Designated player, or banked, card games began in 2012 in Florida and are hosted by nearly every parimutuel facility that operates a cardroom there. But late last year state gaming regulators tried to eliminate a rule that would have ended the popular games, which industry officials claim generate million annually. Regulators said the way they were conducted—not the games themselves–violated state gaming law, which prohibits a parimutuel from acting as a “bank.” At parimutuel cardrooms, only games in which players compete against each other are allowed.
However, in a recent ruling that could impact Florida’s gaming industry and the Seminole Tribe’s lawsuit against the state, Administrative Law Judge E. Gary Early declared state gambling regulators should not have eliminated the rule, adopted in 2014, authorizing the games. Early sided with gambling operators in West Palm Beach, Jacksonville, Melbourne, Miami and other areas who challenged the Department of Business & Professional Regulation’s attempt to repeal the rule.
Gambling regulators said they removed the rule to provide “clarity with the industry.” But Early called that explanation “untenable,” writing, “Rather, 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. 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.”
Early continued, regulators must replace the old rule with a new one. “Respondent cannot, with little more than a wave and well-wishes, expect regulated businesses to expose themselves to liability through their actions under a statute that is open to more than one interpretation, when the agency itself has found it problematic to decipher the statute under which it exercises its regulatory authority.” Early also found that “the effort to restrict game play by repeal of the rules” is beyond the scope of regulators’ authority.
Early also commented on an August 1 decision by Administrative Law Judge Suzanne Van Wyk in a case involving Jacksonville Kennel Club Inc. That cardroom, one of more than 20 that received complaints from regulators in January, “did indeed violate” state law,” Van Wyk declared. But Early stated that was based more on “case-specific proof” about how the games were played, “and was not a sweeping conclusion that designated player games as approved constituted prohibited banking games.”
Attorney John Lockwood, representing the gambling operators challenging the repeal of the rule, accused regulators of changing their minds about designated card games after Governor Rick Scott and the Seminole Tribe signed a proposed $3 billion compact last December, giving the tribe exclusive rights to offer the games. The compact never went into effect.
