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story.lead_photo.caption Alex Lieblong, chairman of the Arkansas Racing Commission, reads the scores Thursday announcing the racing commission’s intent to award a license for a Pope County casino to Gulfside Casino Partnership during the commission meeting at the state Capitol. (Arkansas Democrat-Gazette/Thomas Metthe)

An attorney for Gulfside Casino Partnership on Saturday questioned whether a text message exchange between state Racing Commission Chairman Alex Lieblong and a Cherokee Nation Businesses attorney represents possible collusion as the commission weighs its next step in considering awarding a license for a casino in Pope County.

But a spokesman for the state Department of Finance and Administration, speaking for Lieblong, rejected the suggestion of collusion between Lieblong and the attorney, Dustin McDaniel. The Racing Commission is part of the finance department.

The text exchange between Lieblong and McDaniel, who is a former state attorney general, was revealed in the finance department's Friday night response to a Freedom of Information Act request made by the Arkansas Democrat-Gazette.

Finance department spokesman Scott Hardin said Saturday that the text message exchange between Lieblong and McDaniel occurred Tuesday.

[RELATED: See complete Democrat-Gazette coverage of casinos in Arkansas at arkansasonline.com/casinos]

McDaniel said the exchange started after the commission's meeting Monday.

Six racing commissioners voted Monday to find that fellow commissioner Butch Rice's scores the previous week of the two applicants for the Pope County casino license were biased in favor of Gulfside, though Rice disputed that.

The commission then voted Monday to ask officials of Republican Attorney General Leslie Rutledge's office and both companies to try to reach agreement on a remedy. The options include throwing out Rice's scores and awarding the casino license based on the collective scores of the six other commissioners.

On June 18, the commission signaled its intent to award the license based on all seven commissioners' combined application scores of 637 for Gulfside, compared with 572 for the Cherokees.

McDaniel then filed a complaint alleging that Rice, of Beebe, was biased in giving a score of 100 to Gulfside, compared with 29 to the Cherokees.

That 71-point difference in Rice's scores was larger than the 65-point difference in the combined scores of the commission.

On June 18, Commissioners Denny East of Marion, Bo Hunter of Fort Smith, Michael Post of Altus and Rice each gave higher scores to Gulfside, while Lieblong of Conway, Mark Lamberth of Batesville and Steve Landers of Little Rock gave higher scores to the Cherokees.

Landers was the only other commissioner to give a score of 100. Landers gave a score of 90 for Gulfside.

Lieblong's scores had the second-largest difference, of 22 points -- he gave the Cherokees 95, compared with 73 for Gulfside.

TEXT EXCHANGE

Hardin said this was the text exchange between Lieblong and McDaniel, 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."

McDaniel: "10-4.

"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.

Rutledge's spokeswoman, Amanda Priest, said Saturday that "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."

LETTERS ON THE LICENSE

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 Saturday, "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.

"To date, corrected letters have not yet been sent," she said.

Rowan said Saturday 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."

SUGGESTION DISPUTED

Speaking on behalf of Lieblong, Hardin disputed Rowan's suggestion of possible collusion.

Hardin said in a text message to the Democrat-Gazette that Lieblong didn't proactively reach out to McDaniel.

He said Lieblong's initial text that he "just landed" was in response to a voicemail that he received from McDaniel in which McDaniel indicated he wanted to speak to Lieblong about setting up meetings with the attorney general's office.

"As Mr. Lieblong notes in his text, any decisions regarding the meetings must be routed through the AG's office," Hardin said.

"Chairman Lieblong has consistently directed questions and suggestions to the appropriate party, the attorneys representing the commission," Hardin said. "That was the case in this text exchange.

"Had a representative of Gulfside submitted a similar request, the Chairman's response would remain the same," he said.

Hardin said the Racing Commission didn't take a position on what's now Amendment 100 to the Arkansas Constitution -- which voters approved in November 2018 and which gave the responsibility of casino licensing to the commission.

Amendment 100 authorized the expansion of gambling operations at racetracks in Hot Springs and West Memphis into full-fledged casinos, as well as new casinos in Jefferson and Pope counties.

A year ago, the commission awarded the Jefferson County license to the Oklahoma-based Downstream Development Authority of the Quapaw Nation.

