Lawsuit again filed to challenge Arkansas’ final casino license

An applicant for the Pope County casino license filed a lawsuit Tuesday asking the court to invalidate the recently-awarded permit because the license holder’s requisite letters of support from local government were “coercively issued.” 

This is the third time the Pope County license has been the subject of a lawsuit since 2018 when voters approved Amendment 100 to the Arkansas Constitution, which permits casino gaming in the state. The Arkansas Racing Commission last week awarded the license to Cherokee Nation Entertainment, the tribe’s entertainment and gaming company.

“This unfortunate round of litigation from a rejected operator only stands to further delay the economic benefits and jobs associated with the state’s fourth casino license approved by voters in 2018,” CNE legal counsel Bart Calhoun said. “We will continue to evaluate and defend Cherokee Nation Entertainment’s position as the casino license holder and as Pope County’s operator of choice.”  

Attorneys Lucas Rowan and Kenneth Castleberry filed the latest suit over the state’s fourth and final casino license in Pulaski County Circuit Court on behalf of Gulfside Casino Partnership. Cherokee Nation Businesses, Cherokee Nation Entertainment, Pope County Judge Ben Cross, the Pope County Quorum Court and the Arkansas Racing Commission are the named defendants in the case.

The complaint is brought under the Arkansas Declaratory Judgment Act and asks the court to declare invalid Cherokee Nation Businesses’ Economic Development Agreement, as well as “all letters and resolutions of support coercively issued” to meet the agreement’s exclusivity requirements.

Plaintiffs argue that in exchange for monetary payments, the Economic Development Agreement requires the county judge and quorum court to provide letters and resolutions of support solely to Cherokee Nation Businesses or its designee. The EDA puts officials in the position that if they support another proposal, “Pope County is in jeopardy of receiving nothing if CNB or its designee is ultimately awarded the license,” the complaint states.

Gulfside presented its own Economic Development Agreement to the Pope County Quorum Court on June 6 that did not include an exclusivity requirement, according to the complaint. In a split decision, the quorum court rejected a resolution of support for Gulfside’s proposal to build a casino and resort near Russellville.

Gulfside argues that the exclusivity provision is “antithetical to the language and the spirit of Amendment 100,” which requires a letter of support from the county judge or quorum court, but does not limit them to issuing support for only one candidate. 

“The letter of support is simply an eligibility criteria for a casino applicant, but Judge Cross and the Quorum Court have used their power to issue a letter of support as a way to thwart the Racing Commission’s ultimate authority to select and award the casino gaming license,” the complaint states.

The suit calls on the court to declare CNE’s letters of support invalid “because they’re void against public policy.” Without valid letters of support from local government, CNE’s application does not meet the minimum application requirements and therefore the issued license is void, the complaint states. 

“The exclusive 2019 agreement between the Cherokees and Pope County leadership blocked consideration of Gulfside Casino Partnership, Churchhill Downs or any other potential applicant,” Rowan said in a statement. “When you examine the two proposals, Gulfside’s was superior in every way — economic development, jobs, total investment, square footage, slots and games, hotel rooms and amenities. The unlawful agreement deprived Pope County officials of their constitutional power to give support to other operators and from acting in the best interests of the citizens of Pope County and Arkansas.”

In a letter to the Arkansas Racing Commission, Jason Sauer, Churchill Downs’ senior vice president of corporate development, said that despite cordial meetings with members of the quorum court, Cross “provided immediate and explicit clarity” at their first in-person meeting on Nov. 23, 2023, they “were ‘wasting [our] time,’ as neither he nor a majority of the Quorum Court was willing to consider any applicant other than the Cherokee regardless of what another applicant or proposal could bring to Pope County.”

“Despite positive engagement with community leaders across Pope County, it is clear that local officials will not allow for a second valid applicant during the current application period, and will thereby thwart the ARC’s ability to conduct the fair process contemplated by Amendment 100,” Sauer wrote.

The case has been assigned to Judge Tim Fox and no hearing date had been scheduled as of Wednesday.

Arkansas Racing Commission spokesman Scott Hardin said the lawsuit doesn’t affect the ability of Cherokee Nation Entertainment to move forward with the project unless a judge makes a ruling in the case to change that.

“Since the day Arkansans approved casino gaming in 2018, the Pope County license has been the source of what seems like constant litigation,” Hardin said. “The other three casinos allowed by Amendment 100 have been in operation for years and are doing well.” 

Amendment 100 permits four casinos to operate in Arkansas. The first two were written into the amendment: the existing racetracks in West Memphis (Southland) and Hot Springs (Oaklawn). Southland discontinued greyhound racing in 2022. Oaklawn has featured thoroughbred racing for 120 years.

The third license was issued quickly and without controversy in Jefferson County due to local support for the Quapaw Nation, which opened Saracen Casino Resort in Pine Bluff in October 2019.

The Pope County license has been unique, with local efforts opposing the casino and multiple casino operators interested in the license. 

Local Voters in Charge is pursuing a ballot initiative to repeal authorization for a casino and casino gaming in Pope County and to require a local option vote for any future potential casino locations. The ballot question committee has until Friday to submit the requisite number of signatures to qualify for the ballot.

Meanwhile, a separate ballot question committee, Investing in Arkansas, is advocating for the protection of Amendment 100 and the economic benefits it provides.

Since the amendment’s approval, the courts have voided two previous versions of licenses issued to Gulfside Casino Partnership and Cherokee Nation Businesses/Legends Resort & Casino. 

Gulfside first applied for the license in 2019 after obtaining a letter of support from the Pope County Judge in 2018. The Arkansas Racing Commission awarded the casino license to Gulfside in 2020, but the decision was reversed after the Arkansas Supreme Court held that Gulfside’s letter of support was from a county judge who was in office at the time the letter was issued, but not the time the application was submitted. 

The decision cleared the way for the racing commission to award the license to Cherokee Nation Businesses LLC/Legends Resort and Casino LLC in 2021. That license was challenged, and the courts ultimately ruled that the license could not be issued to two separate entities, even if they were related. 

When the Arkansas Supreme Court declined to rehear the case in January, the commission drafted new rules and opened a new 30-day application period in May. Cherokee Nation Entertainment and Gulfside were the sole applicants, but the commission decided Gulfside’s submission was incomplete because it lacked a letter of support from the county judge or quorum court. 

Cherokee Nation Entertainment presented its proposal to the commission on June 27. The commission scored the plan and awarded the license to CNE the same day.