19-002860RU The Florida Horsemen&Apos;S Benevolent And Protective Association, Inc., Florida Thoroughbred Owners And Breeders Association, Inc. And Ocala Breeders&Apos; Sales Company, Inc. vs. Department Of Business And Professional Regulation, Division Of Pari-Mutuel Wagering Status: Closed DOAH Final 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 N D P ROTECTIVE A SSOCIATION ,

I NC .; F LORIDA T HOROUGHBRED O WNERS

A ND B REEDERS A SSOCIATION , I NC . ; A ND

O CALA B REEDERS ' S ALES C OMPANY , I NC . ,

Petitioners ,

vs. Case No. 19 - 2860RU

D EPARTMEN T OF B USINESS A ND

P ROFESSIONAL R EGULATION , D IVISION OF

P ARI - M UTUEL W AGERING ,

Respondent ,

and

C ALDER R ACE C OURSE , I NC .,

Intervenor .

/

F INAL 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 Lauderdale Lakes, Florida.

A PPEARANCES

For Petitioner The Florida Hor semen's Benevolent and Protective

Association, Inc. ( " FHBPA " ) :

Bradford J. Beilly, Esquire

Beilly and Strohsahl, P.A.

1144 Southeast Third Avenue

Fort Lauderdale, Florida 33316

For Petitioner 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 Petitioner Ocala BreedersÔ Sal es, 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 Wageri ng ( " 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 Intervenor : 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 LL P

350 East Las Olas Boulevard, Suite 1600

Fort Lauderdale, Florida 33301

S TATEMENT O F T HE I SSUE S

Whether the FHBPA, FTBOA, and OBS have standing to bring this

unadopted rule challenge; and, if so, whether their petition was timely; and,

if so , whether the DivisionÔs determination that a new summer jai alai permit

was made available and that Calder is eligible for a new summer jai ala i

permit pursuant to section 550 .0745(1), Florida Statutes (2019), is based on

unadopted rules.

P RELIMINARY S TAT EMENT

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 forw arded the petition to DOAH to assign an

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

assigned to the undersigned under DOAH Case N o. 19 - 1617. On April 2

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

the u ndersigned set the final hearing for Jun e 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 with Pending DOAH Case No. 19 - 1617 with

DOAH. This matter was assigned to the undersigned under DO AH Case No.

19 - 2860RU. On May 31, 2019, the undersigned entered an Order granting

the motion and consolidated DOAH Case Nos. 19 - 1617 and 19 - 2860RU.

On June 7, 2019, the Division filed an unopposed motion to continue the

final hearing. On June 14, 2019, fo llowing a hearing, the undersigned entered

an Order granting the motion and reset the fi nal hearing for July 29

through 31, 2019. On July 15, 2019, Calder filed an Unopposed Motion to

Intervene in DOAH Case No. 19 - 2860RU, which the undersigned granted

that same day. 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 motion. On July 23, 2019, the undersigned entered

orders granting the motion 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. That same day,

Calder filed a motion for official recognition and the par ties filed their Joint

Pre - hearing Stipulation, in which they stipulat ed 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, Florida Administrative Code

R ule 61D - 4.002, and various Florida appellate decisions. The Division

presented the testimony of Jamie 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

Johnson, 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 of 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 f iled 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 Division filed an unopposed

motion for an ad ditional 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 final orders, which were given considerati on in the preparation of

this Final 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 DivisionÔs 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 Regulation , 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 Admi nistrative Code provisions are to the 2019 versions, unless

otherwise indicated.

F INDINGS O F F ACT

Parties/Standing

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

wagering and issuing pari - mutuel permits under the provisions of

chapter 5 50, 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 - mut u el pools on exhibition sports

in Miami - Dade County pursua nt 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 Calder on

February 9, 2018. The Division did not provide F HBPA, 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 licensed Calder to operate this 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 rac ing 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 facil ity.

