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Panel erred in rejecting Arkansas casino license application, judge rules

by Jeannie Roberts | March 26, 2020 at 6:34 a.m.
FILE — A roulette wheel spins at Cherokee Casino & Hotel in West Siloam Springs, Okla.

A Pulaski County circuit judge kicked a rejected application for a Pope County casino license back to the state Racing Commission, after ruling unconstitutional both a rule and a law that set restrictions on when local officials could endorse applicants.

Circuit Judge Tim Fox said in a series of rulings issued late Tuesday that the application from Gulfside Casino Partnership of Mississippi must be sent back to the state Racing Commission to apply the provisions of Amendment 100 and consider Gulfside's application "on its merits."

"As Judge Fox's ruling confirmed, we were the only applicant for Pope County that timely complied with every requirement of Amendment 100," said Casey Castleberry, Gulfside's attorney. "The Arkansas Racing Commission should follow the precedent set with Saracen and grant us the casino license without further delay."

The Racing Commission granted a casino license last summer to the Quapaw Nation to build the proposed $350 million Saracen Casino Resort in Pine Bluff. The casino is scheduled to be fully opened by this summer.

The Quapaw Nation was the only applicant for the Jefferson County license. But five companies competed for the Pope County license.

Constitutional Amendment 100, approved by voters in November 2018, allows a new casino each in Pope and Jefferson counties and allowed the expansion of gambling at the racetracks in Hot Springs and West Memphis.

Gulfside was among the five -- which also included Cherokee Nation Businesses of Oklahoma, Kehl Management of Iowa, Warner Gaming of Nevada and Choctaw Nation Division of Commerce of Oklahoma -- to apply last year for the Pope County casino license.

All were rejected because they lacked endorsements of local officials in office at the time of application, as required by a rule adopted by the Racing Commission and Arkansas Code Annotated 23-117-101(b).

However, in that first round of applications, Gulfside's application was the only one that contained any endorsements, albeit from two local officials who were no longer in office: Jim Ed Gibson, then county judge of Pope County, and Randall Horton, then mayor of Russellville. Both officials left office at the end of December 2018.

Under Amendment 100, the new casinos must have endorsements from local officials, but the amendment does not state when the endorsements have to be dated or submitted.

Last year, before applications were submitted, the Racing Commission established Rule 2.13.4(b) -- which requires endorsements only from local officials in office at the time the application is submitted -- and the Legislature also passed Act 371, which became effective in March, that requires the same thing. The act became ACA 23-117-101(b).

The requirement "imposes an additional qualification, sometimes referred to as a 'negative' qualification, beyond the plain and unambiguous language of Amendment 100," Fox said in the ruling.

Fox also denied Gulfside's request to remand its application back to the Racing Commission with instructions to immediately issue a license to Gulfside.

"It is clear from reading Amendment 100 as a whole that Gulfside's premise is incorrect and that the Racing Commission is invested by Amendment 100 with both the privilege and the responsibility of utilizing its discretion as to whether a casino license should be issued to any applicant, regardless of whether such applicant is the only applicant during an application submission period," Fox said in the ruling.

Scott Hardin, a spokesman for the state Department of Finance and Administration, said the decision of whether to appeal Fox's ruling to the state Supreme Court will be determined by the state attorney general's office "in consultation with the Racing Commission."

"We anticipate a meeting will take place although a date has not been determined," Hardin said. "Due to covid-19 concerns, it may take place via conference call."


A second application window for the Pope County license was opened after the county Quorum Court passed a resolution in support of Cherokee Nation Businesses for the license and Ben Cross, county judge of Pope County, subsequently also issued a letter of support for the Cherokees.

The Cherokees and the Choctaws submitted an application then.

But the Racing Commission on Jan. 10 this year "abandoned" the second application window after Pulaski County Circuit Judge Wendell Griffen -- acting in a lawsuit filed by the anti-casino group Citizens of a Better Pope County against the commission -- barred the commission from issuing a Pope County license pending further hearings.

