551.104(10)(a)1.,

Fla. Stat. The FHBPA would itself be substantially affected by

the DivisionÓs decisions regarding slot machine licensure and by

the DivisionÓs specific decision to approve CalderÓs license

under the circum stances described in the above Findings of Fact.

72. An administrative agency is required to promulgate

rules as to "those statements which are intended by their own

effect to create rights or to require compliance, or otherwise

to have the direct and consistent effect of law." Coventry

First, LLC v. Off. of Ins. Reg. , 38 So. 3d 200, 203 (Fla. 1st

DCA 2010), quoting Ag. for Health Care Admin. v. Custom

Mobility , 995 So. 2d 984, 986 (Fla. 1st DCA 2008).

73. An agency statement need not be reduced to wr iting in

order to meet the definition of a rule, and an agency cannot

avoid the rulemaking requirement by refraining from

memorializing the agency statement in written terms. Dep't of

High. Saf. & Motor Veh. v. Schluter 705 So. 2d 81, 84 (Fla. 1st

DCA 199 7).

74. The focus in determining whether an agency statement

is a rule within the meaning of section 120.52(16) is on the

effect of the statement rather than the agencyÓs

characterization of it. Dep't of Rev. v. Vanjaria Enterprises.,

Inc. , 675 So. 2d 252, 255 (Fla. 5th DCA 1996); Balsam v. Dep't

of HRS , 452 So. 2d 976, 977 (Fla. 1st DCA 1984); Amos v. Dep't

of HRS , 444 So. 2d 43, 46 - 47 (Fla. 1st DCA 1983); State Dep't of

Admin. v. Harvey , 356 So. 2d 323, 325 (Fla. 1st DCA 1977).

75. An agency's interp retation of a statute is a rule if

it gives the statute a meaning not readily apparent from a

literal reading, or if it purports to create rights, require

compliance, or otherwise has the direct and consistent effect of

law. Beverly Enterprises - Florida, Inc. v. Dep't of HRS , 573

So. 2d 19, 22 - 23 (Fla. 1st DCA 1990), quoting St. Francis Hosp.,

Inc. v. Dep't of HRS , 553 So. 2d 1351, 1354 (Fla. 1st DCA 1989).

76. Florida administrative law does not allow an agency to

establish new policy by stealth, throug h the issuance of

licenses. A policy having the force and effect of law must be

formally adopted through the rulemaking process. Fla . Quarter

Horse Track AssÓn v. DepÓt of Bus. & Prof. Reg. , 133 So. 3d

1118, 1119 - 20 (Fla 1st DCA 2014).

77. To reiterat e, section 551.114(4) provides:

Designated slot machine gaming areas may be

located within the current live gaming

facility or in an existing building that

must be contiguous and connected to the live

gaming facility. If a designated slot

machine gaming a rea is to be located in a

building that is to be constructed, that new

building must be contiguous and connected to

the live gaming facility.

78. The FHBPA contends that the quoted statutory language

necessarily implies that a Ðlive gaming facilityÑ mus t be

capable of housing a slot machine gaming area. The FHBPA states

that the evidence established that a slot machine gaming area

requires an enclosed, air conditioned space and that the outdoor

area currently provided by Calder for pari - mutuel wagering is

incapable of housing slot machines. Therefore, Calder does not

currently operate a Ðlive gaming facility.Ñ

79. The FHBPA misreads the statute. First, the statuteÓs

language is permissive: a slot machine gaming area may be

located within the curren t live gaming facility. Second, the

statute goes on to provide the pari - mutuel license holder with

two other options for setting up its slot machine operation,

neither of which logically requires the current live gaming

facility to be capable of housing s lot machines.

80. As noted in the Findings of Fact above, the FHBPAÓs

reading might be compelling if the only option open to a pari -

mutuel facility were to place the slot machine gaming area in

its current live gaming facility. However, it would make n o

sense to require that a current live gaming facility be capable

of housing a slot machine operation when the slot machine

operation is in fact going to be placed in a different building.

81. The FHBPA also argues that the DivisionÓs approval of

CalderÓs license renewal is in derogation of the statuteÓs

requirement that the separate building housing the slot machine

gaming operation be Ðcontiguous and connectedÑ to the current

live gaming facility. Put another way, the Division has acted

in accordance wi th an unadopted rule by interpreting the

Ðcontiguous and connectedÑ requirement in such a way that the

allegedly unconnected, non - contiguous Casino has been approved

for license renewal.

82. The Division responds that its renewal of CalderÓs

license is no t an unadopted rule because it lacks general

applicability. In support of its contention, the Division

quotes Fl orida Quarter Horse Track Ass ociation v. Florida

Dep artment of Bus iness & Prof essional Reg ulation , Case No. 11 -

5796RU at ¶ 59 (DOAH May 6, 2013 ), affÓd , Fl orida Quarter Horse

Track Ass ociation v. State , 133 So. 3d 1118 (Fla. 1st DCA 2014),

as follows:

A statement which, by its terms, is limited

to a particular person or singular factual

situation is not generally applicable, nor

is one whose appl icability depends on the

circumstances. Such ad hoc directives are

orders, not rules. By contrast, "general

applicability" requires that the scope of

the statement ÏÏ its field of operation ÏÏ be

sufficiently encompassing as to constitute a

principle; there must be, in other words, a

comprehensiveness to the statement, which

distinguishes the statement from the more

narrowly focused, individualized orders that

agencies routinely issue in determining the

substantial interests of individual persons.

A general ly applicable statement purports to

affect, not just a single person or singular

situations, but a category or class of

persons or activities.

