Olathe An Olathe company relying heavily on Wall Street investment bank Merrill Lynch for its financing was picked Friday to build and manage a state-owned casino in Dodge City.
The Lottery Gaming Facility Review Board chose Butler National Service Corp. over Dodge City Resort and Gaming, a group of Kansas investors, in a 5-2 vote, reflecting some members having a higher comfort level with Butler's financing.
Butler National plans an $88 million complex, operating as Boot Hill Casino and Resort. It will have an Old West theme in the western Kansas town where Wyatt Earp and Doc Holliday walked the streets and where there was a Boot Hill Cemetery.
The company plans to open its casino in two phases - the first with 575 slot machines and 10 gambling tables by September 2009. The second phase is to open in 2011 with 875 slots, 20 table games, restaurants, convention center and a 124-room hotel on 394 acres near the old Santa Fe Trail, west of the downtown area.
"There's a certain moment of euphoria, but there's a casino we have to open in 12 months," said Douglas Smith, project director for the casino.
Final approval rests with the Kansas Racing and Gaming Commission, which will regulate the casino, after it conducts a background check, expected to be done in a couple of months.
Review board members had postponed the decision for a week because they questioned whether either applicant could secure adequate financing with the nation's markets in turmoil. They sought more information about each and evidence of firm commitments from potential lenders.
Butler National supplied a letter, dated Wednesday, from a Merrill Lynch director, saying the lender was "highly confident" of being able to arrange $45 million for the casino project. Five Kansas banks have committed to providing an additional $20 million, with investors providing the remaining capital.
"I am satisfied that Butler National can, in fact, finance the project," said board member Jack Brier, a former Kansas secretary of state, now a prominent Topeka real estate developer.
Steve Joseph, a Wichita attorney and Dodge City Resort president, said at least one board member wanted a commitment to finance the project with cash. But Joseph said that didn't make financial sense.
"It's done. It's over. We're finished," Joseph said.
Merrill Lynch, the nation's largest brokerage, found itself squeezed by the ongoing credit crunch and agreed recently to a buyout by Bank of America Corp.
But its letter to Butler National persuaded five of seven board members to approve the proposal.
The two dissenting board members, Chairman Matt All, of Topeka, and Jim Bergfalk, of Mission, questioned whether Butler's project would be overbuilt.
Dodge City Resort's plan was for a $70 million complex which Joseph said was matching the size to the market. Both plans called for a casino in Dodge City, the county's largest town with about 27,700 people.
"I prefer a more conservative approach in Dodge City, particularly in today's gaming market and today's capital market," All said.