Casino Battle Turns on Contract Clause of the U.S. Constitution
The Cherokee want to build a casino in Pope County, Arkansas. The Choctaw, who run a casino just over the border in Oklahoma, don’t want the competition. A year ago, after a three-day bench trial, the Court issued its opinion in Cherokee Nation Businesses, LLC v. State of Arkansas. The Court spends twenty pages of its opinion providing the background to the case and clearing out some preliminary issues. Not without reason. That background provides insights into a years-long battle between two well-resourced Indian tribes, who allied themselves with competing political factions within Arkansas, and the judge spins a good yarn. But things really get going on page 20 of the opinion when the Court digs into the Contract Clause claim.
The tribes operate through various business entities, but for the sake of simplicity, I will follow the Court’s practice and refer to them as the Choctaw and the Cherokee. The contracts at issue are an Economic Development Agreement entered into between the Cherokee and Pope County, various real estate and service agreements that the Cherokee executed between 2019 and 2023, and a 2019 employment contract between the Cherokee and Pope County resident Jennifer McGill. The Cherokee claim that Amendment 104 to the Arkansas constitution, which was adopted after the November 2024 election, constitutes a substantial impairment of those contracts. Amendment 104 repealed an earlier Amendment 100, passed in 2018, which allowed for the construction of four new casinos in Arkansas. The Choctaw invested $17.7 million in the campaign to get Amendment 104 passed. The Cherokee spent $15.7 million. And that was on top of the more than $60 million the Cherokee spent on land, construction, employees, and licensing costs in support of a casino.
The Court pretty quickly established that Amendment 104 “affected” but did not “impair” contracts. Each contract entailed a business risk. Each was entered into on the assumption that the Cherokee would be able to open a casino in Pope County. As a result, the Cherokee paid more for the land than they otherwise would have. They entered into service agreements, but the provision of those services was contingent on the establishment of a casino. The Cherokee are not yet obligated to do anything under the Economic Development Agreement, and Ms. McGill always knew that her employment was contingent on the Cherokee’s success in opening a casino.
The Court also concluded that the Cherokees’ Takings Clause claim failed on procedural grounds. It did not consider Amendment 104 an unconstitutional Bill of Attainder. The Court dismissed the Cherokees’ claims under the Contract Clause and the Bill of Attainder Clause with prejudice. It dismissed the Takings Clause claim and remaining claims without prejudice. An appeal to the Eighth Circuit is pending. The case is fully briefed, but no date for oral argument has been set yet.