Florida stands up a new regulator

For nearly a century, Florida’s regulated gaming landscape was overseen by a single division within the agency charged with regulating various businesses and professions across the state. From the inception of legal pari-mutuel wagering in the 1931-32 fiscal year, the state’s Division of Pari-Mutuel Wagering and its predecessor, the Florida Pari-mutuel Commission, (“PMW”) oversaw Florida’s legal gaming landscape, which grew to more than 30 gaming locations offering various forms of horse racing, greyhound racing, cardroom poker, the country’s only live jai-alai performances, with slot machine gaming also available at locations in two of the state’s most populous counties. Furthermore, PMW also regularly liaised without regulatory oversight with the Seminole Tribe of Florida, who entered into a gaming compact with the state, and the Miccosukee Tribe, who have chosen not to do so.

In the wake of the litigation surrounding both the 2010 Seminole Gaming Compact, that threatened over a billion dollars in mandated payments to the state in 2016, and a state constitutional amendment that would end greyhound racing statewide in 2020, calls for the creation of an independent gaming commission began to coalesce from rumblings by industry members and experts into a cohesive movement supported by the Legislature and Florida’s Governor Ron DeSantis. The oversight of the legal gaming industry, which grew to gross over US$3.2 billion dollars in 2021, by the agency charged with the regulation of everything from hotels to barbers to veterinarians was no longer feasible. Moreover, with each passing year, more tax revenue was being lost to grey-market slot machine gaming and illegal charitable gaming occurring throughout the state. Due to the restrictions on its regulatory authority, PMW was unable to take effective enforcement action against these machines, even though the machines were judicially determined to be illegal within Florida.

Thus, in a 2021 legislative special session, the Florida Legislature laid the groundwork for what would become the Florida Gaming Control Commission (“FGCC” or “Commission”) as part of a comprehensive restructuring of the gaming landscape in Florida. Chapter 2021-269, Laws of Florida, created section 16.71, Florida Statutes, establishing the FGCC within the Department of Legal Affairs of the Office of the Attorney General. Despite its official location, neither the Attorney General nor Department of Legal Affairs leadership has any control or supervisory responsibilities over, or ability to direct the FGCC. Instead, the Commission operates independently in the performance of its regulatory and administrative duties with plenary authority over all of Florida’s gambling laws.

 

The Commission itself is composed of five members. The current composition of the Commission is as follows:

• John MacIver, Chairman;
• Michael Yaworksky, Vice Chairman;
• Julie Brown, who served as the Inaugural Chairman;
• John D’Aquila, and;
• Charles Drago.

Initially, each member of the commission was required to a reside in a different appellate court district, however, with the creation of a sixth appellate district in Florida, this requirement was removed in the 2022 legislative session. At least one member must have ten or more years of law enforcement investigation experience, at least one member must be a Florida licensed certified public accountant with ten years of experience, and at least one member must be an attorney authorized to practice law in Florida for the preceding ten years. Commission members serve staggered four-year terms but may not serve as a commissioner for more than twelve years total. Each commissioner is appointed by the Governor, subject to confirmation by the Florida Senate and suspension or removal as set forth in the Florida Constitution. Additionally, each must meet the statutory qualifications for appointment with the FGCC, including not holding any office in a political party, never having a gaming license suspended or revoked in any jurisdiction, and not having been convicted, found guilty, or pled nolo contendere to a crime of dishonesty or a crime related to gambling. Furthermore, no commissioner (or commission employee) may have been any of the following within the previous two years:

• held a permit or a license issued by PMW/FGCC;
• be an officer, or an employee of any such licensees;
• be an officer, employee, or otherwise responsible for gaming operations owned by an Indian tribe with a valid and active compact with the state;
• be a contractor or subcontractor of such tribe or the ultimate owner of an entity performing such services;
• be a member of the Florida Legislature;
• be an operator of charitable bingo games or an employee of a bingo operator in Florida.

The Commission functions similarly to a board unlike the former PMW, which was headed ostensibly by a director with oversight and ultimate authority residing with the Secretary of the Department of Business and Professional Regulation. Therefore, all the Commission’s meetings, discussions, and decisions will be conducted pursuant to Florida’s open government provisions. The Commission has a limited public records exception for items that would otherwise be exempt, such as discussions involving confidential criminal investigation information, but it must follow the proper procedure to invoke its public records exemption and must maintain records internally of any items discussed or determined while out of the so-called “sunshine”. Ideally, this makes the workings of the FGCC more transparent than those of its predecessor.

