22-001121RU Tampa Bay Downs, Inc. vs. Florida Gaming Control Commission Status: Appeal.

Summary: Respondent's interpretation of section 550.0951(3)(c)1., Florida Statutes, constitutes an unadopted rule.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

T AMP A B AY D OWNS , I NC .,

Petitioner,

vs. Case No. 22 - 1121RU

F LORIDA G AMING C ONTROL C OMMISSION ,

Respondent.

____________________________ _______ ___/

F INAL O RDER

An administrative hearing w as held in this case on July 11 , 2022 , in

Tallahassee, Florida, and by Zoom conferencing before James H.

Peterson , III, Administrative Law Judge with the Division of Administrative

Hearings (DOAH) .

A PPEARANCES

For Petitioner s : J. Stephen Menton, Esquire

Tana D. Storey , Esquire

R utledge Ecenia, P.A.

119 South Monroe Street , Suite 202

Tallahassee, Florida 3230 1

For Respondent: M ar c D . T a up i er , Esquire

Emily A. A l v ara do , Esquire

F lo r ida G a ming C ont r ol C ommission

2601 Bl a i r St one R o a d

T a ll a h a ss ee , F l o r i da 32 3 99

S TATEMENT OF THE I SSUE

W hether the Florida Gaming Control CommissionÔs ( Respondent or

Commission ) 1 interpretation of section 550.0951(3)(c)1., Florida Statutes, 2

regarding the tax rate applicable to the handle generated by intertrack

wagering (ITW) on out - of - state races by pari - mutuel permitholders

constitutes an invalid unadopted rule in violation of section 120.54(1)(a),

Florida Statutes.

P RELIMINARY S TATEMENT

In a letter dated September 2, 2021, Tampa Bay Downs, Inc. ( TBD or

Petitioner ) , notified Respondent that it would file a challenge to the alleged

unadopted rule pursuant to section 120.56(4) and would seek to recover its

attorneyÔs fees and costs pursuant to section 120.595(4) , unless Respondent

ceased reliance on the rule and proceeded to rulemaking.

O n April 11, 2022, Petitioner filed a Petition Challenging Agency

Statement Defined a s a n Unadopted Ru le. Thereafter, the parties agreed to

extend the time for holding the final hearing beyond the statutory 30 - day

period and t he final hearing was scheduled and held on July 11 , 2022.

At the f inal h earing, TBD presented the testimony of its vice president of

finance, Greg A. Gelyon, and RespondentÔs revenue program administrator,

Tracy Swain, and offered 1 3 exhibits , which were received into evidence as

1 As of July 1, 2022, the Commission assumed all duties of the Department of Business and

Professional RegulationÔs Division of Pari - mutuel Wagering. The Commission was

substituted as the named party R espondent in this proceeding by O rder dated July 6, 2022 .

All references to Respondent shall include reference to the current Commission , as well as

the former Division of Pari - m utuel Wagering.

2 All references to the Florida Statutes are to the 2021 codification of the Florida Statutes,

unless otherwise noted . The revise d amendments were enacted in 2022 to effectuate the

transfer of responsibilities to the Commission, but such amendments did not otherwise

contain substantive amendments to chapter 550.

Exhibits P - 1 through P - 1 3 . Respondent presented the testimony of Tracy

Swain and offered four exhibits received into evidence as Exhibits R - 1

through R - 4.

The proceedings were recorded and a transcript was ordered. The parties

were given until July 29, 2022, to file proposed final orders. The one - volu me

Transcript was filed on July 20 , 2022. Thereafter, the parties timely filed

their respective Proposed Final Orders, both of which were considered in

rendering this Final Order.

F INDINGS OF F ACT 3

1. Chapter 550, FloridaÔs Pari - m utuel Wagering Act, governs the conduct

of pari - mutuel wagering activities in Florida. Respondent is tasked with

implementing and administering c hapter 550 and regulating the pari - mutuel

industry.

2. Each pari - mutuel permitholder must obtain an annual oper ating

license in order to conduct pari - mutuel activities pursuant to its pari - mutuel

permit, which generally includes the authority to conduct racing or games, as

well as conduct simulcast and ITW activities. The issue in this proceeding

involves the inter pretation and application of the statutory tax rate by

Respondent relative to the conduct of simulcast and ITW activities.

