Recent Legal Opinions Impacting Florida's Gaming Landscape

Abstract

In the past six months, three legal opinions have impacted the opportunities for those interested in Florida’s gaming industry. The first two affect the regulated slot machine operations at pari-mutuel facilities in Florida and the slot machine operations of the Seminole Tribe of Florida. These appellate court opinions have the potential to increase the types of gaming devices at the slot machine casinos, as well as increasing the overall number of slot machine facilities in the Sunshine State. The third opinion, from a trial judge in Jacksonville, upholds local governments’ ability to regulate Internet cafe operations, which have exploded in Florida, with estimates placing this gambling industry at more than $1 billion annually. The first case involved a challenge by slot machine manufacturers to an administrative regulation requiring that random number generators (RNGs) be located inside of each individual slot machine cabinet. The rule at issue required that ‘‘[e]ach slot machine shall use an internal random number generator.’’ The manufacturers challenged the Florida Department of Business, Division of Pari-mutuel Wagering’s authority to promulgate such a rule, which denied them the ability to offer many of their slot machine products in Florida due to their use of a common external RNG. Both Interblock and Shuffle Master sought to market in Florida a roulette-themed slot machine that looks, feels, and plays very similar to a traditional roulette table game, but is tested and certified to meet the slot machine standards by an independent testing laboratory. The Division argued, among other things, that the slot machine statute authorized it to adopt rules concerning ‘‘[p]rocedures to scientifically test and technically evaluate slot machines,’’ which would include the ability to regulate the location of slot machine components, including the RNG. In holding that the Division lacked the authority to require slot machine RNGs to be inside each slot machine cabinet, the administrative law judge stated ‘‘there is no relationship between the object of agency regulation—internal random number generators—and the statutory assignment of duties listed above; Respondent [the Division] can meaningfully discharge each of these duties without requiring slot machine manufacturers or distributors to include a random number generator in each slot machine.’’ This holding allows new electronic table games into the Florida casino marketplace that, so far, have been very popular. Early reports from Florida’s casino operators indicate that these games are currently operating in excess of $1,000 WPU (win per unit), which is four to five times above house average. Clearly, these are very popular products both for Florida’s casino customers and for slot machine operators, since Florida does not allow true table game play except at the facilities operated by the Seminole Tribe—and the permissible table games for the Seminole Tribe are limited to only card games. Industry opinion is that manufacturers of