Opinion
A23-1738
09-23-2024
In the Matter of the Minnesota Racing Commission's Approval of Running Aces Casino, Hotel & Racetrack's Request to Amend its Plan of Operation.
Richard A. Duncan, Joshua T. Peterson, Allison J. Mitchell, Faegre Drinker Biddle & Reath LLP, Minneapolis, Minnesota; and Greg Paulson, Brodeen & Paulson PLLP, New Brighton, Minnesota (for relator Shakopee Mdewakanton Sioux Community) Keith Ellison, Attorney General, Ryan Pesch, Cory J. Marsolek, Assistant Attorneys General, St. Paul, Minnesota (for respondent Minnesota Racing Commission) Erica Holzer, Evan A. Nelson, Maslon LLP, Minneapolis, Minnesota (for respondent Running Aces Casino, Hotel & Racetrack)
This opinion is nonprecedential except as provided by Minn. R. Civ. App. P. 136.01, subd. 1(c).
Minnesota Racing Commission
Richard A. Duncan, Joshua T. Peterson, Allison J. Mitchell, Faegre Drinker Biddle & Reath LLP, Minneapolis, Minnesota; and
Greg Paulson, Brodeen & Paulson PLLP, New Brighton, Minnesota (for relator Shakopee Mdewakanton Sioux Community)
Keith Ellison, Attorney General, Ryan Pesch, Cory J. Marsolek, Assistant Attorneys General, St. Paul, Minnesota (for respondent Minnesota Racing Commission)
Erica Holzer, Evan A. Nelson, Maslon LLP, Minneapolis, Minnesota (for respondent Running Aces Casino, Hotel & Racetrack)
Considered and decided by Ross, Presiding Judge; Johnson, Judge; and Kirk, Judge. [*]
ROSS, Judge
Running Aces Casino, Hotel &Racetrack successfully petitioned the Minnesota Racing Commission for permission to amend its floor plan to add an electronic dealer table linked to blackjack and baccarat player stations that allow patrons to play against the dealer. Relator Shakopee Mdewakanton Sioux Community challenges the commission's approval in this certiorari appeal, arguing that the decision exceeds the commission's regulatory authority, unlawfully allows Running Aces to operate gambling devices and video games of chance, and unlawfully allows Running Aces to operate a number of tables that exceeds the statutory limit. The community argues relatedly that the commission's decision was arbitrary and capricious and rested on an unpromulgated rule. We reject the commission's and Running Aces's contention that the community lacks standing to challenge the commission's decision and decide the appeal on substance. Our review of the commission's quasi-judicial decision on the merits leads us to affirm the commission's decision.
FACTS
The dispute in this certiorari appeal arises from relator Shakopee Mdewakanton Sioux Community's allegations about restricted gambling venues known as "card clubs," which are entities that may, within statutory limits, operate tabled "card playing" to generate revenue to support the facility's horse-racing and breeding industries. See Minn. Stat. § 240.01, subds. 4, 5 (2022). The gambling activities are statutorily constrained and administratively regulated. To allow Minnesota racetracks to mitigate financial challenges, the legislature authorized them to operate card clubs on their premises, permitting games like blackjack, poker, and baccarat. Minn. Stat. §§ 240.07, subd. 3(b), 240.30, subd. 1 (2022). To police racetrack gambling activity, the legislature established the respondent nine-member Minnesota Racing Commission, which issues racetrack and betting licenses and regulates the horse-racing and betting operations. Minn. Stat. §§ 240.02-.03, 349.11.61 (2022).
Particularly at issue here, racetracks, including respondent Running Aces Casino, Hotel &Racetrack, may not operate "video games of chance" or "gambling devices," and they may employ only up to 80 "tables used for card playing at the card club at any one time." Minn. Stat. §§ 240.30, subd. 8(1), 299L.07, subds. 2a, 2b, 609.75, subds. 4, 8 (2022). Running Aces operates a racetrack and card club in Columbus, Minnesota. Running Aces incorporated electronic tables into its plan of operation to supplement its horse-racing purses and improve attendance. It petitioned the commission in 2017 to approve a new type of electronic table manufactured by Interblock, a supplier of electronic table gaming products. Unlike traditional card tables, Interblock's product includes an electronic video interface linking a dealer with players. Interblock's electronic table games (ETGs) involve dealers stationed at a table equipped with a camera and card-recognition technology. Each linked player sits at her own electronic table, called a "player station," apart from the dealer and other players. The surface of each player station is a video touch screen. To begin each card game, the dealer deals a set of cards required for the type of game, and the dealertable camera and card-recognition technology capture the image of the dealt cards and display both a camera image and a digital image of those cards on each player's touchscreen surface. Players place bets and indicate their game-playing decisions using their touch screens. A player also indicates when she has ended her session using the screen, and an attendant will verify the amount won and print a voucher that the player presents to collect her cash winnings.
