19-001617 The Florida Horsemen&Apos;S Benevolent And Protective Association, Inc. vs. Department Of Business And Professional Regulation, Division Of Pari-Mutuel Wagering; And Calder Race Course, Inc. Status: Closed Recommended Order on Tuesday, April 7, 2020.

Summary: FHBPA, FTBOA, and OBS have standing to asssert that alleged agency statements constitute unadopted rules. However, none of the alleged statements constitute unadopted rules.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

T HE F LORIDA H ORSEMEN ' S B ENEVOLENT

A ND P ROTECTIVE A SSOCIATION , I NC . ,

Petitioner ,

and

F LORIDA T HOROUGHBRED B REEDERS '

A SSOCIATION , I NC ., D / B / A F LORIDA

T HOROUGHBRED B REEDERS ' A ND O WNERS '

A SSOCIATION ; A ND O CALA B REEDERS '

S ALES C OMPANY , I NC .,

Intervenors ,

vs. Case No . 19 - 1617

D EPARTMENT OF B USINESS A ND

P ROFESSIONAL R EGULATION , D IVISION OF

P ARI - M UTUEL W AGERING ; A ND C ALDER

R ACE C OURSE , I NC . ,

Respondents .

/

R ECOMMENDED O RDER

This matter came before Administrative Law Judge Darren A. Schwartz

of the Division of Administrative Hearings ( " DOAH " ) for final hearin g on

October 21 through 24, 2019 , by video teleconference with sites in

Tallahassee and L auderdale Lakes, Florida.

A PPEARANCES

For Petitioner The Florida Horsemen's Benevolent and Protective

Association, Inc. ( " FHBPA " ) :

Bradford J. Beilly, Esquire

Beilly and Strohsahl, P.A.

1144 Southeast Third Avenue

Fort Lauder dale, Florida 33316

For Intervenor Florida Thoroughbred BreedersÔ and OwnersÔ

Association, Inc. ( " FTBOA " ) :

Donna E. Blanton, Esquire

Brittany Adams Long, Esquire

Radey Law Firm, P.A.

301 South Bronough Street, Suite 200

Tallahassee, Florida 32301

For Intervenor Ocal a BreedersÔ Sales, Inc. ( " OBS " ) :

Daniel Hernandez, Esquire

Shutts & Bowen LLP

4301 West Boy Scout Boulevard, Suite 300

Tampa, Florida 33607

For Respondent Department of Business and Professional Regulation,

Division of Pari - Mutuel Wagering ( " Division " ):

James A. Lewis, Esquire

Megan S. Silver, Esquire

Johnny P. ElHachem, Esquire

Department of Business and Professional Regulation

Division of Pari - Mutuel Wagering

2601 Blair Stone Road

Tallahassee, Florida 32399

For Respondent Calder Race Course, Inc. ( " Calder " ):

Wilbur E. Brewton, Esquire

Brewton Plante, P.A.

215 South Monroe Street, Suite 825

Tallahassee, Florida 32301

Tamara S. Malvin, Esquire

Akerman LLP

350 East Las Olas Boulevard, Suite 1600

Fort Lauderdale, Florida 33301

S TATEMENT OF T HE I SSUE S

Whether the FHBPA, FTBOA, and OBS have standing to challenge the

DivisionÔs issu ance of a new summer jai alai permit to Calder; and, if so,

whether FHBPAÔs petition and FTBOAÔs and OBSÔs motions to intervene

were timely; and, if so, whether the Division properly granted a new summer

jai alai permit to Calder pursuant to section 550.07 45(1), Florida Statutes

(2019), and Florida Administrative Code Rule 61D - 4.002.

P RELIMINARY S TATEMENT

On February 9, 2018, the Division issued a new summer jai alai permit to

Calder. On July 3, 2018, FHBPA filed a Petition for Formal Administrative

Hearing with the Division, challenging the i ssuance of the permit. On

March 25, 2019, the Division forwarded the petition to DOAH to assign an

administrative law judge to conduct the final hearing. This matter was

assigned to the undersigned under DOAH Case N o. 1 9 - 1617. On April 2

and 3, 2019, FTBOA and OBS filed motions to intervene. On April 4, 2019,

the undersigned set the final hearing for June 17 through 19, 2019. On

April 17, 2019, the Division and Calder filed responses in opposition to the

motions. On May 7, 2019, following a hearing, the undersigned entered an

Order granting the motions.

On May 29, 2019, FHBPA, FTBOA, and OBS filed a separate Petition

Challenging Agency Statement as an Unadopted Rule Incorporating a Motion

to Consolidate this Proceeding w ith Pending DOAH Case No. 19 - 1617 with

DOAH. The unadopted rule challenge matter was assigned to the

undersigned under DOAH Case No. 19 - 2860RU. On May 31, 2019, the

undersigned entered an Order granting the motion and consolidated DOAH

Case Nos. 19 - 1617 an d 19 - 2860RU.

On May 31, 2019, FHBPA filed a motion to amend its petition in DOAH

Case No. 19 - 1617. On June 3, 2019, the undersigned entered an Order

granting the motion. On June 7, 2019, the Division filed an unopposed motion

to continue the final hearing . On June 14, 2019, following a hearing, the

undersigned entered an Order granting the motion and reset the final

hearing for July 29 through 31, 2019.

On July 18, 2019, FHBPA filed a motion to amend its amended petition in

DOAH Case No. 19 - 1617. On July 19, 2019, Calder and the Division filed

responses in opposition to the motion. On July 22, 2019, the Division filed a

motion to continue the final hearing, which FHBPA, FTBOA, and OBS

opposed. On July 22, 2019, a hearing was held on the motions. On July 23 ,

2019, the undersigned entered Orders granting the motions and reset the

final hearing for October 21 through 25, 2019.

On October 15, 2019, Calder filed its Motions in Limine. On October 18,

2019, FHBPA filed a response in opposition to the motions. Tha t same day,

Calder filed a motion for official recognition and the parties filed their Joint

Pre - hearing Stipulation, in which they stipulated to certain facts. On

October 21, 2019, Calder filed another motion in limine.

The final hearing was held in both cases on October 21 through 24, 2019.