Griffen, though, said his temporary restraining order doesn't bar the Racing Commission from taking applications submitted after the deadline for the initial May 2019 application period based on "good cause shown," as cited in the commission's casino rules.

The rule states: "Applications for a casino license will be accepted by the Commission for a period of thirty (30) days, beginning on the date established by the Commission and published as a legal notice by the Commission. No Applications will be accepted after the thirty (30) day period, except for good cause shown."

"We have respected the Arkansas State Racing Commission's process and guidance throughout this period of continued delays, including its decision to wait for action at the circuit court level before considering our requests for acceptance of our application into the May 2019 period for 'good cause shown,' " Chuck Garrett, chief executive officer for Cherokee Nation Businesses, said Wednesday. "Now that the court has ruled, we have renewed our request that our application be accepted so that we can move forward with the process, preferably before the Racing Commission and Attorney General's office decide whether to appeal the ruling."


Before endorsing Cherokee Nation Businesses, Cross had negotiated a $38.8 million "economic development agreement" that would be disbursed among the county, some cities and some nonprofit organizations.

"While I would anticipate an appeal of Circuit Court ruling, I certainly hope the Racing Commission will now expedite their acceptance of the CNB/Legends application for good cause shown; so if ultimately necessary, there is at least two applicants for a side-by-side comparison based on the merits of each," Cross said in an email Wednesday. "I still feel very confident in our selection of CNB/Legends as the appropriate vendor with the best overall economic value for Pope County, and that selection should be abundantly clear to the commission as well."

In a letter to the Racing Commission dated Wednesday, Cross -- who provided a copy of the document to the Arkansas Democrat-Gazette -- asked that the commission act swiftly in making its next move.

"I do not believe there is any likelihood that you would reasonably grant Gulfside Casino Partnership a license," Cross said. "In light of the looming economic outlook, please do not hesitate to act and subject our county to any further potential loss of revenue."

Gulfside's $254 million proposed River Valley Casino Resort promises 80,000 square feet of gambling space, a 500-room hotel and a 15,000-square-foot convention center.

Cherokee Nation Businesses' $225 million Legends proposal includes 50,000 square feet of gambling space, a 200-room luxury hotel and a 15,000-square-foot event center.

Both proposals include additional amenities such as a swimming pool options, restaurants and entertainment stages.

"For more than three decades, we have been strong community partners to the Gulf region by generously supporting schools, first responders, nonprofits and economic development efforts," said Terry Green, co-owner of Gulfside. "We're ready to immediately break ground on the $254-million River Valley Casino Resort, which will support 1,500 permanent jobs, $29 million in annual gaming tax revenue -- 50 percent more than other proposals--and an estimated payroll of more than $60 million."

Garrett said he feels strongly that Cherokee Nation Businesses is the "operator of choice" for Pope County.

"[We] have worked diligently for more than a year to collaborate with local officials, business owners and residents of Pope County to develop a project that promotes economic growth in the region and that the community can be proud of," Garrett said. "We look forward to bringing Legends Resort & Casino Arkansas to the River Valley."

The Cherokees project annual revenue of $150 million. Taxed at 13%, the Cherokees would generate $19.5 million annually in tax revenue.

Gulfside's projection is annual revenue of $200 million. With the first $150 million taxed at 13% and the next $50 million taxed at 20%, Gulfside would generate $29.5 million annually in tax revenue.

In a March 5, 2019, email -- from John Shelnutt, the state's chief economic forecaster, to Duncan Baird, then the budget director for Gov. Asa Hutchinson -- Shelnutt predicted that a Pope County casino would bring in an estimated annual $200.3 million net gaming receipts at full operational level, providing $29.57 million in total tax receipts.

The email was obtained by the Democrat-Gazette through the Freedom of Information Act.

The total tax revenue from casino gaming receipts would be 55% to the state's general revenue, 27.5% to the local governments where the casino sits and 17.5% to purse support, according to Amendment 100.

A Section on 03/26/2020

Print Headline: Panel erred in rejecting casino license application, judge rules


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