3. ÑSimulcast,Ò as pertinent here, means Ñreceiving at an in - state location

events o ccurring live at an out - of - state location.Ò £ 550 .002(32), Fla. Stat.

4. ITW means Ña particular form of pari - mutuel wagering in which wagers

are accepted at a permitted, in - state track, fronton , or pari - mutuel facility, on

a race or game transmitted from and performed live at, or simulcast signa l

rebroa dcast from, another in - state pari - mutuel facility.Ò An Ñintertrack

wagerÒ is a Ñform of pari - mutue l wagering in which wagers are accepted at a

3 Findings of Fact 1 through 19 are derived from the parti esÔ admitted facts section of their

Joint Pre - Hearing Stipulation.

permitted, in - state track, fronton, or pari - mutuel facility on a race or game

transmitted from and performed at , or simulcast signal rebroadcast from,

another in - state pari - mutuel facility.Ò £ 550.002(17), Fla. Stat.

5. The pari - mutuel facility that broadcasts the simulcast signal which is

subject to an intertrack wager is referred to as a Ñhost track.Ò £ 550.002(16 ),

Fla. Stat. The pari - mutuel facility that receives the signal broadcast from the

host track and receives or accepts an intertrack wager thereon is the Ñguest

track.Ò £ 550.002(12), Fla. Stat.

6. As set forth in section 550.0951(3), pari - mutuel facilities conducting

ITW are required to pay taxes on the Ñhandle,Ò which is the Ñaggregate

contributions to pari - mutuel pools , Ò including amounts collected on the out -

of - state rebroadcast races. § 550.002(13), Fla. Stat.

7. Section 550.0951(3)(c)1 . sets forth the tax rate for ITW activities.

8. The applicable tax rate under section 550.0951(3)(c)1. varies depending

on the type of pari - mutuel activity permitted at the host track, as well as the

type of pari - mutuel activities permitted at the guest tr ack conducting ITW

and the location of the facilities. Section 550.0951(3)(c)1. is applicable to all

pari - mutuel permitholders conducting simulcast and intertrack wagers.

9. Section 550.0951(3)(c)1 . provides:

The tax on handle for intertrack wagering is

2.0 percent of the handle if the host track is a horse

track, 3.3 percent if the host track is a harness track,

5.5 percent if the host track is a dog track, and 7.1

percent if the host track is a jai alai fronton. The tax

on handle for intertrack wagering is 0.5 percent if

the host track and the guest track are thoroughbred

permitholders or if the guest track is located outside

the market area of the host track and within the

market area of a thoroughbred permitholder

currently conducting a live race meet. The tax on

handle for intertrack wagering on rebroadcasts of

simulcast thoroughbred horseraces is 2.4 percent of

the handle and 1.5 percent of the handle for

intertrack wagering on rebroadcasts of simulcast

harness horseraces. The tax shall be deposited i nto

the Pari - mutuel Wagering Trust Fund.

10. Market area is defined in s ection 550.002(19) as Ñan area within

25 miles of a permitholderÔs track or fronton.Ò

11. Section 550.0951 was amended in 2000, to provide for tax breaks to

the pari - mutuel industry, including, specifically, thoroughbred permitholders.

12. The Commission is the state agency tasked with implementing and

administering c hapter 550 and regulating the pari - mutuel industry,

including the adoption of administrative rules. The Commission has

a uthority to adopt administrative rules pursuant to sections 550.0251 and

550.3511(10).

1 3 . TBD is a Florida for - profit corporation, located in Hillsborough

County, Florida. TBD holds a pari - mutuel thoroughbred horseracing permit

(Pari - Mutuel Permit #320) and an annual license to operate a pari - mutuel

facility in Hillsborough County. Pursuant to such permit and annual license,

TBD is authorized to broadcast and receive signals for ITW and conduct ITW

thereon.

14. TBD has operated , and continues to operate , a live thoroughbred meet

year round, from July 1 through June 30 of each fiscal year. At all material

times hereto, TBD was , and is , conducting live race meet s .

