Judge’s decision annuls Cherokees’ casino permit

A row of slot machines is shown inside a casino in this June 23, 2021, file photo. (AP/Wayne Parry)
A row of slot machines is shown inside a casino in this June 23, 2021, file photo. (AP/Wayne Parry)

Arkansas Racing commissioners broke the law -- as inscribed in the state constitution -- when they awarded the Pope County casino gaming license to a company that didn't exist during the application process, Pulaski County Circuit Judge Tim Fox ruled in a decision that annuls the permit granted to the Cherokee-owned company.

In a four-page order backed by six pages of findings and legal conclusions, Fox ruled that commissioners erred in the licensing process by awarding that permit to two entities, Legends Resort & Casino LLC and company owner Cherokee Nation Businesses (CNB) LLC, when the constitution explicitly states that only a single entity can own a casino license.

"The Amendment 100 definition of a 'casino applicant' clearly and unambiguously speaks in terms of a single individual or business entity as being the casino applicant and licensee," the judge ruled, describing the commission's decision to give the license jointly to Cherokee Nations and Legends Resort as inexplicable.

"CNB and Legends are two separate legal entities. The fact that CNB may be one of the members of Legends, or even the only member of Legends, does not alter the legal state that CNB and Legends are distinct and separate legal entities."

The issue of the license's ownership was before Fox on an appeal of the Racing Commission's November 2021 decision to license the Legends/Cherokee consortium. Mississippi-based Gulfside Casino Partnership challenged the decision, asking the court to void the permit. Gulfside attorney Lucas Rowen of Little Rock said his clients are glad to see the case move forward.

[RULING: Read Fox's declaration of license 'nullity' » arkansasonline.com/113ruling/]

"Gulfside remains committed to building a first-class entertainment destination in Pope County and bringing good-paying jobs and economic development to Arkansas," he said. "This ruling that Legends was not qualified is a step in that direction."

Lawyers for the Legends/Cherokee companies -- Bart Calhoun, Dustin McDaniel and Scott Richardson -- immediately began the process to appeal the decision to the Arkansas Supreme Court.

"While the circuit court's ruling is disappointing, in the interest of forward progress, we are pleased to have a decision," said Chuck Garrett, CEO of Cherokee Nation Businesses. "We remain confident in our legal position and will move quickly to have our appeal heard."

The state's new attorney general, Tim Griffin, said he is confident the ruling won't last long.

"The issuance of the Pope County casino license by the Arkansas Racing Commission was legal in all respects," Griffin said in a statement. "I look forward to advocating for that position before the Arkansas Supreme Court."

Gulfside and Cherokee Nation Business were two of the five applicants to the Racing Commission for the Pope County casino license in May 2019.

The commission denied all of the applicants the next month after determining none of them met constitutionally mandated requirements. Gulfside was the only one to appeal the decision.

Legends was incorporated in Arkansas in September 2019, about three months after the Pope County license application expired.

[FINDINGS: Read Fox's findings of fact, conclusions of law » arkansasonline.com/113findings/]

But in January 2020, Legends submitted an application, asking the Racing Commission to retroactively accept the application for "good cause shown," with commissioners taking the application and awarding the license to Legends/Cherokee Nation Business.

The judge ruled that Legends also does not meet licensing requirements written into the state constitution because the company has no prior casino gaming experience. The Racing Commission exceeded its authority when it accepted the Legends application, the judge wrote.

"The Racing Commission abused its regulatory agency discretion in allowing ... Legends' casino license application to be tendered over seven months after the May 2019 license period closed when Legends did not even exist at the time of the May 2019 application period," the judge wrote. "It was a legal impossibility for Legends to have submitted a timely casino license application so there could not legally be 'good cause shown' for its application to be submitted late."

Friday's ruling wasn't one "that really comes as a surprise or was not anticipated," according to Pope County Judge Ben Cross.

Though in a vacuum the decision was disappointing, Cross had a positive outlook.

"I'm happy that it's finally going to a court that can close it out," Cross said. "It's actually a point we want to get to, because we want the Supreme Court to have the final say, and I feel confident Judge Fox's ruling will be overturned. I don't think this surprises the legal team from [Cherokee Nation Businesses] or the attorney general's office. ... this will provide the finality that I've been reaching for for four years."

Cross noted "far reaching effects" if Fox's ruling were kept in place.

"If this was to be upheld and the rule of law, so to speak, then it's going to cancel out the [Saracen Casino Resort's] license as well," Cross said, referring to the Pine Bluff casino. "They're operating under the same LLC-type business that Legends would be and corporations typically form LLCs for the sole purpose of operating individual business entities."