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 thoroughb red 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 - m utuel 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 -

mutuel facility. FHBPA and Calder have a contractual a greement, whereby

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

license. 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 t o 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

obligation to run a 40 - day thoroughbred racing schedule by c ontracting 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

interest s of Florida 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 thoroughbr ed 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 conducted 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 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 FTBOA governing the payment of breedersÔ, stallion,

and special racing awards on live thoroughbred races conducted at the

lic enseeÔs 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 intertrack wagering pari - mutuel permit pursuant

to sec tion 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 license 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 horse

auctions annually. OBS has no pari - mutuel permits located in Miami - Dad e

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

discontinue 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 conducts thoroughbred racing. "

12. On October 23, 20 18, 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

FTBOAÔs 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 DCA 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

permit as the predicate for maintaining its slot mac hine 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 the millions of dollars in revenue it receives

thro ugh 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 fa cility.

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 ra cing 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 perm it 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

discontinuing thoroughbred horse racing and replacing the rac es 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 Cald er 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.

CalderÔs Summer Jai Alai Permit Application and the DivisionÔs Proper

Calculation of " Play or Tota l Pool " Under S ection 550.0745

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 stipulate 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 550.0745(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 perm its 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 the county

may apply to the division to convert its per mit 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

a llowed 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 alai permit associated with state fiscal

years 2005/20 06 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 " made available " for issuance in Miami -

Dade County associ ated 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 cons ecutive fiscal years of

200 5/2006 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 2005/2006 and 2006/2007 , because there was no single Miami - Da de

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 permit 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 calculation of a permitholderÔs " play or total pool " pursua nt 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 permitholder on its own live performance are called " live on - trac k

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 bettors 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 on 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 facility 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 faci lity 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 tot al pool " of permit

holders 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 wagers (a/k/a intertrack wagers as a host); and

(3) simul c as t 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 calculations.

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 permits to summer jai alai permits.

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

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

years 2005/2006 and 2006/2007; and, therefore, concluded that a summer jai

alai permit was made available in Miami - Dade Co unty.

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 - Dade County,

the Division approved CalderÔs applicatio n 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 December 9, 2018, the Division received an e - mail from FHBP AÔs

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 M iami - 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 M iami "

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 C ounties and confirmed that " Bet Miami " operated in Miami - Dade

County during the e ntire fiscal year of 2006/2007. 1

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 the fiscal years

2005/2006 and 2006/2007. The Division n ow 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.

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 appl ication to convert the " Bet Miami " permit to a summer jai alai permit

pursuant to section 550.0745 ever received by the Division.

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

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

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 that the Division err ed in failing to

consider all the v arious 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.

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 supplied by the Division.

38. As set forth in the Recommended Order issued by the undersigned in

DOAH Case No. 19 - 1617, the persuasive evidence presented at hearing

established that the Division properly considered only live on - track wagers,

intertrack wagers, and simulcast export wagers in its calculations of " smallest

play or total 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 permitho lder

to conduct pari - mutuel pools in that county. 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 cal culations, the handle for these various wager 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. As set forth in the Recommended Order in DOAH Case No. 19 - 1617,

the Division properly found that " Bet Miami " had the " smallest play or total

pool " based on its calculation of the permit holdersÔ in Miami - Dade County

live wagers, intertrack wagers as a host, and simulcast export wagers for the

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

2 All wa gering 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 " Central Monitoring System " ( " CMS " ), whi ch 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 wagering handle pooled by a facility in state fiscal years, and together

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

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

aggregate 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 th e

calculation of a facilityÔs " play or total pool. "

3 As discussed more fully in the Conclusions of Law below, the Division Ôs 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.

C ONCLUSIONS O F L AW

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

this proceeding pursuant to section 120.56(4), Florida Statutes.

Standing

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

FHBPA, FTBOA, and OBS to maintain this proceeding. Section 120.56(4)(a)

authorizes any person substantially affected by an agency statement to seek

an administrative determination that the statement is actually a rule whose

existence violates section 120.54(1)(a) because the agency has not formally

adopted the statement. §120.56(4)(a), Fla. Stat. To demonstrate standing

under the " substantially affected " test, FHBPA, FTBOA, and OBS must

establish that: (1) the alleged unadopted rule will result in a real or

immediate injury in fa ct; and (2) the alleged injury is of a typ e or nature

which the proceeding is designed to protect. Off. of Ins. Reg. v. Secure Enters.,

LLC. , 124 So. 3d 332, 336 (Fla. 1st DCA 2013); Jacoby v. Fla. Bd of Med., 917

So. 2d 358 (Fla. 1st DCA 2005).

