22-000968RX South Marion Real Estate Holdings, Llc, D/B/A Oxford Downs And Darold R. Donnelly vs. Department Of Business And Professional Regulation, Division Of Pari-Mutuel Wagering Status: Appeal.

Summary: Petitioners failed to demonstrate that Rule 61D-11.005(5) is an invalid exercise of delegated legislative authority.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

S OUTH M ARION R EAL E STATE H OLDINGS ,

LLC, D/B/A O XFORD D OWNS A ND

D AROLD R. D ONNELLY ,

Petitioners ,

vs. Case No. 22 - 0968RX

D EPARTMENT OF B USINESS A ND

P ROFESSIONAL R EGULATION , D IVISION OF

P ARI - M UTUEL W AGERING ,

R espondent .

/

F INAL O RDER

This case is before Administrative Law Judge Garnett W. Chisenhall of

the Division of Administrative Hearings (ÑDOAHÒ), based on the part iesÔ

cross - motions for summary final order.

S TATEMENT O F T HE I SSUE

The issue for determination is whether Florida Administrative Code Rule

61D - 11.005(5) is an invalid exercise of delegated legislative authority.

P RELIMINARY S TATEMENT

On March 25, 2022, South Marion Real Estate Holdings, LLC , d/b/a

Oxford Downs (ÑOxford DownsÒ) and Darold R. Donnelly (ÑMr. DonnellyÒ)

filed a Petition alleging that rule 61D - 11.005(5) is an invalid exercise of

delegated legislative authority.

During a telephonic status co nference on April 4, 2022, the parties agreed

that there were no material facts in dispute and that the instant case could

be decided via a summary final order. 1 The undersigned accepted the partiesÔ

proposed pleading schedule and issued an Order on April 5, 2022,

establishing April 29, 2022, as the deadline for the part ies to submit motion s

for summary final order. The part ies then had up to seven days to file

response s to the opposi tionÔs motion for summary final order.

The p art ies filed timely Motion s for Summary Final Order. Petitioners

responded to the Department of Business and Professional Regulation,

Division of Pari - Mutuel WageringÔs (Ñthe DivisionÒ) Motion for Summary

Final Order on May 6, 2022. The Division did not respond to PetitionersÔ

Motion for Summary Final Order.

Unless stated otherwise, all statutory references shall be to the 2021

version of the Florida Statutes.

F INDINGS O F F ACT

Based on the oral and documentary evidence adduced at the final hearing,

stipulated facts, the entire r ecord of this proceeding, and matters subject to

official recognition, the following Findings of Fact are made:

1. Oxford Downs is a Florida limited liability company that owns and

operates a pari - mutuel facility and cardroom in Marion County, Florida.

2. Section 849.086(2)(c), Florida Statutes, defines a ÑcardroomÒ as

a facility where authorized games are played for

money or anything of value and to which the public

is invited to participate in such games and charged

1 Section 120.57(1)(h), Florida Statutes (2021), provides that Ñ[a]ny party to a proceeding in

which an administrative law judge has final order authority may move for a summary final

ord er when there is no genuine issue as to any material fact. A summary final order shall be

rendered if the administrative law judge determines from the pleadings, depositions,

answers to interrogatories, and admissions on file, together with affidavits, if any, that no

genuine issue as to any material fact exists and that the moving party is entitled as a matter

of law to the entry of a final order. A summary final order shall consist of findings of fact, if

any, conclusions of law, a disposition or penalty, if applicable, and any other information

required by law to be contained in the final order.Ò

a fee for participation by the operato r of such

facility. Authorized games and cardrooms do not

constitute casino gaming operations.

3. Mr. Donnelly holds cardroom employee occupational license number

11022678 and is employed by Oxford Downs.

