Lawsuit alleges bias over casino license

Cherokee Nation says Mississippi operator misrepresented facts

LITTLE ROCK — Cherokee Nation Businesses filed affidavits Friday alleging a member of the state Racing Commission was biased toward a Mississippi casino operator awarded a casino license Thursday and the operator misrepresented facts during its interview with the commission.

The commission responded to the complaints from Cherokee attorney Dustin McDaniel by announcing a special meeting for Monday morning.

The appeals came a day after the commission awarded Gulfside Casino Partnership the license to operate a casino in Pope County.

The decision was reached after evaluation scores were tallied by commissioners. Gulfside scored 637 compared with 572 for Cherokee .

Although J.C. Campbell, commission director, on Thursday sent a letter to Gulfside saying it was awarded the license, it’s not a done deal, said commission spokesman Scott Hardin.

“While a letter was issued to Gulfside informing the company of the intent to award a license (due to the highest score), the license has not been formally awarded,” Hardin said. “There is a

30-day time frame from the date of the meeting in which it must be awarded.”

Commissioner Butch Rice of Beebe gave Gulfside a score of 100, compared with his score of 29 for the Cherokees. The 71-point difference was larger than the difference in the total of commissioners’ scores.

Rice and fellow commissioners Denny East of Marion, Bo Hunter of Fort Smith and Michael Post of Altus each gave higher scores to Gulfside, while Chairman Alex Lieblong of Conway and commissioners Mark Lamberth of Batesville and Steve Landers of Little Rock awarded higher scores to Cherokee.

McDaniel said in a letter to Lieblong and in an Affidavit of Bias that Rice had “consistently attempted to protect Gulfside from facing competition” and Rice opposed accepting or considering any other application “as evidenced by his questions, motion, and vote” at an earlier meeting.

Rice also has an undisclosed relationship with Gulfside owner Terry Green, McDaniel accused in the letter.

Rice declined to comment when contacted.

McDaniel said Rice’s score should be thrown out — which would give Cherokee the highest cumulative score and therefore the casino license.

“Mr. Rice gave a 71-point advantage to Gulfside on his scoresheet (29/100 vs. 100/100). In so doing, Mr. Rice deprived CNB of more than 10% of the total points available from the entire Review Panel (700),” McDaniel said in the letter. “This action is not defensible as a good faith scoring of the applicants. Rather it was a calculated, unethical, biased, and unlawful action to ensure the mathematical impossibility of the defeat for his preferred applicant.”

At a May 7 commission meeting, Rice quizzed McDaniel for several minutes with questions “adverse to CNB that appeared at the time to have been prepared for him or in consultation with Gulfside or its counsel,” McDaniel said in the affidavit.

At the end of the meeting, Rice made a motion to deny acceptance of the Cherokee application for “good cause” saying it was unfair competition because Cherokee already viewed its competitors’ applications submitted during the first application window.

Gulfside and Cherokee were among the five original applicants for the Pope County license. All were rejected by the commission last year.

Gulfside sued the commission. A Pulaski County circuit judge then ruled in Gulfside’s favor.

Cherokee resubmitted their application in August. Subsequently, the commission — at the May 7 meeting — voted 6-1, with Rice issuing the dissenting vote, to accept the Cherokee application on a “good cause” basis.

McDaniel supported his claim of a personal relationship between Rice and Green by stating they “socialized and dined” together at Oaklawn Racing Casino Resort during the application process.

Other than Cherokee CEO Chuck Garrett being introduced to Commissioner Steve Landers at an Arkansas Children’s hospital charity event, McDaniel said Garrett nor any Cherokee representatives had “dinner, drinks, coffee, or other social interaction” with any of the commissioners.

McDaniel also referenced a May 16 letter sent by Cherokee to Deputy Attorney General Olan Reeves expressing concern Rice “would intentionally skew his scorecard so heavily as to ‘eat up’ any point total advantage” the Cherokees may earn from the other commissioners.

At the beginning of Thursday’s meeting, Reaves warned the commission to “be careful not to have a huge difference between the scores” or it would look like “you had your mind made up before you even got here.”

Rice said Thursday he chose Gulfside because they were a better fit for the state and Gulfside would build a larger casino than Cherokee nation, therefore creating more jobs and more tax revenue.

Rice said he wasn’t biased toward Gulfside at the beginning of the Thursday’s proceedings.

In a second affidavit claiming misrepresentation, McDaniel said Green, the Gulfside owner, deceived the commission when asked whether he or his partners in any previous casino operation defaulted on debts or filed for bankruptcy.

