Lawsuit: Arkansas casino amendment misleading, unconstitutional; backers defend

A lawsuit was filed Tuesday (Sept. 7) in the Arkansas Supreme Court by opponents of an amendment authorizing three casinos in Arkansas.

The suit was filed by Chuck Lange and Bill Walmsley with the Committee to Protect Arkansas’ Values/Stop Casinos Now. It seeks to strike the amendment from the ballot and have no votes counted.

Proposed Issue 5 would allow casinos to operate in Boone, Miller and Washington Counties. It is backed by the group Arkansas Wins in 2016.

The suit says the amendment violates federal law and is unconstitutional, says the ballot title is misleading, and finds fault with the amendment’s signature collection process. The lawsuit says casinos would be authorized to conduct wagering on sports events, but such activity is barred by the federal Professional and Amateur Sports Protection Act. By violating federal law, the amendment would violate the Supremacy Clause of the U.S. Constitution, the lawsuit says.

Regarding the ballot title, it says voters would be misled for several reasons. It says the title doesn’t inform voters about the Professional and Amateur Sports Protection Act issue. It doesn’t inform voters that the licenses granted to the three private casino operators can be sold or assigned to others. It also doesn’t inform voters that casino operators will be allowed to sell or provide alcohol without a vote of county residents or provide alcohol on Christmas Day, which is illegal in Arkansas.

The suit says the title is also misleading because it doesn’t inform voters that the amendment gives authority over Arkansas laws to other states by defining “casino gaming” as being consistent with gambling in Louisiana, Mississippi, Missouri, Nevada, Oklahoma, Tennessee or Texas.

Robert Coon with Arkansas Wins in 2016 said that provision was included to ensure Arkansas gaming would be in keeping with generally accepted definitions elsewhere. The purpose is to prevent authorities from narrowly redefining gaming and to ensure the casinos would be competitive with out-of-state providers.

Finally, the lawsuit says the title misleads voters by saying casinos are subject to the same taxes as other for-profit businesses located in the county, while the amendment also provides that no taxes shall be imposed on the casinos “except as authorized in this Amendment.”

Coon said gaming operations would be subject to the same taxes as other businesses in addition to the tax provisions contained in the amendment: an 18% tax by the state on net gaming receipts, a 1.5% tax to the city of operation, and a 0.5% tax to the county of operation. The provision was included in the amendment to prevent authorities from imposing additional taxes. He said electronic games of skill at Oaklawn Park and Southland Park Gaming and Racing have the same tax structure.

“The purpose of this language is to provide that the casinos will pay the same taxes as for-profit businesses located in the county, but no more, no less,” Coon said.

Additionally, the lawsuit says the amendment’s sponsors failed to provide to the secretary of state required information about its paid signature gatherers. A criminal background check was not obtained from the Arkansas State Police on at least 15 canvassers as required by law, the suit says.

The lawsuit also says the amendment’s sponsors did not submit the required 75% of 84,859 signatures on July 8 to qualify for a 30-day “cure period” to collect more signatures. On that day, Arkansas Wins in 2016 submitted 63,725 signatures, which was 80 more than the 63,645 required. The lawsuit says many of those signatures were invalid for various reasons, including missing notary seals and missing birth dates, addresses and/or residence addresses.

In a statement released by Protect Arkansas’ Values/Stop Casinos Now, the group’s chairman, Chuck Lange, a former Arkansas Sheriffs Association executive director, said, “In short, this amendment is a bad deal for Arkansas. There are too many flaws in the way the signatures were gathered and too much uncertainty about how it affects our state’s ability to manage what kind of gaming we want in Arkansas.”

Coon said his group is still reviewing the lawsuit. He added, “We believe Attorney General (Leslie) Rutledge, Secretary Martin, and their staffs executed their constitutional duties thoroughly and correctly and that their respective actions and decisions are supported by Arkansas law. We are confident in our signature gathering process, which resulted in more than 100,000 qualified Arkansas voters signing our petitions. Furthermore, the canvassing firm utilized in this effort is a credible, experienced company that works nationwide. They know the process and go to great lengths to ensure that it is followed.”

Coon noted that in 2012, Lange chaired a group, Stop Casinos Now! that was backed by Southland Park and its parent company, Delaware North.

“Stop Casinos Now has previously received millions of dollars from in-state and out of state gaming companies,” he said. “Their lawsuit is not about protecting Arkansans, it’s about protecting their monopoly. This front group should be honest with Arkansas voters about where they’re getting their funding and what their real motivation is. The fact that they talk about ‘accountability’ yet won’t disclose their donors reeks of hypocrisy.”

Lange not only admitted that Oaklawn and Southland owners support the opposition to expanded gaming, but said he is happy to have their support.

“We appreciate that Oaklawn and Southland are supporting our efforts to prevent two out of state businessmen from writing themselves special privileges into our state constitution,”  Lange said in a statement. “We are working with and anticipate that we will be adding other organizations to our efforts soon. … As also expressed by Governor Hutchinson, both Oaklawn and Southland believe that this is a bad deal for Arkansas.  Two Missouri characters have manipulated Arkansas’ ballot initiative process to get the amendment on the ballot.”

The Committee to Protect Arkansas’ Values/Stop Casinos Now filed its statement of organization with the Arkansas Ethics Commission Aug. 30 and has not yet listed its financial backers or the other members of its coalition. The next filing deadline is Sept. 15.

Attorneys for the petitioners are from the law firms of Friday, Eldredge & Clark and Wright, Lindsey & Jennings.