At the hearing, the undersigned granted CalderÔs request for official

recognition of sections 550.0745 and 550.054, rule 61D - 4.002, and various

Florida appellate decisions. The Division p resented the testimony of

Jami e Pouncey and Tracy Swain. The DivisionÔs Exhibits 1 through 5 were

received into evidence. Calder presented the testimony of Jason Stoess and

Marc Dunbar. CalderÔs Exhibits 1 through 27 were received into evidence.

FHBPA presented the testimony of Keith J ohnson, Robert Ehrhardt,

Milton Roth, John Lockwood, Andrew Lavin, and Steven Screnci. FHBPAÔs

Exhibits 2, 4, 5, 11 through 13, 15, 16B, 16C, 25 through 29, 31, 33, 35, 38,

51, 53, 54, 59, and 60 were received into evidence. FTBOA presented the

testimony o f Taylor Lonny Powell. FTBOAÔs Exhibits 1 through 6 were

received into evidence. OBS presented the testimony of Tom Ventura. OBSÔs

Exhibits 1 through 4 were received into evidence.

The eight - volume final hearing Transcript was filed at DOAH on

December 9, 2019. On December 13, 2019, the parties filed a Joint Motion for

Extension of Time to File Proposed Orders. On December 16, 2019, the

undersigned entered an Order granting the motion, extending the deadline to

January 28, 2020. On January 17, 2020, the Di vision filed an unopposed

motion for an additional extension of the deadline to file proposed orders. On

January 21, 2020, the undersigned entered an Order granting the motion,

extending the deadline to February 18, 2020. The parties timely filed

proposed recommended orders, which were given consideration in the

preparation of this Recommended Order.

On March 18, 2020, the Division filed an unopposed motion for official

recognition. On March 26, 2020, the undersigned entered an Order granting

the DivisionÔ s request for official recognition of the Recommended Order and

Final Order issued by Administrative Law Judge Cathy M. Sellers in the

cases styled Florida Standardbred Breeders and Owners Association, Inc. v.

Department of Business and Professional Regula tion , Division of Pari - Mutuel

Wagering , DOAH Case No. 18 - 6339 (Fla. DOAH Mar. 12, 2020) , and DOAH

Case No. 19 - 0267RU (Fla. DOAH Mar. 12, 2020).

The stipulated facts in the partiesÔ Pre - hearing Stipulation have been

incorporated herein as indicated below. All references to the Florida Statutes

and Florida Administrative Code provisions are to the 2019 versions, unless

otherwise indicated.

F INDINGS OF F ACT

Parties/Standing

1. The Division is the agency charged with regulating pari - mutuel

wagering and issuin g pari - mutuel permits under the provisions of

chapter 550, including section 550.0745 pertaining to summer jai alai

permits, and rule 61D - 4.002.

2. Calder is a pari - mutuel permitholder authorized to operate

thoroughbred horse racing and conduct pari - mutel pools on exhibition sports

in Miami - Dade County pursuant to chapter 550. Calder has been a pari -

mut u el permitholder authorized to operate thoroughbred horse racing in

Miami - Dade County since 1971.

3. The Division issued a new summer jai alai permit to Cald er on

February 9, 2018. The Division did not provide FHBPA, FTBOA, or OBS with

formal notice that Calder had applied for a new summer jai alai permit or

that the Division intended to issue a new summer jai alai permit to Calder.

The Division subsequently l icensed Calder to operate its summer jai alai

permit in fiscal years 2018/2019 and 2019/2020. Calder is currently licensed

to operate both summer jai alai and thoroughbred racing at its Miami - Dade

County facility pursuant to the permits and licenses issued by the Division to

Calder for thoroughbred horse racing and summer jai alai. Calder is also

currently licensed to operate slot machine gaming.

4. Calder receives approximately $85,000,000 in annual gross revenues

from slot machine gaming, making this the most profitable activity Calder

conducts at its facility.

5. FHBPA is not a pari - mutuel permitholder. FHBPA is a Florida not - for -

profit corporation and an association whose membership consists of a

majority of horse owners and trainers (approximately 5,000 to 6,000

" horsemen " ), whose horses race at thoroughbred race meets operated by the

licensed thoroughbred permitholders in South Florida.

6. Pursuant to section 551.104(10)(a)1., Florida Statutes, no slot machine

license or renewal license can be issued to an applicant with a thoroughbred

horse racing pari - mutuel permit unless the applicant has on file with the

Division a binding, written agreement with FHBPA governing the payment

of purses on live thoroughbred horse races conducted at the licenseeÔs pari -

m utuel facility. FHBPA and Calder have a contractual agreement, whereby

Calder must run 40 days of thoroughbred horse races under its thoroughbred

license. Und er the current agreement between Calder and FHBPA, Calder is

required to pay FHBPA a sum equal to ten percent of CalderÔs gross slot

machine revenues to be used for purses. This amounts to approximately

$9,000,000 that FHBPA receives from Calder on an annual basis. This

contractual agreement expires in 2020. Since 2014, Calder has satisfied its

obligat ion to run a 40 - day thoroughbred racing schedule by contracting with

a third party, Gulfstream Park, to run races between October and November

of each year.

7. FTBOA is not a pari - mutuel permitholder. FTBOA is a Florida not - for -

profit corporation, and the statewide trade association representing the

interests of thoroughbred breeders and owners in Florida. Horses owned

and/or bred by FTBOA members participate in the thoroughbred horse races

at CalderÔs race course.

8. FTBOA is designated in section 550.2625 (3)(h) as the administrator of

the thoroughbred breedersÔ awards program established by the Florida

Legislature in sections 550.26165 and 550.2625(3). As part of this program,

FTBOA is responsible for the payment of breedersÔ awards on thoroughbred

races c onducted in Florida. Pursuant to section 550.26165(1), the purpose of

breedersÔ awards is to " encourage the agricultural activity of breeding and

training racehorses in this state. "

9. Pursuant to section 551.104(10)(a)1., no slot machine license or renewa l

license can be issued to an applicant with a thoroughbred horse racing pari -

mutuel permit unless the applicant has on file with the Division a binding,

written agreement with FTBOA governing the payment of breedersÔ, stallion,

and special racing awards o n live thoroughbred races conducted at the

licenseeÔs pari - mutuel facility. FTBOA receives approximately $1,500,000

from Calder each year in breedersÔ awards as a result of the Calder racing

handle and slot machine revenue.