15. As a thoroughbred permitholder, TBD contracts with other pari -

mutuel facilities, including Daytona Beach Kennel Club (DBKC), a

greyhound permitholder, to conduct ITW on out - of - state greyhound races re -

broadcast through DBKC. In that instance, DBKC is a host track and TBD is

a guest track, and TBD accepts wagers thereon. The other tracks TBD has

contracted with for ITW activities include License Acquisitions, LLC , d/b/a

Palm Beach Kennel Club ; Orange Park Kennel Club , Inc. , d/b/a Bestbet ;

Jacksonville Kennel Club, Inc. , d/b/a Bestbet ; Bayard Raceways, Inc. , d/b/a

St. Johns Greyhound Park ; and Pen n Sanford, LLC , d/b/a Orlando Kennel

Club.

16. T he specific tax provision of section 550.0951(3)(c)1. at issue in this

proceeding is:

. . . The tax on handle for intertrack wagering is 0.5

percent if the host track and the guest track are

thoroughbred permitholders or if the guest track is

located outside the market area of the host track and

within the market area of a thoroughbred

perm itholder currently conducting a live race meet .

(E mphasis adde d) .

This provision provides for two situations where the tax on handle is

0.5 percent (rather than the specified higher tax rate). At issue in this

proceeding is the second situation ( emphasized above ), which mandates the

application of the 0.5 percent rate when the guest track is located outside the

market area of the host track and within the market area of a thoroughbred

permitholder currently conducting a live race meet.

17. Pursuan t to contracts with the host tracks referenced above, TBD has

paid the higher tax rate of 5.5 percent through the host tracks with which it

contracted. All taxes collected on the handle for ITW by pari - mutuel facilities

are remitted to the Commission and deposited in the Pari - m utuel Wagering

Trust Fund pursuant to section 550.0951(3)(c)1.

1 8 . The Commission agrees that the first requirement for the application

of the lower tax rate is that a guest track must be located outside the m arket

area of the host t rack. With respect to TBD serving as the guest track, all of

the aforementioned host tracks lie outside Hillsborough County and outside

TBDÔs market area.

19 . Based on it s interpretation of section 550.0951(3)(c)1., Respondent has

required and continues to require that the higher tax rate of 5.5 percent be

applied to TBDÔs ITW activities as a guest track on a regular, on - going basis.

2 0 . Although TBD is a guest track located outside the market area of the

host track and is within its own market area in which it is conducting a live

thoroughbred race meet, t he Commission interprets the statute to require the

application of the 5.5 percent t ax rate to TBDÔs ITW activities with out - of -

market host tracks because TBD does not lie within the market area of

another thoroughbred permitholder conducting a live race meet.

2 1 . The Commission has not promulgated its interpretation at issue in

this proc eeding as a rule.

2 2 . TBD filed requests for tax refunds asserting that there was an

overpayment (or payment in error) of the tax on handle which was remitted

at the tax rate of 5.5 percent rather than 0.5 percent . Those tax refund

requests were denied by Respondent based on its view that there was no tax

overpayment. The tax refund denials are the subject of a related challenge

scheduled for hearing in September 2022. See Tampa Bay Downs, Inc. v. Fla.

Gaming Control CommÔn , DOAH Case No. 22 - 1127 .

2 3 . At the final hearing, the CommissionÔs designated representative,

Ms. Swain, explained the agency interpretation as follows:

Q. Ms. S w a i n, ca n you w a l k us t h r ough how you a pp li e d

i n t h i s ca se t he s e cti on re g ar d i ng t a x s t a t u t e s i n

c onn ec ti on w it h t he d ef i n iti on?

