Can't grant casino license, state told
Saturday 4th January 2020
A Pulaski County circuit judge granted a temporary restraining order Friday barring the state Racing Commission from issuing a license for a casino in Pope County, saying the commission violated its own rules when it opened a second window for applications.
"The rules of the Racing Commission do not hint, let alone provide, that the Commission was authorized to open a second casino license application period after it received and rejected applications submitted during an initial time for filing casino license applications," Pulaski County Circuit Judge Wendell Griffen said in the ruling.
It was the second time in two days that a circuit judge in Pulaski County ruled that the commission should not have opened that second window.
Friday's decision came in a lawsuit brought against the Racing Commission by the anti-casino group Citizens for a Better Pope County.
The commission had planned to meet Monday to decide whether to grant the license to Cherokee Nation Businesses. That meeting was canceled late Friday afternoon.
"Due to the Temporary Restraining Order issued today by Judge Griffen, the meeting of the Racing Commission scheduled for Monday has been canceled," said Scott Hardin, a spokesman for the state Department of Finance and Administration, which oversees the commission.
[RELATED: See complete Democrat-Gazette coverage of casinos in Arkansas at arkansasonline.com/casinos]
Little Rock attorney Jerry Malone, who represents Citizens for a Better Pope County, said group members were pleased with Griffen's order.
"The judge seems to have conducted a very thorough review of the pleadings, casino rules and the requirements of the Administrative Procedure Act and came to what we believe was a very solid decision," Malone said. "The Racing Commission has no authority to engage in a second application window."
Chuck Garrett, chief executive officer for Cherokee Nation Businesses, said Friday in a written statement that they were "disappointed by the recent turn of events and continued delay."
"As the only qualified applicant [in Pope County] pursuant to Amendment 100, our team was prepared to deliver a formal presentation on Monday per the invitation of the Arkansas State Racing Commission," Garrett said. "We look forward to receiving that opportunity in the very near future and subsequently being awarded the casino gaming license."
Citizens for a Better Pope County filed the suit Dec. 27 after voluntarily withdrawing a previous civil suit asking that no casino license be issued until the question is brought before voters.
The group's latest case seeks a permanent injunction to bar the Racing Commission from issuing a casino license based on any applications submitted during the second window.
The second window for applications was opened up after all five contenders for the Pope County casino -- Gulfside Casino Partnership of Mississippi, Cherokee Nation Businesses of Oklahoma, Kehl Management of Iowa, Warner Gaming of Nevada and Choctaw Nation Division of Commerce of Oklahoma -- were rejected by the Racing Commission in June because none contained endorsements by current local officials.
Approved by voters in November 2018, Amendment 100 allows a new casino in both Pope and Jefferson counties, and allows the expansion of gambling at racetracks in Hot Springs and West Memphis. Construction is taking place at all sites except Pope County.
The amendment requires the new casinos to have endorsements of local officials.
While Amendment 100 does not state when the endorsements have to be dated or submitted, the Racing Commission earlier this year added a rule 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.
One applicant, Gulfside Casino Partnership, filed suit against the Racing Commission in August saying its application met the constitutional requirements because, unlike the others, it included letters of endorsement from local officials, although they were issued right before the officials left office in December 2018.
The Racing Commission opened the second window after the Pope County Quorum Court on Aug. 13 issued a surprise endorsement for Cherokee Nation Businesses.
Unlike the initial 30-day application window -- cited in state Gaming Rules 2.13.4(b) -- the Racing Commission voted to leave the second application window open for 120 days, from Aug. 19 to Nov. 18.
Two applications were received during that time: one from Choctaw Nation, which did not include the required endorsements, and one from Cherokee Nation Businesses that included endorsements from Ben Cross, county judge of Pope County, and Roger Lee, mayor of Dover.
"At this point in the process, Pope County is content to allow the judicial process to proceed as necessary," Cross said Friday. "From my standpoint, all the parameters placed upon the county by Amendment 100 have been met in accordance with the language as written, so therefore, the legal and procedural issues raised thus far are now in the hands of the state."
In his ruling, Griffen said the commission-adopted and legislatively reviewed casino gaming rules provide no authorization to the Racing Commission to declare a second casino gaming license application period "nor do the Rules provide that second application period will be 120 days -- four times longer than the application period set out as Rule 2.13.4(b)."
Griffen said in the ruling that there was a "reasonable probability" that Citizens for a Better Pope County "will succeed on the merits of the case" because the Racing Commission "appears to have acted without authority and contrary to its own rules."
Specifically, rule 2.13.4(b) 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."
Furthermore, the gaming rules -- Rule 2.13.4(d) -- state a second window will be opened only if "no application is received by the Commission."
In a ruling Thursday in Gulfside's civil suit, Pulaski County Circuit Court Judge Tim Fox said the second window was invalid because there was "no final judicial resolution" regarding the five applications received by the Racing Commission during the initial window from May 1-30, 2019. Fox's ruling denied the Cherokees' request to intervene in that lawsuit.
Griffen also noted that the second window was opened even though the gaming rules "were not properly amended through the Administrative Procedures Act."
According to Arkansas Code 25-15-201, state agencies must give at least 30 days' public notice of the intended rules change and provide an opportunity for public input, then submit a copy of the rule or rules to the secretary of state and the Legislative Council along with a financial impact statement for review.
"The Arkansas Legislative Council has not reviewed, let alone approved, the second casino license application process and time period. Thus, one can reasonably conclude that plaintiffs have a likelihood of probable success on the merits of this litigation," Griffin said in the ruling. "The law has long been clear in Arkansas that due process requires that a governmental agency act within its delegated authority and follow its own rules."
An emergency rule can be filed and become effective immediately upon filing without prior notice or abbreviated notice if the agency proves that the rule is necessary "because of imminent peril to the public health, safety, or welfare," according to Arkansas Code 25-15-204.
Griffen said it was necessary to grant the restraining order because it was clear Citizens for a Better Pope County would "suffer irreparable harm" unless the motion was granted.
"The Racing Commission is poised to consider awarding a ten (10) year license to a casino license applicant [Cherokee Nation Businesses] whose application was submitted and received during a second casino gaming license application period nowhere mentioned in Racing Commission rules," Griffen said.
The Racing Commission has a regular meeting set for Jan. 16, but has not yet released the agenda.
The temporary restraining order will remain effective for 14 days. Malone said he is -- as Griffen asked in the order -- consulting with the state attorney general's office as well as the Racing Commission's outside counsel to come up with possible hearing dates in the case.
Metro on 01/04/2020