Topeka ? Gov. Kathleen Sebelius isn’t proposing something novel when she suggests having a state board pick from among competing developers to determine who manages state-owned casinos.

The state went through a similar exercise repeatedly in the 1980s and 1990s, when it decided which developers could build, own and operate dog and horse tracks where betting on races would be permitted.

The state’s experiences with pari-mutuel racing left lessons for Sebelius and legislators to ponder now as they consider expanding gambling and leaving big decisions about lucrative management contracts to a new board’s members.

“The work these guys are going to do will be some pretty heavy lifting,” said Matt All, Sebelius’ chief counsel.

Sebelius’ plan, which she is expected to unveil this week, will call for large, state-owned “destination” casinos designed to attract gamblers from both inside and outside Kansas. The board will decide how many casinos will be built, where they will be located, and who will manage them, though the governor assumes at least one will be in Wyandotte County.

As of last week, Sebelius had not hashed out all the details, including the size of the board or its composition. However, All said the board would be a public body, “subject to very strict ethics rules.”

“One of the most important objectives of our approach is to set up a system that the industry doesn’t run,” All said.

Racing missteps

In 1987, Gov. Mike Hayden and legislators faced setting up a new Racing Commission after voters during the previous year approved a constitutional amendment to permit betting on dog and horse races. Hayden promised racing would be “squeaky clean.”

Then, he appointed commission members who had little experience with pari-mutuel racing and an executive director who had served as Garden City’s police chief. Within two years, the commission and its chairman, former Kansas Supreme Court Chief Justice Alfred Schroeder, faced intense public criticism over decisions.

Charles McAtee, a Topeka attorney who represented an unsuccessful southeast Kansas applicant in the first round of pari-mutuel licensing hearings, said members of a new gambling board should come to their jobs with a good deal of knowledge about the casino industry.

“She could even consider appointing some outside consultant from (Las) Vegas or Atlantic City,” McAtee said, referring to Sebelius.

He and former Kansas House Speaker Bob Miller, of Wellington, said the new gambling board must rely on independent sources, not developers, for information.

In 1988 and 1989, the Racing Commission did not hire its own consultants or experts to evaluate applications. McAtee said initial licensing decisions were based on “blue smoke and mirrors” from developers.

Miller, who helped write pari-mutuel legislation in 1987 and later served on the racing commission, said, “The casino people are going to come in with well-educated, smooth numbers people.”

Keep it open

Sebelius and legislators also would be wise to promote open discussions of competing gambling proposals.

In its first two years, the racing commission went into executive session a staggering 107 times — as often as it went to lunch. When it decided in July 1988 to grant licenses for The Woodlands, in Kansas City, Kan., its vote followed two days of closed-door sessions but only a brief public debate.

The secrecy seriously undercut the commission’s credibility, so much so that when Schroeder retired in 1990, one legislator declared, “A breath of fresh air has come rolling in.”

And, after 15 years, McAtee said, he still doesn’t understand why the commission rejected his clients’ application.

“They never really did, I believe, a good job in an open public meeting of explaining their rationale,” he said. “We were never told why we were not selected.”

Finally, the state’s experience with pari-mutuel racing suggests that Sebelius and legislators ought to expect plenty of litigation.

Perhaps the saddest example from pari-mutuel racing is that of Camptown Greyhound Park, north of Pittsburg.

The racing commission issued a license for a southeast Kansas track in 1988, but four developers came into, then left, the project before the track opened for less than six money-losing months in 1995. In between, backers of a track saw construction prevented by two Kansas Supreme Court cases, the bankruptcy of one financial backer and the federal fraud conviction of another.

Sebelius should remember some of the controversies of Kansas pari-mutuel racing’s early years. She began eight years in the Kansas House in 1987 and served on the committee that reviewed gambling legislation.

And, she said last week, “I probably need to go back and review exactly what was done.”