Gator Coin II, Inc., a Florida Corporation v. Florida Dept. Business and Professional Reg. etc. ( 2018 )

FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D17-2966
_____________________________
GATOR COIN II, INC., a Florida
Corporation,
Appellant,
v.
FLORIDA DEPARTMENT OF
BUSINESS AND PROFESSIONAL
REGULATION, DIVISION OF
ALCOHOLIC BEVERAGES AND
TOBACCO, an agency of the State
of Florida,
Appellee.
_____________________________
No. 1D17-3705
_____________________________
BLUE SKY GAMES, LLC,
Appellant,
v.
FLORIDA DEPARTMENT OF
BUSINESS AND PROFESSIONAL
REGULATION, DIVISION OF
ALCOHOLIC BEVERAGES AND
TOBACCO, an agency of the State
of Florida, and GATOR COIN II,
INC., a Florida Corporation,
Appellee.
_____________________________
On appeal from the Circuit Court for Leon County.
John C. Cooper, Judge.
August 30, 2018
LEWIS, J.
In these consolidated appeals, Appellants, Gator Coin II, Inc.
(Gator Coin) and Blue Sky Games, LLC (Blue Sky Games), appeal
the trial court’s Order on Motion for Rehearing and Final
Declaratory Judgment, challenging its determination that Blue
Sky Games Version 67 (Version 67) is a “slot machine or device” as
that term is defined in section 849.16(1), Florida Statutes (2015).
For the following reasons, we agree with the trial court’s
conclusion and, therefore, affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Blue Sky Games developed Version 67 with the goal of making
it a no-chance game in order to avoid the applicability of Florida’s
gambling statutes, and it licensed to Gator Coin the right to use it.
In turn, Gator Coin leased Version 67 to “adulthood places,” such
as bars. After Appellee, the Florida Department of Business and
Professional Regulation, Division of Alcoholic Beverages and
Tobacco, issued official notices to two of Gator Coin’s machine
lessees, notifying them that the machines may be considered
illegal slot machines under section 849.16 and directing them to
remove the machines from their premises, Gator Coin filed against
Appellee a Complaint for Declaratory Judgment, seeking a
declaration that Version 67 is not an illegal slot machine pursuant
to sections 849.15 and 849.16, Florida Statutes (2015), and is
instead a legal amusement machine. Blue Sky Games was
permitted to intervene in the action.
2
At the non-jury trial, the undisputed evidence established
that Version 67 is a profitable game that depicts traditional slot
machine symbols, such as reels; it takes $1 to $20 bills; and the
amount of return to the player varies by the amount of money
played. Version 67 has a mandatory preview feature that displays
the outcome of the game selected before the insertion of any money
and before the play button appears. The preview displays the
actual result of the game 100% of the time, and players are not
financially obligated to play—if they dislike the previewed result,
they may cash out any time before pressing the play button, they
may select a different play level within the same game theme, or
they may choose a different game theme. Version 67 has a preset
win/loss ratio, and the outcome that is displayed in the preview is
generated by the machine with the use of a random number
generator (RNG). When the first game is played, the outcome of
the next game is automatically generated by the RNG and is stored
in memory, and that outcome is displayed when the player presses
preview for the next game. There is nothing a player can do to
change the outcome that is randomly generated by the machine
from among millions of potential outcomes.
The only dispute at trial was whether Version 67 involves skill
or any element of chance or any other outcome unpredictable by
the user so as to fall under the purview of section 849.16(1).
Appellants contended that Version 67 does not involve any skill
and that the mandatory preview feature eliminates all chance and
unpredictability. Following rehearing, the trial court vacated its
original declaratory judgment in Appellants’ favor and concluded
that Version 67 is an illegal slot machine pursuant to section
849.16(1). The trial court found that Version 67 is presumed to be
a prohibited slot machine because it falls within the parameters of
section 849.16(3) and the evidence did not overcome that
presumption. The trial court determined that Version 67 is not a
game of skill, but it may award a player something of value by
reason of an element of chance inherent in the machine because it
has a preset win/loss ratio and determines the outcome randomly
with the use of an RNG, and it may award a player something of
value by reason of an outcome unpredictable by the player at the
time the outcome is determined and before it is displayed.
Additionally, the trial court recognized that each game unlocks the
opportunity to play subsequent games, whose outcomes are
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unpredictable at the time the first game is played, and that the
preview feature seeks to circumvent gambling prohibitions. These
appeals followed.
ANALYSIS
On review of a declaratory judgment, we defer to the trial
court’s factual findings if supported by competent, substantial
evidence, but review conclusions of law de novo. Crapo v.
Provident Grp.-Continuum Props., L.L.C., 238 So. 3d 869, 874 (Fla.
1st DCA 2018). We review questions of statutory construction de
novo. W. Fla. Reg’l Med. Ctr., Inc. v. See, 79 So. 3d 1, 8 (Fla. 2012).