10. OBS holds a limited intertra ck wagering pari - mutuel permit , pursuant

to section 550.6308 , that authorizes it to conduct intertrack horse racing at

its Ocala facility. OBS also holds a non - wagering horse racing permit ,

pursuant to section 550.505, and a thoroughbred horse sales licens e ,

pursuant to chapter 535, Florida Statutes. OBS sells thoroughbred horses at

its facility located in Ocala. OBS is the only licensed Florida - based

thoroughbred auction sales company in Florida, and it conducts five

thoroughbred h orse auctions annually. O BS has no pari - mutuel permits

located in Miami - Dade County, Florida.

11. On July 31, 2018, Calder filed a Petition for Declaratory Statement

with the Division regarding whether it can discontinue the operation of its

thoroughbred races and instead operate a full schedule of jai alai

performances in order to maintain its eligibility to continue to conduct slot

machine gaming. In its petition, Calder made clear its intention to

discontinue live thoroughbred horse racing, stating: " Calder desires to

discontinu e live thoroughbred racing and to obtain a license to operate a full

schedule of live jai alai games under its summer jai alai permit. Calder

intends on conducting live jai alai games at the same physical location or

piece of property where it currently co nducts thoroughbred racing. "

12. On October 23, 2018, the Division issued its Final Order Granting

Declaratory Statement, concluding that Calder may substitute jai alai games

in lieu of live horse racing. In its Final Order, the Division also granted

FTBOA Ôs and OBSÔs motions to intervene, concluding that FTBOA met its

burden of demonstrating associational standing, and that OBS demonstrated

its standing pursuant to Agrico Chemical Company v. Department of

Environmental Regulation , 406 So. 2d 478 (Fla. 2d D CA 1981). The DivisionÔs

Final Order was affirmed on appeal in Florida Thoroughbred BreedersÔ

Association, Inc. v. Calder Race Course, Inc., 283 So. 3d 843, 845 (Fla. 1st

DCA 2019).

13. Calder intends to replace its thoroughbred permit with its jai alai

pe rmit as the predicate for maintaining its slot machine gaming permit. An

incentive for Calder to substitute its jai alai permit for its thoroughbred

permit is that if it stops racing horses after December 2020, Calder will be

under no obligation to share t he millions of dollars in revenue it receives

through its slot machines with FHBPA or FTBOA.

14. FHBPA, FTBOA, and their members will be substantially affected if

Calder is allowed to use a summer jai alai permit in place of thoroughbred

racing to qualify for the continued operation of its slot machine facility.

Millions of dollars that would otherwise be available to FHBPA, FTBOA, and

their members through the payment of purses and awards from thoroughbred

racing will be lost if Calder is permitted to subs titute its underlying pari -

mutuel activity from racing thoroughbreds to conducting jai alai games.

FHBPAÔs and FTBOAÔs substantial injury is of a type or nature which this

proceeding is designed to protect.

15. Likewise, OBS will be substantially affected if Calder is allowed to use

a summer jai alai permit in place of thoroughbred racing. The de mand to

breed and purchase race horses, and the value of breeding and selling

thoroughbred horses, will decrease significantly as a consequence of Calder

discontinui ng thoroughbred horse racing and replacing the races with

summer jai alai games. In addition, as a guest track, OBS retains seven

percent of the wagers placed at OBS on thoroughbred races in Florida. OBS

intertrack wagering generally handles approximately $1,000,000 on

thoroughbred races conducted at Calder and Tropical Park, which directly

results in revenue to OBS. OBSÔs substantial injury is of a type or nature

which this pr oceeding is designed to protect.

CalderÔs Summer Jai Alai Permit Application and the DivisionÔs Proper

Calculation of " Play or Total Pool " Under Section 550.0745(1)

16. On August 31, 2017, Calder submitted an application to the Division

for the issuance of a new summer jai alai permit pursuant to section

550.0745(1). The parties stipul ate that, at all times material hereto, Calder

was a qualified applicant as to all statutory requirements, but for the dispute

as to whether a summer jai alai permit was " made available " pursuant to the

second sentence in section 550.0745(1). Section 550.0 745(1) provides , in

pertinent part , as follows:

550.0745 Conversion of pari - mutuel permit to

summer jai alai permit. -

(1) The owner or operator of a pari - mutuel permit

who is authorized by the division to conduct pari -

mutuel pools on exhibition sports in any county

having five or more such pari - mutuel permits and

whose mutual play from the operation of such pari -

mutuel pools for the 2 consecutive years next prior

to filing an application under this section has had

the smallest play or total pool within th e county

may apply to the division to convert its permit to a

permit to conduct a summer jai alai fronton in such

county during the summer season commencing on

May 1 and ending on November 30 of each year on

such dates as may be selected by such permittee for

the same number of days and performances as are

allowed and granted to winter jai alai frontons

within such county. If a permittee who is eligible

under this section to convert a permit declines to

convert, a new permit is hereby made available in

that permitteeÔs county to conduct summer jai alai

games as provided by this section, notwithstanding

mileage and permit ratification requirements.

17. Accompanying CalderÔs application was a cover letter stating that the

application was for the summer jai a lai permit associated with state fiscal

years 2005/2006 and 2006/2007.

18. The determination of whether the Division properly granted Calder a

new summer jai alai permit pursuant to section 550.0745(1) turns on whether

a new summer jai alai permit was " mad e available " for issuance in Miami -

Dade County associated with state fiscal years 2005/2006 and 2006/2007.

Whether a new summer jai alai permit was made available, in turn, centers

on whether there was a single, pari - mutuel permitholder with the " smallest

play or total pool " within the county for the two consecutive fiscal years of

2005/2006 and 2006/2007.

19. FHBPA, FTBOA, and OBS maintain that no new summer jai alai

permit was made available for issuance in Miami - Dade County for state fiscal

years 2005/20 06 and 2006/2007 , because there was no single Miami - Dade

permitholder that had the " smallest play or total pool " in Miami - Dade County

during those two consecutive fiscal years. The disagreement between the

parties concerning the existence of an available p ermit with the " smallest

play or total pool " in Miami - Dade for the fiscal years 2005/2006 and

2006/2007 centers on their different methods of interpreting section

550.0745(1) and disagreement regarding the types of wagers the Division

must use in its calcu lation of a permitholderÔs " play or total pool " pursuant to

section 550.0745(1).

