Florida gambling overseers were wrong to do away with a rule governing controversial “designated player” card games at pari-mutuel facilities without replacing the regulations, an administrative law judge said Friday.
Judge E. Gary Early’s ruling could have widespread implications within the state’s gambling industry and could have an impact on a lawsuit filed by the Seminole Tribe of Florida challenging the card games.
In Friday’s ruling, Early sided with gambling operators in West Palm Beach, Jacksonville, Melbourne, Miami and other parts of the state, who challenged the Department of Business and Professional Regulation’s attempt to repeal a rule governing what are known as “designated player games” or “banked card games,” years after regulators first approved the games.
First launched in 2012, the games have become wildly popular among gamblers and are now hosted by nearly every pari-mutuel that operates a cardroom in Florida. The industry maintains doing away with the rule, adopted in 2014, would put an end to games that bring in $87 million a year.
Regulators proposed doing away with the rule late last year, insisting that the way the games are being conducted — and not the games themselves — violates a state gambling law, which prohibits pari-mutuels from acting as the “bank.”
Under Florida law, a “banking game” is defined as one “in which the house is a participant in the game, taking on players, paying winners, and collecting from losers or in which the cardroom establishes a bank against which participants play.” Pari-mutuel cardrooms are allowed to conduct games in which players compete only against each other.
But John Lockwood, a lawyer representing the gambling operators challenging the repeal of the rule, argued doing away with the regulation effectively prohibited the cardrooms from offering the lucrative games, some of which require players to post $100,000 in order to participate.
Gambling regulators’ argument they did away with the rule to provide “clarity with the industry” is “simply untenable,” Early wrote.
“Rather, respondent (the department) has taken an activity that it previously found to be legal and authorized and, by repealing the rule and simply being silent on its effect, determined that activity to be prohibited,” Early wrote in the 52-page order Friday.
“The evidence is conclusive that, by its repeal of (the rule), respondent simply changed its mind as to whether playing with a designated player constituted the establishment of a prohibited banking game. It previously determined that such games were lawful. … It has now determined they are not,” he wrote.
Because state law involving the designated player games is ambiguous, gambling operators require direction from the department’s Division of Pari-mutuel Wagering, Early wrote, meaning regulators must replace the old rule with a new one.
Early’s ruling appears at odds with a recent decision by Administrative Law Judge Suzanne Van Wyk in a case involving Jacksonville Kennel Club Inc., one of more than two-dozen cardroom operators that received complaints from regulators in January.
Van Wyk ruled Aug. 1 the way the Jacksonville facility operated the games “did indeed violate” state law.
But, in a footnote in Friday’s order, Early wrote that Van Wyk’s decision in the Jacksonville case was based more on “case-specific proof” about the manner in which the games were played at the facility “and was not a sweeping conclusion that designated player games as approved constituted prohibited banking games.”