Why did the Arkansas AG certify the 2018 four-LLC casino-gaming amendment proposed by Randall Bynum?

Plain-English summary

Randall Bynum's coalition submitted a competing 2018 casino-gaming amendment, certified by AG Leslie Rutledge on the same day as the Gray/Oaklawn/Southland amendment (Op. 2018-068). The Bynum measure took a very different geographic and corporate-structure approach.

Key features:

• Four casinos, four named LLCs, four counties. One in Benton County (Benton County Gaming, LLC), one in Boone County (Arkansas Gaming and Resorts, LLC), one in Miller County (Miller County Gaming, LLC), one in Pulaski County (Pulaski County Gaming, LLC).
• New Arkansas Gaming Commission, with five governor-appointed commissioners on staggered five-year terms, would regulate the casinos under General Assembly-enacted laws.
• Casino gaming defined broadly to include cards, dice, equipment, mechanical/electromechanical/electronic games, and wagers on sporting and other events. The definition reached "any game, device, or type of wagering permitted at a casino operated within any one or more of the States of Louisiana, Mississippi, Missouri, Nevada, Oklahoma, Tennessee, or Texas as of November 6, 2018, or as subsequently permitted thereafter," providing automatic interstate-floor expansion.
• Tax structure. 18% net casino gaming receipts tax to the state Treasury (general revenues), 0.5% to the host county, 1.5% to the host city. Ordinary corporate-tax obligations (income, property, sales, use, employment) apply, but the Gross Receipts Act of 1941 and local gross receipts taxes do not apply to casino gaming receipts.
• Operational provisions. Open any day, any hours; on-premises alcoholic-beverage sales during all operating hours; legal interstate shipment of gambling devices into the four counties under 15 U.S.C. §§ 1171-1178.
• Carve-outs. No effect on Amendment 84 (bingo and raffles), Amendment 87 (state scholarship lottery), or Act 1151 of 2005 (electronic games of skill).

AG Rutledge certified the popular name and ballot title as submitted, with the standard cautionary note about complexity and challenge risk. The opinion includes the canvasser-and-signer instructions required by Ark. Code Ann. § 7-9-108. This measure was a competitor to the Gray amendment certified earlier the same day (Op. 2018-068). Only the Gray measure (Issue 4) ultimately appeared on the November 2018 ballot and was approved as Amendment 100.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: How did this measure differ from the Gray amendment certified the same day?
A: Different counties (Benton, Boone, Miller, Pulaski versus Crittenden, Garland, Pope, Jefferson). Different licensee structures (named Arkansas LLCs in this measure; existing pari-mutuel franchise holders in the Gray measure). Different regulators (new Arkansas Gaming Commission here; existing Arkansas Racing Commission in Gray). Different tax rates (flat 18%/0.5%/1.5% here; tiered 13%/20% with different distribution percentages in Gray).

Q: What is the Arkansas Gross Receipts Act of 1941?
A: Arkansas's primary state-sales-tax statute. The Bynum measure exempted casino gaming receipts from it (along with local gross receipts taxes), so casinos would pay the new 18%/0.5%/1.5% net-casino-gaming-receipts tax instead of standard sales tax on gaming.

Q: What about non-gaming casino activities (food, hotel, retail)?
A: Those activities would be subject to ordinary income, property, sales, use, employment, and other taxation as for-profit businesses in the host city/town and county. Only the casino gaming receipts themselves would be exempt from gross receipts taxation.

Q: Why include the cross-state list of jurisdictions?
A: To create an automatic-floor on the kinds of wagers Arkansas casinos could offer. Whatever Louisiana, Mississippi, Missouri, Nevada, Oklahoma, Tennessee, or Texas casinos offered as of November 6, 2018 (or later) would be authorized for the four Arkansas casinos. This was a future-proofing mechanism so Arkansas would not lose competitive ground to neighboring states.

Q: Did this measure make it to the ballot?
A: No. The Gray amendment (Op. 2018-068) was the casino measure that appeared on the November 2018 ballot as Issue 4 and was approved.