20. For purposes of this case, the various types of wagers are summarized

as follows:

21. Wagers placed at a permitholderÔs facility into the pool conducted by

the permitholde r on its own live performance are called " live on - track

wagers. "

22. In addition to wagers placed at a particular facility on its live races or

games, bettors may place wagers on races or games occurring offsite through

intertrack wagering, which allows be ttors at a guest - permit facility in Florida

to bet on a race or game transmitted from and performed live at another host -

permit facility in Florida. The facility holding the live event is referred to as

the " host " track, and the facility taking the wager o n the event being held

elsewhere is referred to as the " guest " track.

23. Wagers placed at the facility of an out - of - state entity on a live event

conducted by a Florida host - permitholder are called " simulcast export

wagers. "

24. Wagers placed at the facili ty of a Florida permitholder on a live event

occurring at an out - of - state facility are called " simulcast import wagers. "

25. Wagers placed at the facility of a Florida guest permitholder on a live

event, conducted at an out - of - state facility that is being rebroadcast through

a Florida host permitholderÔs facility to the Florida guest - permitholderÔs

facility, are called " intertrack simulcast as a guest. " The Florida facility

rebroadcasting the out - of - state signal is the " intertrack simulcast in - state

host. "

26. The DivisionÔs calculations of " smallest play or total pool " of

permitholders in Miami - Dade County for the two consecutive fiscal years of

2005/2006 and 2006/2007 included the following three types of wagers, only:

(1) live wagers; (2) intertrack wager s (a/k/a intertrack wagers as a host); and

(3) simulcast export wagers.

27. The Division did not include intertrack wagers as a guest, simulcast

import wagers, simulcast intertrack as a guest wagers, or simulcast

intertrack as a host wagers in its calculat ions.

28. In the state fiscal years 2005/2006 and 2006/2007, five or more pari -

mutuel permitholders were authorized and licensed by the Division to

conduct pari - mutuel pools on exhibition sports in Miami - Dade County. None

of them applied to convert their p ermits to summer jai alai permits.

29. The Division initially determined that West Flagler had the " smallest

play or total pool " of permitholders in Miami - Dade County for the state fiscal

years 2005/2006 and 2006/2007, and therefore, concluded that a summe r jai

alai permit was made available in Miami - Dade County.

30. On February 9, 2018, based on the DivisionÔs determination that

Calder was a qualified applicant under chapter 550, and the rules

promulgated thereto, and that a permit was available in Miami - D ade County,

the Division approved CalderÔs application and issued Calder a summer jai

alai permit.

31. On November 18, 2018, Calder received an operating license to

conduct a full schedule of summer jai al ai performances in May and

June 2019.

32. On Decemb er 9, 2018, the Division received an e - mail from FHBPAÔs

counsel regarding " Bet Miami, " a greyhound dog racing permitholder located

in Miami - Dade County, which was authorized to conduct pari - mutuel pools

on exhibition sports in both Miami - Dade and Broward Counties in the state

fiscal year 2005/2006, and in Miami - Dade County in the state fiscal year

2006/2007. In response to this e - mail, the Division reviewed its records,

confirmed the dates that " Bet Miami " operated in Miami - Dade County in the

state fiscal year 2005/2006, and calculated the amount that " Bet Miami "

pooled in Miami - Dade County in this fiscal year. The Division also reviewed

the operating licenses for each of the permitholders in Miami - Dade and

Broward Counties and confirmed that " Bet Miami " op erated in Miami - Dade

County during the entire fiscal year of 2006/2007.

33. The Division corrected its data to reflect that " Bet Miami, " in fact, had

the " smallest play or total pool " in Miami - Dade County for fiscal years

2005/2006 and 2006/2007. The Divis ion now takes the position that

" Bet Miami " had the " smallest play or total pool " in Miami - Dade County for

the fiscal years 2005/2006 and 2006/2007. 1

34. " Bet Miami " declined to convert its greyhound dog racing permit to a

summer jai alai permit. The " Bet Miami " permit was never converted nor was

an application to convert the " Bet Miami " permit to a summer jai alai permit ,

pursuant to section 550.0745(1) , ever received by the Division.

35. Calder built a jai alai fronton in Miami - Dade County and conducted i ts

first jai alai meet in May and June 2019, pursuant to its operating license.

1 There is no dispute over the authenticity and accuracy of the financial information supplied

by the DivisionÔs annual reports or of the authenticity and accuracy of the " simulcast export "

figures su pplied by the Division.

36. On May 15, 2019, Calder received an operating license to conduct a

full schedule of jai alai performances in August and September 2019.

37. FHBPA, FTBOA, and OBS contend th at the Division err ed in failing to

consider all the various types of wagers in its calculation of " smallest play or

total pool. " According to FHBPA, FTBOA, and OBS, ha d the Division

considered all the various types of wagers, no permit would be available for

the fiscal years 2005/2006 and 2006/2007.

38. Based on the persuasive evidence presented at hearing, the Division

properly considered only live on - track wagers, intertrack wagers, and

simulcast export wagers in its calculations of " smallest play or tot al pool "

under section 550.0745(1). This is because pari - mutuel pools are only formed

at the host permitholderÔs track where the live race is conducted, pursuant to

the annual license that authorizes that permitholder to conduct pari - mutuel

pools in that c ounty. Had the Division included the other types of wagers

(i.e . , intertrack wagers as a guest, simulcast import wagers, simulcast

intertrack as a guest wagers, or simulcast intertrack as a host wagers) in its

calculations, the handle for these various wag er types would be counted

twice -- at the host and guest tracks. Double - counting the wagering handle

would result in the Division substantially overstating the amount of ha ndle

received by permitholders. 2

39. The Division properly found that " Bet Miami " had the " smallest play

or total pool " based on its calculation of the permitholdersÔ in Miami - Dade

2 All wagering data is compiled by a totalizator system, such as AmTote, which calculates the

overall amount of " handle " collected by each pari - mutuel facility for each transaction. The

Division utilizes a sub - system called " Centra l Monitoring System " ( " CMS " ), which captures

the totalizator wagering data and applies it to a racing monitoring system to calculate the

overall handle from each pari - mutuel facility. The Division uses the CMS report to calculate

the total amount of wageri ng handle pooled by a facility in state fiscal years, and together

with a review of the pari - mutual licenses, determines whether a summer jai alai permit was

" made available " in that county for the pu rpose of section 550.0745(1). " 'Handle' means the

aggreg ate contributions to pari - mutuel pools. " §550.002(13), Fla. Stat. Handle is not

equivalent to revenue or profitability, and a facilityÔs revenue has no impact on the

calculation of a facilityÔs play or total pool.

