A Mississippi casino operator sued the Arkansas Racing Commission on Thursday afternoon just after the commission refused to reconsider its decision to deny the company a license to operate in Pope County.
Both actions came just two days after the Pope County Quorum Court voted in a special meeting to back Cherokee Nation Businesses -- one of five rivals competing for the license -- as the company that justices of the peace want to build a casino and hotel in the county.
Also, Gulfside Casino Partnership asked the Pulaski County Circuit Court for an injunction barring the commission from awarding a casino license until the legal challenge has been resolved.
At the same meeting in which it denied Gulfside's appeal, the commission opened a 90-day window for taking another round of applications for the Pope County license.
At issue is whether an applicant has the support of local officials, as required by Amendment 100 of the Arkansas Constitution. Gulfside's application included letters of endorsement from local officials right before they left office in December.
"Gulfside is the only Pope County applicant that timely complied with every requirement of Amendment 100," Casey Castleberry, Gulfside's attorney, said in a statement. "We are disappointed by the Racing Commission's decision but believe we have a strong case to appeal its denial during the judicial process. When we receive the license, we look forward to building our first-class resort and fulfilling our commitment to be a strong partner to the River Valley."
The Racing Commission rebuffed a request from Cherokee Nation Businesses to cap the open window for new applications at 10 days instead of 90 days. The commission agreed in June to open the 90-day window if an applicant stepped forward with the required letters of support.
Commissioner Steve Landers, who owns several car dealerships in the state, told Cherokee Nation attorney Scott Richardson that he wished people "would come buy a car and not shop" around.
"The thing is, I think we all need to relax for a minute," Landers said. "This is a good thing for the people of Pope County. It's a good thing for the people of Arkansas."
Racing Commission Chairman Alex Lieblong told Richardson that the 90-day period is necessary to allow others the same opportunity afforded the previous applicants.
"I understand y'all have been through the dog-and-pony show probably pretty rigorously for the last couple of weeks, but, again, to have that door suddenly open, then everybody else find out and more details of it, I think the more light and transparency we can show them, the better," Lieblong said.
Commission attorney Byron Freeland said the 90-day window would begin on the day a legal advertisement is in the Arkansas Democrat-Gazette, which he hopes is in Sunday's classifieds section.
Amendment 100, which was passed by state voters in November, allows new casinos in Pope and Jefferson counties if they have the support of local officials. The amendment also allows Oaklawn Racing Casino Resort in Hot Springs and Southland Gaming and Racing in West Memphis to expand their operations into full-fledged casinos, but they aren't required to have local endorsements. The amendment also allows sports betting.
Amendment 100 was defeated by Pope County voters, who also approved an initiated county ordinance that said an election must be called to allow voters to decide if they want officials to back a casino applicant. But no special election was called, and no action was taken on the ordinance at Tuesday's Quorum Court meeting. Arkansas Code Annotated 14-14-918 allows a quorum court to repeal or amend an ordinance by two-thirds vote of all members.
The Racing Commission ruled earlier this year that the endorsements can come only from officials in office at the time the application is submitted. The Legislature also passed Act 371, which became effective in March, that requires the same thing. But Amendment 100 does not state when those documents have to be dated or submitted.
In June, the Racing Commission rejected all five of the applications received for the Pope County license because they lacked the official endorsement of current officeholders.
Castleberry, Gulfside's attorney, has maintained from the beginning that his group would seek legal remedies if its application was not accepted by the commission.
In its lawsuit, Gulfside asked for an injunction barring the acceptance of any new license applications and to remand the matter "to the Racing Commission, with instructions to issue to Gulfside the casino gaming license for a casino in Pope County to which it was entitled."
At the Racing Commission's Dec. 26, 2018, meeting -- before the Jan. 3 adoption of Rule 2.13, which dictates that only endorsements from current officials made at the time of license application are acceptable -- a rule was approved that said those letters from local leaders should be dated after Nov. 14, the effective date of the amendment.
Freeland, the commission's attorney, also said at the Dec. 26 meeting that if somebody gets a letter of endorsement "after Jan. 1" with the new administration, "a letter dated after the effective date is valid as far as the Racing Commission is concerned."
Gulfside contends in the court document that the current rule was made after the Racing Commission consulted with Gov. Asa Hutchinson's office and attorneys for the Department of Finance and Administration "in order to prevent Gulfside, the only qualified applicant, from receiving a casino gaming license in Pope County."