4. Section 849.086(6)(a) mandates that

[a] perso n employed or otherwise working in a

cardroom as a cardroom manager, floor supervisor,

pit boss, dealer, or any other activity related to

cardroom operations while the facility is conducting

card playing or games of dominoes must hold a

valid cardroom empl oyee occupational license

issued by the [D]ivision. Food service, maintenance,

and security employees with a current pari - mutuel

occupational license and a current background

check will not be required to have a cardroom

employee occupational license. [ 2 ]

5. The Division is the state agency charged with regulating the operation

of pari - mutuel facilities and cardrooms in Florida. Section 550.0251, Florida

Statutes, sets forth the DivisionÔs Ñpowers and duties.Ò Section 550.0251(12)

provides that the Divi sion Ñshall have full authority and power to make,

adopt, amend, or repeal rules relating to cardroom operations, to enforce and

to carry out the provisions of s. 849.086, and to regulate the authorized

cardroom activities in the state.Ò

6. Section 849.08 6(4) further delineates the DivisionÔs authority over

cardrooms. It states that the Division

2 Section 849.086 authorizes cardroom s in Florida, and subsection (1) states that Ñ [ i]t is the

intent of the Legislature to provide additional entertainment c hoices for the residents of and

visitors to the state, promote tourism in the state, and provide additional state revenues

through the authorization of the playing of certain games in the state at facilities known as

cardrooms which are to be located at li censed pari - mutuel facilities. To ensure the public

confidence in the integrity of autho rized cardroom operators, this act is designed to strictly

regulate the facilities, persons, and procedures related to cardroom operations. Furthermore,

the Legislature finds that authorized games as herein defined are considered to be pari -

mutuel style ga mes and not casino gaming because the participants play games against each

other instead of against the house. Ò

shall administer this section and regulate the

operation of cardrooms under this section and the

rules adopted pursuant thereto, and is hereby

authorized to:

(a) Adopt rules, including, but not limited to: the

issuance of cardroom and employee licenses for

cardroom operations; the operation of a cardroom;

recordkeeping and reporting requirements; and the

collection of all fees and taxes imposed by this

section.

( b) Conduct investigations and monitor the

operation of cardrooms and the playing of

authorized games therein.

(c) Review the books, accounts, and records of any

current or former cardroom operator.

(d) Suspend or revoke any license or permit, after

heari ng, for any violation of the provisions of this

section or the administrative rules adopted

pursuant thereto.

(e) Take testimony, issue summons and

subpoenas for any witness, and issue subpoenas

duces tecum in connection with any matter within

its jurisdi ction.

(f) Monitor and ensure the proper collection of

taxes and fees imposed by this section.

Permitholder internal controls are mandated to

ensure no compromise of state funds. To that end, a

roaming division auditor will monitor and verify

the cash flo w and accounting of cardroom revenue

for any given operating day.

7. The Division has adopted a series of rules pertaining to cardrooms.

Rule 61D - 11.005 is entitled ÑProhibitions,Ò and subsection (5) states that

Ñ[c]ardroom occupational licensees are proh ibited from participating in

authorized cardroom games at the cardroom facility where they are

employed.Ò This prohibition has been in place since at least May 5, 2004.

8. Rule 61D - 11.005 cites sections 550.0251(12) and 849.086(4) as its

rulemaking authori ty. The rule identifies section 849.086 as the law being

implemented.

C ONCLUSIONS O F L AW

9. DOAH has jurisdiction over the subject matter and the parties to this

proceeding. § 120.56, Fla. Stat.

