The glowing predictions for new state revenue from expanded gambling in Kansas are starting to lose some of their luster.

The state’s new law takes a two-pronged approach to expanded gambling in the state. One prong was to allow the development of up to four new state-owned casinos in the state. The other prong was to allow the addition of slot machines at three existing racetracks in Wichita, Frontenac and Kansas City, Kan.

Because it takes less time to install slot machines than to develop a casino, state officials expected revenue from slot machines to start flowing into state coffers relatively quickly. In fact, Stephen Martino, executive director of the Kansas Racing and Gaming Commission, predicted in December 2007 that slot machines at the Woodlands racetrack in Kansas City would be producing revenue by the following May.

Think again. Now there is a real possibility that the state won’t see any revenue from racetrack slot machines.

On Tuesday, the Woodlands racetrack in Wyandotte County announced that it would close next month after its owners were unable to reach an agreement with lottery officials on operating slot machines at the track. Frontenac’s Camptown Greyhound Park, which has been closed since 2000 broke off negotiations with the Lottery earlier this year, and Wichita Greyhound Park is off the table after Sedgwick County voters rejected the addition of slots there.

So much for the $98 million in annual slot machine revenue projected in a study prepared for the Kansas Lottery in April.

It’s possible that negotiations will be renewed with either the Woodlands or Camptown, but the financial arrangements spelled out in the gambling statute apparently aren’t providing a particularly attractive package.

Although the state still has a full slate of applicants for its four approved casino sites, there also was some discouraging news on that front this week when the Las Vegas Sands Corp. decided to abandon its bid to build a casino in Wyandotte County. A major reason given for the withdrawal was the possibility that Missouri may lift its limit on how much money gamblers can lose in its floating casinos, eliminating one competitive advantage for casinos on the Kansas side. Four other casino proposals still are on the table for Wyandotte County but here, too, the outlook for the gambling industry may not be as rosy as some proponents had hoped.

That also is bad news for the state’s less-than-rosy budget picture. The current year’s budget counts on new gaming revenue to fund a number of projects including making the bond payments on the expansion of the Kansas University pharmacy school. Advanced fees paid by casino developers may cover some of those costs, but the loss of expected revenue from slot machines is likely to further complicate an already tight state budget.

Gambling proponents had reason to celebrate last month when the Kansas Supreme Court declared the new gambling law constitutional, but financial realities are setting in. Kansans know their gambling statute is legal; the question now is whether it will provide anything close to the predicted financial boon for the state.