CNB requests approval to operate Ark. casino

BY D. SEAN ROWLEY
Senior Reporter
06/26/2020 06:00 PM
Main Cherokee Phoenix
Gulfside’s River Valley Casino’s proposal includes a 500-room hotel and 80,000 square feet of gaming space. The Arkansas Racing Commission on June 18 awarded a license to build the resort to Gulfside Casino Partnership. RIVER VALLEY CASINO
Main Cherokee Phoenix
An artist’s rendering of the Legends Resort and Casino that Cherokee Nation Businesses wants to build in Pope County, Arkansas. CNB officials have filed a request that it receive an approved permit to operate a casino in the county. COURTESY
LITTLE ROCK, Ark. – Cherokee Nation Businesses has filed a formal request that it receive an approved permit from the Arkansas Racing Commission to operate a casino in Pope County.

CNB made its filing after it was determined on June 22 that the score for Gulfside Casino Partnership, submitted by ARC commissioner Butch Rice, should be discarded, leaving CNB as the higher scorer under the combined tally of the other commissioners.

The ARC made no decision on awarding a gaming permit after dismissing Rice’s score, but asked CNB and Gulfside to discuss resolution with the state attorney general. CNB and Gulfside have said they would likely file suits if their respective application is not chosen.

The CNB filing is essentially an appeal of the ARC decision to award the casino rights to Gulfside, asking that it be reversed in favor of CNB.

“We are grateful the commission reached the appropriate conclusion today, and we’ll diligently work with their counsel to determine next steps,” said attorney Dustin McDaniel, representing CNB. “However, their options are severely limited by the rules that are now in place.”

The license must be issued within 30 days from June 18. McDaniel said it would be impossible to approve a new rule, even under emergency protocols.

“It appears that their only real option is to remove the disqualified score from the panel’s award of points and let the appeals proceed,” he said.

He reminded the commissioners they were warned by Butch Reeves, deputy attorney general, that large disparities in the scores could be viewed as arbitrary, and suggest a commissioner had already decided the outcome.

McDaniel said Rice’s “widely divergent” scores in all criteria were clear evidence of bias, and that Rice had taken other steps to “ensure that Gulfside would not lose and could not lose this license.”

“The standard is whether or not there is a reasonable suspicion of unfairness, the standard that the Supreme Court will implement in reviewing what you do today,” McDaniel said. “If you find (that), then Mr. Rice’s scores must be disqualified.”

McDaniel said he wanted the commissioners to exclude Rice’s scores because “this 71-point scoring differential stands out like a sore thumb.”

CNB was not chosen on June 18 to receive the casino license, with it instead going to Gulfside and its proposal for the River Valley Casino Resort.

The casino is supposed to be the fourth and final allowed under state law when Arkansans passed Amendment 100 to its state constitution in 2018. The amendment allowed the licensing and establishment of casinos in Jefferson and Pope counties, and the horse racing venues at Oaklawn and Southland.

In a statement after the June 18 meeting, McDaniel said he submitted a letter on June 16 to the Arkansas attorney general’s office expressing concern that a biased commissioner could potentially overturn the ARC’s will because of the proposed scoring system.

“Despite the AG’s office expressly warning Commissioners not to engage in arbitrary, capricious or biased scoring, Commissioner Rice in fact single handedly overturned the score given by the rest of the Commission,” McDaniel said. “We anticipate both an administrative appeal and a request for injunctive relief from a court. This is a uniquely significant state decision, and such an egregious act of bad faith should not be allowed to control it.”

The scores given by ARC commissioners, respectively for Gulfside-CNB, were Denny East 94-88; Bo Hunter 94-79; Mark H. Lamberth 89-91; Steve Landers 90-100; Alex Lieblong 73-95; Michael Post 97-90; and Rice 100-29.

The criteria scored included experience with casino gaming, timeline for opening the venue, proof of financial stability and access to financial resources, and the proposal summary.