42. A claim of standing based solely upon economic interests is not

sufficient to establish standing unless the statutes governing the issuance of

the permit contempla te 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, associations such as FHBPA and FTBOA have standing to

initiate an unadopted rule challenge proceeding if they c an establish: (1) a

substantial number of their members are " substantially affected " by the

alleged unadopted rule; (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. NAACP, Inc. v. Bd of Regents , 863 So. 2d 294, 298 (Fla. 2003); Fla.

Home Builders AssÔn v. DepÔt of Labor & EmpÔt Sec. , 412 So. 2d 351, 353 - 54

(Fla. 1982).

43. In SCF, Inc. v . Fl orida 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

noncompliant with statutory requirements. In reaching th is 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 sufficient to confer its

standing.

44. In Florida HorsemenÔs Benevolent and Protective Association, Inc. v.

Department of Business and Professional Regulation , Division ofPari - Mutuel

Wagering , DOAH Case No. 17 - 5872RU (Fla. DOAH Sept. 4, 2018),

Administrative Law Judge Lawrence P. Stevenson held that FHBP A had

standing to bring a challenge asserting that the Division relied on an

unadopted rule when it renewed CalderÔs license to operate slot machines. In

reaching this conclusion, Judge Stevenson noted that FHBPA is substantially

affected because it is spe cifically named in chapter 551 as an entity with

which a thoroughbred horse racing license must contract in order to obtain a

slot machine license, and FHBPAÔs purpose is to promote and economically

support the pari - mutuel industry, including thoroughbred horse racing.

45. Most recently, in Florida Standardbred Breeders and Owners

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

Final Order, pages 63 - 72, Administrative Law Judge Cathy M. Sellers held

that the FSBOA had standing to chall enge many of the same alleged

unadopted rules as those alleged by FHBPA, FTBOA, and OBS in the instant

proceeding.

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

FTBOA, and OSB have established standing to initiate this proceeding.

Chapters 550 and 551 specifically contemplate a consideration of the

economic interests of FHBPA and FTBOA 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 activities and the economic interests of entities such as

FHBPA and FTBOA.

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

FTBOA have c ontractual agreements with Calder which provide them with a

direct financial interest in the continuation 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 Cald erÔs 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. 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.

48. As detailed above, Calder intends to replace its thoroughbred 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 pe rmit for its

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

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

it receives through its slot machines with FHBPA or FTBOA.

49. FHBPA, FTBOA, and their m embers 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 substitute its underlying pari -

mutuel activity from racing thoroughbreds to conducting jai alai games.

FHBPAÔs and FTBOAÔs sub stantial injury is a type or nature which this

proceeding is designed to protect.

50. 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 ho rses and the value of breeding and selling

thoroughbred horses will decrease significantly as a consequence of Calder

discontinuing thoroughbred horse racing and replacing the races with

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

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 substan tial injury is of a type or nature

which this proceeding is designed to protect.

51. 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 Divisio n to support standing are basically the

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

matter.

Timeliness

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

FTBOA, and OBS was 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 Ca lderÔs position is without merit. Cape letti Bros., Inc. v. State

DepÔt of Transp ., 362 S o. 2d 346 (Fla. 1st DCA 1978). 4

Burden of Proof

53. This is a de novo proceeding in which FHBPA, FTBOA, and OBS have

the burden of proving, by a preponderance of the ev idence, that the DivisionÔs

determination that Calder is eligible for a permit under section 550.0745 is

based on a statement which constitutes an unadopted rule. §120.56(4)(a),

Fla. Stat.; Ag. for Pers. w ith Disab. v. V.C.B. , 130 So. 3d 713, 717 (Fla. 1st

DCA 2013). Section 120.54(1)(a) declares that " [r]ulemaking is not a matter

of agency discretion " and directs that " [e]ach agency statement defined as a

rule by s. 120.52 shall be adopted by the rulemaking procedure provided by

this section as soon as fea sible and practicable. "

54. Section 120.52(16) defines the term " rule, " in pertinent part, as:

[E]ach agency statement of general applicability

that implements, interprets, or prescribes law or

policy or describes the procedure or practice

requirements of an agency and includes any form

which imposes any requirement or solicits any

information not specifically required by statute or

by an existing rule.

