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Pari-Mutuels Targeted Over Controversial Games

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TALLAHASSEE (CBSMiami/NSF) – Gambling regulators have filed complaints alleging two pari-mutuel cardrooms failed to comply with requirements for "designated player games," after Gov. Rick Scott and the Seminole Tribe reached an agreement about the controversial card games this summer.

The Florida Department of Business and Professional Regulation filed an administrative complaint against the Sarasota Kennel Club on Thursday, a week after a filing a similar complaint against Pensacola Greyhound Racing.

The games, in which a player acts as the "bank," were at the center of a legal battle between the state and the Seminole Tribe. The battle focused on whether the wildly popular --- and lucrative --- games violated the tribal casinos' "exclusive" rights to offer banked card games such as blackjack.

Scott and the Seminoles reached an agreement this summer after U.S. District Judge Robert Hinkle ruled in favor of the tribe.

In the July agreement, the state agreed to drop its appeal of the federal court decision and to take "aggressive enforcement action" against pari-mutuels that might be violating state law in the way they conduct designated-player games. State law requires players to "play against each other," as opposed to playing against the "house," which operates as a "bank."

The agreement with the tribe also freed up $200 million in payments to the state, something lawmakers were eager to tap into, even though the deal took legislative leaders by surprise.

The complaints issued this month allege that the Sarasota and Pensacola cardrooms are operating a casino-type game, in which players are playing against a bank instead of each other.

Barry Richard, a lawyer who represents the Seminoles, said he met with Department of Business and Professional Regulation officials last week to discuss the settlement agreement.

"They informed us that they wanted us to know that they've already begun to enforce the law as Judge Hinkle interpreted," Richard told The News Service of Florida in a telephone interview Monday. "We have a high level of confidence they appear to be conscientiously and in good faith abiding by the settlement agreement and by Judge Hinkle's decision."

The settlement agreement focused on a portion of a 20-year gambling deal, called a "compact," that expired in 2015. That portion of the deal gave exclusive rights to tribal casinos to operate banked card games, such as blackjack.

Under the 2010 deal, the tribe guaranteed $1 billion in payments to the state for the exclusive rights to offer the banked card games for five years.

The tribe sued the state when the agreement expired, accusing state gambling officials of breaching the compact by allowing improper designated-player games at horse and dog tracks and jai alai frontons.

Hinkle last fall sided with the Seminoles, saying designated-player games had violated state law that prohibits pari-mutuels from conducting banked card games. In his 36-page ruling, Hinkle ordered that the tribe be allowed to continue to conduct banked games for the remainder of the compact's 20-year term.

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."

Lawyers for the state argued that a player acting as the bank does not establish a bank within the meaning of the statute.

But Hinkle rejected that, writing that the second part of the definition describes a game banked by anyone, including a player.

"The essential feature of a 'banked' game is this: The bank pays the winners and collects from the losers," he wrote.

In the November order, Hinkle focused in part on one cardroom's requirement that potential designated players pass a background check and post a cash bond of $100,000 to act as the bank.

"The assertion that this game was just players competing against one another, without a 'bank' established by the facility, should have been a nonstarter. But the department assured the cardroom in writing that the game was compliant with Florida law. The assurance provided a 'safe harbor,' protecting the facility from prosecution for conducting an illegal banked game," Hinkle wrote.

The recent complaints did not specifically outline how the Pensacola and Sarasota games were illegal, but indicated that the "designated player" did not change, something referenced in Hinkle's ruling.

Gambling regulators are likely to issue similar complaints against other cardrooms, predicted Nick Iarossi, a lobbyist who represents Jacksonville Greyhound Racing, also known as bestbet Jacksonville, and Melbourne Greyhound Park. Both dog tracks operate designated player games.

"What this does show, and what puts all the facilities that are operating designated player games on notice, is that the division plans to live up to their word in the recently agreed-to settlement with the tribe that they will vigorously enforce any designated player games," Iarossi told the News Service. "The bottom line is, a designated payer cannot remain the designated player all the time without … giving other people the opportunity to be the player."

Iarossi said cardrooms are expecting intense scrutiny by gambling regulators in the coming days.

"They're going to come in. They're going to check tape. They're going to watch games being played live. And if they see anything out of compliance being done, they're going to issue administrative complaints and fines," he said. "So everybody is double and triple-checking to make sure they're in compliance."

The News Service of Florida's Dara Kam contributed to this report.

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