Standing

10. Section 120.56(1)(a) provides that Ñany person substantially affected

by a rule or a proposed rule may seek an administrative determination of the

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

delegated legislative authority.Ò

11. The Division stated in its Motion for Su mmary Final Order that it

Ñdoes not contest PetitionersÔ standing.Ò However, the DivisionÔs declination

to contest PetitionersÔ standing does not resolve the issue. In an

administrative context, standing is a matter of subject matter jurisdiction

that a tr ibunal may raise sua sponte. See Escambia Cnty. Sch. Bd. v. Warren ,

2022 WL 1101300 at *2 (Fla. 1 st DCA 2022).

12. Rule 61D - 11.005 regulates cardroom operators and employees, and

those entities are subject to being penalized for failing to comply with th e

rule. See £ 849.086(14)(a), Fla. Stat. (providing that the Division Ñmay deny a

license or the renewal thereof, or may suspend or revoke any license, when

the applicant has: violated or failed to comply with the provisions of this

section or any rules ad opted pursuant thereto ; knowingly caused, aided,

abetted, or conspired with another to cause any person to violate this section

or any rules adopted pursuant thereto ; or obtained a license or permit by

fraud, misrepresentation, or concealment; or if the ho lder of such license or

permit is no longer eligible under this section.Ò) (emphasis added) ;

§ 8 49.086(14)(c), Fla. Stat. (providing that Ñ[n]otwithstanding any other

provision of this section, the [D]ivision may impose an administrati ve fine not

to exceed $1,000 for each violation against any person who has violated or

failed to comply with the provisions of this section or any rules adopted

pursuant thereto .Ò)(emphasis added).

13. Therefore, Oxford Downs and Mr. Donnelly have standin g to challenge

r ule 61D - 11.005 (5). See Cole Vision Corp. v. DepÔt of Bus. & Pro . Reg ul ., Bd. of

Optometry , 688 So. 2d 404, 407 (Fla. 1 st DCA 1997)(holding the appellants

had standing by virtue of being Ñsubstantially affectedÒ by a proposed rule

Ñ[b]ecause this rule purports to regulate appellants, and as a result

potentially exposes them to legal action and monetary penalties ÈÒ).

The Merits

14. ÑDuly promulgated rules are presumptively valid until invalidated,

and the party challenging an administrati ve rule bears the burden to prove

by a preponderance of the evidence that the rule is an invalid exercise of

delegated legislative authority.Ò Fla. Prepaid College Bd. v. Intuition College

Savings Solutions, LLC , 330 So. 3d 93, 97 (Fla. 1 st DCA 2021).

15. Rulemaking is a legislative function, and the Florida Legislature Ñmay

specifically delegate, to some extent, its rulemaking authority to the

executive branch to permit administration of legislative policy by an agency

with the expertise and flexibility ne eded to deal with complex and fluid

conditions.Ò Whiley v. Scott , 79 So. 3d 702, 711 (Fla. 2011).

16. A rule adopted by an agency amounts to an Ñinvalid exercise of

delegated legislative authorityÒ if that rule Ñgoes beyond the powers,

functions, and dut ies delegated by the Legislature.Ò £ 120.52(8), Fla. Stat.

17. Section 120.52(8) sets forth the grounds upon which a proposed or

existing rule must be deemed an invalid exercise of delegated legislative

authority. Pertinent to the instant case is section 120.52(8)(b) and (c). The

former provides that a proposed or existing rule is an invalid exercise of

delegated legislative authority if the agency responsible for the rule Ñhas

exceeded its grant of rulemaking authority.Ò The latter subsection states that

a proposed or existing rule is invalid if it Ñenlarges, modifies, or contravenes

the specific provisions of law implemented.Ò

18. With regard to Ñrulemaking authority,Ò section 120.52(17) defines the

term as Ñstatutory language that explicitly authorizes o r requires an agency

to adopt, develop, establish, or otherwise create any statement coming within

the definition of the term Órule.ÔÒ Ñ[T]he authority for an administrative rule is

not a matter of degree. The question is whether the statute contains a spe cific

grant of legislative authority for the rule, not whether the grant of authority

is specific enough . Either the enabling statute authorizes the rule at issue or

it does not. È [T] his question is one that must be determined on a case - by -

case basis.Ò S W . Fla. Water Mgmt. Dist. v. Save the Manatee Club, Inc. , 773

So. 2d 594, 599 (Fla. 1 st DCA 2000). See Fla. Bd. of Med. v. Fla. Acad. of

Cosmetic Surgery, Inc. , 808 So. 2d 243, 254 (Fla. 1 st 2002)(stating that Ñthe

degree of specificity of the grant of auth ority is irrelevant.Ò)(superceded by

statute on other grounds).