55. " If an agency statement merely reiterates a law, or declares what is

Óreadily apparentÔ from the tex t of a law, however, the statement is not

considered a rule. " Grabba - Leaf, LLC v. DepÔt of Bus. and ProfÔ l Reg ., 257

So. 3d 1205, 1208 (Fla. 1st DCA 2018).

4 The Division and Calder contend that FHB PA, FTBOA, and OBS had actual notice in February 2018 of

the DivisionÓs 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 administrative process and any re quirement to file a petition by a certain date.

Sterman v. Fla. State Univ. Bd. of Regents , 414 So. 2d 1102, 1104 (Fla. 1st DCA 1982).

The DivisionÔs Use of Only Three Types of Wagers in its Calculation of

" Smallest Play or Total Pool " to Determine Whether a New Summer Jai Alai

Permit Was Made Available in Miami - Dade County for Fiscal Years

2005/2006 and 2006/2007 Pursuant to Section 550.0745(1) Is Not An

Unadopted Rule

56. Under the first sentence of section 550.0745(1), a permitholde r 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

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

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

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

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

its pari - mutuel permit to a summer jai alai per mit, then under the second

sentence of section 550.0745(1), a new summer jai alai permit is " made

available " for which other permitholders may apply to obtain, provided that a

single pari - mutuel permitholder exists with the " smallest play or total pool "

fo r two consecutive fiscal years. W. Flagler Assocs. v. DepÔt of Bus. & ProfÔl

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

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

proper analysis in determini ng the specific types of wagers which should be

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

an examination of certain unambiguous statutory provisions and case law.

58. To begin with, section 550.0745(1) does not expre ssly specify the types

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

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

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

o r game for a single possible result. "

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

determining the two consecutiv e year period, which explains why Calder relies on the

t wo consecutive fiscal years of 2005/2006 and 2006/2007 . Id.

59. 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 [permitholder authorized to

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

poolsÈhas had the smalles t play or total pool within the county. " )(emphasis

added).

60. 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 f rom 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 sections 550.002(24) and 550.0745(1). In sum, the

DivisionÔs interpretation merely reiterates the unambiguous and pertinent

statutory provisions and states what is readily apparent from the statutory

language.

61. Furthermore, in South Florida Racing Assoc iation 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

permithold erÔs " 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 inclu ded in the calculations because the

statute does not limit the calculation to wagers physically placed within the

county. Id.

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

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

149, 155 (Fla. 3d DCA 2017), the court addressed whether 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 includ ed in calculating a permitholderÔs " play or total pool. " In

reaching this conclusion, the court succinctly 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 und er

section 550.0745(1), drawing a distinction between

intertrack wagers and simulcast 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

poo lÔ is defined to mean Óthe total amount wagered

on a race or game for a single possible result, " and

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

limits the total pool to solely physical in - county

wagers. " Id. Our interpretation in the instant case --

t hat the statutory language includes simulcast

export wagers -- is consistent with our 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.

63. 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 wa gers; and (3) simulcast export wagers.

64. In determining that a summer jai alai permit was made available in

Miami - Dade County for state fisc al years 2005/2006 and 2006/2007 , the

Division applied the plain and unambiguous statutory language within

certain statutory provisions, and the case law interpreting section

550.0745(1), in concluding that only live on - track wagers, intertrack wagers,

and simulcast export wagers should be used in the calculations, and that

intertrack wagers as a guest, simulcast impo rt wagers, simulcast intertrack

as a guest wagers, and simulcast as a host wagers should not be included in

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

DivisionÔs interpretation is consistent with and readily apparent from the

a pplicable statutory provisions. The DivisionÔs interpretation is also

consistent with the case law. Accordingly, the DivisionÔs position is not based

on an unadopted rule.

