Topeka A Kansas review board remained troubled Monday because plans for casinos in the Kansas City and Wichita areas don’t include hotels in their first phases. But consultants warned that holding out for better proposals would be risky.
Several Lottery Gaming Facility Review Board members questioned whether casinos without hotels are true tourist destinations. A 2007 state law allowing the casinos contemplated “destination” projects and directed the board to pick projects to encourage tourism.
“I think that will be one of the central issues we’ll have,” board Chairman Matt All said during a break in a daylong hearing.
The board has a single proposal each for Kansas City and the Wichita area and plans to decide in December whether either can go forward. The Kansas Lottery will own the new gambling but contract with private developers to build and operate them.
Last year, the board had multiple proposals for each area and picked a developer for each, only to see them back away from their plans because of the economy. The lottery then reopened the application process.
The proposed casino in Kansas City would overlook Kansas Speedway, the NASCAR racetrack already at the center of a tourist-drawing district of shopping, dining and entertainment sites. For the $521 million project, Kansas Speedway’s parent company, International Speedway Corp., is partners with Penn National Gaming Inc., of Wyomissing, Pa.
The companies have said they expect to begin building a hotel in 2014, two years after opening their casino.
The south-central Kansas casino would be located about 20 miles south of Wichita, near Mulvane. The $225 million project is proposed by a partnership that includes Lakes Entertainment Inc., of Minnetonka, Minn., which is involved in 11 Indian tribal casinos.
Lakes does not have a timetable for building a hotel but says it is pursuing a deal with multiple hotel companies.
One of the board’s consultants, William Eadington, said the sour national economy led to only one plan remaining for each area. He said the lack of competition for a Lottery contract meant a lack of “sweetners” in each plan, such as a hotel in the first phase of construction.
But Eadington, the director of an institute that studies commercial gambling at the University of Nevada, Reno, said reopening the application would cost the state casino revenues and might not result in significantly better proposals later. Also, he said, prospective developers might lose confidence in the state if a second round of applications doesn’t result in one being chosen.
Bill Lerner, a founder and analyst for another board consultant, Las Vegas-based Union Gaming Group, said: “I don’t think it’s worth the wait, frankly.”
Still, board members indicated that rejecting the proposals remains an option for them. Jack Brier, a Topeka real estate developer, questioned how a “basic hotel” could be considered a mere “sweetner” for a destination site. Bob Boaldin, co-owner of an Elkhart telecommunications firm, asked, “How do we know we’re not being low-balled here?”
All said legislators had hotel-and-casino complexes in mind when they passed the casino law in 2007.
But he added, “I don’t think the Legislature was able to foresee the crash of the economy, the unprecedented restriction on capital and the lack of competition.”