The commission approved Running Aces's 2017 plan to implement the ETGs into its operations, "with the understanding that the card games will be played 'live' without the use of a random number generator." Running Aces sought the commission's approval to make incremental changes to its floor plan, with varying success. For example, in 2018 it successfully asked the commission to authorize an increase in the number of player stations assigned to each dealer table from 7 to 11. Three years later, it unsuccessfully sought the commission's approval to increase that number from 11 to 30.
This case arises from Running Aces's May 2023 proposal to again amend its floor plan. The plan existing at the time of the 2023 proposal allowed 60 traditional card-playing tables with 7 player seats at each table, 14 other traditional tables in the atrium with 9 player seats at each table, and 3 Interblock dealer ETGs with 11 player stations per dealer table. The 2023 proposal sought to modify that plan by adding one dealer ETG, which, when combined with the existing arrangement, would result in a configuration with one "Stadium Three Card Poker" dealer ETG serving its 11 player stations, one "Aces Live 5 Card Draw Poker" dealer ETG serving 11 player stations, and one "Multi Hand Blackjack" dealer ETG and one Baccarat dealer ETG, each serving 11 player stations (so that each player at any of these 11 stations could choose whether to play blackjack or baccarat). In total, with the additional requested dealer ETG and player stations, the newly configured arrangement would result in a total of four dealer ETGs linked to 33 player stations, 60 traditional cardplaying tables, and 14 poker tables. The Shakopee Mdewakanton Sioux Community sent a letter to the commission and submitted written arguments objecting to the requested amendment, asserting that ETGs constitute gambling devices and video games of chance and that the request would result in exceeding the statutory 80-table limit.
The commission members voted to approve Running Aces's requested amendment. The commission memorialized its decision in an October 2023 letter to Running Aces, stating that the commission conditioned the approval on the card games being played live and without the use of a random-number generator. The community has challenged the commission's decision in this certiorari appeal.
DECISION
The Shakopee Mdewakanton Sioux Community appeals from the commission's approval of Running Aces's 2023 amended floor plan. It argues that the approved plan illegally permits Running Aces to operate gambling devices and video games of chance and allows the racetrack to operate tables exceeding the statutory 80-table limit. The community also argues that the commission's decision is arbitrary and capricious and that the commission based the decision on an unpromulgated rule. The commission and Running Aces counter, arguing that the community lacks standing to challenge the floorplan approval and, alternatively, that the community's arguments fail on the merits. We first address the question of standing, and we then address the dispute in substance.
I
We have carefully considered the question of standing, and we conclude that the community has standing to challenge the commission's decision. Standing is a jurisdictional prerequisite requiring our de novo review. Scheffler v. City of Anoka, 890 N.W.2d 437, 451 (Minn.App. 2017), rev. denied (Minn. Apr. 26, 2017). A party has standing when it has "a sufficient stake in the controversy to seek relief from the court." Webb Golden Valley, LLC v. State, 865 N.W.2d 689, 693 (Minn. 2015). A party's mere participation in agency proceedings does not confer standing to appeal. In re Pappas Senate Comm., 488 N.W.2d 795, 798 (Minn. 1992). A party instead has standing either when it has suffered an injury-in-fact or when it is "the beneficiary of some legislative enactment granting standing." Lorix v. Crompton Corp., 736 N.W.2d 619, 624 (Minn. 2007). The community argues that it has suffered an injury-in-fact based on its status as an economic competitor to Running Aces and based on its (and other tribes') exclusive legal right to operate video games of chance and gambling devices in the state.
The alleged violation of its right to be free of competition (and the presumed consequential lost revenue) is the economic harm the community identifies as the basis for its standing to challenge the commission's decision. Lost revenue from competition is an injury that can confer standing in a limited circumstance. The Supreme Court has explained that "economic injury [that] results from lawful competition cannot, in and of itself, confer standing on the injured business to question the legality of any aspect of its competitor's operations." Hardin v. Kentucky Utils., 390 U.S. 1, 5-6 (1968). Instead, "the injured competitor has standing to require compliance with that provision" only if the statute giving rise to the dispute "reflect[s] a legislative purpose to protect a competitive interest." Id. at 5. The state supreme court applied this principle and determined that standing existed in Twin Ports Convalescent, Inc. v. Minnesota State Board of Health, a case in which the challenger similarly asserted that an injury-in-fact resulted from business competition. 257 N.W.2d 343 (Minn. 1977). The reasoning in Hardin and Twin Ports satisfies us that the community has standing here.
