Application period for casino licenses invalid, Arkansas circuit judge finds

Ruling backs blocking Cherokees from lawsuit of Pope County rival

FILE — A roulette wheel spins at Cherokee Casino & Hotel in West Siloam Springs, Okla.
FILE — A roulette wheel spins at Cherokee Casino & Hotel in West Siloam Springs, Okla.

The second window opened by the state Racing Commission to accept applications for a Pope County casino license is invalid because it contradicts adopted gambling rules, a Pulaski County circuit judge said Thursday in a case lodged against the commission by a Mississippi casino operator.

Circuit Judge Tim Fox issued the opinion to support his denial of Cherokee Nation Businesses' request to intervene in the case filed by Gulfside Casino Partnership.

"Under the plain language of its own rules, which were promulgated in accordance with the Administrative Procedure Act, the Arkansas Racing Commission has no authority to establish a subsequent thirty-day casino license application period until such time as final judicial resolution is made concerning any applicants from the initial thirty-day casino license application period," Fox said in his ruling. "Accordingly, the putative Intervenor has no standing of any nature to intervene in this matter."

Messages left for Casey Castleberry, Gulfside's attorney, weren't returned as of late Thursday.

[RELATED: See complete Democrat-Gazette coverage of casinos in Arkansas at]

The ruling comes just days before a meeting scheduled for Monday where the commissioners will consider whether to issue a license for a casino in Pope County or put the issue on the back burner until all legal challenges are resolved.

"The Racing Commission meeting scheduled for Jan. 6 remains unchanged, including the agenda," said Scott Hardin, a spokesman for the state Department of Finance and Administration, which oversees the commission.

The second window for applications was opened up after all five applicants for the Pope County casino -- Gulfside Casino Partnership of Mississippi, Cherokee Nation Businesses of Oklahoma, Kehl Management of Iowa, Warner Gaming of Nevada and Choctaw Nation Division of Commerce of Oklahoma -- were rejected by the Racing Commission in June because none contained endorsements by current local officials.

Constitutional Amendment 100, approved by voters last year, allows new casinos in Pope and Jefferson counties and allows the expansion of gambling at the racetracks in Hot Springs and West Memphis. The new casinos must have the endorsement of local officials under Amendment 100. Construction of the Jefferson County casino and of the expansions at Oaklawn Racing Casino Resort and Southland Casino Racing is underway.

While Amendment 100 does not state when the endorsements have to be dated or submitted, the Racing Commission earlier this year added a rule that the endorsements can come only from officials in office at the time the application is submitted. The Legislature also passed Act 371, which became effective in March, that requires the same thing.

Gulfside filed suit against the Racing Commission in August, arguing that its application met the constitutional requirements because, unlike the other applications considered in June, it included letters of endorsement from local officials issued right before those officials left office in December 2018.

Later, on Aug. 13, the Pope County Quorum Court issued a surprise endorsement for Cherokee Nation Businesses, which prompted the Racing Commission to open the second application window.

By doing so, Fox said in his ruling, the Racing Commission violated its own gambling rules. Specifically, section 2.13.4(d) of the rules of the Arkansas Racing Commission states that "if no application is received by the Commission" during the first window, then the commission "shall re-open" the application process.

"As there were five (5) applications received by the Arkansas Racing Commission during the license application period from May 1, 2019, thru May 30, 2019, Rule 2.13.4(d) is inapplicable to the present matter," Fox said in his answer.

The Racing Commission can either amend its rules to allow additional application windows or wait until current litigation is "fully adjudicated," Fox said.

In his ruling denying the Cherokees' request to intervene in the lawsuit, Fox incorrectly stated that Cherokee Nation Businesses "failed and/or refused to submit a casino license application for a casino in Pope County to the Arkansas Racing Commission" during the first application window.

In fact, Cherokee Nation Businesses was among the five initial applicants.

"It is important to clarify that our application was simply amended from the original submission to include the letters of support received from Pope County officials as required by Amendment 100," Chuck Garrett, chief executive officer for Cherokee Nation Businesses, said Thursday in a written statement. "The application was accepted by the Arkansas State Racing Commission for good cause pursuant to the Commission's rules. We are hopeful that Monday's meeting will go as planned and that we will be able to make our formal presentation pursuant to the rules outlined by the Commission as part of the application process."

Fox's ruling was also cited in a request filed Thursday in another court case -- this one by the anti-casino group Citizens for a Better Pope County against the Racing Commission -- to deny Cherokee Nation Businesses' intervention status in that case as well.

Citizens for a Better Pope County also asked Pulaski County Circuit Judge Wendell Griffen to grant an immediate hearing on its request for an emergency temporary restraining order and a preliminary injunction to bar the Racing Commission from issuing a Pope County casino license.

In a letter to Griffen, the citizens group's attorney, Jerry Malone of Little Rock, said an "immediate hearing" is necessary because of the Racing Commission's "announced intent to take substantive actions" at its meeting set for Monday morning.

The casino issue has caused division in Pope County from the beginning. More than 60% of the voters there rejected Amendment 100 at the polls and also approved an initiated county ordinance that said an election must be called to allow voters to decide if they want officials to back a casino applicant.

That ordinance was repealed by the Pope County Quorum Court after the body endorsed Cherokee Nation Businesses for the casino license there. As part of the endorsement, the Cherokees agreed to an Economic Development Agreement that included a $38.8 million "economic development fee" that would be disbursed among the county, some cities and some nonprofit organizations.

Ben Cross, county judge of Pope County, said that Fox's ruling "will most certainly be appealed."

"So I anticipate the litigation to return to the Supreme Court, and all parties involved will continue to wait upon a legal resolution that is binding," Cross said.

On Monday, the state Supreme Court rejected Gulfside's plea for the high court to intervene and force Fox to expedite the case.

The civil case had been tossed back and forth between Fox and Circuit Judge Bill Pearson in Pope County in an argument over venue.

Russellville Mayor Richard Harris, who campaigned on an anti-casino ticket, said that he will be at Monday's Racing Commission meeting to see what transpires.

"The ruling today continues to demonstrate that thrusting issues of this significance upon a community without consideration of the desires of that community is inappropriate, from both a political and professional perspective. The citizens of Russellville deserve a resolution to these issues in a timely manner," Harris said. "I would suggest the attorney general's office and the Arkansas State Supreme Court learn from this experience and use this knowledge when considering constitutional ballot issues in the future."

A Section on 01/03/2020

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