The polestar of statutory construction is legislative intent. Id. To
discern legislative intent, we must first look to the plain and
obvious meaning of the statute’s text, which may be discerned from
a dictionary. Id. at 9. If the statutory language is clear and
unambiguous, we must apply that unequivocal meaning and may
not resort to the rules of statutory construction. Id. We must give
full effect to all statutory provisions and avoid readings that would
render a part of a statute meaningless; additionally, we may not
construe an unambiguous statute in a way that would extend,
modify, or limit its express terms or its reasonable and obvious
implications. Bennett v. St. Vincent’s Med. Ctr., Inc., 71 So. 3d 828,
838 (Fla. 2011).
Chapter 849, Florida Statutes, governs gambling and makes
it unlawful to manufacture, own, store, keep, possess, sell, rent, or
lease any “slot machine or device.” § 849.15(1), Fla. Stat. (2015).
In section 849.16, the term “slot machine or device” is defined and
a rebuttable presumption is created as follows:
(1) As used in this chapter, the term “slot machine or
device” means any machine or device or system or
network of devices that is adapted for use in such a way
that, upon activation, which may be achieved by, but is
not limited to, the insertion of any piece of money, coin,
account number, code, or other object or information,
such device or system is directly or indirectly caused to
operate or may be operated and if the user, whether by
application of skill or by reason of any element of
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chance or any other outcome unpredictable by the
user, may:
(a) Receive or become entitled to receive any piece of
money, credit, allowance, or thing of value, or any check,
slug, token, or memorandum, whether of value or
otherwise, which may be exchanged for any money,
credit, allowance, or thing of value or which may be given
in trade; or
(b) Secure additional chances or rights to use such
machine, apparatus, or device, even though the device or
system may be available for free play or, in addition to
any element of chance or unpredictable outcome of such
operation, may also sell, deliver, or present some
merchandise, indication of weight, entertainment, or
other thing of value. The term “slot machine or
device” includes, but is not limited to, devices
regulated as slot machines pursuant to chapter
551.
....
(3) There is a rebuttable presumption that a device,
system, or network is a prohibited slot machine or device
if it is used to display images of games of chance and is
part of a scheme involving any payment or donation of
money or its equivalent and awarding anything of value.
§ 849.16, Fla. Stat. (2015) (emphasis added). 1
Chapter 551 governs slot machines, and the term “slot
machine” is defined for the purpose of that chapter as follows:
1 Prior to the latest amendment to section 849.16, in 2013, the
statutory definition of slot machine or device did not include the
application of skill and there was no statutory presumption. See §
849.16, Fla. Stat. (1997); see also Ch. 13-2, § 4, Laws of Fla. (2013).
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[A]ny mechanical or electrical contrivance,
terminal that may or may not be capable of
downloading slot games from a central server system,
machine, or other device that, upon insertion of a coin,
bill, ticket, token, or similar object or upon payment of
any consideration whatsoever, including the use of any
electronic payment system except a credit card or debit
card, is available to play or operate, the play or
operation of which, whether by reason of skill or
application of the element of chance or both, may
deliver or entitle the person or persons playing or
operating the contrivance, terminal, machine, or other
device to receive cash, billets, tickets, tokens, or
electronic credits to be exchanged for cash or to receive
merchandise or anything of value whatsoever,
whether the payoff is made automatically from the
machine or manually. . . . A slot machine is not a “coin-
operated amusement machine” as defined in s.
212.02(24) or an amusement game or machine as
described in s. 546.10 . . . .
§ 551.102(8), Fla. Stat. (2015) (emphasis added). 2
2 During oral argument, Appellants properly conceded that
Version 67 cannot be deemed an “amusement game or machine” as
defined in section 546.10. See § 546.10(3), Fla. Stat. (2015)
(defining “amusement game or machine” as “a game or machine
operated only for the bona fide entertainment of the general public
which a person activates by inserting or using currency or a coin,
card, coupon, slug, token, or similar device, and by the application
of skill, with no material element of chance inherent in the game
or machine, the person playing or operating the game or machine
controls the outcome of the game”; excluding from the definition
games that use or depict slot machine reels or symbols and games
in which the player does not control the outcome through skill or
where the outcome is determined by factors not visible, known, or
predictable to the player; and defining “material element of chance
inherent in the game or machine” in part as “[t]he possibility of the
player succeeding at the game or accomplishing the player’s task
is determined by the number or ratio of prior wins or prior losses
6
Pursuant to case law, in order for a machine to be an illegal
slot machine, the element of chance or unpredictability must be
inherent in the operation of the machine itself. In Deeb v.
Stoutamire, the Florida Supreme Court explained that the
characteristics that differentiate an innocent machine from a
guilty one are “any element of chance or [] other outcome . . .
unpredictable by [the player],” and concluded that “inasmuch as
the machine itself is on trial,” “it should not be condemned unless”
the element of chance or unpredictability is inherent in its
operation. 53 So. 2d 873, 874-75 (Fla. 1951) (en banc) (applying
section 849.16, Florida Statutes (1941), which did not prohibit
games involving skill, and concluding that a miniature bowling
alley that did nothing except register the score that depended
entirely on the player’s skill was not an illegal slot machine). It is
the operation of the machine, not the player’s knowledge, that is
determinative: “the element of unpredictability is not supplied
because a player may not be sure what score he can accomplish,
but that it must be inherent in the machine.” Id. at 875.