"As stated in numerous meetings, Chairman Lieblong respects the varying positions on this issue and simply wants what is best for the citizens of Pope County," Hardin said.

Lieblong rarely returns phone calls from reporters of the Democrat-Gazette.

McDANIEL'S RESPONSE

McDaniel said Saturday in a text message to the Democrat-Gazette that he left a voicemail for Lieblong on Monday afternoon suggesting that Lieblong, Freeland and the attorney general's office meet with both parties separately before having a joint session, and that Lieblong responded by text that he would talk to the attorney general's office about it.

McDaniel said that on Tuesday, after learning about the letter denying the license to Cherokee Nation Businesses, he asked Lieblong via text to contact the attorney general's office on that issue.

"I hope that he did, but he did not respond to me nor have we communicated further," McDaniel said.

He said the attorney general's office and Lieblong authorized attorneys for both applicants to communicate with commissioners in early 2020.

"Nonetheless, I had zero communication with any of them during the months when [Cherokee Nation Businesses'] application was pending," McDaniel said in his text message to the newspaper.

He said Rowan's characterization of potential collusion is "ridiculous."

Hardin said Lieblong doesn't remember telling the applicants or their representatives whether they could speak to the commissioners.

OTHER REACTIONS

As for Rowan's remark about potential collusion, Priest said Saturday that "the attorney general's office has worked extensively with both parties and our clients to ensure transparency in the process."

Casteel said Saturday in a written statement, "I do not know why Mr. McDaniel encouraged Chairman Lieblong to call me to engage the Racing Commission's attorney [Freeland], who has not worked on casino matters in many months.

"I am not working with Mr. McDaniel to achieve anything," Casteel said. "The exchange suggests that he is dissatisfied with the actions of the Attorney General's Office, and I could not disagree with that position more. I have complete confidence in the lawyers from the Attorney General's Office advising the Racing Commission on this issue."

McDaniel declined comment Saturday about Casteel's remarks.

A LONG PROCESS

Gulfside, based in Mississippi, and the Cherokees, based in Oklahoma, were the last two Pope County license applicants standing after all five original applicants -- including them -- were rejected by the Racing Commission in the first application period last year.

All five were rejected because none met the commission's rule then in place requiring endorsements from local elected officials in office at the time of the application filing.

Endorsements of local officials are required by Amendment 100. However, the amendment doesn't specify that endorsements must come from officials still in office.

Gulfside sued the Racing Commission because its application contained endorsements from local elected officials who had left office in December 2018.

Earlier this year, Pulaski County Circuit Judge Tim Fox ruled unconstitutional the commission's rule and a state law with the same requirement.

The Cherokees resubmitted their application after being endorsed by the Pope County Quorum Court in August, thus setting up the hearing before the Racing Commission to score the applications.

Cherokee Nation Businesses operates 10 casinos in Oklahoma. Gulfside Casino Partnership operates a casino in Gulfport, Miss.

The Cherokees are proposing a $225 million casino and resort with 1,100 slot machines, 32 table games and 200 hotel rooms near Russellville off Hob Nob Road, while Gulfside is proposing a $254 million casino and resort with 1,900 slot machines, 90 table games and 500 hotel rooms near Russellville north of Interstate 40 and off Exit 84.

In its 2018 campaign promoting the measure that became Amendment 100, the Driving Arkansas Forward committee reported raising $7.1 million.

Its largest contributors were the Downstream Development Authority of the Quapaw Tribe, which contributed $3.78 million, and Cherokee Nation Businesses, which contributed $2.28 million.

Former Arkansas Attorney General Dustin McDaniel is shown in this file photo.
 (AP Photo/Danny Johnston)
Former Arkansas Attorney General Dustin McDaniel is shown in this file photo. (AP Photo/Danny Johnston)
Butch Rice makes a statement in his defense as the state racing commission hears an appeal from the Cherokees about the license for Pope County that was awarded to Gulfside on Monday, June 22, 2020. (Arkansas Democrat-Gazette / Stephen Swofford)
Butch Rice makes a statement in his defense as the state racing commission hears an appeal from the Cherokees about the license for Pope County that was awarded to Gulfside on Monday, June 22, 2020. (Arkansas Democrat-Gazette / Stephen Swofford)
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