The challenger in Twin Ports provided emergency ambulance service in the same geographic area to be served by a newly licensed competitor. Id. As in this case, the Twin Ports challenger's "only interest" in the underlying decision contested on appeal and its basis for asserting standing was "in keeping down the number of competitors." Id. at 346. The supreme court determined that the company providing the existing ambulance service had standing to challenge the licensure because the applicable statute was designed uniquely to resist competition. Specifically, the Twin Ports court agreed with the challenger's arguments that the operative statute recognized "the inelastic demand and fixed costs characteristic of the ambulance service business" and "was intended to preserve the quality of service offered to the public by protecting existing services from competition." Id. at 346, 348. The supreme court's finding of a legislative purpose in favor of reducing competition is the premise that allowed the Twin Ports appellants to show injury-in-fact:
We interpret Minn. [Stat. §] 144.802 to manifest a legislative intention to protect the public welfare against deleterious competition in the ambulance services field. The provision embodies a legislative determination that the ambulance service business is one in which the public welfare is not promoted by free enterprise.Id. at 348. In other words, in keeping with the principle established in Hardin, the Twin Ports challenger had standing to contest a municipal decision allowing the competitor into the market and disrupting the challenger's ambulance-service monopoly because the statute regulating ambulance service reflected a legislative purpose to protect the challenger's competitive interest.
We have reviewed the statutory scheme to consider whether the legislature has exhibited a preference about competition in gambling involving the alleged type of devices at issue in this case. For the following reasons, we have found such a preference, albeit indirectly, and it supports the community's standing.
The community's authority to engage in gambling operations in the state has its origin in the federal recognition of tribal sovereignty. In 1988 Congress enacted the Indian Gaming Regulatory Act, Pub. L. No. 100-497, 102 Stat. 2467 (1988), after it found that "existing Federal law does not provide clear standards or regulations for the conduct of gaming on Indian lands" and that "Indian tribes have the exclusive right to regulate gaming activity on Indian lands if the gaming activity is not specifically prohibited by Federal law and is conducted within a State which does not, as a matter of criminal law and public policy, prohibit such gaming activity." 25 U.S.C. § 2701(3), (5) (2018). The federal directive that states must honor tribes' "exclusive right to regulate" gambling on their own lands is not itself a federal mandate that a state must grant tribes an exclusive right to operate specific types of gambling facilities within the state. By directing states to enter compacts authorizing tribes to regulate only those gambling activities that are not prohibited by the state's criminal law and public policy, the federal mandate arguably presumes that gambling on the various tribes' land may face competition within the state.
But we see a preference regarding gambling operations in the state legislation that arose from the Indian Gaming Regulatory Act. The act authorizes states to enter into compacts with tribes to designate allowable gaming activity on their lands. 25 U.S.C. § 2710 (d)(3)(A) (2018). Based on that federal authorization, in 1989 the Minnesota Legislature began authorizing the governor to negotiate tribal-state gaming compacts with the several Indian tribal governments. 1989 Minn. Laws ch. 44. That same year the state and the community executed the "Tribal-State Compact for Control of Class III Video Games of Chance on the Shakopee Mdewakanton Sioux Community Reservation in Minnesota." The compact recognized that the community had been operating various forms of gambling since 1982 and declared the primary purpose of the compact: "to provide the Community with the opportunity to operate video games of chance in a way that will benefit the Community economically." Two years later in 1991, the state and the community executed a similar compact governing the community's control of Class III Blackjack gaming on the community's reservation, with the identical purpose "to provide the Community with the opportunity to offer Blackjack in a way that will benefit the Community economically." The compacts include detailed regulatory standards for the operation and oversight of the games, focused substantially on ensuring fair play and the integrity of the gambling processes.