The DivisionÔs Interpretation of S ection 550.0745(1) To Not Require An

" Affirmative Declination " by a Permitholder Eligible to Convert Before a New

Permit is Made Available Under S ection 550.0745(1) is not an Unadopted

Rule

65. FHBPAÔs, FTBOAÔs, and OBSÔs contention that the DivisionÔs failure

to require an " affirmative declination " by a permitholder eligible to convert

under the first sentence of section 550.0745(1) before a new summer jai alai

permit is made available under the second sentence, is without merit. Again,

the DivisionÔs interpretation is based on a plain and unambiguous sta tutory

provision and the case law interpreting the provision.

66. 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 permit 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 . Standardbred Breeders & Owners Ass' n, Inc., DOAH Case

No. 19 - 0267RU ( Fla. DOAH Mar. 12, 2020), Final Order , pp. 55 - 57.

67. 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 permit holder to

affirmative ly 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 permittee does not file an application to convert. Id . The DivisionÔs

interpretation merely reiterates the pertinent statutory provisions and states

what is readily apparent from the language of the statute.

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

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

Professional Regulation , Division of Pari - Mutuel Wagering , 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 (emphasis added). As recognized by Judge Sellers

on page 57 of her Final Order in DOAH Case No. 19 - 0267RU, the phrase " to

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

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

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

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

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

would render the plain language within the sta tute meaningless.

69. In sum, the undersigned has carefully considered each of the alleged

agency statements asserted by FHBPA, FTBOA, and OBS to be unadopted

rules, and concludes that the Division did not rely on any unadopted rules in

a pproving the permi t to Calder. 6

6 In section h.i through h. viii on pages 26 through 28 of the partiesÔ Pre - hearing Stipulation,

FHBPA, FTBOA, and OBS set forth numerous ass ertions which they contend are statements

by the Division which constitute unadopoted rules. None of these assertions are statements

which constitute unadopted rules.

O RDER

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

O RDERED that the Petition Challenging Agency Statement As An Unadopted

Rule filed by Petitioners, FHBPA, FTBOA, and OBS , is dismissed.

D ONE A ND O RDERED this 7th d ay 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 Fil ing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 7 th day of April , 2020 .

C OPIES F URNISHED :

Bradford J. Beilly, Esquire

Beilly and Strohsahl, P.A.

1144 Southeast Third Avenue

Fort Lauderdale, F lorida 33316

(eServed)

Donna Elizabeth Blanton, Esquire

Radey Law Firm, P.A.

301 South Bronough Street , Suite 200

Tallahassee, Florida 32301

(eServed)

Daniel Hernandez, Esquire

Shutts & Bowen LLP

4301 West Boy Scout Boulevard , Suite 300

Tampa, Florida 33607

(eServed)

Raymond Frederick Treadwell, General Counsel

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Brittany Adams Long, Esquire

Radey Law Firm, P.A.

301 South Bronough Stre et , Suite 200

Tallahassee, Florida 32301

(eServed)

Wilbur E. Brewton, Esquire

Brewton Plante, P.A.

215 South Monroe Street , Suite 825

Tallahassee, Florida 32301

(eServed)

Halsey Beshears, Secretary

Department of Business and

Professional Regulation

2 601 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 Road

Tallahassee, Florida 32399

(eServed)

Ken Plante, Coordi n ator

Joint Administrative Procedures Committee

Room 680, Pepper Building

111 West Madison Street

Tallahassee, Florida 32399 - 1400

(eServed)

Ernest Reddick, Program Administrator

Anya Grosenbaugh

Florida Administrative Code & Register

Department of State

R .A. Gray Building

500 South B ronough Street

Tallahassee, Florida 32399 - 0250

(eServed)

N OTICE O F R IGHT T O J UDICIAL R EVIEW

A party who is adversely affected by this Final Order is entitled to judicial

review pursuant to section 120.68, Florida Statutes. R eview proceedings are

governed by the Florida Rules of Appellate Procedure. Such proceedings are

commenced by filing the original notice of administrative appeal with the

agency clerk of the Division of Administrative Hearings within 30 days of

rendition o f the order to be reviewed, and a copy of the notice, accompanied

by any filing fees prescribed by law, with the clerk of the d istrict c ourt of

a ppeal in the appellate district where the agency maintains its headquarters

or where a party resides or as othe rwise provided by law.