Arkansas Racing Commission sticks with competition for Pope County casino; Mississippi operators promise lawsuit if they don't win - Arkansas Times

Thursday 7th May 2020

The legal wrangling continued today on the process of awarding a permit to open a casino in Pope County.

The Arkansas Racing Commission rescinded an earlier vote finding "good cause" for the Cherokee Nation to submit a late application for the permit because it didn't have the necessary approval from local officials on May 30, 2019 deadline. A Little Rock lawyer, John Tull, acting for an unidentified client, had questioned whether the brief April meeting had been conducted in violation of the Freedom of Information Act, tainted by conversations between the commission director and commission members.

Commission Chair Alex Lieblong said the earlier meeting had been hampered by technology glitches in teleconferencing. To clear the air, the earlier vote was rescinded then an hour-long discussion followed.

In that discussion, Commissioner Butch Rice of Beebe emerged as an opponent of allowing the Cherokee permit to go forward. He said it was "bad business" to enter a contract with someone who missed a deadline.

But Dustin McDaniel, attorney for the Cherokee Nation, countered that the presumption at that time was that the Gulfside Casino Partnership was ineligible under a rule, eventually struck down in court, that said a casino applicant had to have approval from current county officials. Eventually, the Cherokee Nation won local official approval with a promise of $38.5 million in economic development money and also legal advice that a voter-referred ordinance requiring a vote before county officials could endorse a casino was unconstitutional. That ordinance was rescinded by the Quorum Court. There was no rush for county officials to act, McDaniel said.

Rice's motion that the Cherokees be denied a "good cause" exception failed to get a second,

The Commission then voted 6-1, with Rice dissenting, to again find "good cause" for the Cherokees to submit an amended application after the initial deadline. Casey Castleberry, attorney for Gulfside, said it was his client's position that it was the only eligible applicant on the strength of endorsements it had from former county officials who left office at the end of 2018. If the Commission eventually chooses the Cherokee application over Gulfside, Gulfside will challenge that decision in court, Castleberry said.

The Commission also adopted a point system for an outside expert to use in evaluating the two applications. This issue arose because a lawyer for casino opponents has argued in court that the entire process is fatally flawed because commission rules required that the point system had to be in place before applications were taken. It wasn't. It wasn't required for the Saracen Resort Casino permit awarded in Pine Bluff, now in business.

McDaniel said it was too late to fix the failure to include a point system at the outset, but approving a point system now removes a basis for a legal challenge later by whichever applicant falls short in the current evaluation. There was some discussion about how the point system should be weighted among four factors -- gaming experience, finances, the scope of the project and timeline. The consultant prefers to count a timeline less than other factors and that process was approved by the commission.

Lieblong reiterated at the outset that the commission has no choice under the constitutional amendment but to award a casino permit, though he recognized some in Pope County opposed it and others were divided on a favorite. "We do not have any power under the amendment on whether gaming is going to happen if the applications come in correctly," he said. (Opponents were quick to say the Commission COULD reject all applications.)

Butch Reeves, lawyer for the commission, recommended the revote on good cause "out of an abundance of caution."

That led to a discussion that included the broad point that "good cause' was open to commission interpretation and a lengthy explanation from the Cherokee lawyers about why they believed they met the requirement.

McDaniel said the commission had wisely included a broad "good cause" exception for late applications. "What better cause could there be," he asked, than a change in circumstance that made their ineligible application eligible through subsequent approval of local officials.

Commissioner Michael Post brought up the issue of the local referendum ordinance, which he said was still on appeal. McDaniel corrected him. He said the case became moot when the Quorum Court repealed the ordinance by a two-thirds vote.

Rice also brought up the defeat of several quorum court members who'd voted for the Cherokee proposal. McDaniel said that wasn't relevant to the commission's decision today, but acknowledged the "unpleasantness" of the process was a factor in the elections.

Rice also noted the omission of Russellville from the $38.5 million economic development deal. But McDaniel noted that it will be the major beneficiary of money promised for a jail, a 911 center and ambulance services. Also, discussions are underway about Russellville annexing the casino site and the city has been working cooperatively on zoning and other issues, McDaniel said.

Lieblong articulated the reason for his good cause motion in support of the Cherokee application: "They had to wait for judge and quorum court to get around to making a decision."

Castleberry, the Gulfside attorney, said the question over the weighting of aspects of the permit applications wasn't important to Gulfside because it contends it's the only valid application.

"If the commission chooses to award a license to CNB, obviously we will challenge in court," he said.

The consultant will review applications and the commission has said public presentations would follow, with a possible decision this summer. Casino opponents are still in court with the challenge to the award of a permit.