Although the compacts themselves do not imply a competition-restrictive environment for the gambling forms that they cover, the corresponding statutory scheme does. The legislature has made gambling a crime except to the extent it expressly allows gambling by statute. See Minn. Stat. §§ 609.75-.763 (2022). The allowed forms of gambling are few, well defined, and highly regulated. For example, the state operates a lottery. See Minn. Stat. §§ 349A.01-.20 (2022 &Supp. 2023). Nonprofit organizations may organize and sponsor pull-tabs, bingo, and raffles. See Minn. Stat. §§ 349.13, 349.16, subds. 1, 2. Licensed racetracks may conduct parimutuel wagering on horse races as well as operate card clubs featuring card games such as blackjack and poker. See Minn. Stat. § 240.30 (2022). Card clubs are effectively prohibited from operating "gambling devices," not just because they are not affirmatively authorized to operate them but because distributors may sell them only to federally recognized Indian tribes (and other entities not relevant here). See Minn. Stat. § 299L.07, subds. 2a, 2b. And the community has entered into the compacts referenced above, allowing them to operate casinos not only with card games but also with "gambling devices" and "video games of chance." This legislative framework that invites competition in card-game gambling but not in gambling-device gambling or video-game gambling leads us to conclude that the state has afforded the community a limited, legally cognizable, competition-restricted environment similar to the interest that established standing in Twin Ports.
We therefore hold that the community has standing to contest the commission's decision because the decision potentially harms the community's market-restricted interest in operating gambling devices and video games of chance.
We are not persuaded otherwise by our decision in In re Dakota Telecommunications Group, a case in which we held that the owner of a cable television franchise lacked standing to challenge a city's decision to grant a franchise to a potential competitor. 590 N.W.2d 644, 648 (Minn.App. 1999). The challenger in that certiorari appeal, like the community in this certiorari appeal, claimed that its injury-in-fact was its potential loss of market share resulting from business competition. Id. at 648. But no language in the underlying federal statute regulating cable-television franchises in local markets protected existing cable companies from losing profits to competition, as the statute instead encouraged competition. Id. at 647-48. For that reason we held that the challenger company "has not asserted a legally cognizable injury sufficient to establish standing." Id. at 648 (referencing Minn. Stat. §§ 238.01-.43 (1998); 47 U.S.C. §§ 521-573 (1994 &Supp. 1996)). The statutory scheme underlying this case therefore differs substantially from Dakota Telecommunications, in that here, a legislatively created restrictive market exists. Having concluded that the community has standing to challenge the commission's decision, we turn to the substance of its challenge.
II
The community argues that the commission made an error of law and exceeded its authority by authorizing Running Aces's use of ETGs, specifically contending that ETGs are gambling devices, that they are video games of chance, and that their use exceeds Running Aces's 80 card-table limit. Our standard of review lies in the common law. Because the commission investigated Running Aces's request to amend its plan of operation, weighed facts, applied the law to those facts, and issued a binding decision, the commission acted in a quasi-judicial matter. See Minn. Ctr. for Env't Advoc. v. Metro. Council, 587 N.W.2d 838, 842 (Minn. 1999). The "[c]onstitutional principles of separate governmental powers require that [we] refrain from a de novo review of administrative decisions." Dokmo v. Indep. Sch. Dist. No. 11, Anoka-Hennepin, 459 N.W.2d 671, 674 (Minn. 1990). We will uphold an agency's quasi-judicial decision unless it is "unconstitutional, outside the agency's jurisdiction, procedurally defective, based on an erroneous legal theory, unsupported by substantial evidence, or arbitrary and capricious." Carter v. Olmsted Cnty. Hous. &Redevelopment Auth., 574 N.W.2d 725, 729 (Minn.App. 1998). The commission's decision survives under this deferential standard for the following reasons.
ETGs as Alleged Gambling Devices
The community contends that the commission's approval improperly allows Running Aces to operate gambling devices. We clarify at the outset our limited scope of review. Although the community wrote the commission to challenge Running Aces's proposed 2023 plan amendment by asking the commission to "revoke its prior approval of the Interblock [ETG] table game for lack of statutory authority," the commission considered and decided only Running Aces's proposed amendment to its then-existing floor plan. Because the commission did not entertain the community's 2023 request to revisit the commission's un-appealed 2017 approval of ETG use at Running Aces, the validity of that 2017 decision and subsequent revisions are not before us in this certiorari appeal. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (holding that reviewing court must generally consider only issues previously considered and decided); In re Expulsion of A.D., 883 N.W.2d 251, 261 (Minn. 2016) (applying Thiele rule in appeal from agency decision). The issue the commission faced when it decided Running Aces's proposed amendment concerned the addition of one "dealer assist" ETG unit with corresponding player stations. We therefore address only the commission's 2023 plan approval-specifically the addition of one ETG dealer table and 11 corresponding player stations.