19. Therefore, it is unnecessary for the authorizing statute to explicitly

delineate every conceivable subject matter within an agencyÔs rulemaking

purview. See Fla. Elections CommÔn v. Blair , 52 So. 3d 9, 13 - 14 (Fla. 1 st DCA

2010)(holding that Ñbecause section 106.26(1) specifically authorizes the

Commission to adopt rules pursuant to which it will ÓconsiderÔ sworn

complaints, and because an evaluation of ÓwillfulnessÔ is a necessary

component of the consideration of the complaint, we conclude that the rule

defining ÓwillfulÔ clearly falls within the rulemaking authority provided by

this statute.Ò); Hanger Prosthetics and Orthotics, Inc. v. DepÔt of Health, Bd.

of Orthotists and Prosthetists , 9 48 So. 2d 980 (Fla. 1 st DCA 2007)(stating Ñthe

Legislature has authorized the Board to implement rules governing the

standards of practice for orthotists, prosthetists, and pedorthists under

section 468.802. A licensed professionalÔs Ódirect supervisionÔ o f unlicensed

support personnel qualifies as a standard of practice. Consequently, the

Board acted within its grant of rulemaking authority.Ò); United Faculty of

Fla. v. Fla. State Bd. of Educ. , 157 So. 3d 514, 517 (Fla. 1 st DCA

2015)(holding that Ñit is no t necessary under Save the Manatee and its

progeny for the statutes to delineate every aspect of tenure that the Board is

authorized to address by rule; instead, all that is necessary is for the statutes

to specifically authorize the Board to adopt rules f or college faculty contracts

and tenure, which the statutes clearly do.Ò).

20. In addition to being supported by specific rulemaking authority, a

proposed or existing rule must also be implementing a specific statute.

See AssÔn of Fla. Cmty. Dev . v. DepÔt of Envtl. Prot . , 943 So. 2d 989 (Fla. 1 st

DCA 2006)(explaining that Ñ[a] rule is an invalid exercise of delegated

legislative authority when it enlarges, modifies, or contravenes the specific

provision of law implemented. § 120.52(8)(c), Fla. Stat. (2005). Under section

120.52(8)(c), the test is whether a proposed rule gives effect to a specific law

to be implemented, and whether the proposed rule implements or interprets

specific powers and duties.Ò); Hanger Prosthetics and Orthotics , 948 So. 2d at

981 (ho lding that a proposed rule was valid and stating Ñ[t]he BoardÔs

proposed rule also does not enlarge, modify, or contravene the LegislatureÔs

requirement that unlicensed professionals be given direct supervision. The

Legislature has mandated that licensed p rofessionals directly supervise the

work they delegate to unlicensed support staff. See § 468.808. Fla. Stat.

(2005). The proposed rule merely specifies what direct supervision entails in

the particular setting addressed by the statute.Ò).

21. In the in stant case, Petitioners argue that rule 61D - 11.005 is an

invalid exercise of delegated legislative authority under section 120.52(8)(b)

because the Division lacks authority to adopt rule 61D - 11.005 pursuant to

statutes giving the Division the authority to regulate the operation of

cardrooms . Petitioners also argue that rule 61D - 11.005 is an invalid exercise

of delegated legislative authority under section 120.52(8)(c) because nothing

in section 849.086 authorizes the Division to prohibit occupational licens ees

from participating in authorized cardroom games where they are employed.