Q: Why was the AG willing to certify both competing casino measures the same day?
A: The AG's role under Ark. Code Ann. § 7-9-107 is limited to determining whether the popular name and ballot title accurately and impartially summarize the proposal. She does not pick winners or decline to certify because a competing measure also exists. Each is reviewed on its own terms.

Q: What does it mean for one measure to be a "competitor" to another?
A: Both involved casino-gaming legalization in different counties with different operators. Sponsors and political coalitions choose between them for endorsement, signatures, and ballot listing. Only the measure that gathers enough valid signatures and clears legal challenges actually reaches the ballot.

Background and statutory framework

The 2018 Arkansas casino-gaming push produced two formally certified amendments and at least one cannabis amendment. The four-LLC structure here was an alternative approach to legalizing casinos that did not depend on existing pari-mutuel franchise holders.

The reach of the Gross Receipts Act of 1941 (Ark. Code Ann. § 26-52-101 et seq.) is the standard sales tax mechanism. Excluding gaming receipts from that base while preserving the new tiered casino tax was a deliberate design choice for tax-policy uniformity across the four casinos.

15 U.S.C. §§ 1171-1178 is the federal Johnson Act, which restricts interstate transportation of gambling devices. The amendment specifically authorized shipments into Benton, Boone, Miller, and Pulaski counties so long as they complied with federal labeling and registration rules.

Citations and references

Statutes and constitutional provisions:

• Ark. Code Ann. § 7-9-107 (AG ballot-title review)
• Ark. Code Ann. § 7-9-108 (canvasser-and-signer instructions)
• Ark. Code Ann. § 26-52-101 et seq. (Arkansas Gross Receipts Act of 1941)
• 15 U.S.C. §§ 1171-1178 (Johnson Act, gambling-device interstate transportation)
• Ark. Const. amend. 84 (bingo and raffles)
• Ark. Const. amend. 87 (state scholarship lottery)
• Acts 2005, No. 1151 (Electronic Games of Skill)

Cases:

• Pafford v. Hall, 217 Ark. 734, 233 S.W.2d 72 (1950)
• Becker v. Riviere, 270 Ark. 219, 604 S.W.2d 555 (1980)
• Bailey v. McCuen, 318 Ark. 277, 884 S.W.2d 938 (1994)
• Wilson v. Martin, 2016 Ark. 334, 500 S.W.3d 160 (technical terms in ballot titles)
• Lange v. Martin, 2016 Ark. 337, 500 S.W.3d 154 (reasoned decision in voting booth)
• Christian Civic Action Committee v. McCuen, 318 Ark. 241, 884 S.W.2d 605 (1994) (partisan coloring)
• Roberts v. Priest, 341 Ark. 813, 20 S.W.3d 376 (2000) (internal consistency)

Related AG opinions:

• Op. Att'y Gen. 2018-068 (companion certification of competing casino measure)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2018-070
May 23, 2018

Randall Bynum, Esq.
Dover Dixon Horne PLLC
425 West Capitol Avenue, Suite 3700
Little Rock, AR 72201-3465

Dear Mr. Bynum:

I am writing in response to your request for certification, pursuant to Ark. Code Ann. § 7-9-107 (Supp. 2017), of the popular name and ballot title for a proposed initiated measure.

[Standard discussion of the AG's role under Ark. Code Ann. § 7-9-107 follows.]