The community argues that ETGs are gambling devices under the defining statute and that the commission acted unlawfully and exceeded its authority by allowing Running Aces to add another ETG to its floor plan. "A gambling device is a contrivance the purpose of which is that for a consideration a player is afforded an opportunity to obtain something of value, other than free plays, automatically from the machine or otherwise, the award of which is determined principally by chance, whether or not the contrivance is actually played." Minn. Stat. § 609.75, subd. 4. The definition also includes any "video game of chance." Id. The first element of the statute is a redundancy, since "device" and "contrivance" are essentially synonyms. A device is "a contrivance or invention serving a particular purpose, especially a machine used to perform one or more relatively simple tasks," while contrivance is, "[s]omething contrived, as a mechanical device or a clever plan." The American Heritage Dictionary of the English Language 496, 400 (5th ed. 2018) (emphasis added). The legislature offers some guidance to determine whether the challenged ETGs are gambling devices by defining "associated equipment" as distinguished from gambling devices and providing examples: "Associated equipment means any equipment used in connection with gambling that would not be classified as a gambling device, including but not limited to: cards, dice, computerized systems of betting at a race book or sports pool, computerized systems for monitoring slot machines or games of chance, devices for weighing or counting money, and links which connect progressive slot machines." Minn. Stat. § 609.75, subd. 4a (emphasis added).
Based on the record and one of our nonprecedential opinions considered by the commission before it approved Running Aces's use of ETGs in 2017, the commission did not act unlawfully and did not exceed its authority by concluding that the additional ETG qualifies as equipment associated with both card playing and gambling, i.e., "associated equipment," rather than a "gambling device." For starters, "card playing," by statutory definition, does not require the use of physical cards:
'Card playing' means an activity wherein individuals wager utilizing a 52-unit system comprised of a series of numbers, numbered two through ten, and the letters J, Q, K, and A, combined with four symbols commonly known as hearts, diamonds, spades, and clubs, wherein each individual unit constitutes the display of one of the 52 possible combinations. The symbol commonly known as a joker may be incorporated into the system.Minn. Stat. § 240.01, subd. 5. And the record before the commission in 2017 indicated that ETGs are essentially electronic viewing devices that allow the gambler to see the cards (both in photographic and digitized form) that the dealer has dealt, and that allow the gambler to communicate her responsive playing or betting choices by touching options on a screen rather than by physically moving chips or cards or announcing the choices to the dealer audibly. The commission was informed that the only chance element in a game played using the ETG system lies in the distribution of the actual cards dealt physically by the dealer and the player's corresponding choices, not in any device-based, automated, algorithmic software. The commission received evidence that the ETG system simply facilitates the gaming interaction between the dealer and the player. It includes both a "computerized system of betting" and a "computerized system for monitoring" the dealer's activity, mirroring two of the legislature's examples of "associated equipment." Minn. Stat. § 609.75, subd. 4a.
The understanding that a dealer-assisting ETG system constitutes equipment associated with gambling rather than a gambling device finds support in the reasoning of our 2013 nonprecedential opinion in In re Request of North Metro Harness Initiative, LLC, No. A13-0033, 2013 WL 4711204 (Minn.App. Sept. 3, 2013). See Dynamic Air, Inc. v. Bloch, 502 N.W.2d 796, 800-01 (Minn.App. 1993) (observing that unpublished opinions, although not precedential, may offer persuasive reasoning). In Metro Harness, we concluded that substantial evidence supported the commission's decision to reject a request to allow Running Aces to use an electronic device called "Table Master," because Table Master was "a fully automated machine." 2013 WL 4711204, at *6. In doing so, we contrasted the Table Master with a system named "iTable" and concluded that "[t]here is nothing inconsistent about [the commission] authorizing North Metro's use of the iTable but not Table Master." Id. We reached this conclusion by distinguishing the authorized iTable from the unauthorized Table Master, describing the iTable as "an accessory to a blackjack game involving a human dealer." Id. And when the commission in 2017 authorized the use of the type of ETG at issue here, it did so after it received evidence and argument from Running Aces that ETG tables operate as "Dealer Assist Gaming, like the iTable" because an ETG is merely "an accessory to the blackjack game and not an automated gambling device." We believe that our reasoning in Metro Harness is both sound and persuasive, and the record confirms that the commission relied on the Metro Harness decision in 2017 when it originally authorized ETG use. Under these circumstances, we do not believe that the commission acted unlawfully or exceeded its authority by declining to treat the proposed additional ETG as a "gambling device" and by allowing its addition to Running Aces's operation.
