Board picks casino managers
Highlights of the proposal by Harrah’s Entertainment Inc. for operating a state-owned casino in Sumner County:
¢ Gross first-year gambling revenue (consultants’ estimate): $186,517,947.
¢ Gross first-year gambling revenue (applicant’s estimate): $206,000,000.
¢ Gross gambling revenue to state at 22 percent based on consultants’ estimate: $41,033,948.
¢ Gross gambling revenue to local governments: $5,595,538.
¢ Gross gambling revenue to Problem Gambling and Addiction Fund: $3,730,358.
¢ Full-time employees: 1,187.
¢ Investment in infrastructure: $535,000,000.
¢ Ancillary revenue (third year): $52,000,000.
¢ Estimate, gambling visitors (consultants): 2,606,492.
¢ Estimate, gambling visitors (applicant): 2,900,000.
¢ Hotel: 175 rooms
¢ Restaurants: 5.
¢ Bars: 3.
¢ Amenities: Retail outlets, outdoor amphitheater, convention center, 18-hole golf course; 44-space RV park with hookups; sporting clay facility, spa and health club.
Source: Kansas Racing and Gaming Commission
Topeka ? Kansas has picked Harrah’s Entertainment Inc. to build and manage a state-owned casino in Sumner County, but the decision left some upset and wondering what happens if three lawsuits go the wrong way.
The Lottery Gaming Facility Review Board made the selection Friday on a 4-3 vote. Others in the running for the 15-year contract were Marvel Gaming and Penn National Gaming Inc. Harrah’s will be in Mulvane, while the other two were vying for spots near Wellington.
On a 5-2 vote, the board awarded Penn the contract to manage a casino in southeast Kansas’ Cherokee County. Penn was the lone bidder on that project but faces competition from a $300 million tribal casino that opened
July 5 just across the state line in Oklahoma.
A 2007 state law provides for four state-owned casinos. The others will be in Wyandotte and Ford counties, and the board plans to decide Sept. 18 and 19 who gets those contracts.
Penn spokesman Eric Schippers expressed disappointment that the company did not land the Sumner County contract. The company had said a Cherokee County casino would be more viable if the company also had the Sumner contract.
“We need to digest it and see where we need to go,” Schippers said, adding that the company’s board of directors will decide whether to go forward in Cherokee County.
If Penn pulled out, the entire Southeast Zone – Cherokee and Crawford counties – would be reopened for applicants who would negotiate contracts with the Kansas Lottery, which will own the gambling operations.
Penn and Harrah’s now must clear background checks by the Kansas Racing and Gaming Commission, which could take months.
Turmoil in Mulvane
About 150 people from the Mulvane area, many wearing green T-shirts with Harrah’s logos, were on hand for Friday’s meeting.
“It’s going to give us jobs, lower our taxes and definitely benefit the school system,” said Gene Klaus of Mulvane. “They’ve got the best amenities, the best draw card and will draw a lot of people from Wichita.”
But Shelley Hansel, executive director of the Wellington Chamber of Commerce, was unhappy with the choice of Harrah’s. The Sumner County Commission had endorsed Penn and Marvel but not Harrah’s.
“By picking Harrah’s, they ignored Sumner County’s wishes. The will of the people should matter, and today the state of Kansas said it didn’t,” Hansel said.
The city of Mulvane had annexed land where Harrah’s would be, and the city council endorsed its plan. About 80 percent of Mulvane is within Sedgwick County, where voters rejected casinos last year.
“This is far from over. I’m meeting with the county commission Monday, and we’ll figure out where we go from here,” said Rep. Vince Wetta, a Wellington Democrat.
Wetta said the county commission has filed suit to have Mulvane’s annexation of the land for Harrah’s declared invalid. The law requires the casino manager to be endorsed by the governing body of the city or county where it’s located.
If the annexation lawsuit succeeds, Wetta said, “That means you can’t annex, and the contract is invalid.”
Mulvane, meanwhile, has sued the county, claiming the commission didn’t give fair consideration to all applicants in making its endorsements.
A third lawsuit also complicates the issue.
On Tuesday, the Prairie Band Potawatomi Nation sued Harrah’s, alleging the company violated a noncompete agreement with the tribe by seeking the Mulvane contract.
A hearing is set for Friday in Shawnee County District Count on the tribe’s request for a court order to stop Harrah’s from starting construction until January 2010.
“We believe we have studiously complied with the agreement,” Charles Atwood, vice president of Harrah’s board, told the review board Thursday.
Ed Van Petten, Lottery executive director, said a court order blocking Harrah’s would delay its plans to open within two years after getting final approval.
“We’re not worried about the lawsuits,” Van Petten said. “There will be other lawsuits, and we have to go forward.”
Board Chairman Matt All said two keys to Harrah’s contract victory were its higher revenue projections and the scope of its plans for the casino and amenities, such as a 175-room hotel and five restaurants.
“It was far and away the best quality project,” All said. “It was going to be the biggest investment and draw the most people.”
Based on total annual revenue, Harrah’s is considered the world’s largest casino company, owning or managing 49 casinos. It’s a partner in Sumner Gaming Joint Venture, which includes Kansas investors.