At the June 18 meeting, Reeves warned commissioners not to give widely disparate scores, saying they could be “considered arbitrary and can get us in trouble.”

“We may be back here again if that happens,” Reeves said. “If you give Gulfside a 30 on something and you give the Cherokees a zero … in my mind, in the court’s mind, that makes your scoring arbitrary. You had your mind made up before you even got here is what it looks like. Either we can come back and do it again if that happens, or your scores are thrown out, so please don’t do that either. Both proposals have merit.”

Gulfside’s proposal calls for 80,000 square feet of gaming with 1,900 slot machines and 90 table games, along with 500 hotel rooms. Projections included initial revenue of $200 million the first year, growing to $267 million the fifth year, and total tax revenue of $393 million over the first decade. Total payroll would start at $60.5 million annually and grow to $82 million by the fifth year. Hotel rooms would total 900 by the fifth year with a $100 million investment over the fourth and fifth years.

Green said “(CNB) is trying to protect their market in Oklahoma.”

“We are going to turn this into a destination resort,” he said. “We want people coming from all over the south part of the United States, and that’s what we are good at. That’s what we have done in Mississippi. ... We want to compete with all the Oklahoma casinos.”

The CNB proposal outlines a $225 million investment with a 50,000-square-foot gaming area of 1,200 slots and 32 tables. The venue would have included 200 hotel rooms and created 1,000 jobs.

CEO Chuck Garrett said the CNB also had a $38 million economic development agreement with Pope County – pending the granting of the license – and that CNB had “never filed bankruptcy, permanently closed a gaming facility, faced a tax lien or laid off any gaming employees.”

“We strongly believe we do it better, we do it smart, we do it safer and do it for the good of the community,” Garrett said. “We are ready to be part of Arkansas tourism fabric and serve as an economic anchor for the River Valley.”

The ARC asked Green about him filing for bankruptcy in 1997, along with Gulfside co-owner Rick Carter. Casey Castleberry, attorney for Gulfside, said Green and Carter held minority ownership in Gulfside Casino Inc., but the two created Gulfside Casino Partnership the following year and have never filed for bankruptcy. Green also stated that Gulfside repaid its debts.

Rice asked Garrett whether CNB would use a Pope County casino to funnel customers into Oklahoma where the tax burden is less.

“We have a casino in Roland (Okla.), just outside of Fort Smith (Ark.), and our marketing strategy would include both going east, west, where the population centers are, and the difference in taxation rate does not enter into that marketing strategy at all,” Garrett said.

Ben Cross, who endorsed the CNB proposal as the county judge for Pope County, said he and other county officials had acted with sincerity to prepare residents for the “inevitable reality” of the casino legalized by Amendment 100.

“The lengthy process and time it took for our selection … was our attempt to show the Commission our selection did not come without thorough scrutiny and vetting,” Cross said. “As I have openly stated throughout this process, I will continue to honor the decisions of the litigation that will ultimately settle this issue, but at the same time, I remain disappointed at the lack of consideration for local choice that was effected by today’s decision.”

Initially, five interests filed proposals to be granted the license to establish a casino in Pope County, but all were initially rejected by the ARC on the grounds that none included requisite endorsements from county officials, and the ARC opened a second application window.
About the Author
Sean Rowley was hired by the Cherokee Phoenix at the beginning of 2019. Sean was born a long time ago in Tulsa, where he grew up and attended Booker T. Washington High School as a freshman before moving to Pawnee County and graduating from Cleveland High School in 1987. 

He graduated sans honors from Northeastern State University in 1992 with a bachelor of arts in mass communication with emphases in advertising and public relati ...
david-rowley@cherokee.org • 918-453-5560
Sean Rowley was hired by the Cherokee Phoenix at the beginning of 2019. Sean was born a long time ago in Tulsa, where he grew up and attended Booker T. Washington High School as a freshman before moving to Pawnee County and graduating from Cleveland High School in 1987. He graduated sans honors from Northeastern State University in 1992 with a bachelor of arts in mass communication with emphases in advertising and public relati ...

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