Topeka ? Gov. Kathleen Sebelius said Tuesday she’s hoping there will be better days for the gambling industry in Kansas and nationwide after a second firm dropped plans to operate in Kansas.

She said during a news conference she was disappointed with a decision Monday by Harrah’s Entertainment Inc. to withdraw its application to manage a state-owned casino in Sumner County.

Harrah’s is the second firm to pull its application with the state to operate one of four state casinos. In September, Penn National Gaming Inc. withdrew from its Cherokee County project.

Sebelius said the gambling industry has been affected by national economic troubles, but no one anticipated the downturn that is gripping the United States.

Still, she’s hopeful that new applicants will step forward in Sumner County and the southeast zone that covers Cherokee and Crawford counties.

“We want this to work,” Sebelius said.

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 Monday 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 new applications.

By withdrawing before final approval, Harrah’s will get back the $25 million privilege fee it had paid the state when it was selected. Penn’s fee currently is tied up in litigation.

The Kansas Lottery, which owns the gambling and contracts with the companies to build and operate the casinos, will reopen Sumner County for bids. It has set a Jan. 21 deadline for the southeast zone.

Sebelius said the return of the fees complicates state revenues and that she and her staff would be looking at figures next month. That’s when the governor’s office completes its budget recommendation for fiscal year 2010, which begins July 1, 2009.

Legislative researchers project that Kansas will end its 2009 fiscal year on June 30 with a $141 million budget deficit. They say if the state’s problems aren’t addressed, the shortfall would grow to $1.02 billion by the end of fiscal 2010.