ETGs as Alleged Video Games of Chance
The community relatedly contends that the commission exceeded its lawful authority by failing to conclude that ETGs are video games of chance. The legislature defines a "video game of chance" as "a game or device that simulates one or more games commonly referred to as poker, blackjack, craps, hi-lo, roulette, or other common gambling forms, though not offering any type of pecuniary award or gain to players." Minn. Stat. § 609.75, subd. 8 (emphasis added). The same statute includes an alternate definition: "any video game having one or more of the following characteristics: (1) it is primarily a game of chance, and has no substantial elements of skill involved; (2) it awards game credits or replays and contains a meter or device that records unplayed credits or replays." Id. The community's argument that the challenged ETG meets both of these definitions is unconvincing.
The community contends that ETGs are video games of chance because, "[f]rom the player's perspective, they are no different from typical video blackjack or video poker games or devices." But to be a video game of chance the ETGs must be a video game. The commission received information tending to support the view that ETGs are instead technological visual aids that allow a player to see and play the hand of cards actually dealt by the dealer. It does not simulate a card game; it facilitates a human dealer's interaction with human players in an actual game of cards. It also is not a video game in the usual sense of a device comprised of an automated computerized program that either competes against a human challenger or that provides a virtual environment where humans compete against other humans simulating some physical activity that is not actually occurring. The community is only partially accurate in maintaining that a patron playing a hand of cards using an ETG "interacts exclusively with the automated individual video." Based on the information presented to the commission, it is more precise to say that the dealer interacts with the patron through the device and that the patron responds to the cards dealt by the dealer using the device only as a conduit. We cannot conclude that the commission acted unlawfully or exceeded its authority by declining to treat the ETGs as "video games of chance" and declining to exclude them from use by Running Aces.
The ETG System and the 80-Table Limit
The community argues that the commission exceeded its statutory authority by authorizing Running Aces to exceed the statutory 80-table limit. The commission's decision about the limit turned on whether the ETG player stations count toward the limit. This court "review[s] de novo an agency decision that turns on the meaning of words in a statute or regulation." In re NorthMet Project Permit to Mine Application, 959 N.W.2d 731, 757 (Minn. 2021) (quotation omitted). "When the language of a statute or regulation is unambiguous, we apply the plain language....But when the language is ambiguous, we may, but are not required to, defer to the agency's reasonable interpretation of the statute or regulation." In re Denial of Contested Case Hearing Requests, 993 N.W.2d 627, 646 (Minn. 2023). For the following reasons, we believe the statute defining the table limit is ambiguous, and, because the agency did not provide its rationale, we cannot defer to its interpretation and must rely on our own.
The controlling statute includes a somewhat ambiguous provision. Minnesota Statutes section 240.30, subdivision 8, limits the number of tables used for card playing the commission may approve. The restriction states, "[T]he maximum number of tables used for card playing at the card club at any one time, other than tables used for instruction, demonstrations, or poker tournament play, may not exceed 80." Minn. Stat. § 240.30, subd. 8. Chapter 240 nowhere defines "table." The term "tables used for card playing" affords alternative reasonable interpretations. It might refer broadly to any table where a patron who is playing cards is seated. If so, it would include each ETG player station. We base this on illustrations in the record, which indicate that each dealer ETG is linked to player stations that are, at least arguably, themselves table surfaces. But a table under the statutory scheme might instead refer to the ETG table where the dealer is located and handles the physical playing cards. We have no reason to believe that the legislature contemplated ETG technology when it passed this 80-table restriction in 2012. See 2012 Minn. Laws ch. 279, § 5. The record indicates that ETGs were not part of the gaming market at that time. Games like blackjack are traditionally played with all participants engaging with a dealer across the same table surface, suggesting that the legislature likely envisioned each "table" to include one dealer and those players interacting with that dealer. One might therefore reasonably interpret the table limit to restrict the number of tables where a dealer is positioned and so engaged. We think this is the more reasonable of the alternative definitions, since the term "tables used for card playing" naturally includes at least one dealer and any number of participants.
The commission did not expressly provide its rationale explaining its interpretation to aid us in determining whether its interpretation is reasonable under Benedictine Health. When considering whether to defer to an agency interpretation because it is "reasonable," we generally treat "reasonable" to mean "fair, just, equitable, and sensible." St. Otto's Home v. Minn. Dep't of Hum. Servs., 437 N.W.2d 35, 40 (Minn. 1989) (quotation omitted). One commissioner commented at the hearing approving the floor plan while noting uncertainty about the meaning of "table":
I think when the statute was written, it wasn't a consideration of playing tables, there (indiscernible), you know, 10 other positions or 20 positions in stadium style betting. So, I think in that sense, that's something that ultimately, I think is going to be up to the courts to decide and not really us.
