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Judge backs state in dispute over gambling legal fees

The state won’t have pay up to $450,000 to lawyers representing nine cardroom operators in a battle about controversial “designated player” games, according to an order issued Friday.

Administrative Law Judge E. Gary Early sided with Florida gambling regulators in the dispute over attorney fees, deciding that a $50,000 statutory cap on fees in disputes with state agencies applies in the aggregate and not by individual party, as the lawyers for the cardroom operators had argued.

While the state maintained that attorneys for the gambling operators are only entitled to split $50,000 in fees, Early found the law “is not so clear as to allow for a definitive determination on its face as to whether the statute allows for multiple awards against an agency up to $50,000 when multiple parties have challenged the same proposed rule.”

In rejecting the request for the individual fees, Early relied in part on a previous ruling, in a case known as “G.B. v. Agency for Persons with Disabilities.” In that case, the 1st District Court of Appeal upheld an order by Administrative Law Judge R. Bruce McKibben that concluded the statutory cap applied as an aggregate.

“Thus, it is concluded that in cases such as this, in which a group of petitioners is acting in a concerted and collective manner to achieve a common result, the total award of fees to the petitioners, and against the agency, is limited to $50,000,” Early wrote in Friday’s 27-page order.

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Last year, Early sided with gambling operators in West Palm Beach, Jacksonville, Melbourne, Miami and other parts of the state in a challenge about the designated player games. Early ruled that Florida gambling overseers were wrong to do away with a rule governing designated player games without replacing the regulations.

Lawyer John Lockwood, who represents seven of the nine cardrooms that filed the challenge, said Monday he is reviewing the decision and “considering our options.”

A 1996 law created the cap on attorney fees in disputes with state agencies and set the maximum at $15,000. In 2008, the law was amended, and the cap was raised to $50,000.

The staff analysis of the legislation that established the caps didn’t clarify the issue, Early found.

“There is little in the attorney fees section of the 1996 bill analysis that sheds further light on the issue of whether the statutory cap on fees is to be applied per case or per party,” the judge wrote.

But an analysis of the 2008 bill, which later became law, provided more insight, according to Early. That analysis noted that the bill raises the cap on attorney fees “that may be awarded against a party” in an administrative law proceeding.

“Not only does the 2008 bill analysis suggest that the Legislature understood that an award against a party was to be limited to the capped amount but, as indicated previously, if the attorney’s fee cap could create an open-ended economic impact on state agencies, it is unlikely that the committee staff would have neglected to perform an analysis of that possibility,” Early wrote.

Early also noted that the petitioners were “all in the same boat,” and that their “journeys through the rulemaking and enforcement processes, as well as through the rule challenge proceeding, were substantially similar, and led to a result that would not have varied” depending on the circumstances of any individual cardroom.

First launched in 2012, designated-player games have become wildly popular among gamblers and are now hosted by most pari-mutuels that operate cardrooms in Florida. The industry argued that doing away with the rule, adopted in 2014, would put an end to games, which bring in $87 million a year.

Regulators proposed doing away with the designated-player rule in 2015, insisting that the way the games were being conducted — and not the games themselves — violated 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.

The games have also been a key part of a legal battle between the Seminole Tribe and the state. The Seminoles maintained that the manner in which the designated player games were being conducted at cardrooms violated an agreement with the state that gave the tribe the exclusive rights to operate banked card games at most of its casinos. A federal judge sided with the tribe in the dispute over the games, and Gov. Rick Scott and the Seminoles entered an agreement last year in which gambling regulators promised to “aggressively enforce” the cardrooms. The agreement ends in March.

Lawyers representing the gambling operators convinced Early that doing away with the regulation — a move from the Department of Business and Professional Regulation that came in the midst of the Seminoles’ federal lawsuit — effectively prohibited the cardrooms from offering the lucrative games.

An appeal court in November upheld Early’s decision, paving the way for Lockwood, who represents seven gambling operators, and Christopher Kise, who represents two, to move forward with their request for legal fees, which, they argued, could have maxed out at $450,000.

The case law about the statutory cap included a 20-year-old case in which Early was a private lawyer who represented companies in a dispute with state regulators over reimbursements related to a petroleum-contamination site cleanup program. Early was on the winning side in the 1997 decision granting fees to all parties involved in the environmental case. The lawyers never received the fees, however, because an appeals court overturned the underlying ruling in the case.

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