Topeka ? Work began Monday on a western-themed hotel-and-gambling complex in Dodge City, the only one of four proposed state-owned casinos that hasn’t been delayed by financial problems.

The project started by Olathe-based Butler National Corp. is the smallest casino authorized by the Legislature last year. But developers in southeast Kansas and the Wichita and Kansas City areas withdrew after being awarded contracts with the Kansas Lottery, which owns the new gambling.

Butler expects to have part of its casino and dining space open by early December 2009 and to complete its $88 million complex in three years. Its site is on U.S. 50, just west of a town perhaps best known as the setting for the long-running television drama “Gunsmoke.”

The work kicked off with a groundbreaking ceremony. Gov. Kathleen Sebelius, legislative leaders and Butler National officials braved below-freezing temperatures and gusty winds for the event.

Clark Stewart, Butler’s chief executive officer, said a standard winter day on the Plains became cheerier because, “This is a big day for Kansas.”

“It was a very warm feeling,” he said during a telephone interview after the event. “It was a very nice day, actually.”

State consultants expect the casino to generate about $50 million in revenues annually by 2012, with almost

$11 million going to the state and $1.4 million to local governments.

But legislators who enacted the law allowing state-owned casinos last year had hoped that four hotel-and-gambling complexes eventually would generate about $200 million a year in revenues for the state.

A seven-member review board awarded contracts with the Lottery to Wyomissing, Pa.-based Penn National Gaming Inc. for a casino in Cherokee County; to a group led by Las Vegas-based Harrah’s Entertainment Inc., for a complex south of Wichita, in Sumner County; and a partnership of Kansas Speedway and Baltimore-based Cordish Co. for a Kansas City casino.

But Penn pulled out in September, citing competition with a nearby Indian casino in Oklahoma, and Harrah’s dropped its plans in November, citing turmoil in worldwide financial markets. Earlier this month, the Speedway group pulled its application, saying it wanted to revise its plans because of market conditions.

Their decisions have forced the Lottery to seek new applications for each of the three areas. The deadline for applications are Jan. 21 for Cherokee County and April 1 for Sumner and Wyandotte counties.

The 2007 law also permitted slot machines at Camptown Greyhound Park north of Pittsburg and The Woodlands dog and horse tracks in Kansas City. But track owners have been unable to strike a deal with the Lottery and argue the law gave the state too high a share of the slots revenue.

That made Monday’s groundbreaking a single bright spot after several months of bad news for backers of expanded gambling.

“This is good news for Kansas,” Sebelius said in a written statement after the event. “It means jobs in the area and revenue for our state.”

Project manager Doug Smith said the casino complex will open with 575 video gambling devices and 10 table games, including poker, as well as a restaurant with buffet service for 150 and a 25-seat snack bar.

Eventually, the complex will have 875 video machines, 20 game tables and a 124-room hotel, as well as a convention center, open at the end of 2011.