The commission's interpretation instead appeared to hinge on its mission to protect the financial viability of racetracks. And its approval letter to Running Aces articulated no basis for its interpretation of the 80-table limit. Because the commission failed to provide an interpretation, we have no articulated rationale to which we can defer. But we have already concluded that one of the interpretations of "tables used for card playing" is more reasonable than the other. And that interpretation is the one that is consistent with the commission's result.
The community argues that adopting any definition that counts only dealer stations as tables would lead to an absurd result, reasoning that authorizing 80 dealer tables each linked to 11 ETG player stations would result in 880 potential players. But this concern is hypothetical and not compelling, because traditional arrangements of seven players per dealer table would also result in a very high total number of potential players, since 80 dealer tables could accommodate 560 players. The community does not explain why the commission was bound to reject an interpretation that results in 880 players and adopt an interpretation that would allow 560 players.
We add that the legislature has demonstrated that it knows how to limit gambling based on the number of participants who can engage at once, and it did not do so here. For example, it limits the number of hand-held, electronic bingo devices in an establishment based on occupation limits in the fire code. Minn. Stat. § 349.17, subd. 9(b). And it limits the number of mechanical pull-tab dispensing devices per establishment to three, while allowing up to 6, 12, or 50 electronic pull-tab devices depending on the seating capacity of the premises or whether its primary business is bingo. Minn. Stat. § 349.1721, subds. 3(b), 4. Because the legislature has not defined "tables used for card playing" and the commission's decision implicitly adopts the interpretation that seems most reasonable, we cannot conclude that the commission acted beyond its statutory authority when it approved the amended floor plan that is consistent with the number of dealer tables.
III
We next address the community's contention that the commission acted arbitrarily and capriciously and without substantial evidence when it decided to approve Running Aces's proposed plan. An agency's decision is arbitrary and capricious when it "(a) relied on factors not intended by the legislature; (b) entirely failed to consider an important aspect of the problem; (c) offered an explanation that runs counter to the evidence; or (d) the decision is so implausible that it could not be explained as a difference in view or the result of the agency's expertise." Citizens Advocating Responsible Dev. v. Kandiyohi Cnty. Bd. of Comm'rs, 713 N.W.2d 817, 832 (Minn. 2006). It may also be arbitrary and capricious if it rests on an irregularity in procedure that constitutes a "danger signal." Denial of Contested Case Hearing Requests, 993 N.W.2d at 648. An agency's decision is not arbitrary and capricious, however, if a rational connection exists between the facts found and the conclusion reached. In re Rev. of 2005 Ann. Automatic Adjustment of Charges for All Elec. &Gas Utils., 768 N.W.2d 112, 120 (Minn. 2009). We address the community's argument under this standard, and we incorporate our prior discussion.
The community contends that the commission's decision rested only on how long it would take to make a reasoned decision and how it could protect horse racing. But the commission bears the responsibility to protect Minnesota racetracks. See, e.g., Minn. Stat. § 240.135 (2022) ("It is the intent of the legislature that the proceeds of the card playing activities authorized by this chapter be used to improve the horse racing industry by improving purses."). The commission's concerns over how the proposed floor plan could affect horse racing was a factor that the commission could properly consider.
The community argues that the effect-on-horse-racing discussion overtook other important considerations. But the transcript of the meeting informs us that the commissioners grappled with central issues, like the 80-table limit, gambling devices (at least briefly), and the effect of delay on Running Aces. The transcript also reveals that the commission implicitly rejected the community's interpretation of the 80-table limit, concluding that the legislature plainly did not intend to regulate player stations. The commission considered the disputes raised, weighed the relevant interests, and voted to approve the amended floor plan.
The community argues also that the commission's decision was arbitrary and capricious because its letter approving the amended floor plan articulated no reasons for the approval. It is true that the letter provided only a conclusory approval to adding one ETG dealer table and 11 corresponding player stations. And the supreme court has previously held that "at a minimum," an agency must "have the reasons for its decisions recorded or reduced to writing and in more than just a conclusory fashion." White Bear Rod &Gun Club v. City of Hugo, 388 N.W.2d 739, 742 (Minn. 1986) (quotation omitted). Although the better practice is to reduce agency decisions to writing, a recording of its reasons can suffice. Given the content of the meeting transcript, remanding the case with instructions to prepare a detailed statement of findings is unnecessary for our judicial review.