County live wagers, intertrack wagers as a host, and simulcast export wagers

for the two consecutive fiscal years 2005/2006 and 2006/2007. 3

CalderÔs Application Complies with rule 61D - 4.002

40. The parties stipulate that Calder was a qualified applicant as to all rule

requirements, but for the dispute as to whether it has complied with

rule 61D - 4.002. Rule 61D - 4.002 provides , in pertinent part , as follows:

61D - 4.0 02 Evaluating a Permit Application for

a Pari - Mutuel Facility.

(1) In evaluating a permit application, the division

shall deny any application where the applicant fails

to establish the following criteria:

(a) Financial profitability of the prospective

p ermitholder as derived from the assets and

liabilities of the applicant; the existence of any

judgment or current litigation, whether civil,

criminal, or administrative; the type of pari - mutuel

activity to be conducted and desired period of

operation; and net income projected over the first

three years of operation with the permit. If the

applicant is able to show any profitability as

outlined in this paragraph, the Division will review

the following criteria in paragraph (b).

(b) That the issuance of the permit will preserve

and protect the pari - mutuel revenues of the state

by generating an increase of total state revenue.

41. In determining the financial profitability of an applicant, the Division

evaluates the applicantÔs overall financial situation, in cluding its total assets

and liabilities. The Division does not measure financial profitability by

simply looking at the prospective pari - mutuel activity to be conducted

pursuant to the permit application.

3 As discussed more fully in the Conclusi ons of Law below, the DivisionÔs method of

calculating the " smallest play or total pool " for purposes of section 550.0745 (1) is consistent

with the clear, unambiguous, and plain language of section 550.0745(1), and Florida

appellate decisions.

42. In the instant case, Calder demonstrated its p rofitability as derived

from its assets and liabilities. Calder submitted financial statements, annual

reports, balance sheets, and tax reports. The uncontroverted evidence

adduced at hearing demonstrates that Calder is a financially stable and

profitable company.

43. As to the existence of any judgment or current litigation, whether civil,

criminal, or administrative, Calder submitted a list of its active litigation.

44. As to the type of pari - mutuel activity to be conducted and the desired

period of opera tion, Calder provided the information on its application.

45. As to the net income projected over the first three years of operation

with the permit, Calder submitted an initial pro forma. The Division sent

Calder a deficiency letter following its review o f the initial pro forma. In

response, Calder submitted an amended pro forma showing the projected net

income derived from the operation of the permit over the first three years.

46. Ms. Swain, the DivisionÔs program administrator, testified that the

amende d pro forma included $32,329 in year one for projected live gaming

taxes to the State, which is not unreasonable. The amended pro forma also

included additional amounts for projected intertrack gaming taxes to the

State and an additional $72,000 to the Sta te each year for projected license

fees. As Ms. Swain persuasively testified, the amounts paid by Calder to the

State of Florida in taxes and license fees over the first three years of

operation of the permit would result in an increase in state revenues. These

tax revenues and license fees would not be available to the State of Florida

without the issuance of the summer jai alai permit to Calder.

C ONCLUSIONS OF L AW

47. DOAH has jurisdiction over the parties to, and the subject matter of,

this proceeding p ursuant to sections 120.569 and 120.57(1), Florida Statutes.

Standing

48. As an initial matter, the Division and Cald er challenge the standing of

FHBPA, FTBOA, and OBS to maintain this proceeding. Third parties who

are not named parties in administrative proceedings have standing if they

can establish: (1) they will suffer injury in fact which is of sufficient

immediacy to entitle them to a section 120.57(1) hearing; and (2) their

substantial injury is of a type or nature which the proceeding is designed t o

protect. SCF, Inc. v. Fla. Thoroughbred BreedersÔ AssÔn , 227 So. 3d 770 (Fla.

1st DCA 2017); Agrico Chem. Co. v. DepÔt of Envtl. Reg ., 406 So. 2d 478, 48 2

(Fla. 2d DCA 1981).

49. A claim of standing by third parties based solely upon economic

interests i s not sufficient to establish standing unless the statutes governing

the issuance of the permit contemplate a consideration of the third - partiesÔ

economic interests. Gads d en Jai Alai, Inc. v. State , 26 So. 3d 68, 69 (Fla. 1st

DCA 2010). In addition, associ ations such as FHBPA and FTBOA have

standing to intervene or initiate in administrative proceedings if they can

establish: (1) a substantial number of their members are " substantially

affected " by the challenged agency action; (2) the subject matter of the

challenged action is within the associationÔs general scope of interest and

activity; and (3) that the relief requested is appropriate for the association to

request on behalf of its members. Fla. Home Builders Assoc. v. DepÔt of Labor

& EmpÔt Sec. , 412 S o. 2d 351, 353 - 54 (Fla. 1982).

50. In SCF, Inc. v. Florida Thoroughbred BreedersÔ Association , 227 So. 3d

770 (Fla. 1st DCA 2017), the court held that SCF had standing to challenge

the annual plan for distribution of ownersÔ and breedersÔ awards as

noncomp liant with statutory requirements. In reaching this decision, the

court examined the statutory framework governing the payout of prize money

and awards resulting from thoroughbred horse races and found SCFÔs

economic interests in obtaining an award to be s ufficient to confer its

standing.

