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Archive for Thursday, April 28, 2011

Kansas House rejects casino project lawsuit

April 28, 2011

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— Kansas legislators who support a state-owned casino south of Wichita narrowly blocked an attempt Thursday to launch a court challenge to regulators' decision to allow the project to go forward.

The House voted 62-59 against a resolution directing the attorney general to file a lawsuit in a state court over the Racing and Gaming Commission's approval of the project. Peninsula Gaming, based in Dubuque, Iowa, is planning a $260 million complex with a casino and horse arena in Mulvane, 18 miles south of Wichita.

Critics consider the commission's decision in January premature. Many of them cite misdemeanor charges pending in Iowa against Peninsula and two top executives, alleging they participated in illegal campaign contributions to Iowa Gov. Chet Culver's unsuccessful re-election campaign last year.

The company and its executives have said they committed no wrongdoing and expect the case to be resolved in their favor. Peninsula has started work at the Mulvane site.

Kansas House members who support the project noted that the criminal case hasn't gone to trial. They suggested the allegations aren't serious enough under state law anyway to disqualify the company from operating the casino for the state lottery.

"These allegations, first of all, haven't been proved yet. And, as I think we are all aware, you are innocent until proven guilty," said House Minority Leader Paul Davis, a Lawrence Democrat and attorney. "Let's move beyond this. Let's allow the jobs to be created."

A 2007 law permits a single state-owned casino in each of four locations, including the Wichita area. Private developers build and operate the casinos under contract with the lottery, but the state owns the rights to the gambling and gambling equipment and takes 22 percent of the revenues. The setup is unique among states.

Another Kansas law allows one legislative chamber to direct the attorney general to file a lawsuit to settle a legal question. The gambling resolution didn't say whether Attorney General Derek Schmidt would file his case in district court or with the Kansas Supreme Court.

As a state senator, Schmidt, a Republican, voted for the 2007 gambling law. But he's stayed out of the Legislature's debate this year.

Backers of the resolution said a lawsuit was necessary to resolve the issues they see surrounding Peninsula's project and the gaming commission's decision. They've questioned whether local zoning issues were properly settled before the commission acted, and whether a provision in the gambling law meant to keep lawmakers from interfering in the selection of developers actually stifles free speech.

But project critics have repeatedly raised the criminal charges in Iowa as a key issue, suggesting the commission should have at least waited until the case was resolved to let Peninsula go forward.

"This is one that worries me to no end, that Kansas is about to embark on something where the i's have not been dotted, the t's have not been crossed," said House Speaker Mike O'Neal, a Hutchinson Republican. "Things that are pending in Iowa may come back to haunt us."

Peninsula lobbied against the resolution and planned to issue a statement about the debate. The firm has said previously that it has a valid contract with the lottery and has spent tens of millions of dollars on the project already.

Some supporters of the casino described the resolution as an attempt to cancel the project on behalf of local residents who oppose it. The resolution's strongest backers were lawmakers who opposed the 2007 law.

Rep. Judy Loganbill, a Wichita Democrat who supports the casino, said intervening would send a bad message to businesses that might want to invest in Kansas.

"Future projects are at risk if folks from around the country who want to come build an economic engine in our state get the idea that if you sign a contract with the state of Kansas, they're liable to change the rules midstream," she said.

But backers of the resolution noted that the casino contracts specify that the state's gambling policy can be reviewed and changed.

And House Federal and State Affairs Committee Chairman Steve Brunk, a Bel Aire Republican whose committee endorsed the resolution, said a lawsuit would help protect the integrity of state-owned casinos.

"The state of Kansas is the owner of the casino, and the people of the state of Kansas, they have every expectation that we would be doing this in the highest moral way necessary according to the law," he said. "Today, we failed on that account."

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