22. With regard to PetitionersÔ argument under section 120.52(8)(b), rule

61D - 11.005 cites sections 550.0251(12) and 849.086(4) as the sources of its

rulemaking authority. Sectio n 550.0251(12) provides that the Division Ñshall

have full authority and power to make, adopt, amend, or repeal rules relating

to cardroom operations, to enforce and to carry out the provisions of

s. 849.086, and to regulate the authorized cardroom activit ies in the state.Ò

Section 849.086(4) authorizes the Division to Ñ[a]dopt rules, including, but

not limited to: the issuance of cardroom and employee licenses for cardroom

operations; the operation of a cardroom; recordkeeping and reporting

requirements; a nd the collection of all fees and taxes imposed by this section.Ò

23. Distilled to its essence, PetitionersÔ argument on this point is that the

authority to adopt rules relating to cardroom operations does not encompass

the authority to adopt a rule prohib iting cardroom employees from

participating in authorized cardroom games where they work. However, what

is a more basic aspect of cardroom operations than deciding who may, and

may not, patronize a cardroom? See generally Warren, 2022 WL 1101300 at

*4 (Tan enbaum, J., concurring)(stating Ñ[t]he appellees in this case

administratively challenged a rule that reflected a policy of the school board

that governed the hiring, firing, and disqualification of district employees; it

appeared under the heading Ó Recrui tment and Selection of Personnel, Ô located

within the chapter titled Ó Human Resource Services. Ô They claimed that the

rule exceeded the authority delegated to the school board by the Legislature.

The problem with the claim is that there are few functions m ore closely

associated with the operation, control, and supervision of schools than the

management of their personnel.Ò).

24. There is a clear, logical connection between regulating cardroom

operations and prohibiting cardroom employees from gambling w here they

work. See St. Petersburg Kennel Club v. DepÔt of Bus. & Pro . Reg ul ., Div. of

Pari - Mutuel Wagering , 719 So. 2d 1201, 1212 (Fla. 1 st DCA 1998)(stating

Ñ[t]here is a clear logical connection between the law giving authority to the

Division to conduc t investigations and monitor the operation of cardrooms

and the rule requiring surveillance equipment.Ò).

25. Moreover, by specifying in section 849.086(4)(a) that the DivisionÔs

rulemaking authority was Ñnot limited toÒ the items enumerated therein, it i s

readily apparent that the Florida Legislature intended to give the Division

broad rulemaking authority over an industry that is to be ÑstrictlyÒ regulated.

See DepÔt of Elder Affairs v. Fla. Senior Living AssÔn , 295 So. 3d 904, 913 (Fla.

1 st DCA 2020)(st ating Ñ[s]ection 429.41(1)(h), Florida Statutes, gives DOEA

the responsibility for Ó[t]he care and maintenance of residents.Ô In particular,

section 429.41(1)(h)7. l ists Ó[r]esident recordsÔ as an area of DOEA

rulemaking. Furthermore, the statute clearly s tates that the areas delegated

to DOEA for resident care and maintenance Óinclude, but is not limited to Ô the

listed areas in section 429.41(h). Thus, DOEA was given flexible rulemaking

authority in order to ensure the care of ALF residents.Ò) (emphasis in

original). See also § 849.086(1), Fla. Stat. (stating that Ñ[t]o ensure the public

confidence in the integrity of authorized cardroom operations, this act is

designed to strictly regulate the facilities, persons, and procedures related to

cardroom operatio ns.Ò). 3

26. In sum, Petitioners argue that the DivisionÔs rulemaking authority is

not specific enough to encompass the prohibition at issue. However, Ñ[a]s

Save the Manatee makes clear, whether the grant of authority is specific

enough is beside the point. Ò Fla. Acad. of Cosmetic Surgery, Inc. , 808 So. 2d

at 253 - 54. Ñ[T]he degree of specificity of the grant of rulemaking authority is

irrelevant.Ò Id . at 254.

3 In addition to the foregoing, Ñit is well established that the legislature had broad discretion

in regulating and controlling pari - mutuel wag ering and gambling under its police powers.Ò

Div. of Pari - Mutuel Wagering, DepÔt of Bus. Reg. v. Fla. Horse Council, Inc. , 464 So. 2d 128,

130 (Fla. 1985); see also Jacques v. DepÔt of Bus. & ProfÔl Reg., Div. of Pari - Mutuel Wagering ,

15 So. 3d 793, 797 (F la. 1 st DCA 2009)(stating Ñthe legislature has broad discretion in

regulating and controlling gambling under its police powers, and the state may exercise its

police power in a more arbitrary manner because gambling is inherently dangerous to

society.Ò).