51. In Florida Standardbred Breeders and Owners Association , DOAH

Case No. 18 - 6339 (Fla. DOAH Mar. 12, 2020), Recommended Order pages 72

through 75, Judge Sellers recently held that FSBOA had standing to

challenge the Divi sion's proposed issuance of a summer jai alai permit to PPI,

Inc., under section 550.0745(1) , based on the identical issues presented in the

instant case regarding the types of wage rs the Division must consider in

determining the " smallest play or total po ol. "

52. Applyi ng the foregoing legal principle s to the instant case, FHBPA,

FTBOA, and OSB have established standing to participate in this proceeding.

Chapters 550 and 551 specifically contemplate a consideration of the

economic interests of FHBPA and FT BOA and their members in receiving

revenue and awards, which serve as an incentive for the racing, breeding,

and training of thoroughbreds. In addition, section 550.0745, which must be

satisfied in order to convert an existing pari - mutuel permit to summer jai

alai or create a new summer jai alai permit, necessarily contemplates a

consideration of the economic interests of entities involved in thoroughbred

horse racing as a pari - mutuel activity. These requirements exist in order to

protect pari - mutuel activi ties and the economic interests of entities such as

FHBPA and FTBOA.

53. As detailed above, pursuant to section 551.104(10)(a)1., FHBPA and

FTBOA have contractual agreements with Calder which provide them with a

direct financial interest in the continuatio n of thoroughbred horse racing.

Under the current agreement between Calder and FHBPA, Calder is required

to pay FHBPA a sum equal to ten percent of CalderÔs gross slot machine

revenues to be used for purses. This amounts to approximately $9,000,000

that FH BPA receives from Calder on an annual basis. FTBOA receives

approximately $1,500,000 from Calder each year in breedersÔ awards as a

result of the Calder racing handle and slot machine revenue.

54. As detailed above, Calder intends to replace its thoroughbr ed permit

with its jai alai permit as the predicate to maintaining its slot machine

gaming permit. An incentive for Calder to substitute its jai alai permit for its

thoroughbred permit is that if it stops racing horses after December 2020,

Calder will be u nder no obligation to share the millions of dollars in revenues

it receives through its slot machines with FHBPA or FTBOA.

55. FHBPA, FTBOA, and their members will be substantially affected if

Calder is allowed to use a summer jai alai permit in place of t horoughbred

racing to qualify for the continued operation of its slot machine facility.

Millions of dollars that would otherwise be available to FHBPA, FTBOA, and

their members through the payment of purses and awards from thoroughbred

racing will be lost if Calder is permitted to substitute its underlying pari -

mutuel activity from racing thoroughbreds to conducting jai alai games.

FHBPAÔs and FTBOAÔs substantial injury is of a type or nature which this

proceeding is designed to protect.

56. Likewise, OBS w ill be substantially affected if Calder is allowed to use

a summer jai alai permit in place of thoroughbred racing. The de mand to

breed and purchase race horses and the value of breeding and selling

thoroughbred horses will decrease significantly as a conse quence of Calder

discontinuing thoroughbred horse racing and replacing the races with

summer jai alai games. In addition, as a guest track, OBS retains seven

percent of the wagers placed at OBS on thoroughbred races in Florida. OBS

intertrack wagering gene rally handles approximately $1,000,000 on

thoroughbred races conducted at Calder and Tropical Park, which directly

results in revenue to OBS. OBSÔs substantial injury is of a type or nature

which this proceeding is designed to protect.

57. Finally, in the Final Order Granting Declaratory Statement, the

Division concluded that both FTBOA and OBS had standing to intervene.

There, the facts found by the Division to support standing are basically the

same as those demonstrated by FHBPA, FTBOA, and OBS in the in stant

matter.

Timeliness

58. The Division and Calder contend that the petition filed by FHBPA and

motions to intervene filed by FTBOA and OBS were untimely. However,

there is no statute of limitations in administrative proceedings. Sarasota Cty.

v. NatÔl City Bank , 902 So. 2d 233, 234 (Fla. 2d DCA 2005). Moreover, no

clear point of entry was provided by the Division to contest the permit issued

to Calder. Accordingly, the DivisionÔs and CalderÔs position is without merit.

Cape letti Bros., Inc. v. State Dep Ôt of Transp. , 362 So. 2d 346 (Fla. 1st DCA

1978). 4

Burden of Proof

59. This is a de novo proceeding to formulate final agency action. As the

party seeking issuance of the permit, Calder has the burden of proving, by a

preponderance of the evidence, that t he applicable requirements for issuance

of the permit under section 550.0745(1) and rule 61D - 4.002 have been met.

Fla. DepÔt of Transp. v. J.W.C. Co. , 396 So. 2d 778, 787 (Fla. 1st DCA 1981);

Cohen v. DepÔt of Bus. Reg., Div. of Pari - Mutuel Wagering , 584 S o. 2d 1083,

1086 (Fla. 1st DCA 1991); Pershing Industries, Inc. v. DepÔt of Banking and

Fin. , 591 So. 2d 991, 994 (Fla. 1st DCA 1991).

The Division Properly Concluded That a New Summer Jai Alai Permit Was

Made Available in Miami - Dade County for Fiscal Year s 2005/ 2006 and

2006/2007 Pursuant to S ection 550.0745(1)

60. Under the first sentence of section 550.0745(1), a permitholder who is

authorized by the Division to conduct pari - mutuel pools on exhibition sports

in any county having five or more such pari - mu tuel permits, and whose

4 The Divisi on and Calder contend that FHBPA, FTBOA, and OBS had actual notice in

February 2018 of the DivisionÔs issuance of the summer jai alai permit to Calder. This

contention was disputed and not proven at hearing. Even if FHBPA, FTBOA, and OBS had

actual notice of the proposed agency action in February 2018, however, they were not

informed of their right to request a formal hearing and the time limits for doing so, and

therefore, such actual notice would have been inadequate to trigger the commencement of

the adm inistrative process and any requirement to file a petition or motion to intervene by a

certain date. Sterman v. Fla. State Univ. Bd. of Regents , 414 So. 2d 1102, 1104 (Fla. 1st DCA

1982).

mutuel play from the operation of such pari - mutuel pools was the " smallest

play or total pool " for the im mediately prior two consecutive - year period s , has

a one - year period in which to file an application to convert its pari - mutuel to

a summer jai alai permit. If that permitholder declines to convert its pari -

mutuel permit to a summer jai alai permit, then under the second sentence of

section 550.0745(1), a new summer jai alai permit is " made available " for

which other permit h olders may apply to obtain, provided that a single pari -

mutuel permitholder exists with the " smallest play or total pool " for two

consecutive fiscal years. W. Flagler Assocs. v. DepÔt of Bus. & ProfÔl Reg ., Div.

of Pari - Mutuel Wagering, 216 So. 3d 692, 695 (Fla. 1st DCA 2017). 5

61. In addition to a consideration of the evidence adduced at hearing, a

proper analysis in determining the specific types of wagers which should be

included in the DivisionÔs calculations of " smallest play or total pool " requires

an examin ation of certain unambiguous statutory provisions and case law.

