Casino applications' 2nd round is cut off

Saturday 11th January 2020

In the face of court rulings against the path it was taking, the Arkansas Racing Commission on Friday decided to abandon its second round of taking applications for a Pope County casino license and try a new approach.

Commission attorney Byron Freeland said the commission will accept applications from any entity that "can show 'good cause' shown under our rules."

Freeland later said the applicants for the casino license in Pope County are required to have the endorsement of local elected officials under the commission's rules.

Five casino operators applied last year for the license, but all were rejected by the commission for lacking endorsements by officials currently in office. One applicant, Gulfside Casino Partnership of Mississippi, sued over the rejection because it had endorsements, albeit from officials right before they left office in late 2018.

The commission then reopened the door to applications after current Pope County officials backed Cherokee Nation Businesses. The Cherokee Nation of Oklahoma and the Choctaw Nation Division of Commerce of Oklahoma reapplied in that round, although the Choctaws lacked endorsements. The commission did not act on those applications.

The commissioners said Friday that they don't expect make a decision on issuing a license at least until Pulaski County Circuit Judge Tim Fox rules in Gulfside Casino Partnership's lawsuit. Fox scheduled a March 30 hearing to consider motions.

[RELATED: See complete Democrat-Gazette coverage of casinos in Arkansas at]

The chief executive officer for Cherokee Nation Businesses, Chuck Garrett, later lauded the commission's decision. Garrett said the Cherokees plan to submit a new application and show that "good cause" exists for the commission to accept the application and grant the license to the Cherokees.

The commission's action Friday, which was based on the advice of the attorney general's office, came a week after Pulaski County Circuit Judge Wendell Griffen, acting in a separate lawsuit, granted a temporary restraining order barring the commission from issuing a Pope County license.

"The rules of the Racing Commission do not hint, let alone provide, that the commission was authorized to open a second casino license application after it received and rejected applications submitted during an initial time for filing casino license applications," Griffen wrote in his Jan. 3 ruling in a lawsuit filed against the commission by the anti-casino group, Citizens for a Better Pope County.

Griffen's ruling came a day after Fox also ruled in Gulfside's separate lawsuit that the commission shouldn't have opened that second window for applications. Fox said the second window was invalid because there was "no final judicial resolution" regarding the five applications received during the initial window from May 1-May 30. The five original applicants also included Kehl Management of Iowa and Warner Gaming of Nevada.

Under 2.13.4(b) of the Racing Commission's casino gambling rules, "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 30 day period, except for good cause shown under the rule."

Another rule -- Rule 2.13.4(d) -- states a second window will be opened only if "no application is received by the Commission."

After Friday's commission meeting, Casey Castleberry, an attorney representing Gulfside, said in a written statement, "We are pleased the Racing Commission agrees with Judges Fox and Griffen, and we look forward to presenting our case in March" before Fox.

At the outset of Friday's meeting, commission Chairman Alex Lieblong asked the attorney general's office for advice.

Senior Assistant Attorney General KaTina Guest, who represents the commission in three lawsuits over Pope County, said Griffen's temporary restraining order barred the commission from holding its scheduled hearing Monday and issuing a license for an application submitted during the second window, which lasted 90 days and ended in November.

"Your rules allow, in my view and in my read, two avenues for accepting applications for a casino gaming license for Pope County," she said. "The easiest one to deal with, subsection (d), and it says that this body can reopen the application period, if you don't receive any applications, upon written request by an applicant. That's easy to deal with because you received five applications in your May application period."

Griffen interpreted the 90-day application period to be a "reopening" and concluded that the only way the commission could do that was if the commission hadn't received applications, Guest said.

"So in his view, that 90-day application period is not supported by that particular rule," she said. "In my view, while the 90-day second application period is not supported by the rules or not contained in the rules, this body could accept applications for good cause shown, so my recommendation is that this body rescind the 90-day application period because the 90-day period is not found in the rules."

Amendment 100, approved by voters in November 2018, allows new casinos in Pope and Jefferson counties and expanded gambling at racetracks in Hot Springs and West Memphis. The new casinos must have endorsements by local officials.

While Amendment 100 does not state when the endorsements have to be dated or submitted from local officials, the Racing Commission last year added a rule that endorsements can only come from officials in office at the time the application in submitted. The 2019 Legislature also enacted Act 371, which became effective in March, that requires the same thing.

Gulfside's suit against the commission, filed in August, says its application met the constitutional requirements because unlike the others, it included letters of endorsement, though they were issued right before the officials left office in December 2018.

In the second window for applications, from Aug. 19 to Nov. 18, Choctaw Nation did not include endorsements, while Cherokee Nation included endorsements from Ben Cross, county judge of Pope County, and Roger Lee, mayor of Dover.

Scott Hardin, a spokesman for the state Department of Finance and Administration, said Friday that, as a result of the commission's vote to abandon the second application window, the full fees of $250,000 will be provided back to the Cherokees and Choctaw.

"In the first application period, four of the five applicants were refunded the full application fee of $250,000. While Gulfside did not request a refund of the application fee, it will be provided either at the company's request or the resolution of litigation," he said in a written statement.

Garrett said Friday in a written statement, "We agree with the legal analysis provided by the AG's office and support the Commission's decision to abandon the 90-day application period. As the only qualified applicant for Pope County having received the required support of County officials in August pursuant to Amendment 100, we are eager to submit a new application and demonstrate that good cause exists for the Commission to accept our application and grant us the license."

Meanwhile Friday, Jerry Malone, attorney for Citizens for a Better Pope County, filed an amended motion for a temporary restraining order in its suit, mainly for the purpose of disputing the Cherokee Nation's claim that the anti-casino group had no standing to lodge a civil suit.

"We had no choice but to amend the action to clarify that the plaintiffs are taxpayers who, in fact, have standing to pursue these claims -- including the claim for illegal exaction," Malone said.

The hearing on the case is set for 9 a.m. Tuesday in Griffen's courtroom.

Malone said he is reviewing the commission's Friday decision.

"My initial assessment is that it does not moot the case -- especially given the filing that we made prior to the commission's discussion and action," Malone said.

In the amended motion, Malone said justification for a second application period cannot be found anywhere in the adopted casino gambling rules.

Furthermore, Malone argued, the group has a right to file the civil suit because if a casino license had been issued to one of the applicants from the second window, the group "would have suffered, and will still suffer, immediate irreparable harm and injury because the Commission's actions would have been, and will still be, in violation of the Arkansas Administrative Procedures Act" as well as in violation of Amendment 100 and the casino gambling rules.

"The Plaintiffs (as persons, citizens and taxpayers of the state of Arkansas) are acting, among other things, as champions representing the public in a matter of public interest -- being to prevent the Defendants from taking official actions and expending tax dollars based on the illegal Second Casino Application Period," Malone said in the amended motion.

The anti-casino group also claimed in the motion that the Racing Commission would be committing "illegal exaction" by awarding a casino license from an application submitted during the second window because Gulfside's appeal -- which is provided for in the rules -- has not yet been fully adjudicated.

Specifically, Rule 2.18 outlines an appeal process should an application be denied or rejected, which includes an initial hearing in front of the Racing Commission and, if necessary, a circuit court appeal.

A Section on 01/11/2020

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