It’s clear gambling regulators weren’t keen on a horse race between two aging nags on a dirt path, with the race launched by a red rag on a stick.

But what’s less clear is whether the regulators had the authority to punish a tiny North Florida horse track that ran the race.

The controversial “flag drop” race three years ago at Hamilton Downs between two horses owned by the same woman was the focus of a hearing Tuesday before a three-judge panel of the 1st District Court of Appeal.

Hamilton Downs is appealing an order by the state Division of Pari-Mutuel Wagering disciplining it for the race. A major part of the appeal stems from a complaint filed by gambling regulators six months after an administrative law judge found the state lacked the authority to punish the Hamilton County track for “flag-drop” races.

Administrative Law Judge E. Gary Early found that, while the races were comparable to an “entry-level campers’ horse show held at the conclusion of a two-week YMCA summer camp,” gambling regulators do not have any laws or rules governing the “flag-drop” races.

While the administrative law judge sided with the track, Early clearly took a skeptical view of the races, which, he wrote, “must be seen to be believed.”

But in a final order, state regulators rejected Early’s findings, leading Hamilton Downs to file the appeal.

One of the state regulators’ objections involved what is known as a “coupled entry” race.

Those races are permitted in other types of horse races, which generally involve up to eight horses instead of the two running in the flag drops. None of the state regulators who were at the track at the time of the race in June 2014 objected to the “coupled” entry, and the race was made “official” after it was run, meaning that it counted toward Hamilton Downs’ required number of performances for the year.

But six months after Early’s ruling, state regulators informed Hamilton Downs that the race would not be included among the track’s required number of performances, a violation that could have far-reaching implications.

The Hamilton facility is among several pari-mutuels across the state hoping to add slot machines after county voters approved the lucrative devices in referendums.

A black mark from regulators could make it more difficult for Hamilton Downs to add slots, if that ever becomes an option for what are known as “referendum counties.”

Gambling regulators could be using Hamilton Downs in an attempt to rein in the controversial “flag-drop” races, even if the races are not banned by state law.

“I thought it was selective prosecution,” Seann Frazier, a lawyer who represents Hamilton Downs, told The News Service of Florida after Tuesday’s hearing.

Regulators have “never gone after a permittee for this alleged violation,” Frazier said, referring to the “coupled” entry issue.

“This is an extraordinary prosecution, and you’d have to ask them what their motives are,” he said.

Frazier told the judges Tuesday that Glenn Richards, one of the track’s owners, tried to resolve the situation after the 2014 race.

One of the officials at the track became aware of the “coupled” entry shortly before the race began but was unable to stop the race from proceeding, according to court documents, testimony in a 2016 trial and Tuesday’s hearing.

When the race was over, a variety of officials representing the state and the track huddled for about 30 minutes, trying to figure out how to resolve the situation.

Richards offered to have the race run again, but state regulators told him it wasn’t necessary, Frazier told the three-judge panel Tuesday.

But Dwight Slater, chief appellate attorney for the Department of Business and Professional Regulation, which includes the Division of Pari-Mutuel Wagering, told the judges that officials at the track had no authority to decide whether the race was legit or not.

“We believe we properly reversed” Early’s recommendation, Slater said.

But appeals-court Judge Harvey Jay wasn’t satisfied, saying Florida law doesn’t even address the “flag-drop” races at the center of the dispute between the track and the state.

“Help me understand how they can be punished for something that’s not in the statute,” Jay said.

Slater said the races were regulated in statutes because they are an activity governed by pari-mutuel, or gambling, laws.

In his recommended order siding with Hamilton Downs, Early rejected what he called the state’s “efforts to cobble together various statutory and regulatory definitions” by which to nullify the coupled entry race.

“What is missing in the rules of the division is any suggestion that coupled entries are, per se, illegal, or that races with coupled entries are subject to invalidation on that basis alone,” he wrote.

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