Arkansas Supreme Court says CNB can intervene in casino suit

An artist's rendering of the Legends Resort & Casino that Cherokee Nation Businesses hopes to build in Pope County, Arkansas. COURTESY

LITTLE ROCK, Ark. -- In a ruling issued Feb. 4, the Arkansas Supreme Court has decided Cherokee Nation Businesses can intervene in a lawsuit as part of the long legal battle between it and the Arkansas Racing Commission's decision to award a casino license to Gulfside Casino Partnership.

Due to pending litigation, Gulfside has not begun construction of the casino approved for Pope County by Arkansas voters when they passed Amendment 100 to the state constitution. The casino is to be built near Russellville.

"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," wrote Arkansas Supreme Court Associate Justice Shawn A. Womack in the court's opinion. "We conclude that (CNB) was entitled to intervention as a matter of right and therefore reverse and remand the circuit court's decision.... The protracted litigation surrounding the license has carried on in numerous actions brought before multiple circuit courts, this court and the Commission."

Pulaski County Circuit Judge Tim Fox previously had ruled CNB could not intervene, and the case will be returned to his court.

Dustin McDaniel, representing CNB, said the Supreme Court's decision set aside Fox's order to allow Gulfside to apply for the 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.

Amendment 100, passed in October 2018 by Arkansas voters, allowed the establishment of new casinos in Pope and Jefferson counties, and expansion of the horse track facilities at Hot Springs and West Memphis to include casino gaming.

CNB and Gulfside were among five applicants rejected during the initial application window because none were endorsed by local officials still in office, per a rule adopted by the ARC and a law passed by the Arkansas Legislature.

CNB has repeatedly argued that Gulfside's application could not receive approval due to invalid endorsements. Gulfside's application was endorsed by officials who had since left office: Jim Ed Gibson, while Pope County judge, and Randall Horton while mayor of Russellville.

There was some ambiguity in Amendment 100 about when endorsements were to be submitted, which the ARC and state legislature attempted to clarify. The ARC passed Rule 2.13.4(b) requiring endorsements only from local officials in office when the application is submitted. Arkansas lawmakers passed Act 371 also requiring endorsements from those in office.

Gulfside appealed the rejection of its application, and after being denied, sued the ARC and DFA, claiming their requirements ran afoul of 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," Womack wrote. "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."

Womack noted that CNB had gained the support of the Pope County Quorum Court and current Pope County Judge Ben Cross, and had agreed to provide $40 million in economic development to Pope County. Womack also pointed to CNB's decision to intervene -- on August 23, 2019 -- in Gulfside's suit to get its application accepted for consideration.

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

Womack also wrote that because Fox decided CNB could not intervene based on his ruling that the second application period was not legal under Arkansas' gaming rules.

"(CNB) asserts a sufficient interest in the litigation based on its status as the only qualified applicant for the Pope County casino license," Womack wrote. "According to the record, (CNB) is the only potential casino operator with the support of the sitting county judge and Quorum Court.... We conclude that (CNB) 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."

McDaniel said Arkansas courts will likely be asked to interpret the constitutionality of some of the state's gaming regulations.

"Thanks to (this) ruling, the Arkansas Supreme Court will have the opportunity to hear that question," he said. "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."