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 First District Court of Appeal.