Cherokee Nation Businesses filed affidavits Friday alleging that a member of the state Racing Commission was biased toward the Mississippi casino operator that was awarded an Arkansas casino license Thursday and that the operator misrepresented facts during its interview with the commission.
The Racing Commission responded to the complaints from Cherokee attorney Dustin McDaniel by announcing a special meeting for Monday morning.
The appeals came a day after the commission awarded Gulfside Casino Partnership the license to construct and operate a casino in Pope County.
The decision was reached after evaluation scores were tallied by commissioners. Gulfside scored 637 compared with 572 for Cherokee Nation Businesses.
Although commission Director J.C. Campbell on Thursday sent a letter to Gulfside saying it was awarded the license, it's not a done deal, said commission spokesman Scott Hardin.
"While a letter was issued to Gulfside informing the company of the intent to award a license (due to the highest score), the license has not been formally awarded," Hardin said in an email. "There is a 30 day time frame from the date of the meeting in which it must be awarded."
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 total of all the commissioners' scores.
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 Chairman Alex Lieblong of Conway and commissioners Mark Lamberth of Batesville and Steve Landers of Little Rock awarded higher scores to the Cherokees.
McDaniel said in a letter to Lieblong and in an Affidavit of Bias that Rice had "consistently attempted to protect Gulfside from facing competition" and that Rice opposed accepting or considering any other application "as evidenced by his questions, motion, and vote" at an earlier commission meeting.
Rice also has an undisclosed relationship with Gulfside owner Terry Green, McDaniel asserted in the letter.
Rice declined to comment.
McDaniel said Rice's score should be thrown out -- which would give the Cherokees the highest cumulative score and therefore the casino license.
"Mr. Rice gave a 71-point advantage to Gulfside on his scoresheet (29/100 vs. 100/100). In so doing, Mr. Rice deprived CNB of more than 10% of the total points available from the entire Review Panel (700)," McDaniel said in the letter. "This action is not defensible as a good faith scoring of the applicants. Rather it was a calculated, unethical, biased, and unlawful action to ensure the mathematical impossibility of the defeat for his preferred applicant."
At a May 7 commission meeting, Rice quizzed McDaniel for several minutes with questions that were "adverse to CNB that appeared at the time to have been prepared for him or in consultation with Gulfside or its counsel," McDaniel said in the affidavit.
At the end of that meeting, Rice made a motion to deny the acceptance of the Cherokee application for "good cause," saying that it was unfair competition because the Cherokees had already viewed its competitors' applications submitted during the first application window.
Gulfside and the Cherokees were among the five original applicants for the Pope County license. All 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. A Pulaski County circuit judge then ruled in Gulfside's favor.
The Cherokees resubmitted their application after being endorsed by the Pope County Quorum Court in August. Subsequently, the Racing Commission -- at the referenced May 7 meeting -- voted 6-1, with Rice issuing the dissenting vote, to accept the Cherokee's application on a "good cause" basis.
McDaniel supported his claim of a personal relationship between Rice and Green by stating in the affidavit that they "socialized and dined" together at Oaklawn Racing Casino Resort during the application process.
Other than Cherokee CEO Chuck Garrett being introduced to Commissioner Steve Landers at a 2019 Arkansas Children's hospital charity event, McDaniel said neither Garrett nor any other Cherokee representative had "dinner, drinks, coffee, or other social interaction" with any of the commissioners.
McDaniel also referenced a May 16 letter sent by the Cherokees to Deputy Attorney General Olan Reeves expressing concern that Rice "would intentionally skew his scorecard so heavily as to 'eat up' any point total advantage" the Cherokees might earn from the other commissioners.
At the beginning of Thursday's meeting, Reeves warned the commission to "be careful not to have a huge difference between the scores" or it would look like "you had your mind made up before you even got here."
Rice told the Arkansas Democrat-Gazette on Thursday that he chose Gulfside because it was a better fit for the state and would build a larger casino than Cherokee Nation, thereby creating more jobs and more tax revenue.
Rice said he was not biased toward Gulfside at the beginning of Thursday's proceedings.
In a second affidavit claiming misrepresentation, McDaniel said Green, the Gulfside owner, deceived the commission when asked directly whether he or his partners in any previous casino operation had ever defaulted on debts or filed for bankruptcy.
McDaniel listed three casino companies in which Green was an owner and operator that had filed for bankruptcy in the late 1980s and 1990s.
Green told the commissioners that he had never filed personal bankruptcy and was a minority, noncontrolling owner in a company that had past financial struggles.
Gulfside attorney Lucas Rowan said McDaniel's accusations were incorrect. In the bankruptcies referenced, he said, Green and Gulfside co-owner Rick Carter owned only 5% each of one company, and in another case had sold the company in question long before the bankruptcy was filed.
"There was no ownership at all in that one," Rowan said.