83. The actual ÐstatementÑ in this case was the DivisionÓs

renewal of CalderÓs slot machine gaming license, whi ch the FHBPA

characterized as expressing the DivisionÓs judgment that Ða

designated slot machine gaming area in a building that is both

physically disconnected from and located in a different

geographic area than a live gaming facility is actually

Òcontigu ous and connectedÓ to the live gaming facility.Ñ

84. Despite the FHBPAÓs effort to broaden the DivisionÓs

statement into one of general applicability, it was in fact

specific to Calder and the configuration of CalderÓs gaming

facilities. Calder was the o nly slot machine licensee that

chose to build a new and separate building to house its Casino

and to connect the Casino to the pari - mutuel facility via

sidewalks. All seven of the other eligible pari - mutuel

licensees elected to house their slot machine ga ming areas

within their current live gaming facilities.

85. The Division is specifically authorized by section

550.104(1) to issue a license to conduct slot machine gaming

upon a finding that the application is complete and the

applicant is qualified. Given the uniqueness of CalderÓs

facility, the Division was not required to initiate the

rulemaking process in order to renew CalderÓs license. The

DivisionÓs interpretation of the Ðcontiguous and connectedÑ

criterion is inapplicable to any other slot mac hine licensee.

CalderÓs license renewal was an order, not an unadopted rule.

86. All three parties presented argument as to whether the

DivisionÓs interpretation of the Ðcontiguous and connectedÑ was

a correct reading of section 551.114(4). Because the

undersigned concludes that the DivisionÓs issuance of a license

renewal to Calder was not an unadopted rule, there is no need to

reach the issue of whether the agencyÓs interpretation of the

statute was erroneous.

ORDER

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is

ORDERED that the Florida HorsemenÓs Benevolent and

Protective Association, Inc.Ós Petition Challenging an Agency

Statement as a Rule is DISMISSED.

DONE AND ORDERED this 4th day of September , 2018 , in

Tallahassee, Leon Co unty, Florida.

S

LAWRENCE P. STEVENSON

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 4th day of September , 2018 .

ENDNOTE S

1/ Paragraphs 6 through 17 of Fl orida Quarter Horse Racing

Ass ociation v. Dep artment of Bus iness & Prof essional Reg ulation ,

DOAH Case No. 11 - 5796RU (Final Order May 6, 2013), affÓd 133 So.

2d 1118 (Fla. 1st DCA 2014), provide an excellent primer on

Florida pari - mutuel wagering in general and quarter horse racing

in particular.

2/ There was testimony regarding the existence of a s econd and

confidential agreement between Calder, the FHBPA, and Gulfstream

Park, the entity that has operated the race meet at Calder since

2014. It was not necessary to delve into the terms of either

agreement because there was no dispute that Calder was in

compliance with the statutory requirement that an agreement be

on file with the Division.

3/ ÐDesignated slot machine gaming areasÑ are defined as Ð the

area or areas of a facility of a slot machine licensee in which

slot machine gaming may be conduct ed in accordance with the

provisions of this chapter.Ñ £ 551.102(2), Fla . Stat.

4/ The partiesÓ extensive argument over whether the Division

conducted a formal ÐinvestigationÑ into the Ðcontiguous and

connectedÑ question, or why it failed to do so, is i rrelevant to

the decision in this case. The Division had personnel on the

ground at Calder throughout the period of the CasinoÓs

construction and the grandstandÓs demolition. The Division was

well aware of the configuration of CalderÓs facility. The

Div ision did not need to undertake a formal investigation of

CalderÓs premises to conclude that the FHBPAÓs objections were

unfounded.

5/ Of less significance but some interest, Mr. Smith qualified

his testimony regarding the practicality of tents by pointi ng

out that the Seminole Tribe of FloridaÓs Big Cypress gaming

facility was in an air conditioned tent for several years. The

slot machines were in the tent and the computer, monitoring and

surveillance equipment were kept in storage containers capable

of withstanding a hurricane.

COPIES FURNISHED:

Bradford J. Beilly, Esquire

Beilly & Strohsahl, P.A.

1144 Southeast Third Avenue

Fort Lauderdale, Florida 33316

(eServed)

Jason L. Maine, General Counsel

Department of Business and

Professional Regulati on

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Joseph Yauger Whealdon, Esquire

Florida Fish and Wildlife Conservation Commission

620 South Meridian Street

Tallahassee, Florida 32399 - 1600

(eServed)

Louis Trombetta, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

James A. Lewis, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399

(eServed)

Wilbur E. Brewton, Esquire

Kelly Plante, Esquire

Brewton Plante, P.A.

Suite 825

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

Robert Ehrhardt, Director

Division of Pari - Mutuel Wagering

Department of Business and

Professional Regulation

Capital C ommerce Center

2601 Blairstone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Jason Maine, General Counsel

Department of Business and

Professional Regulation

Capital Commerce Center

2601 Blairstone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Jo nathan Zachem, Secretary

Department of Business and

Professional Regulation

Capital Commerce Center

2601 Blairstone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Ernest Reddick, Program Administrator

Anya Grosenbaugh

Department of State

R.A. Gray Buil ding

500 South Bronough Street

Tallahassee, Florida 32399 - 0250

(eServed)

Ken Plante, Coordinator

Joint Administrative Procedures Committee

Room 6800, Pepper Building

111 West Madison Street

Tallahassee, Florida 32399 - 1400

(eServed)

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 o riginal notice of administrative appeal with the

agency clerk of the Division of Administrative Hearings within

30 days of rendition of the order to be reviewed, and a copy of

the notice, accompanied by any filing fees prescribed by law,

with the clerk of the District Court of Appeal in the appellate

district where the agency maintains its headquarters or where a

party resides or as otherwise provided by law.