62. To begin with, section 550.0745(1) does not expressly specify the types

of pari - mutuel wagers that are included in calculating a permitholderÔs " play

or total pool. " However, the phrase " p ari - mutuel wagering pool " is statutorily

defined in section 550.002(24) to mean " the total amount wagered on a race

or game for a single possible result. "

63. Moreover, although section 550.0745(1) does not limit the calculation

of the applicantÔs pool to bets physically placed within the county, the statute

does limit the calculation to include only wagers placed toward the

applicantÔs pool, and not pools conducted by other facilities inside or outside

of the state. §550.0745(1), Fla. Stat. ( " The [permitho lder authorized to

conduct pools] whose mutuel play from the operation of such pari - mutuel

pools È has had the " smallest play or total pool " within the county. " )(emphasis

added).

5 There is no time limitation imposed under the second sentence of section 550.0745(1) for

determining the two consecutive year period, which explai ns why Calder relies on the

two consecutive fiscal years of 2005/2006 and 2006/2007. Id.

64. An examination of the unambiguous and plain language of

sections 550.002(24 ) and 550.0745(1), and specifically, the LegislatureÔs use of

the phrases " pari - mutuel pool, " and " whose mutuel play from the operation of

such pari - mutuel pools, " can lead to only one conclusion: only the licensed

permitholderÔs pool in Miami - Dade County should count toward the

DivisionÔs calculations. To hold otherwise would ignore the plain and

unambiguous language in section 550.0745(1).

65. Furthermore, in South Florida Racing Association v. Department of

Business and Professional Regulation , Division of Pari - Mutuel Wagering , 201

So. 3d 57, 61 (Fla. 3d DCA 2015), the court addressed the partiesÔ dispute

involving the types of wagers that should be included in calculating a

permitholderÔs " play or total pool " under section 550.0745(1). In that case, the

Division had used only live on - track wagers in its calculations. The court held

that, in addition to live on - track wagers, wagers placed remotely as

intertrack wagers must also be included in the calculations because the

statute does not limit the calculat ion to wagers physically placed within the

county. Id.

66. More recently, in West Flagler Associates v. Department of Business

and Professional Regulation , Division of Pari - Mutuel Wagering , 219 So. 3d

149, 155 (Fla. 3d DCA 2017), the court addressed whethe r simulcast export

wagers should also be included in the DivisionÔs calculations. The court held

that simulcast export wagers, intertrack wagers, and live on - track wagers

must be included in calculating a permitholderÔs " play or total pool. " In

reaching th is conclusion, the court stated:

We can discern nothing in the language of the

statute which would require, for the purpose of

calculating the smallest play or total pool under

section 550.0745(1), drawing a distinction between

intertrack wagers and simulc ast export wagers. As

this court recognized in South Florida Racing , 201

So. 3d at 61, " [a]lthough Ótotal poolÔ is not

statutorily defined, the term Ópari - mutuel wagering

poolÔ is defined to mean Óthe total amount wagered

on a race or game for a single pos sible result, " and

" [n]othing in Chapter 550 of the Florida Statutes

limits the total pool to solely physical in - county

wagers. " Id. Our inter pretation in the instant case

Ï that the statutory language includes simulcast

export wagers Ï is consistent with o ur analysis in

South Florida Racing , and the contrary

construction proposed by West Florida would

conflict wi th the plain meaning of

section 550.0745(1).

Id. at 154.

67. Thus, of those Florida appellate courts that have addressed the issue

of what types of wagers should be included in the DivisionÔs calculation of

" play or total pool, " only three types of wagers have been recognized: (1) live

on - track wagers; (2) intertrack wagers; and (3) simulcast export wagers.

68. Most recently, in Florida Standardbred Breeders and Owners

Association, Inc. , DOAH Case No. 18 - 6339 (Fla. DOAH Mar. 12, 2020),

Recommended Order pages 52 - 53, Judge Sellers addressed the identical issue

presented in the instant case, and held that only live on - track wagers,

intertrack wagers, an d simulcast export wagers should be used in the

calculation of a permitholderÔs " play or total pool. " Judge Sellers expressly

rejected the same argument presented by FHBPA, FTBOA, and OBS in the

instant proceeding that other types of wagers (i.e. intertrac k wagers as a

gues t, simulcast import wagers, simulcast intertrack as a guest wagers, or

simulcast intertrack as a host wagers) should be included. In reaching her

conclusion, Judge Sellers examined and relied on the same statutory

provisions and appellate decisions in South Florida Racing and West Flagler

cited above. The undersigned agrees with Judge SellersÔ s well - reasoned legal

analysis and conclusion.

69. In sum, the undersigned concludes, as a matter of law, that the only

types of wagers that are corr ectly included in determining a permitholderÔs

play or total pool for purposes of section 550.0745(1) are live on - track wagers,

intertrack wagers, and simulcast export wagers. Intertrack wagers as a

guest, simulcast import wagers, simulcast intertrack as a guest wagers, or

simulcast intertrack as a host wagers should not be included in calculating

total play or pool for purposes of section 550.0745(1).

An " Affirmative Declination " by a Permitholder Eligible to Convert is not

Required for a New Permit to be Made Available Under S ection 550.0745(1)

70. FHBPAÔs, FTBOAÔs, and OBSÔs contention that a permitholder eligible

to convert its pari - mutuel permit to a summer jai alai permit pursuant to the

first sentence of section 550.0745(1) must " affirmatively declin e " to convert

its permit to a summer jai alai permit before a new permit becomes available

under the second sentence of section 550.0745(1), is without merit.