REQUEST

You have requested certification, pursuant to Ark. Code Ann. § 7-9-107, of the following popular name and ballot title for a proposed constitutional amendment:

Popular Name
An Amendment to Allow Four Casinos to Operate in Arkansas, One Each in the Following Counties: Benton County, Operated by Benton County Gaming, LLC; Boone County, Operated by Arkansas Gaming and Resorts, LLC; Miller County, Operated by Miller County Gaming LLC; and Pulaski County, Operated by Pulaski County Gaming, LLC

Ballot Title
An amendment to the Arkansas Constitution authorizing four casinos to operate in Arkansas, one in Benton County, operated by Benton County Gaming, LLC, an Arkansas Limited Liability Company, one in Boone County, Arkansas, operated by Arkansas Gaming and Resorts, LLC, an Arkansas Limited Liability Company, one in Miller County, Arkansas, operated by Miller County Gaming, LLC, an Arkansas Limited Liability Company, and one in Pulaski County, Arkansas, operated by Pulaski County Gaming, LLC, an Arkansas Limited Liability Company, all being subject to the laws enacted by the General Assembly in accord with this amendment and regulations promulgated by the Arkansas Gaming Commission in accord with laws enacted by the General Assembly; defining casino gaming and gaming as dealing, operating, carrying on, conducting, maintaining, or exposing for play any game played with cards, dice, equipment, or any mechanical, electromechanical, or electronic device or machine for money, property, checks, credit, or any representative value, as well as accepting wagers on sporting events or other events, including, without limiting the generality of the foregoing, any game, device, or type of wagering permitted at a casino operated within any one or more of the States of Louisiana, Mississippi, Missouri, Nevada, Oklahoma, Tennessee, or Texas as of November 6, 2018, or as subsequently permitted thereafter; creating the Arkansas Gaming Commission to regulate casinos in accord with laws enacted by the General Assembly, with the Arkansas Gaming Commission comprised of five (5) commissioners, each appointed by the Governor for staggered 5-year terms; providing for the General Assembly to appropriate monies to or for the use of the Arkansas Gaming Commission; requiring each casino to pay to the Arkansas State Treasury as general revenues a net casino gaming receipts tax equal to eighteen percent (18%) of its annual net casino gaming receipts; requiring each casino to pay to the county in which the casino is located a net casino gaming receipts tax equal to one-half of one percent (0.5%) of its annual net casino gaming receipts; requiring each casino to pay to the city or town in which the casino is located a net casino gaming receipts tax equal to one and one-half percent (1.5%) of its annual net casino gaming receipts; defining annual net casino gaming receipts as gross receipts for a 12-month period from casino gaming less amounts paid out or reserved as winnings to casino patrons for that 12-month period; subjecting each casino to the same income, property, sales, use, employment and other taxation as any for-profit business located in the county and city or town in which the casino is located, except that the Arkansas Gross Receipts Act of 1941 and local gross receipts taxes shall not apply to casino gaming receipts; allowing a casino to operate any day for any portion or all of any day; allowing the selling or complimentary serving of alcoholic beverages in casinos during all hours the casino operates but otherwise subject to all applicable Arkansas laws involving the distribution and sale of alcohol; permitting the shipment into Benton, Boone, Miller and Pulaski counties in Arkansas of gambling devices shipped and delivered in accordance with applicable federal law (15 USC §§ 1171-1178 and amendments and replacements thereto); rendering the provisions of this amendment severable; declaring inapplicable all constitutional provisions and laws to the extent they conflict with this amendment, but not otherwise repealing, superseding, amending, or otherwise affecting Amendment 84 (bingo or raffles) or Amendment 87 (state lottery) to the Arkansas Constitution, or Arkansas Act 1151 of 2005 (Electronic Games of Skill).

RESPONSE

Your proposed popular name and ballot title are certified as submitted. I believe a cautionary note is warranted, however, due to the significance of the subject matter undertaken (taxation and legalized gaming) and the complexity and far-reaching effects of this proposal. Experience has shown that there is a correlation between the length and complexity of initiated measures and their susceptibility to a successful ballot title challenge. Any ambiguity in the text of a measure could lead to a successful challenge.

Pursuant to Ark. Code Ann. § 7-9-108, instructions to canvassers and signers must precede every petition, informing them of the privileges granted by the Arkansas Constitution and of the associated penalties for violations. Enclosed herewith are instructions that should be incorporated in your petition prior to circulation.

Sincerely,

Leslie Rutledge
Attorney General

Enclosure (canvasser-and-signer instructions per Ark. Code Ann. § 7-9-108).