On line casino license case returned to decrease courtroom

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The Arkansas Supreme Court ruled Thursday that Cherokee Nation Businesses has the right to intervene in a lawsuit over a casino license in Pope County.

The ruling reverses a decision by Pulaski County Circuit Judge Tim Fox and sends the case back to his court.

“This case is part of ongoing litigation for the sole casino license available in Pope County,” Shawn A. Womack, associate justice of the Arkansas Supreme Court, wrote in Thursday’s opinion. “The narrow question before us is whether the circuit court erred in refusing to allow Cherokee Nation Businesses LLC, to intervene in litigation brought by Gulfside Casino Partnership against the Arkansas Department of Finance and Administration and the Arkansas Racing Commission. We conclude that Cherokee was entitled to intervention as a matter of right and therefore reverse and remand the circuit court’s decision.”

The Arkansas Racing Commission, which oversees the license application and selection process, awarded the casino license to Gulfside Casino Partnership of Mississippi.

But Gulfside has yet to break ground at the casino site while it awaits rulings in pending lawsuits and appeals.

“The protracted litigation surrounding the license has carried on in numerous actions brought before multiple circuit courts, this court and the Commission,” Womack wrote in Thursday’s opinion.

(RELATED: See complete Democrat-Gazette coverage of casinos in Arkansas at arkansasonline.com/casinos)

Dustin McDaniel, legal counsel for Cherokee Nation Businesses, said the Supreme Court’s decision Thursday vacated Fox’s order allowing Gulfside to apply for a casino license.

“This means that, for now, the state statute and Arkansas Racing Commission rule that both expressly disqualify Gulfside as an applicant are back in effect,” McDaniel said.

Arkansas Code Annotated § 23-117-101 and Casino Gaming Rule 2.13.5(b) state that a letter of support from the county judge or a resolution of support from the quorum court is required and must be signed and dated by the county judge or quorum court “holding office at the time of the submission of an application” for a casino license.

The statute and rule stem from Amendment 100, which was approved by Arkansas voters as Issue 4 on the ballot in 2018.

According to Amendment 100, “The Arkansas Racing Commission shall require all casino applicants for a casino license in Pope County and Jefferson County to submit either a letter of support from the county judge or a resolution from the quorum court in the county where the proposed casino is to be located and, if the proposed casino is to be located within a city or town, shall also require all casino applicants to include a letter of support from the mayor in the city or town where the applicant is proposing the casino to be located.”

Act 371 of 2019 clarified that the letters must be signed by the office holders at the time the application is submitted.

Gulfside presented a letter with its application, but the county judge who signed it was no longer in office by then.

Lucas Rowan, legal counsel for Gulfside, said, “The trial court determined Gulfside is a qualified applicant, and the Racing Commission chose Gulfside on the merits. We look forward to a resolution so we can proceed with construction to keep gaming dollars in Arkansas.”

Amendment 100 to the state constitution allowed four casino licenses to be issued in various parts of the state, including one in Pope County.

Five applicants, including Gulfside and Cherokee, applied for the Pope County casino license during the initial May 2019 application period.

“The Commission denied each application as incomplete for failure to include a letter of support from the county judge or a resolution from the Pope County Quorum Court,” wrote Womack.

In Arkansas, “county judge” refers to the chief executive officer of the county. County judges are custodians of county property and public buildings.

As part of its application, Gulfside had submitted a letter of support from County Judge Jim Ed Gibson.

The letter was dated before the expiration of Gibson’s term on Dec. 31, 2018, but it was submitted several months after he left office, Womack wrote.

The commission determined that the letter was not sufficient because Gibson wasn’t the sitting county judge at the time of the application.

“Gulfside’s application was consequently denied and an unsuccessful administrative appeal followed,” Womack wrote.

The day its appeal was denied on Aug. 15, 2019, Gulfside filed suit against the commission and the Department of Finance and Administration. Gulfside wanted a review under the state’s Administrative Procedure Act and a declaratory judgment holding that the “county judge” rule and statute are contrary to Amendment 100.

“Gulfside asked the circuit court to reverse the Commission’s denial of its application and remand the matter to the Commission with instructions to award it the license,” wrote Womack. “It further sought to enjoin the Commission from accepting or considering any other applications and from issuing a license until further order of the court.”

In the meantime, Cherokee Nation Businesses obtained support from the Pope County Quorum Court and executed an economic development agreement with Pope County’s sitting County Judge Ben Cross.

“In exchange for county officials’ exclusive support of its casino application, Cherokee committed to invest over $40 million in Pope County,” wrote Womack. “Cherokee informed the Commission on Aug. 15 (2019) that it had obtained the requisite support and requested reopening of the application period.”

The Commission agreed and reopened the application period. Cherokee Nation Businesses submitted its application with county official support.

On Aug. 23, 2019, after it submitted its application, Cherokee Nation Businesses moved to intervene in Gulfside’s lawsuit to defend its right to have its application considered, wrote Womack.

“Though Gulfside initially opposed intervention, it withdrew its opposition by letter to the court,” wrote Womack. “In its letter, Gulfside explicitly stated that it did not object to Cherokee’s intervention. On Jan. 2, 2020, the circuit court entered an order denying intervention. It concluded that Cherokee did not submit a casino license application during the May 2019 licensing period.”

Fox declared the second application period unlawful under Casino Gaming Rule 2.13.4(d), which states, “If no application is received by the Commission for the casino licenses in Pope County … then the Commission shall re-open the application process upon receipt of a written request by a casino applicant.”

“The court concluded that any reopening of the application period was barred until final judicial resolution is made concerning applications from the initial period or until the Commission amends its rule under the Administrative Procedure Act,” wrote Womack. “Because Cherokee’s claim of standing to intervene was premised on its application submitted during the allegedly unlawful second application period, the court held that Cherokee had no standing of any nature to intervene.”

“Cherokee asserts a sufficient interest in the litigation based on its status as the only qualified applicant for the Pope County casino license,” wrote Womack. “According to the record, Cherokee is the only potential casino operator with the support of the sitting county judge and Quorum Court.”

Cherokee Nation Businesses also has a contractual agreement to invest more than $40 million in the county, if it is awarded the casino license.

“We conclude that Cherokee has a ‘recognized interest’ in the litigation based on its interest in the license, having its license application considered, and its contract with Pope County,” wrote Womack.

McDaniel said the most important question now in the long-running controversy is the constitutionality of Arkansas Code Annotated § 23-117-101 and Casino Gaming Rule 2.13.5(b)

“Thanks to today’s ruling, the Arkansas Supreme Court will have the opportunity to hear that question,” said McDaniel. “We will consider next steps in the other pending cases, but it would not make sense to litigate a temporary casino nor any of the Commission’s past decisions so long as Gulfside is legally barred from filing an application in the first place.”