Adopting rules that impose additional requirements not found in Amendment 100 is unconstitutional, the filing said.
Amendment 100 also uses the language of "shall," which means that a casino license for Pope County has to be granted, Castleberry said in the court filing.
The lawsuit includes a Jan. 3 email from John Shelnutt, administrator for economic analysis and tax research for the state Department of Finance and Administration, which warns of a potential $31.1 million annual net loss to state general revenue if a Pope County casino license is not issued.
Ben Cross, the county judge of Pope County, told the Racing Commission that no letters of endorsement, other than the one given Tuesday to Cherokee Nation Businesses, would be issued.
The Cherokees pledged a $38.8 million "economic development fee" to be distributed among the county, several cities and nonprofit organizations in order to secure county officials' support.
The amount will be paid in the form of a cashier's check within 30 days of "the successful resolution of all litigation or administrative challenges relating to the issuance of" a casino license for Pope County, according to the Economic Development Agreement signed by Cherokee Nation Businesses Executive Vice President Charles Garrett and attorney Dustin McDaniel of Little Rock.
Also in the agreement is a caveat that the monetary agreement will be voided if the county, whether through the Quorum Court or directly from Cross, endorses any other casino license applicant.
Cross read from a statement to the Racing Commission that he said "members of the Pope County Quorum Court would like me to express to the members today."
"With many careful considerations, which are defined not just by resolution, but by the contract entered into between the county judge and the Cherokee Nation Business, it is the intent of this statement today to relate to the commission that, while this will open up another application window for potential casino vendors, no other considerations will be accepted by members of the Pope County Quorum Court nor the office of the county judge," Cross said. "As our commitment to Cherokee Nation Business is as strong as their commitment to Pope County."
Toward the end of the meeting -- after an Arkansas Democrat-Gazette reporter posted on Twitter that the Pope County Quorum Court had not met since Aug. 13 and therefore should not have legally been able to compose the statement or discuss it -- Cross asked to address the commission again to clarify his previous statement.
"When I was reading my statement, and since all this litigation is pending and going on, let me make clear that my statement was offered by me, as a summation of individual conversations I had with members of my court," Cross said. "And I want to make sure that was in the record, that is my summation based on individual conversations."
According to Arkansas Code Annotated 25-19-106, meetings of a public governing body are open to the public. Also, the public must be given at least two hours' notice of special meetings.
In Arkansas Attorney General Opinion No. 2000-111, then-Attorney General Mark Pryor said it's illegal to poll individual members of a governing body outside of a public meeting in order to reach a consensus or make a decision.
On Monday, Pope County Justice of the Peace Joseph Pearson and seven other residents filed a complaint with Pope County Prosecuting Attorney Jeff Phillips alleging that Cross and some members of the county's Quorum Court held private meetings in the past few months to discuss the competition for a casino license there.
The complaint -- which was also sent to the U.S. attorney for the Western District of Arkansas and Pulaski County Prosecuting Attorney Larry Jegley -- came after two of the five contenders for a casino license in Pope County said they were told by Cross last Friday that the Quorum Court would give its endorsement Tuesday to Cherokee Nation Businesses.
Before the start of Tuesday's Quorum Court meeting, Justice of the Peace Doug Skelton walked into the crowded room waving the complaint and screamed, "What do y'all think of that?" His display was met with cheers from the crowd.
At Thursday's Racing Commission meeting, Lieblong commended the people and government of Pope County for their conduct during the process of choosing a casino vendor there.
"I want to thank the people of Pope County, the Quorum Court, both sides of the deal. Everybody has conducted themselves in a very admirable way," Lieblong said. "I've not heard pushback from anybody. Everybody's got their side of the game that they want to win. And I understand that, but it's nice to see everybody can conduct their business in a civil way and we appreciate it."
Hans Stiritz, one of the residents who complained to the prosecutor on behalf of the anti-casino group Concerned Citizens of Pope County, asked the commission to hold off on any action on casino applications until all legal questions are concluded.
"There was zero Quorum Court meetings where casino applicants or proposals were discussed prior to this week's special meeting," Stiritz said. "How could this decision had been made without public and open meetings of the Quorum Court?"
A Section on 08/16/2019