A . The wa y it 's b e e n a pp l i e d i s t h a t w h e n a host t r a c k

s e nds t h e i r s i gn a l t o a gu e s t , i f t h e y ar e ou t s i de o f t he

m ar k e t a r e a of t h a t host t rac k, w h i c h i s ou t s i de t he

25 mil e s but w it h i n t he m ar k e t ar e a of a t ho r ough b r e d

t h a t i s c u rre n tl y c ondu cti ng a live m ee t , t h a t w e a pp l y

t he .5 t o t hose gu e st t rac k s. I f t h er e i s not a - - i f o n e - - i f

t h e y' r e w it h i n t he m ar k e t are a o f t he host or t h e y' r e not

w it h i n t he m ar k e t a r e a of t he t ho r oughb re d c ond u cti ng

a li ve m ee t , i t i s a pp li e d t o be 5.5 p er c e nt or 3 . 9,

d e p e nd i ng on t he l o ca ti o n of w h e r e t h e y a r e i n t he s t a t e .

2 4 . As explained by Ms. Swain, the Commission does not view TBD as

qualifying for the lower tax rate because it is not located within the market

area of another thoroughbred permitholder conducting a live race meet. Even

though the statute does not include the word Ñanother,Ò the Commission

interprets the statute to not include the permitholder within its own market

area.

2 5 . The Commission provided examples as to how it applies this statute

using Derby Lane and Tampa Greyhound, both of which are greyhound

permitholders located in the market area of TBD. Both Derby Lane and

Tampa Greyhound are deemed entitled to 0.5 percent tax rate on signals

from DBKC since the y are located within the market area of TBD, a

thoroughbred permitholder conducting a live race meet. But, under the

CommissionÔs interpretation, wagering on the same signal from DBKC at

TBD would result in the application of the 5.5 percent tax rate since it is not

within the market area of another thoroughbred permitholder conducting a

live race meet.

2 6 . Similarly, the Commission has informed DBKC that Dania Jai Alai

located in Broward County is entitled to the 0.5 percent tax rate when

wagering on the same signal TBD receives from DBKC since Dania Jai Alai

lies within the market area of a thoroughbred permitholder operating a liv e

race meet.

2 7 . The Commission acknowledges that there are instances where two

thoroughbred permitholders are located at and operate at the same facility.

For example, Gulfstream Park Racing Association (Gulfstream) and

Gulfstream Park Thoroughbred After Racing Program, Inc. ( GTARP ) , both

operate at the Gulfst ream Park racetrack . The Commission did not explain

how it would inter pret the definition of market area in such instance where

two thoroughbred permitholders operate at the same location (i.e., would

Gulfstream lie within the market area of GTARP).

2 8 . Based on its interpretation of section 550.0951(3)(c)1., the Commission

has required , and continues to require , the higher tax rate of 5.5 percent be

applied to TBDÔs ITW activities on signals received from host tracks out side

its market area.

29 . The CommissionÔs regulatory responsibilities include the adoption of

Ñreasonabl e rules for the control, supervision, and direction of all applicants,

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

racetracks, race meets, and races held in this state.Ò The statutes expressly

require the rules to be uni form in their application and effect. § 550.0251(3),

Fla. Stat.; see also § 550.3551, Fla. Stat. The Commission may levy fines and

penalties against pari - mutuel permitholders that do not comply with chapter

550, including the failure to remit the taxes on handle s at the rates

determined by the Commission. §§ 550.0251(10) and 550.0951(6), Fla. Stat.

3 0 . TBDÔs contention that the lower tax rate of 0.5 percent should apply to

its ITW based on the signals from out - of - market host tracks is entirely

consistent wi th the statutory language.

3 1 . The CommissionÔs interpretation that for TBD to qualify for the

0.5 percent tax rate , there must be another thoroughbred permitholder

operating a live race meet within TBDÔs market area is an agency statement,

which is generally applicable and has the force and effect of law but has not

been adopted as a rule.

3 2 . As a matter of fact, the CommissionÔs interpretation of section

550.0951(3)(c)1. is an agency statement , which is generally applied and

constitutes an agency r ule that has not been promulgated.

C ONCLUSIONS OF L AW

3 3 . DOAH has jurisdiction over this case pursuant to sections 120.56(4),

120.569, and 120.57(1) .

3 4 . The Florida Administrative Procedures Act, c hapter 120 (the APA),

imposes limitations and obligations on policymaking by executive agencies.