71. In support of its position, FHBPA, FTBOA, and OBS do not cite any

legal authority. Indeed, a plain reading of the first sentence of section

550.0745(1) supports the opposite conclusion. Section 550.0745(1) expressly

states in the first sentence that a permitholder who is eligible to convert

" may apply to the division to convert its permit to a per mit to conduct a

summer jai alai fronton in such county. " Thus, in order to convert, it is the

eligible permitholder that must take affirmative action by filing an

application for the summer jai alai permit. Fl a . St andardbred Breeders &

Owners Ass'n , DOAH Case No. 18 - 6339 (Fla. DOAH Mar. 12, 2020),

Recommended Order pp. 53 - 54 .

72. The second sentence of section 550.0745(1) further states: " [i]f a

permittee who is eligible to convert under this section to convert a permit

declines to convert, a new permit is hereby made available in that permitteeÔs

county. " Because converting a summer jai alai permit is not automatic and

requires a permittee to apply to convert, it makes no sense that the phrase

" declines to convert " in the second sentence requires the permi tholder to

affirmatively notify the Division that it is not going to apply to convert its

permit to a summer jai alai permit in order for a new summer jai alai permit

to be made available. Thus, the phrase " declines to convert " can only mean

that the permi ttee does not file an application to convert. Id.

73. Finally, the DivisionÔs and CalderÔs position is further supported by

the courtÔs decision in West Flagler Associates v. Department of Business &

Professional Regulation , Division of Pari - Mutuel Wagerin g, 139 So. 3d 419

(Fla. 1st DCA 2014). There, the court expressly stated: " the statute plainly

provides that the permitholder with the lowest handle for Óthe two

consecutive years next prior to filing an applicationÔ may apply for a summer

jai alai permit and, if it declines to do so, a new summer jai alai permit is

made available. " Id. at 422. As recognized by Judge Sellers on pages 54 and

55 of her Recommended Order in DOAH Case No. 18 - 6339, the phrase " to do

so " in the courtÔs opinion clearly refers to t he affirmative act of " apply[ing]

for " a summer jai alai permit. This language can only be construed to mean

that " declining, " under the second sentence of section 550.0745(1), is

accomplished by not filing an application to convert under the first sent enc e

of section 550.0745(1). A ccept ing the position of FHBPA, FTBOA, and OBS

would render the plain language within the statute meaningless.

Profitability Under rule 61D - 4.002(1)

74. FHBPAÔs, FTBOAÔs, and OBSÔs contention that Calder failed to

demonstrate its profitability under rule 61D - 4.002(1) based on CalderÔs

proposed summer jai alai operations is without merit. As detailed above and

as recognized in West Flagler Associates, Ltd. v. Department of Business and

Professional Regulation, Division of Pari - Mutu el Wagering , DOAH Case

No. 15 - 6773 (Fla. DOAH June 20, 2016)(Fla DBPR Sept. 16, 2016),

profitability is not based on the pari - mutuel jai alai events conducted under

the proposed permit. Rather, profitability is based on the assets and

liabilities of the co mpany as a whole.

75. In the instant case, Calder demonstrated its profitability as derived

from its assets and liabilities. Calder submitted financial statements, annual

reports, balance sheets, and tax reports. The uncontroverted evidence

adduced at hear ing demonstrates that Calder is a financially stable and

profitable company.

76. In addition, Ms. Swain testified that the amended pro forma included

$32,329 in year one for projected live gaming taxes to the State, which is not

unreasonable. The amended p ro forma also included additional amounts for

projected intertrack gaming taxes to the State and an additional $72,000 to

the State each year for projected license fees. As Ms. Swain persuasively

testified, the amounts paid by Calder to the State of Florid a in taxes and

license fees over the first three years of operation of the permit would result

in an increase in state revenues. These tax revenues and license fees would

not be available to the State of Florida without the issuance of the summer

jai alai permit to Calder.

77. In sum, for the reasons stated above, it is concluded that Calder Race

Course, Inc. , is entitled to issuance of the summer jai alai permit and

subsequent licenses.

R ECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

R ECOMMENDED that that the Department of Business and Professional

Regulation, Division of Pari - Mutuel Wagering, enter a final order approving

Calder Race Course, Inc.Ôs , application for a new summer jai alai permit and

subsequent licenses. 6

6 FHBPA, FTBOA, and OBS challenge the issuance of CalderÔs operating licenses for fisc al

years 2018/2019 and 2019/2020 based solely on the alleged invalidity of the underlying

summer jai alai permit. Because Calder is entitled to the summer jai alai permit, it is also

entitled to the operating licenses.

D ONE A ND E NTERED this 7th day of April , 2020 , in Tallahassee, Leon

County, Florida.

S

D ARREN A. S CHWARTZ

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 7th day of April , 2020 .

C OPIES F URNISHED :

Megan S. Silver, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399

(eServed)

Bradford J. Beilly, Esquire

Beilly and Strohsahl, P.A.

1144 Southeast Third Avenue

Fort Lauderdale, Florida 33316

(eServed)

Wilbur E. Brewton, Esquire

Brewton Plante, P.A.

215 South Monroe Street , Suite 825

Tallahassee, Florida 32301

(eServed)

Daniel Hernandez, Esquire

Shutts & Bowen LLP

4301 West Boy Scout Boulevard , Suite 300

Tampa, Florida 33607

(eServed)

Tamara S. Malvin, Esquire

Akerman LLP

350 East Las Olas Boulevard , Suite 1600

Fort Lauderdale , Florida 33301

(eServed)

Raymond Frederick Treadwell, General Counsel

Office of the General Counsel

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Brittany Adams Long, Esquire

Rade y Law Firm, P.A.

301 South Bronough Street , Suite 200

Tallahassee, Florida 32301

(eServed)

Johnny P. ElHachem, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399

(eServed)

Halsey Beshears, Secr etary

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Louis Trombetta, Director

Division of Pari - Mutuel Wagering

Department of Business and

Professional Regulation

2601 Blair Stone R oad

Tallahassee, Florida 32399

(eServed)

N OTICE OF R IGHT T O S UBMIT E XCEPTIONS

All parties have the right to submit written exceptions within 15 days from

the date of this Recommended Order. Any exceptions to this Recommended

Order should be filed with t he agency that will issue the Final Order in this

case.