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Archive for Thursday, December 16, 2010

Kansas review board approves $260 million casino proposal from Peninsula Gaming

December 16, 2010

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— A Kansas review board chose a $260 million casino proposal by Peninsula Gaming for Sumner County on Wednesday, citing its potential to generate more revenue for the state than the competing project.

By a 6-1 vote, the Kansas Lottery Gaming Facility Review Board supported the Dubuque, Iowa-based company’s plan to build its Kansas Star hotel, casino and equine center near Mulvane on Interstate 35. It was chosen over a $280 million proposal from Global Gaming Solutions, an Ada, Okla., company owned by the Chickasaw Nation.

Board members cited the potential for more revenue from the Peninsula project than Global Gaming’s proposal for a project on I-35 near Wellington.

“To me, that’s the (factor) most focused on,” said board member Jim Bergfalk, who voted for the Peninsula project. “We benefited from healthy competition.”

The Racing and Gaming Commission, as the regulator, must sign off on the winning proposal after conducting a background check. No one has ever been turned down and denied a gambling license from the commission once the contract has been approved by the lottery review board. But there is a possible wrinkle in Peninsula’s project.

Two Peninsula executives, Brent Stevens, its chief executive, and Jonathan Swain, its chief operating officer, were charged in October with two misdemeanor counts each of violating Iowa’s campaign finance laws. The charges involve accusations that their company made donations in the name of others to Democratic Iowa Gov. Chet Culver’s unsuccessful re-election campaign.

Stevens said the campaign controversy wouldn’t affect the Kansas project, which he said would be built regardless of the outcome in Iowa. He added that construction could begin early next year.

“We don’t believe there is a reason to be concerned,” Stevens said. “We deny any wrongdoing. It is a process that is ongoing. The Kansas Star will go forward, irrespective the people which are actually managing the company at that point.”

The casino must be in Sumner County because voters in neighboring Sedgwick County, home to Wichita, rejected the idea. It is the third time the board has awarded a project in Sumner County. The first two winners backed out of their deals because of issues related to the national recession.

Peninsula plans to build near Mulvane, about 18 miles south of Wichita. It plans to have an equestrian center, 300-room hotel and casino completed by 2015. The equestrian center could host concerts, trade shows and conventions, as well as dozens of horse events annually.

Two consulting firms hired by the review board, Cummings Associates of Arlington, Mass., and Wells Gaming Research of Reno, Nev., both projected that most of either proposed casino’s revenue would come from customers living within 100 miles. Both suggested that Peninsula could generate more revenue.

Cummings projected that in 2014, Peninsula’s casino would generate $192 million in revenue, compared to $141 million for Global’s casino, a difference of almost 27 percent. The gap was even larger in Wells’ projections — 41 percent, or $179 million for Peninsula and $109 million for Global.

The Kansas Lottery will own the rights to the new gambling and the gambling equipment, and the state will claim 22 percent of the gambling revenues. Kansas opened its first casino in Dodge City in 2009, and a second is under construction near Kansas Speedway in Wyandotte County.

Members of the review board noted that the process had been divisive for Sumner County, but it also created more competition that yielded better proposals.

“It would have been nice for us to receive a single proposal in Sumner County, a proposal that all of the leaders of the county had agreed on. We don’t have that, we never had,” said Matt All, chairman of the facility review board.

Mulvane City Administrator Kent Hixon said officials were “cautiously optimistic” that this proposal would be the last and a casino would be built.

“Whatever we can do to utilize this economic development to the betterment of everyone in Sumner County, all the cities, we’re going to do,” Hixon said. “I think some people took it more personally than others. Whatever wounds that need to be healed, hopefully we can do that and move on.”

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