The Commission is an ÑagencyÒ within the meaning of section 120.52(1) and

is subject to the rulemaking requirements of section 120.54. See §§ 16.71 and

120.52( 1), Fla. Stat.

3 5 . Section 120.56(4) provides substantially affected parties the ability to

challenge agency policies that have not been adopted through the formal

rulemaking process. The parties stipulated , and the evidence confirms , that

Petitioner has s tanding to initiate this proceeding under section 120.56(4).

3 6 . TBD bears the burden of proof to establish by a preponderance of the

evidence : (1) the substance of the agency statement(s) and (2) facts sufficient

to show that the agency has not adopted the statement(s) according to

requir ed rulemaking procedures. See § § 120.56(1)(e) and 120.56(4)(a),

Fla. Stat. Once TBD satisfies this burden, th en the Commission has the

burden of proving rulemaking is not feasible and practicable as provided in

section 120.54(1)(a) .

3 7 . TBD met its burden and demonstrated that the CommissionÔs

interpretation of section 550.0951(3)(c)1. is an agency statement meet ing the

definition of a rule under section 120.52(16), which has not been adopted

through formal rulemaking as required by the APA.

3 8 . Section 120.54(1)(a) requires agencies to follow the rulemaking

procedures to enunciate policies which meet the definiti on of a Ñrule.Ò The

Legislature has made it clear that agencies must adopt policies that meet the

definition of a ÑruleÒ through the formal rulemaking process set forth in the

APA. ÑR ulemaking is not a matter of agency discretion. Each agency

statement def ined as a rule by s. 120.52 shall be adopted by the rulemaking

procedure provided by this section as soon as feasible and practicable.Ò

§ 120.54(1)(a) , Fla. Stat .

39 . Section 120.52(16) defines a rule as Ñeach 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 requirem ent or solicits any information not

specifically required by statute or by an existing rule. . . . Ò

4 0 . Section 120.52(20) defines an Ñunadopted ruleÒ as Ñan agency

statement that meets the definition of the term Órule,Ô but that has not been

adopted purs uant to the requirements of s. 120.54.Ò

4 1 . An administrative agency is required to promulgate rules on Ñthose

statements which are intended by their own effect to create rights or to

require compliance, or otherwise to have the direct and consistent effec t of

law.Ò Coventry First , LLC v. State, Off . of Ins. Regul. , 38 So. 3d 200 (Fla. 1st

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

995 So. 2d 984, 986 (Fla. 1st DCA 2008)); see also Grabba - Leaf , LLC v. Fla.

DepÔt of Bus. and Pro . Reg ul . , 257 So. 3d 1205 (Fla. 1st DCA 2018).

4 2 . While agency statements qualifying as ÑrulesÒ are often reduced to

writing, the existence or form of writing is not dispositive to the

determination of whether there has been an agency statement meeting the

definition of a rule. See DepÔt of High. Saf. & Motor Veh. v. Schluter , 705 So.

2d 81, 84 (Fla. 1st DCA 1997). An agency cannot avoid the statutory

definition of a rule in section 120.52(16) by simply refraining from

memorializing the agency statement in clear written terms. See Schluter ,

705 So. 2d at 86.

4 3 . An agency statement can be any declaration , expression , or

communication that requires compliance or otherwise has the direct and

consistent effect of law. Fla . Qtr . Horse Racing Ass Ô n, Inc. , et al v. DepÔt

of Bus. and Pro . Reg ul ., Div. of Pari - m utuel Wagering , DOAH Case

No. 14 - 5796RU, ¶ 57 (DOAH Final Order May 6, 2013).

4 4 . The focus in determining whether an agency statement is a rule

within the meaning of section 120.52(16) is the effect of the statement rather

than the label ascribed to it by the agency. Balsam v. DepÔt of Health and

Rehab. Serv. , 452 So. 2d 976, 977 (Fla. 1st DCA 1984) .

4 5 . A generally applicable statement purports to affect a category or class

of persons or a ctivities. See McCarthy v. DepÔt of Ins. , 479 So. 2d 135 (Fla. 2d

DCA 1985); Schluter , 705 So. 2d at 83; see also Fla . Qtr . Horse Track AssÔn v.