McDaniel listed three casino companies in which Green was an owner and operator that filed bankruptcy in the late 1980s and 1990s.

Green told the commissioners he never filed personal bankruptcy and was a minority, non-controlling owner in a company with past financial struggles.

When contacted, Gulfside attorney Lucas Rowan said McDaniel’s accusations were incorrect. In the bankruptcies referenced, Green and Gulfside co-owner Rick Carter only owned 5% each of one company and in another sold the company in question long before the bankruptcy was filed.

“There was no ownership at all in that one,” Rowan said.

In another, the 1997 case by Gulfside Casino Inc. referenced by Commissioner Steve Landers on Thursday, Green and Carter were listed as creditors in the bankruptcy — not the debtors.

Years earlier, Green and Carter sold the company to Sands Casino and “owner financed” part of the sales price. The new owner failed to repay the promissory note, so Green and Carter were named as creditors in the Sands bankruptcy.

Eventually, the company was given back to them by the new owner in order to satisfy debt.

“Mr. Green accurately stated that neither he nor Mr. Carter nor Gulfside Casino Partnership has ever filed bankruptcy,” Rowan said.

In an April 14 letter obtained to Russellville City Councilman Chris Olson, Gulfside attorney Hugh Keating disputed allegations similar to McDaniel’s lobbed by former commissioner Thomas Akins.

Keating admitted it was true the companies sought relief in bankruptcy, but all debts had been paid within a year and gaming in Mississippi “as we know it today” is a result of the trailblazing by Carter and Green and their mentor William Redd.

Green said Friday that Gulfside is “passionate about serving others and we showcase that commitment by championing causes for local nonprofit organizations, both on the corporate and employee levels.”

“In Mississippi, we have become a staple of the Gulf Coast community as one of the region’s largest employers and a strong supporter of local businesses,” Green said. “We will do the same for Russellville, Pope County and Arkansas as we build our $254-million, first-class River Valley Casino Resort.”

In Pope County, the sentiment is still divisive and varied.

Russellville Mayor Richard Harris said he isn’t “thrilled” the commission is closer to a casino license and the city’s position on having a casino hasn’t changed.

Pope County voters rejected Constitutional Amendment 100, approved by state voters in November 2018. The amendment allows a casino in Pope and Jefferson counties and expansion of gambling at the racetracks in Hot Springs and West Memphis.

“However, as mayor of Russellville, I have a fiduciary responsibility to the citizens of Russellville. Therefore, if a license is issued to Gulfside Casino Partnership and a casino is to be built, the city will work in good faith to ensure that citizens of Russellville get the utmost benefit in addressing the infrastructure and resource needs from having a casino in our community,” Harris said. “Terry Green of Gulfside Casino Partnership has already reached out to me and has assured me it’s his desire to be within Russellville’s city limits and that he will work with the city to the mutual benefit of both parties.”

Pope County Judge Ben Cross — who endorsed Cherokee for the license after negotiating a $38.8 million economic development agreement — said the community is “utterly shocked and disheartened by the total lack of local consideration and disrespect given to our county by a governing body of the state.”

“The blatant and arrogant actions taken by Commissioner Rice to single-handedly skew the outcome of such a proceeding, after being publicly admonished from the onset by the AG’s Office to not commit such actions, calls into question the integrity and legitimacy of the entire process,” Cross said. “The fact Commissioner Rice awarded maximum points to the obviously inferior applicant, even going so far as to actually award maximum points in categories that were clearly demonstrated to be wrong, furthers the deliberate bias exhibited by his participation in the process.”

Cherokee Nation Businesses opened an office in downtown Russellville several months ago. Rowan, Gulfside’s attorney, said Friday opening an office prior to obtaining the license would’ve been premature, but the company plans to open one soon.

Hans Stiritz, with the group Fair Play Arkansas — which is collecting signatures to place a proposed constitutional amendment on the Nov. 3 ballot removing the county as one of the locations for a casino — said Pope County voters have made it clear they don’t want a casino there.

“While we wish the law and the constitution were different, we respect that the Racing Commission is taking their job seriously,” Stiritz said. “In the meantime, we’ll continue our efforts on all fronts to stop any casino from being built here, and to change the law that allows for it.”

The group must collect 89,151 valid signatures of registered voters by July 3 to qualify its measure for the Nov. 3 ballot. Stiritz wouldn’t divulge how many signatures have been collected thus far.