Topeka ? Harrah’s Entertainment Inc. has withdrawn its application to manage a state-owned casino in Sumner County, leaving only two of the original four casino companies still in the running in Kansas.

The Kansas Lottery said it was notified Monday that Sumner Gaming Joint Venture, a partnership of Harrah’s and a group of Kansas investors, decided not to pursue a license to operate a $535 million facility in the south-central town of Mulvane.

“Current economic conditions and the unprecedented disruption in world financial markets have made it impossible to proceed with the project as planned,” Harrah’s said in a statement.

But the company also said that “both parties will continue to consider available options for the proposed Mulvane casino” — a statement interpreted by some as leaving open the possibility of reapplying if the financial climate improves.

“We are, of course, disappointed that Harrah’s has withdrawn its plans for a casino in Sumner County for financial reasons,” said Ed Van Petten, Lottery executive director. “They tell us it is not feasible for them to move forward with a project at this time and we have to respect their decision.”

The two remaining applicants are a partnership of Kansas Speedway and the Baltimore-based Cordish Co. to operate a Wyandotte County casino, and Butler National Service Corp. for a casino in Ford County. Both said they still plan to go forward with their plans.

Final approval by the Kansas Racing and Gaming Commission for those two applicants is expected next month following background checks. The commission will go through the formality of rejecting Harrah’s so that the Lottery can start accepting applications. Van Petten said the application period probably will be 90 days.

By withdrawing before final approval, the Lottery will return the $25 million privilege fee that Harrah’s had paid when it was selected for the Sumner County project.

The Lottery, which owns the gambling and contracts with the companies to build and operate the casinos, will reopen Sumner County for bids. The 2007 expanded gambling law allows for four state-owned casinos.

Harrah’s was picked by the Lottery Gaming Facility Review Board over Penn National Gaming Inc. and Marvel Gaming, which had both proposed to build Sumner County casinos in Wellington.

Penn was the only bidder for a Cherokee County casino in southeast Kansas, but walked away in September after receiving the contract. The company said it couldn’t compete with a new Oklahoma tribal casino located so close to the state line that its parking lot is in Cherokee County.

The Lottery set a Jan. 21 deadline for new applications for the Southeast Zone, which also includes Crawford County.