Dept. of Bus. and Pro . Reg ul ., Div. of Pari - m utuel Wagering , 133 So. 3d 1118,

1119 - 120 (Fla. 1st DCA 2014).

4 6 . An agency statement interpreting a statute is Ñgenerally applicableÒ if

it is intended to create rights, to require compliance, or to otherwise have the

direct and consistent effect of law and purports to affect a category or class of

persons or activiti es. See McCarthy, 479 So. 2d at 136; Schluter, 705 So. 2d

at 83. The statement is not required to apply universally to every person or

activity within the agency jurisdiction. It is sufficient that the statement

applies uniformly to a class of person s or a ctivities over which the agency

may properly exercise authority. Schluter, 705 So. 2d at 83.

4 7 . In this case, the evidence established that the Commission Ôs

interpretation of section 550.0951(3)(c)1. is applied t o every pari - mutuel

permitholder conducting ITW activities. Thus, the CommissionÔs

interpretation is a statement of general applicability. The remaining

questions are : (i) whether the challenged agency statement gives section

550.0951(3)(c)1., a meaning not readily apparent from its plain language,

and, if so, (ii) whether the agency statement has the direct and consistent

effect of law.

4 8 . Ñ An agencyÔs interpretation of a statute is a rule if it gives the statute

a meaning not readily apparent from a literal reading . . .Ò Beverly

Enterprises - Fla. , Inc. v. DepÔt of Health and Rehab. Serv. , 573 So. 2d 19, 22 - 23

(Fla. 1st DCA 1990). ÑThe test is whether an agency statement reiterates a

law, or declares what is Óreadily apparentÔ from the text of a law.Ò See

Grabba - Leaf, 257 So. 3d at 1210.

49 . The Co mmission claims that in requiring the higher tax rate in section

550.0951(3)(c)1. it is not interpreting section 550.0951(3)(c) 1. , but simply

applying the plain meaning of the statute.

5 0 . The plain language of section 550.0951(3)(c)1. provides that the

applicable tax rate on handle is 0.5 percent Ñif the guest track is located

outside the market area of the host track and within the market area of a

thoroughbred permitholder currently cond ucting a live race meet.Ò

5 1 . Despite the statutory language setting forth the criteria for the

0.5 percent tax rate, Respondent has consistently imposed a higher tax rate

on a thoroughbred permitholder that is a Ñguest trackÒ while conducting live

racing as a thoroughbred permitholder. This interpretation is premised upon

RespondentÔs view that a thoroughbred permitholder cannot qualify for the

lower rate if it is not located within the market area of ÑanotherÒ

thoroughbred permitholder.

5 2 . While Responde nt interprets the requirement that a thoroughbred

permitholder serving as a guest track must lie within the market area of

ÑanotherÒ thoroughbred permitholder in order to qualify for the lower tax

rate, the statute does not include the term Ñanother.Ò Rath er, the statute

unambiguously refers to the market area of Ña thoroughbred permitholder.Ò

5 3 . T he word ÑanotherÒ does not appear anywhere in the statutory

language of section 550.0951(3)(c)1., and is it not readily apparent from

reading the plain languag e of the statute that the guest track has to be

within the market area of another thoroughbred track to receive the lower

tax rate.

5 4 . The CommissionÔs interpretation is not simply an application of the

existing language, it clearly requires reading the word Ñ another Ò into the

statute even though that word is not contained in the law. See Grabba - Leaf,

257 So. 3d at 1210 - 11 (holding that whether an agencyÔs statement regarding

the taxation of loose leaf tobacco is an unadopted rule Ñ[b]ecause the statute

does not clearly include whole leaf tobacco wraps, we conclude that the

Department cannot by memorandum extend the statutory definition to cover

them and disregard its rulemaking obligations.Ò) .

