The Mississippi-based Gulfside Casino Partnership on Thursday won the Arkansas Racing Commission's license to construct and operate a casino in Pope County -- but its competitor argued the scoring was flawed and promised to contest the decision.
The seven-member commission selected Gulfside over Oklahoma-based Cherokee Nation Businesses based on the commissioners' total score of 637 for Gulfside compared with 572 for Cherokee Nation Businesses, commission Chairman Alex Lieblong announced. The panel spent about three hours hearing presentations and questioning representatives of the companies.
Afterward, Terry Green, co-owner of Gulfside Casino Partnership, told reporters that he's "very surprised and grateful" that the commission opted to grant his firm the license.
"We'll just have to see what plays out in the courts because I am sure that they are going to bring some actions," he said. "But right now, we are just going to enjoy it today. It's been a long road."
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Dustin McDaniel, legal counsel for Cherokee Nation Businesses, said late Thursday afternoon in a written statement that he submitted a letter to the attorney general's office Tuesday expressing his concern that "an obviously biased commissioner could potentially overturn the will of the rest of the commission due to the proposed scoring system."
Commissioner Butch Rice of Beebe gave Gulfside a score of 100, compared with his score of 29 for the Cherokees. The 71-point difference in his totals was larger than the difference in the commissioners' scores overall.
"Despite the AG's office expressly warning Commissioners not to engage in arbitrary, capricious or biased scoring, Commissioner Rice in fact single handedly overturned the score given by the rest of the commission," said McDaniel, a Democrat who is a former attorney general.
"We anticipate both an administrative appeal and a request for injunctive relief from a court. This is a uniquely significant state decision, and such an egregious act of bad faith should not be allowed to control it."
Rice said he believes that Gulfside Casino Partnership is a better fit for Russellville, Pope County and Arkansas.
Gulfside wants to build larger casino in Pope County than Cherokee Nation Businessesenvisioned, and that would create many more jobs and more tax revenue, he said.
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"It is almost like comparing apples and oranges when comparing job creation and tax revenue," Rice said in a telephone interview. "The job creation was big to me, and that's what Gulfside proved, and that's what the people of Pope County would have been looking at."
Contacted later for further comment, Rice said Thursday night that he conducted an objective evaluation of the competing proposals and he wasn't biased toward Gulfside at the beginning of the proceedings.
Rice and fellow commissioners Denny East of Marion, Bo Hunter of Fort Smith and Michael Post of Altus each gave higher scores to Gulfside, while Lieblong of Conway and commissioners Mark Lamberth of Batesville and Steve Landers of Little Rock awarded higher scores to the Cherokees.
The differences in the scores by commissioner were: East, 6 points; Hunter, 15 points; Lamberth, 2 points; Landers, 10 points; Lieblong, 22 points; Post, 7 points; and Rice, 71 points.
The commission acted as the review panel to score the applicants based on their experience with casino gambling; timeline for opening the casino; proof of financial stability and access to financial resources; and summary of the proposed casino. Each was assigned a maximum of 30 points except for the timeline, which was weighted at 10 points.
At the outset of the meeting, the deputy attorney general for state agencies, Butch Reeves, told the commission, "I would also ask you to be careful not to have a huge difference between the scores.
"If you give somebody 30 and then the next party zero, your score is considered arbitrary and can get us in trouble. We may be back here again if that happens," he said. "If you give Gulfside a 30 on something and you give the Cherokee a zero, that makes, in my mind, in the court's mind, that makes your scoring arbitrary. You had your mind made up before you even got here is what it looks like. Either we can come back and do it again if that happens, or your scores are thrown out, so please don't do that either.
"Both proposals have merit. You just have to decide between the two how much merit on your score," Reeves said.
In a brief telephone interview Thursday afternoon, Lieblong declined to comment on Rice's scores.
Asked about the commission's decision and Rice's scores, Gov. Asa Hutchinson said in a written statement, "I have not reviewed the decision.
"This is a determination of the racing commission and my priority has been to have any decision made on the merits of the application," said the Republican governor. Hutchinson, who has been in office since 2015, has appointed all seven racing commissioners.
Cherokee Nation Businesses operates 10 casinos in Oklahoma, while Gulfside Casino Partnership operates the Island View Casino Resort in Gulfport, Miss.
Green, Gulfside's co-owner, told the commission the company planned an initial investment of $254 million in Pope County, with 80,000 square feet of gambling space, 1,900 slot machines and 90 table games. The project also would start with 500 hotel rooms. Construction of the casino on 100 acres along Arkansas 331 and behind the Flying J in Pope County would take 24 months, he said.
The casino's initial revenue projection was $200 million a year, and that would grow to $267 million by the fifth year, he said, and the initial gaming tax revenue would be $29.5 million a year and total $393 million over 10 years.
The investment would grow by $50 million in the third year and $50 million more in the fifth year to total $354 million, and the hotel would increase to 900 rooms by the fifth year, he said.