We turn to the community's contention that the commission's decision was unsupported by substantial evidence. Whether an agency relied on substantial evidence to support its decision depends on the reasonableness of what the agency did with the evidence before it. Substantial evidence is: "(1) such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more than some evidence; (4) more than any evidence; or (5) the evidence considered in its entirety." Cannon v. Minneapolis Police Dep't, 783 N.W.2d 182, 189 (Minn.App. 2010) (quotation omitted). The community implies that the commission was required to explain why it disagreed with "the only factual declaration from a person with substantial experience in gaming," who had opined in the community's favor as to whether the plan complied with the law. But the fact-finder, not this court, determines the weight afforded to an expert's opinion. See A.D., 883 N.W.2d at 260. And on the questions of law, the commission had previously determined that ETGs are not gambling devices or video games of chance when the issue arose in 2017. The community does not develop its position further except to again point out the commission's lack of a detailed explanation on the 2023 proposal.
We hold that the commission's approval was neither arbitrary and capricious nor unsupported by substantial evidence.
IV
The community argues that the commission's approval of ETGs is invalid because the approval rests on an unpromulgated and therefore unenforceable rule. We have clarified that an agency may develop policy either by rulemaking or by enforcing the law on a case-by-case basis. In re Shakopee Mdewakanton Sioux Cmty., 988 N.W.2d 135, 143 (Minn.App. 2023); In re Crown CoCo, Inc., 458 N.W.2d 132, 136 (Minn.App. 1990). The Minnesota Administrative Procedure Act governs an agency's authority to engage in administrative rulemaking. See Minn. Stat. §§ 14.001-.69 (2022). Agency rules "must be adopted in accordance with specific notice and comment procedures established by statute." White Bear Lake Care Ctr., Inc. v. Minn. Dep't of Pub. Welfare, 319 N.W.2d 7, 9 (Minn. 1982). The community contends that the commission created an unpromulgated rule by including the following statement when it approved of Running Aces's plan of operations in 2017: "The commission's approval was with the understanding that the card games will be played 'live' without the use of a random number generator." The community maintains that the commission then applied the rule in 2018 when it approved four additional ETG player stations while stating, "[T]he request is approved subject to the same conditions as were set out in the commission's prior approval letter dated October 3, 2017, that is, that the game will be played 'live' without the use of a random number generator." This contention fails.
The commission's challenged statements lack the hallmarks of a rule. An agency creates a rule when it makes a "statement of general applicability and future effect, including amendments, suspensions, and repeals of rules, adopted to implement or make specific the law enforced or administered by that agency or to govern its organization or procedure." Minn. Stat. § 14.02, subd. 4. By contrast, an agency does not make a rule when it instead "enforces a law or rule by applying [it] to specific facts on a case-by-case basis." Minn. Stat. § 14.381, subd. 1(b). The questioned 2017 statement does not declare a standard by which it will measure any future-requested plan amendment. The 2017 statement merely establishes a condition placed on the ETGs, specifically that their use would entail live gaming between a dealer and players and that they would not employ any automated, randomly generated numbers. The 2018 and similar 2023 statements reiterate the same restriction. They reflect a case-by-case assessment of the gaming tables as they were proposed for use at the time the commission considered Running Aces's amendment proposals.
The community unconvincingly urges a different result based on our holding in In re Shakopee Mdewakanton Sioux Community, that the Minnesota Gambling Control Board had issued an unpromulgated rule. 988 N.W.2d at 145. We see no similarity between the thrust of the challenged statements here and the broad proclamations in that case, first that, "Going forward, the Board will not authorize proposed games with tickets that have no more than 1 line, row, or column of symbols without the player opening each line," followed by an about-face email saying that the board would "cautiously proceed and allow game submissions [with open-all functionality] for positive consideration . . . [and] continue to research this subject to provide [regulated parties] with a clearer interpretation of [section 349.12, subdivision 12b(3)] going forward." Id. at 140. These broad pronouncements of future direction bear no resemblance to the substance in the commission's approval notices here. Rulemaking does not occur when an agency makes "a determination based on facts as applied to a specific party." Bunge Corp. v. Comm'r of Revenue, 305 N.W.2d 779, 784 (Minn. 1981). We read the statements in the approval notices to indicate conditions on the ETGs applied specifically to Running Aces. They are not unpromulgated rules.
Affirmed.
[*]Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.