5 5 . The CommissionÔs alternative argument that its interpreta tion is

correct because the statute does not specifically state the permitholder may

be located within its own market is without merit . Ñ Taxes cannot be imposed

except in clear and unequivocal language. Taxation by implication is not

permitted . Ò Fla. S & L Servs., Inc. v. Dep't of Rev. , 443 So. 2d 120, 122

(Fla. 1st DCA 1983). The Ñ authority to tax must be strictly construed. Ò Dep't

of Rev. v. GTE Mobilnet of Tampa, Inc. , 727 So. 2d 1125, 1128 (Fla. 2d DCA

1999) . ÑThe primary consideration in the construction and interpretation of

tax statutes is to ascertain and give effect to legislative intent, determined

primarily from the language of the statute.Ò D epÔt of Rev. v. James B. Pirtie

Const r. Co., Inc. , 690 So. 2d 709, 711 (Fla. 4th DCA 1997); D epÔt of Rev. v.

GTE Mobil n et of Tampa, Inc. , 727 So. 2d at 1128. ÑIt is a fundamental rule of

construction that tax laws are to be construed strongly in favor of the

taxpayer and against the government, and that all ambiguit ies or doubts are

to be resolved in favor of the taxpayer. This salutary principle is found in the

reason that the duty to pay taxes, while necessary to the business of the

sovereign, is still a duty of pure statutory creation and taxes may be collected

on ly within the clear definite boundaries recited by statute.Ò Maas Bros., Inc.

v. Dickinson , 195 So. 2d 193, 198 (Fla. 1967)(internal citations omitted);

GTE Mobilnet of Tampa , Inc. , 727 So. 2d at 1128 .

5 6 . Significantly, the CommissionÔs interpretation is not entitled to any

deference in this proceeding. The issues here are to be reviewed de novo .

Art. 5, § 21, Fla. Const . ; Kanter Real Estate, LLC v. Dep't of Envtl. Prot. ,

267 So. 3d 483, 487 (Fla. 2019).

5 7 . The c hallenged a gency s tatement h as the d irect and c onsistent e ffect

of l aw . The authority to proscribe taxes on pari - mutuel wagering activities ,

however, lies with the Florida Legislature. It is the CommissionÔs duty to

interpret the tax statutes in accordance with the purpose and intent of the

law. Grabba - Leaf, 257 So. 3d at 1208. Here, the Legislative staff analysis

makes it clear the legislation adopted in 2000 giving rise to the tax statute at

issue was a deliberate effort to afford tax breaks to the pari - mutuel industry

as a whole, and speci fically to thoroughbred permitholders. The varying tax

rates in the statute are dependent on several factors including the status of

the guest track in relation to a thoroughbred permitholder operating a live

race meet. By requiring a higher tax rate for I TW activities conducted by a

thoroughbred permitholder guest track conducting a live race meet unless

there is another thoroughbred permitholder operating a live race meet in the

market area, the Commission, is improperly and unlawfully increasing the

tax burden on handle collected on the ITW activities conducted at facilities

like TBD.

5 8 . If a statement of general appli cability creates or extinguishes rights,

privileges , or entitlement, then the statement is a rule. As explained by the

First District Court of Appeal in State of Florida, Dep artment of

Admi nistration , Div ision of Per s onnel v. Harvey , 356 So. 2d 323, 325 (F la. 1st

DCA 1977) :

The breadth of the definition [of ÑruleÒ] in Section

120.52(1[6]) indicates that the legislature intended

the term to cover a great variety of agency

statements regardless of how the agency designates

them. Any agency statement is a rule if it Ñpurports

in and of itself to create certain rights and adversely

affect othe rs,Ò Stevens , 344 So .2d at 296, or serves

Ñby (its) own effect to create rights, or to require

compliance, or otherwise to have the direct and

consistent effect of law.Ò McDonald v. Dep't of

Banking & Fin. , 346 So. 2d 569, 581 (Fla. 1st DCA

1977) . See als o Straughn v. O'Riordan , 338 So. 2d

832 (Fla. 1976) ; Price Wise Buying Group v. Nuzum ,

343 So. 2d 115 (Fla. 1st DCA 1977) .

59 . In applying its interpretation of this statute for years and

preliminarily den ying the tax refunds sought by TBD based on its

interpretation of the statute, the Commission has confirmed its intent to

continue to rely on the agency statement at issue and determine pari - mutuel

permitholderÔs substant ial interests based thereon. Because the

C ommissionÔs statement has the force and effect of law, it is an invalid

unpromulgated rule.

