The chairman of the Arkansas Racing Commission on Monday recused from the process to determine which company will operate a casino in Pope County.
Chairman Alex Lieblong's recusal came a month after the Arkansas Democrat-Gazette reported that he had been exchanging text messages with an attorney for Cherokee Nation Businesses of Oklahoma, which has been vying for the Pope County casino license. The other competitor is Gulfside Casino Partnership of Mississippi.
Lieblong's recusal letter to the other commissioners didn't mention that or any other specific reason for recusing.
"Recently, there have been unfounded concerns about the actions of the remaining commissioners tasked with awarding the casino license for Pope County," wrote Lieblong. "In my opinion these commissioners have acted honorably, professionally, and with the best interest of the citizens of Arkansas as their guidepost. ...
"While I know that I have not acted inappropriately, nor am I in any way biased toward either of the candidates, and to avoid any appearance of impropriety and remove any doubts as to the integrity of either myself or this process, I am voluntarily withdrawing my scores and recusing from any votes regarding the Pope County casino licensing matter."
"Judges and commissioners recuse from proceedings all the time," said Dustin McDaniel, the attorney for Cherokee Nation Businesses with whom Lieblong had been exchanging text messages.
"I know of no reason of any kind why the chairman should recuse, but I respect him as a gentleman and professional if he thinks it is best to do so," said McDaniel, who is a former Arkansas attorney general.
A spokesman for Gulfside declined to comment.
Scott Hardin, a spokesman for the Arkansas Department of Finance and Administration, said Lieblong wasn't referring to anything specific "but an overall reference to the questions and challenges that have been raised throughout the process (the text would be one example of this)."
The Racing Commission is part of the finance department.
According to information provided under the state Freedom of Information Act, this was the text exchange between Lieblong and McDaniel on June 23, starting with Lieblong:
Lieblong: "Just landed let's me clear my head tonight."
McDaniel: "10-4! Thank you again for your service in a complicated matter I think we should get AG [attorney general] approval To bring Byron [Freeland] in?" (Freeland is a private attorney who is the commission's counsel.)
Lieblong: "That's it's okay with AG meeting without the other side being there."
"Been on the phone with [the attorney general's Deputy Chief of Staff Brian] Bowen and other lawyers. Is there a good time to talk?
"That's a good thought. Good progress being made. Go get 'em!"
Lieblong replied with a thumb's-up emoji.
Amanda Priest, spokeswoman for Arkansas Attorney General Leslie Rutledge, said "a verbal request was made to bring the commission's outside counsel, Byron Freeland, to assist," and "that request was denied as Mr. Freeland was replaced by the attorney general's office to act as counsel on the casino issue at the end of 2019."
Rutledge's attorneys have been in regular contact with representatives of both casino applicants throughout the process since litigation and representation of the commission began, and all parties are treated equally, Priest said.
In the exchange, McDaniel later texted to Lieblong: "we just found out about two more letters [commission Director] Smokey [Campbell] sent Friday. Very bad new problems. I encourage you to call Mary Robin Casteel [an attorney in Gov. Asa Hutchinson's office] and get Byron back involved before this gets more indefensible. Kat [Guest, a senior assistant attorney general,] tells me she is going to instruct Smokey to issue new letters tomorrow. That would be a serious error."
McDaniel again texted Lieblong: "I am sorry to bother you, but you deserve to know before anything else happens Kat is going to instruct Smokey to deny our application tomorrow.
"Only the commission can grant license. Thus only the commission can deny an application."
Campbell, the commission's director, sent a letter dated June 18 to McDaniel informing him that the Racing Commission denied Cherokee Nation Businesses' application for the casino license.
Campbell wrote another letter the same day to Lucas Rowan, counsel for Gulfside Casino Partnership, informing him that the commission awarded the license to Gulfside.
Priest said on June 27, "After review of the letters dated June 18, 2020, our attorneys began drafting revised letters to the applicants for clarity and consistency with the Arkansas Racing Commission's Casino Gaming Rules."
Rowan said in a written statement, "Like everyone, we're shocked and concerned by these revelations of possible collusion against Gulfside to overturn a decision made by a majority of the commissioners."
After three-hours of presentations on June 18, the commissioners scored the two finalists. Mississippi-based Gulfside received 637 points, compared with 572 for Oklahoma-based Cherokee Nation Businesses. The license has not yet been formally awarded.
Lieblong had voted 95 to 73 in favor of the Cherokees.
Hardin said a vote will be required to accept Lieblong's recusal and a withdrawal of his score. The commission is scheduled to meet Thursday.
If Lieblong's recusal is accepted, the scores will be 564 for Gulfside and 477 for the Cherokees.
Cherokee Nation Businesses argued the scoring was flawed and promised to contest the decision.
The commission decided that commissioner Butch Rice's 100-to-29 score in favor of Gulfside showed bias for that applicant, but Rice's scores remain in the total.
"While the Commission did affirm a bias allegation related to commissioner Butch Rice's score at the most recent meeting, the score remains active as it was never formally eliminated via a vote," said Hardin.
An Arizona gambling consultant issued a report last week saying the Cherokee Nation's proposal is the best pick for the state's last available casino license. Fox & Fox Consulting in Scottsdale, Ariz., was prepared as part of a $150,000 consulting contract with the Racing Commission.
Fox's report noted Cherokee Nation Businesses' experience in running gambling operations at its 10 Oklahoma properties, as well as its plans to build a $225 million casino in Pope County in less than two years without the need for outside financing.
Ben Cross, the county judge in Pope County, said he was for Cherokee Nation Businesses all along.
"The state of Arkansas has contracted with an expert and paid him handsomely to come to the same conclusion I came to a year ago," said Cross.
"Regardless of what happens, I'm sure further [litigation] will ensue," he said.
Information for this report was contributed by Michael R. Wickline of the Arkansas Democrat-Gazette.