27. With regard to PetitionersÔ argument under section 120.52(8)(c), rule

61D - 11.005 cites section 8 49.086 as the law being implemented. As explained

above, section 849.086(4)(a) gives the Division broad authority to regulate

cardroom operations, and prohibiting cardroom employees from gambling

where they are employed is logically and integrally related to cardroom

operations.

28. Rather than enlarging, modifying, or contravening section 849.086,

rule 61D - 11.005 furthers the legislative directive for the Division to regulate

cardroom operations. See AssÔn of Fla Cmty. Dev elopers v. DepÔt of Envtl.

Prot. , 943 So. 2d 989, 992 (Fla. 1 st DCA 2006)(noting that under section

120.52(8)(c), the test is whether a rule gives effect to a specific law to be

implemented, and whether the rule implements or interprets specific powers

and duties). Mor eover, it is worth n oting that rule 61D - 11.005, by barring

cardroom employees from gambling where they are employed, furthers the

legislative mandate to advance public confidence in the integrity of

authorized cardroom operations. See § 849.086(1) (noting Ñ[t]o ensure the

pub lic confidence in the integrity of authorized cardroom operations, this act

is designed to strictly regulate the facilities, persons, and procedures related

to cardroom operations.Ò ).

O RDER

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

O RDERED that the Petition filed by South Marion Real Estate Holdings, LLC ,

d/b/a Oxford Downs and Darold R. Donnelly be D ISMISSED .

D ONE A ND O RDERED this 6th day of June , 2022 , in Tallahassee, Leon

County, Florida.

S

G. W. C HISENHALL

Administrative Law Judge

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 6th day of June , 2022 .

C OPIES F URNISHED :

Da vid Axelman, General Counsel John M. Lockwood, Esquire

Department of Business The Lockwood Law Firm

and Professional Regulation 106 East College Avenue , Suite 810

2601 Blairstone Road , OGC Suite/B6 Tallahassee, Florida 32301

Tallahassee, Florida 32399

Devon Nunneley, Esquire

Thomas J. Morton, Esquire The Lockwood Law Firm

The Lockwood Law Firm 106 East College Avenue , Suite 810

106 East College Avenue , Suite 810 Tallahassee, Florida 32301

Tallahassee, Florida 32301

Marc Daniel Taupier, Esquire Emily Ann Leiva, Esquire

Department of Business Department of Business

and Professional Regulation and Professional Regulation

2601 Blair Stone Road 2601 Blair Stone Road

Tallahassee, Florida 32399 Tallahassee, Florida 32399

Eric Anthony Saccomanno, Esquire

Ross Marshman, Esquire Department of Business

Department of Business and Professional Regulation

and Professional Regulation 2601 Blair Stone Road

2601 Blair Stone Road T allahassee, Florida 32399

Tallahassee, Florida 32399 - 2202

Melanie S. Griffin, Secretary Louis Trombetta, Director

Department of Business Division of Pari - Mutuel Wagering

and Professional Regulation Department of Business

2601 Blair Stone Road and Professional Regulation

Tallahassee, Florida 32399 - 2202 2601 Blairstone Road

Tallahassee, Florida 32399 - 2202

Ken Plante, Coordinator

Joint Administrative Anya Owens, Program Administrator

Proceeding Committee Margaret Swain

Pepper Building, Room 680 Florida A dministrative Code and Register

111 We st Madison Street Department of State

Tallahassee, Florida 32399 - 1400 R. A. Gray Building

500 South Bronough Street

Tallahassee, Florida 32399 - 0250

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 pur suant to section 120.68, Florida Statutes. Review proceedings are

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

commenced by filing the original notice of administrative appeal with the

agency clerk of the Division of Administr ative Hearings within 30 days of

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

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

a ppeal in the appellate district where the agency maintains its head quarters

or where a party resides or as otherwise provided by law.