6 0 . In sum, T B D met its burden of demonstrating that RespondentÔs

interpretation of section 550.0951(3)(c)1. imposing a tax rate of 5.5 percent

instead of 0.5 perc ent on ITW activities as set forth above constitutes an

unadopted rule.

6 1 . Because TBD met its burden, to avoid a finding that it has violated

section 120.56(4), the Commission must demonstrate that rulemaking was

neither practicable nor feasible. The Com mission did not offer any evidence

that it was not practicable to engage in rulemaking nor did it present any

evidence regarding the feasibility or lack of feasibility of rulemaking. The

statute includes a presumption that rulemaking is feasible and practi cal, see

§ 120.54(1)(a), Fla. Stat, and that presumption ha s not been rebutted.

6 2 . A petitioner who prevails in a section 120.56(4) proceeding is entitled

to reasonable costs and attorneysÔ fees under section 120.595(4). Petitioner

has requested such an a ward of attorneysÔ fe es and costs in this proceeding.

6 3 . Section 120.595(4)(a) provides that, if an appellate court or an

administrative law judge determines that all or part of any agency statement

violates section 120.54(1)(a), a judgment or order shall be entered against the

agency for reasonable costs and a ttorneyÔs fees, unless the agency

demonstrates that the statement is required by the f ederal g overnment to

implement or retain a delegated or approved program or to meet a condition

to receipt of federal funds. The Commission does not claim that its

interp retation is based on any federal requirement. Accordingly, an award of

fees is warranted.

O RDER

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

O RDERED that the RespondentÔs interpretation of the tax rate applicable to

ITW activities is a statement meeting the definition of a rule that has not

been adopted pursuant to section 120.54(1). Respondent must immediately

discontinue all reliance upon the statement or any substantially similar

statement as a basis for agency action.

The unde rsigned reserves jurisdiction to determine, if necessary, the

amount of attorneys' fees and costs Petitioner should be awarded. Should the

parties be unable to amicably resolve this issue, Petitioner shall file with

DOAH a written request with the undersig ned seeking resolution of the

matter.

D ONE A ND O RDERED this 9th day of August , 2022 , in Tallahassee, Leon

County, Florida.

S

J AMES H. P ETERSON , III

Administrative Law Judge

Division of Administrative Hearings

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 9th day of August , 20 22 .

C OPIES F URNISHED :

J. Stephen Menton, Esquire Marc D. Taupier , Esquire

Gary R. Rutledge, Esquire Emily A. Alvarado , Esquire

Tana D. Storey, Esquire Florida Gaming Control Commission

Rutledge Ecenia, P.A. 2601 Blair Stone Road

119 South Monroe Street , Suite 202 Tallahassee, Florida 32399

Tallahassee, Florida 3230 1

Louis Trombetta, Executive Director

David Axelman, Esquire Capital Commerce Center

Department of Business 2601 Blair Stone Road

and Professsional Regulation Tallahassee, Florida 32399

OGC Suite B/6

2601 Blair Stone Road Melanie S. Griffin, Secretary

Tallahassee, Florida 32399 - 2202 Department of Business

and Professional Regulation

Eric Anthony Saccomanno, Esquire 2601 Blair Stone Road

Department of Business Tallahassee, Florida 32399 - 2202

and Professional Regulation

2601 Blair Stone Road Ken Plante, Coordinator

Tallahassee, Florida 32399 Joint Admin istrative

Proced ures Committee

Room 680, Pepper Building

111 West Madison Street

Tallahassee, Florida 32399 - 1400

Anya Owens, Program Administrator

Margaret Swain

Florida Administrative Code & Register

Department of State

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 pursuant to s ection 120.68, Florida Statutes. Review proceedings are

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

commenced by filing one copy of a Notice of Administrative Appeal with the

agency clerk of the Division of Administrative H earings and a second copy,

accompanied by filing fees prescribed by law, with the District Court of

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

district where the party resides. The Notice of Administrative Appeal must

be filed within 30 days of rendition of the order to be reviewed.