Archive for Sunday, October 28, 2001

Gambling expansion re-examined as state budget shortfalls mount

October 28, 2001

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— By this time next year, you may be able to gamble with a slot machine at a racetrack, or drive to a convenience store and play a hand of video poker.

Supporters and opponents of gambling say that the legislative session that starts in January will produce the best chance in years to increase gambling opportunities in Kansas.

Here is the situation: State revenues are falling while spending is climbing, and many lawmakers with an eye on the 2002 elections don't want to raise taxes.

Enter gambling.

"The stars are aligned at this point in time," said Thomas Palace, executive director of the Petroleum Marketers and Convenience Store Assn. of Kansas.

"It's a make-or-break legislative session," said Phillip Ruffin Jr., director of operations at Wichita Greyhound Park and son of the track's owner. "The Legislature would be silly to pass it up."

In the hole

Kansas voters approved the lottery and pari-mutuel wagering in 1986. Simulcast wagering was approved by the Legislature in 1992. Since then, the Legislature has regularly rejected attempts to expand gambling.

But lawmakers will start the 2002 legislative session facing the widest gap between revenue and spending in recent memory.

The state's social service agency says it needs $123 million just to keep up with current services. State prison officials say they need more prison space, and public schools and higher education want more money. State employee salary increases and higher costs for health insurance also will strain the budget.

Track operators say they can help out. Allow them to have slot machines at the tracks and they say they can produce $30 million to $50 million annually in gaming taxes, helping lawmakers avoid a general tax increase.

"Nobody is in favor of increasing taxes, including conservative Republicans," Ruffin Jr. said. "Hopefully those conservative Republicans are capitalists as well."

But aside from helping the state, the tracks say they need the slot machines to survive because they are losing customers to the Indian tribal casinos in northeast Kansas and the riverboat casinos in Missouri.

"We're taking it from both barrels," said Larry Seckington, legal counsel for The Woodlands, a Kansas City, Kan. horse and dog track.

Without the ability to draw patrons with casino-style gambling, the tracks may be in their final days, according to Seckington and Ruffin Jr.

Seckington said Woodlands officials have decided to "contribute enough money to keep it open through the legislative session, but after that is anybody's guess."

Gambling opponents say they don't care if the tracks close.

"Businesses go into bankruptcy all the time," said Glenn O. Thompson, executive director of Stand Up for Kansas, an anti-gambling group.

Thompson said the state's dire budget situation is another reason to reject increased gambling.

"Casinos are parasites. They don't generate new money," he said. "Kansas needs to go on an austerity program."

Out of the money

But some charities and horse and dog breeders have a special interest in seeing the tracks succeed.

Spokesmen for horse and dog associations say animal owners are bypassing Kansas for more lucrative races.

James Smart, president of the Kansas Greyhound Assn., said he can win $1,000 for a purse in Rhode Island, and only about $150 to $200 in Kansas. "You can't afford to race in Kansas," he said.

Dwight Daniels, president of the Kansas Thoroughbred Assn., said slots at The Woodlands would increase the number of live racing days from 27 to 60.

More racing would boost the economy by prompting breeders to raise more horses and spend more money on barns, equipment and feed, he said.

"I've been hanging on for years, hoping the Legislature would pass this. I think this is the last hurrah," Daniels said.

Under state law, the pari-mutuel licenses at The Woodlands and Wichita Greyhound Park are held by nonprofit organizations which receive a cut of the wagered dollars to hand out to charities.

At Wichita Greyhound Park, the annual amount donated to charities has fallen from a high of $750,000 to $136,000, said Ben Travis, executive director of Wichita Greyhound charities.

Travis said the nonprofit board has endorsed slot machines at the track in order to get more funds for charities.

According to state records, the past couple of years have not been good ones at the tracks.

And 2001 is shaping up "not as good as last year and last year wasn't great," said Tracy Diehl, executive director of the Kansas Racing and Gaming Commission.

In 2000, Ruffin opened Camptown Greyhound Park, a pari-mutuel track in Frontenac. The track closed just four months later. The total amount wagered at The Woodlands in 2000 was $69.7 million, up from $65.4 million the year before, according to the state racing commission. But the increase came from simulcast wagering at the track. Betting on live racing was down.

Wichita Greyhound Park had an overall decrease in wagering to $43.6 million from $49.7 million, despite an increase in simulcast wagering.

Track officials pushed simulcast wagering as a way to stay in operation, but say that since then, the riverboat casinos have opened, presenting another obstacle to their success.

Now, both tracks say they are losing about $50,000 per month.

Down the stretch

Many state leaders, including Gov. Bill Graves, have said they support putting slots at the tracks, but neither Graves nor key legislative leaders have taken a leadership role on the issue.

Former House Speaker Robin Jennison has been hired by Ruffin to try and get more votes, especially from conservative Republicans.

Jennison said as a legislator he initially opposed gambling bills but that later he tried to get different sides in the dispute to negotiate because he was tired of seeing Kansans' entertainment dollars going to the tribal casinos and Missouri casinos.

Jennison said there has never been widespread opposition in the Legislature to slot machines, but that a minority of Republicans fervently opposed to gambling have managed to carry the day. That situation may change, he said, because of the budget crisis.

While most legislative debate in the past several years has focused on whether to allow slots at the tracks, so-called video lottery received consideration during the last session when lawmakers faced a late budget deficit.

The games which allow a player to play poker, blackjack or other games on devices similar to electronic slot machines were eventually rejected. But lawmakers say video lottery will be a force to reckon with this legislative session.

Both slots-at-the-tracks and video lottery supporters said they see themselves in direct competition before the Legislature because they doubt lawmakers would approve both.

$150 million to state

Palace, who leads the convenience store association, said he believed the video games could produce much more revenue for the state than slot machines at the two tracks. Depending on how many machines are allowed and the state's cut, he said, video lottery could provide upwards of $150 million to the state each year.

And, he said, the games would be more accessible.

"I can see a lot of people wanting to jump in bowling alleys, bars, restaurants. It can generate some serious dollars for the state," he said.

Palace points to the success of video lottery in South Dakota, which has pumped into that state's budget an average of $93 million per year over the past five years. In Kansas, gambling revenue to the state totaled $56 million during the last fiscal year; with nearly all of that revenue coming from the state's lottery games, which sell about $200 million scratch-off tickets per year.

The popularity of South Dakota's video lottery may also be attributed to the fact that the game is pretty much the only one there. South Dakota has a small scratch-off lottery game.

Tribal casinos

Regardless of whether slots or video lottery gets primary consideration during the legislative session, supporters of expanded gambling say they expect opposition from the Indian tribes that run four casinos located at White Cloud, Mayetta, Horton and Powhattan.

Steve Cadue of Lawrence, a former tribal chairman of the Kickapoos that operate the Golden Eagle Casino at Horton, said he would want to see the legislation before voicing an opinion on expanded gambling. But, he said, "I don't think the state should be in the business of operating casinos. They don't know how."

A chairman of a tribal council said he was also taking a wait-and-see approach. That person said he didn't want his comments identified in this article. Other tribal leaders did not return repeated telephone calls from the Lawrence Journal-World.

The tribes have been fierce defenders of their casinos, saying they have benefited the Indian nations and the state through increased payroll and economic activity.

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