In another, the 1997 case by Gulfside Casino Inc. that was referenced by Commissioner Steve Landers on Thursday, Green and Carter were listed as creditors in the bankruptcy -- not the debtors. Years earlier, Green and Carter had sold the company to Sands Casino and "owner financed" part of the sales price. The new owner failed to repay the promissory note, so Green and Carter were named as creditors in the Sands bankruptcy.
Eventually, the company was given back to them by the new owner in order to satisfy his debt.
"Mr. Green accurately stated that neither he nor Mr. Carter nor Gulfside Casino Partnership has ever filed bankruptcy," Rowan said.
In an April 14 letter obtained by the Arkansas Democrat-Gazette to Russellville City Councilman Chris Olson, Gulfside attorney Hugh Keating disputed allegations similar to McDaniel's that were made by former Racing Commissioner Thomas Akins.
Keating said it was true that the companies sought relief in bankruptcy, but said all debts had been paid within a year and that gaming in Mississippi "as we know it today" is a result of the trailblazing by Carter and Green and their mentor William Redd.
Green said Friday that Gulfside is "passionate about serving others, and we showcase that commitment by championing causes for local nonprofit organizations, both on the corporate and employee levels."
"In Mississippi, we have become a staple of the Gulf Coast community as one of the region's largest employers and a strong supporter of local businesses," Green said. "We will do the same for Russellville, Pope County and Arkansas as we build our $254 million, first-class River Valley Casino Resort."
In Pope County, the sentiment is still divisive and varied.
Russellville Mayor Richard Harris said he is not "thrilled" that the Racing Commission is closer to a casino license for Pope County and that the city's position on having a casino in the community has not changed.
The majority of Pope County voters rejected Constitutional Amendment 100, approved by state voters in November 2018. Amendment 100 allows a new casino each in Pope and Jefferson counties and allows for the expansion of gambling at the racetracks in Hot Springs and West Memphis.
"However, as Mayor of Russellville, I have a fiduciary responsibility to the citizens of Russellville. Therefore, if a license is issued to Gulfside Casino Partnership and a casino is to be built, the city will work in good faith to ensure that citizens of Russellville get the utmost benefit in addressing the infrastructure and resource needs from having a casino in our community," Harris said.
"Terry Green of Gulfside Casino Partnership has already reached out to me and has assured me that it is his desire to be within Russellville's city limits and that he will work with the city to the mutual benefit of both parties," Harris said.
Pope County Judge Ben Cross -- who endorsed the Cherokees for the license after negotiating a $38.8 million economic development agreement -- said the community is "utterly shocked and disheartened by the total lack of local consideration and disrespect given to our county by a governing body of the state."
"The blatant and arrogant actions taken by Commissioner Rice to single-handedly skew the outcome of such a proceeding, after being publicly admonished from the onset by the AG's Office to not commit such actions, calls into question the integrity and legitimacy of the entire process," Cross said. "The fact Commissioner Rice awarded maximum points to the obviously inferior applicant, even going so far as to actually award maximum points in categories that were clearly demonstrated to be wrong, furthers the deliberate bias exhibited by his participation in the process."
Mike Goad, a member of the pro-casino group Pope County Majority, said he was "shocked and disappointed" by Thursday's vote. Pope County Majority is solidly in favor of the Cherokees getting the license.
"Mr. Rice says that he 'conducted an objective evaluation.' A perfect 100 for Gulfside and 29 for CNB looks very subjective, in my view. He said job creation was 'what the people of Pope County would have been looking at.' We have been looking at job creation, for sure, but from a casino operator that has already proven to be a community partner before any dirt has been turned. That wasn't Gulfside. I do not believe this result shows any consideration for local choice by current officials or the community."
Cherokee Nation Businesses opened an office in downtown Russellville several months ago and has ensconced itself in the city's business and charitable life.
Rowan, Gulfside's attorney, said Friday that opening an office before obtaining the license would have been premature, but the company plans to open one soon.
Hans Stiritz, with the group Fair Play Arkansas -- which is collecting signatures to place a proposed constitutional amendment on the Nov. 3 ballot that would remove the county as one of the locations for a casino -- said Pope County voters have made it clear that they don't want a casino there.
"While we wish the law and the constitution were different, we respect that the Racing Commission is taking their job seriously," Stiritz said. "In the meantime, we'll continue our efforts on all fronts to stop any casino from being built here, and to change the law that allows for it."
The group must collect 89,151 valid signatures of registered voters by July 3 to qualify its measure for the ballot. Stiritz would not divulge how many signatures have been collected so far.
Also on Friday, the Arkansas Ethics Commission dismissed an ethics complaint filed against Pope County Majority and its leader Kelly Jett.
The complaint, filed in February by Teresa Harris of Russellville, accused the group and Kelly of operating as an unregistered political action committee or ballot question committee. Harris also charged that the group's activities appeared to be funded by undisclosed donors.
In its ruling, the state Ethics Commission said the investigation did not reveal "sufficient evidence to support a finding" that the group violated the law.