The project initially would create 1,657 permanent jobs and grow to 2,301 jobs by the fifth year, and the total payroll would increase from $60.5 million a year to $82 million by the fifth year, Green said.
"We want to grow this market as big as it can possibly go," he said. "Our competitor is trying to protect their market in Oklahoma.
"We are going to turn this into a destination resort," Green said. "We want people coming from all over the south part of the United States, and that's what we are good at. That's what we have done in Mississippi. ... We want to compete with all the Oklahoma casinos."
He said he looked at the casino competition like it was a football game.
"You have an offense. You have a defense," Green said. "We'll be your offense and our competitor will be on the defensive side."
After the commissioners filled out their scoring sheets on the two applicants and Reeves collected the papers, Landers wanted to ask another question of Green, so Reeves handed the score sheets back to the commissioners.
Landers asked about information that he said showed that Green and his partner Rick Carter had filed for bankruptcy in 1997.
But Casey Castleberry, an attorney for Gulfside Casino Partnership, said thatwas a bankruptcy filing in the mid-1990s by Gulfside Casino Inc.
He said Green and Carter had minority ownership interests in that company at that time. They subsequently created Gulfside Casino Partnership in 1998 and they've never filed for bankruptcy, he said.
Under questioning by Lieblong, Green said he and Carter each owned 5% of Gulfside Casino Inc., which filed for bankruptcy, but the company paid back the money it owed.
Chuck Garrett, chief executive officer of Cherokee Nation Businesses, said if it received the license, the company would begin constructing the casino immediately upon receipt of the license and the resolution of related litigation. The goal would be to open the doors within 18 months.
The company has prepared potential casino sites in Dover and near Russellville as much as possible, he said.
The proposed project would have a minimum investment of $225 million, with 1,200 slot machines and 32 table games on a gambling floor of 50,000 square feet, with 200 hotel rooms. It would initially create more than 1,000 permanent jobs, he said.
Cherokee Nation Businesseswould provide more than $38 million to Pope County under its economic development agreement that would be allocated to various municipalities, fire protection districts and agencies determined by local elected officials, he said. Cherokee Nation Businesses also would donate $2 million a year to a charitable foundation developed in concert with county officials, he said.
"We have never filed bankruptcy, permanently closed a gaming facility, faced a tax lien or laid off any gaming employees," Garrett said.
"In every category of your scoring category, we strongly believe we do it better, we do it smart, we do it safer and do it for the good of the community," he said. "We are ready to be part of Arkansas tourism fabric and serve as an economic anchor for the River Valley. ... CNB is the right choice for Pope County."
Hunter pressed Garrett about why the commission should select Cherokee Nation Businesses.
Garrett said, "I think the breadth and depth of our organization and financial strength and stability as well as the operating history are the key attributes that I would point to."
Rice asked Garrett whether Cherokee Nation Businesses would be sending a lot of casino guests from Russellville to Oklahoma because of the tax differences.
"We have a casino in Roland, just outside of Fort Smith, and our marketing strategy would include both going east, west, where the population centers are, and the difference in taxation rate does not enter into that marketing strategy at all," Garrett said.
Gulfside and the Cherokees were the last two operators standing after all five original applicants were rejected by the Racing Commission last year because none met the commission's rule in place at the time requiring endorsements from current officials at the time of application.
Gulfside sued the Racing Commission because its application contained endorsements from local officials who had left office in December 2018. Constitutional Amendment 100, which allows new casinos in Pope and Jefferson counties, was approved by voters in November 2018. The Jefferson County casino is under construction.
Earlier this year, Pulaski County Circuit Judge Tim Fox ruled unconstitutional the commission rule and a state law with the same requirement -- that the endorsements come from current local officials.
The Cherokees resubmitted their application after being endorsed by the Pope County Quorum Court in August.
Pope County has been deeply divided about whether there should be a casino in Russellville.
"I think once we get this casino built and up and running, the majority of people will see what we are doing, and I think everybody will get on board, because we are definitely going to do everything we can to help Russellville and help the state of Arkansas," Green said.
Ben Cross, county judge of Pope County, expressed disappointment with the decision in a statement issued late Thursday: "From the onset of this issue, which was squarely placed into motion by my predecessor, I have diligently attempted to navigate the county to the best possible outcome of a situation for which we did not create. In doing so, I believe we acted with sincere intention to prepare the county for the inevitable reality of a casino being placed in Pope County.
"The lengthy process and time it took for our selection of [Cherokee Nation and its Legends casino] as the operator of choice, was our attempt to show the Commission our selection did not come without thorough scrutiny and vetting. ... As I have openly stated throughout this process, I will continue to honor the decisions of the litigation that will ultimately settle this issue, but at the same time, I remain disappointed at the lack of consideration for local choice that was effected by today's decision," Cross said.
Information for this article was contributed by Jeannie Roberts of the Arkansas Democrat-Gazette.
