Sebelius gambling plan contemplates state-owned casino

? Every year, Kansans make millions of visits to casinos just over the state line in Kansas City, Mo. And every year, state officials go hunting for millions of dollars in new revenue for state government.

All of which could lead to a new enterprise: state ownership of a large, Las Vegas-style casino, most likely in Wyandotte County near Kansas Speedway. It’s an idea that Gov. Kathleen Sebelius is expected to propose in the coming days and that a leading lawmaker says is gaining support.

Other cash-strapped states also have contemplated casino ownership. The idea has been at least introduced in recent years from Oregon to Texas, although it has been studied and rejected in Illinois, Maryland and New Hampshire.

In Kansas, only two entities — the state or an Indian tribe — are empowered by the state constitution to own a casino. All four tribes with Kansas reservations already have casinos, and many advocates of expanded gambling think the state would reap more revenue by owning a casino than if a new tribal one were built.

Consensus is lacking so far on how much control the state would have to exercise over a casino to satisfy the Kansas Constitution.

Matt All, Sebelius’ general counsel, said the governor does not anticipate that the state would build the casino or hire the staff. But it would control the gambling business and have a larger role in day-to-day management than other states play in the operations of privately owned casinos, he said.

“To some extent, it’s just a matter of degree,” All said.

All said recently that Sebelius’ proposal — expected by the end of the week — would create a state board to pick private companies to manage large, state-owned “destination” casinos designed to attract patrons from within and outside Kansas. The board would determine how many casinos could be built in Kansas, and where.

The state would control the gambling operations, including selection of games and payout percentages. It has no such control over casinos owned by Indian tribes, nor does it receive any revenue from them.

Estimates for potential gambling revenues vary widely, depending on what legislators approve. The chairman of a task force Sebelius appointed last year predicted $100 million; some legislators have said $150 million or more.

There’s no doubt that many Kansans gamble. They buy about $200 million worth of Kansas Lottery tickets each year, and the state constitution also permits bingo and betting on dog and horse races.

The Missouri Gaming Commission said Kansans accounted for 3.24 million of the 10.8 million visits to riverboat casinos in the Kansas City market in the past 12 months, or about 30 percent.

Such figures haven’t escaped the attention of Kansas legislators, including Senate President Dave Kerr, R-Hutchinson.

“I think probably the aspect that has gained a little momentum is the idea of maybe putting something in Wyandotte County that is some sort of an offset to the riverboats that are supposedly taking a substantial amount of Kansas dollars,” Kerr said Friday.

Paul Winterscheidt, a retired Leavenworth Penitentiary employee who drives to Kansas City about once a week with his wife to play slot machines at the Ameristar and Argosy casinos, said a Kansas casino probably would be successful if “addicted people like us” visit.

“If it’s a state-of-the-art casino, we’d definitely go,” he said as he prepared to leave the Argosy after a Tuesday night out. “We’ve been paying a lot of money here in Missouri.”

Winterscheidt said he does not care who owns a Kansas casino, but policy-makers must because of the way the constitution constrains their choices.

All said Kansas could own and operate a casino without spending taxpayer money to construct a single building or buying even one slot machine or blackjack table.

Paul Alexander, attorney for the Sac and Fox tribe, which has proposed a $175 million casino in Wyandotte County, disagreed.

“Management of a casino is a 24-hour business,” Alexander said. “The state would have to have its employees making those day-to-day, hour-by-hour decisions on casino operations.

“I don’t think most people who invest large amounts of money on destination resorts would be willing to turn those types of decisions over to the state,” he added.

All acknowledged that the state could face lawsuits if the governor’s gambling proposal is enacted but said any legislation would be written with the state constitution in mind. He likened a state-owned casino to the state-owned lottery, where people buy lottery tickets in grocery and convenience stores that the state doesn’t own.

However, the American Gaming Association doesn’t think state ownership is a good idea.

Frank Fahrenkopf, the association’s president and CEO, said studies show that between 10 percent and 15 percent of the residents of every state consider gambling a sin and can feel alienated if their government is directly involved in the gambling business.

Owning a casino also puts the state in direct competition with private enterprise, he said.

“Government should be government and not be in the casino business,” Fahrenkopf said in an interview. “There are severe conflicts as to what the role of government should be. Government exists to serve the people — all the people — the best it can.”