Operationally, the FGCC also employs Executive Director Louis Trombetta, formerly the Director of the now-defunct PMW. The Executive Director oversees the day-to-day activities necessary to fulfil the Commission’s responsibilities, including personnel, budgeting, and other administrative matters. Furthermore, Trombetta and his team will likely be tasked with the preparation of the Commission’s annual report to be submitted to the Governor, Speaker of the Florida House, and President of the Florida Senate each December. Additionally, the Commission absorbed most of the former PMW’s personnel through a legislative budget transfer, effectively excising PMW from DBPR and placing them within the FGCC’s hierarchy. As a result, positions such as track stewards, slot machine inspectors, and licensing personnel remained staffed by those who are ostensibly familiar with the industry and its regulations, the facilities, and the industry members themselves.

The creation of the FGCC also attempts to address one of PMW’s biggest sore spots – illegal gaming within Florida. While PMW was authorized to regulate legal gambling and address administrative violations of its licensees, it was extraordinarily limited in its ability to address unlicensed activity. Allegations of illegal gambling were referred to other agencies, most often to local law enforcement already burdened with other, more generalized peacekeeping obligations. Grey-market gambling, particularly “internet café” establishments offering illegal slot machine gaming, predictably proliferated throughout the state. These alleged violations were often overlooked unless a higher profile, often violent crime took place at the infringing establishment. Consequently, while creating the Commission, the Legislature also took the first affirmative steps to attempting to reign in illegal gambling statewide. The bill that created the FGCC also amended section 16.56(1)(a), Florida Statutes, authorizing the Office of Statewide Prosecution to investigate and prosecute violations of the state’s lottery, amusement facility, pari-mutuel facility, general gambling and slot machine laws, as well as violations of the Seminole Gaming compact, referred to the office by the Commission.

Further and most importantly, the bill also created the Division of Gaming Enforcement (“DGE”) as an entirely new criminal justice agency within the Commission. Each employee within the DGE must be a Florida certified law enforcement officer. These agents are tasked with enforcing the laws under the Commission’s jurisdiction and the rules properly promulgated thereunder, authorized to seize any contraband related to gaming violations and have the power to arrest alleged violators and enter, search, and inspect any location where there is reason to believe a violation has or is occurring. Essentially, the Florida Legislature created a singular law enforcement agency tasked with nothing but enforcement of Florida’s gambling laws as a way to fill the void left between PMW’s lack of authority and the lack of interest held by more generally tasked law enforcement agencies.

However, because the FGCC is charged with both regulatory and criminal justice functions, it must be able to perform on both fronts. Through the legislative budget transfer, the Commission retained the former PMW’s administrative law attorneys, and under the guidance of General Counsel Ross Marshman, these attorneys advise the Commission on issues that arise under chapter 120, Florida Statutes (Florida’s Administrative Procedure Act), such as the creation and promulgation of Commission rules or licensing determinations before the Commission, and also the handling of the prosecution of administrative, non-criminal violations by licensees. Additionally, the FGCC’s Office of General Counsel also serves in an advisory capacity to the Executive Director on issues ranging from legislative proposals to media inquiries to the full and complete scope of the Commissioner’s authority. Despite the FGCC being in its relative infancy, it is under pressure to hit the ground running and make a difference in the state. Already, Commission representatives have had to address the grey-market slot issue publicly when the Jacksonville City Commission was presented with an ordinance proposal that could have ostensibly permitted the machines to be played in Duval County in clear violation of state law. The issue will likely continue to be high-profile for the Commission until it either chooses to mobilize its resources in a commitment to take action against operators or acquiesces to the operation of these machines. Given the economic and political interests on both sides of the issue, a rare one in which those in favor of the expansion of legalized gaming and those who seek to restrict expansion are on the same side, it is one that the FGCC should not ignore. Moreover, the Commission must also navigate the state-federal cooperative regulatory scheme envisioned by the creation of the federal Horseracing Integrity and Safety Authority (“HISA”). Finally, each of these issues operates in the shadow of Florida’s attempt to enter into a new gaming compact with the Seminole Tribe in 2021. The validity of the newest compact is currently being litigated at the federal appellate level, and the outcome will greatly impact both the landscape of gaming in Florida, as sports betting (both in-person and mobile), fantasy sports contests, an expansion of tribal gaming into roulette and craps, and state revenue projections going forward. Should the compact be reinstated, the Commission will be responsible for its application and enforcement, including ensuring the exclusivity of certain gaming types guaranteed to the Seminole Tribe within Florida’s borders.

In all, Florida’s new Gaming Commission has its work cut out for it as it gets its arms around the nation’s third largest gaming market. As the new agency is nurtured by its new commissioners, significant domestic and international gaming interests are taking note as their actions will likely ripple across other jurisdictions.