In accordance with the rationale of Deeb, the Fourth District
in State, Department of Business & Professional Regulation,
Division of Alcoholic Beverages & Tobacco v. Broward Vending,
Inc., held that the machine at issue there was a prohibited
gambling device because the element of chance was inherent in the
machine itself given that it was set to record a certain win/loss
ratio. 696 So. 2d 851, 851-52 (Fla. 4th DCA 1997); see also
Hernandez v. Graves, 4 So. 2d 113, 114 (Fla. 1941) (en banc)
(concluding that the machine at issue was a slot machine because
its operation involved an element of chance; specifically, “its
operation as the result of the insertion of a coin involves an
element of chance for the operator to win a stated cash prize if he
correctly answers an unknown or unpredictable question in twenty
seconds after it is disclosed by the machine, or to lose the coin
inserted in the machine if the player does not, within twenty
seconds after it is shown, correctly answer an unpredictable
of players playing the game” or “[a] computer-based or mechanical
random number generator or other factor that is not discernible,
known, or predictable by the player determines the outcome or
winner of the game”).
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question posed by the machine and not known to, or controlled by,
the player”); In re Forty-Seven Video Redemption Games, 799 So.
2d 221, 222 (Fla. 2d DCA 2001) (deciding whether certain
“machines operated ‘by reason of any element of chance’ so as to
fall within the definition of a slot machine in section 849.16” and
finding that “the testimony provided a sufficient probability to
warrant a reasonable belief that there was an element of chance
inherent in the Florida Skill machines”).
Turning to the present cases, the resolution of the issue of
whether Version 67 is an illegal slot machine under section
849.16(1) turns on whether the user may receive something of
value “by reason of any element of chance or any other outcome
unpredictable by the user.” See § 849.16(1), Fla. Stat. The element
of chance or unpredictability must be inherent in the machine
itself. See Deeb, 53 So. 2d at 874-75; Broward Vending, Inc., 696
So. 2d at 851-52.
On appeal, the parties do not dispute that the remaining
statutory elements of consideration and award of something of
value are present in Version 67, that the game does not involve
skill, or that the statutory presumption that the game is a slot
machine applies. It is further undisputed that Version 67 has a
mandatory preview feature that accurately displays the outcome
of the game at hand before that game is played and before money
for that game is inserted. However, it is also undisputed that
Version 67 displays images of games of chance, that it has a preset
win/loss ratio, that it utilizes an RNG to randomly select the
outcome from a pool of millions of potential outcomes, and that the
outcome of Game 2 is unknown at the time Game 1 is played.
Appellants’ position is that the preview feature removes any
element of chance or unpredictability because the player knows
the outcome of the game. In so arguing, Appellants improperly
focus on the player’s knowledge instead of the machine’s operation
and seek to define the game as what happens after the player
presses the play button, i.e., the flashing lights and sounds,
thereby ignoring the operation of the machine up to the point.
We hold that the trial court was correct in determining that
Version 67 is a slot machine because the element of chance is
inherent in it given that it has a preset win/loss ratio, see Broward
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Vending, Inc., 696 So. 2d at 851-52, and that the game outcomes
are determined by the machine by chance, via an RNG, and there
is nothing the user can do to affect the outcomes. Furthermore,
Version 67 is a slot machine for the additional and independent
reason that also inherent in it is an outcome unpredictable by the
user. While it is true that the user is advised of the outcome of the
game at hand ahead of time through the preview feature, the user
cannot predict that outcome until it is randomly generated and
then displayed by the machine. Nor can the user predict the
outcome of Game 2 while playing Game 1. As the trial court
recognized, section 849.16’s definition of slot machine is satisfied
regardless of when the outcome is generated or when it is made
known to the user, and nothing in the statute requires that each
game be analyzed in isolation without considering its relationship
to subsequent games.
Therefore, pursuant to the plain language of section 849.16(1)
and well-established case law, Version 67 is an illegal slot
machine. Accordingly, we affirm the trial court’s judgment.
AFFIRMED.
WOLF and RAY, JJ., concur.
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Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
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Wm. J. Sheppard, Elizabeth L. White, Bryan E. DeMaggio, Jesse
B. Wilkison, and Camille E. Sheppard of Sheppard, White,
Kachergus & DeMaggio, P.A., Jacksonville, for Appellant Gator
Coin II, Inc.
Robert E. Turffs of Robert E. Turffs, P.A., Sarasota, for Appellant
Blue Sky Games, LLC.
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Christine Davis Graves, Martha Harrell Chumbler, and James
Parker-Flynn of Carlton Fields, Tallahassee, for Amicus Curiae
Cowboy Gaming, LLC d/b/a Pace-O-Matic, in support of Gator Coin,
II, Inc., and Blue Sky Games, LLC.
Jason L. Maine, General Counsel; Daniel J. McGinn and Beth A.
Miller, Florida Department of Business and Professional
Regulation, Tallahassee, for Appellee.
Barry Richard, Greenberg Traurig, P.A., Tallahassee, for Amicus
Curiae Seminole Tribe of Florida, in support of Appellee.
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