Topeka — The speaker of the Kansas House on Friday questioned the legality of an Iowa company’s contract with the state lottery to build and operate a casino south of Wichita, saying he and other lawmakers want the attorney general to intervene and perhaps even challenge it in court.
But a spokeswoman for Peninsula Gaming, based in Dubuque, Iowa, said the company went through “a lengthy and diligent” review before getting the go-ahead last month for its $260 million project. And another influential legislator accused Speaker Mike O’Neal of “blowing smoke.”
O’Neal, a Hutchinson Republican and attorney who opposed the 2007 law allowing the state-owned casino, said he and other House members would like at least a legal opinion about the validity of Peninsula’s contract from Attorney General Derek Schmidt, also a Republican. O’Neal also wouldn’t rule out pushing Schmidt to file a lawsuit over it with the Kansas Supreme Court.
As grounds for legislators’ questions, O’Neal cited unresolved litigation over local zoning issues and a misdemeanor criminal case in Iowa against Peninsula and its two top officials over campaign finance allegations. Peninsula officials have repeatedly said there was no wrongdoing and expect the Iowa case to be resolved in their favor.
O’Neal questioned the contract in the context of the Legislature’s debate over trimming spending from the current budget. He noted the state has collected a $25 million fee from Peninsula for the privilege of building and operating the casino and said lawmakers need to know whether the money can be budgeted.
“When these legal issues are raised, then they probably need to get answered, particularly when we’re sitting on $25 million,” O’Neal told reporters. “We’d like to know: Are we going to have pay it back or are we going to be able to plug it into the budget somewhere?”
Schmidt’s office did not respond Friday to the House speaker’s comments. O’Neal said legislators have raised their questions with Schmidt as a courtesy before considering pushing him into acting, such as by adopting a resolution directing him to file a lawsuit.
Peninsula’s project has been approved not only by the lottery and a separate review board but also by the state Racing and Gaming Commission, which will regulate the casino, to be built in Mulvane, 18 miles south of Wichita. The commission’s approval, granted last month, was the last regulatory hurdle the Iowa company faced.
Spokeswoman Kathy Damron said the company already is preparing its site for construction and has raised $130 million in cash for the project. She said Peninsula has received 1,000 job applications from Kansans and more than 250 firms have signed up to do business with it.
“Peninsula Gaming has a contract with Kansas that was executed following a lengthy and diligent process involving three separate state agencies,“ she said. “The company is very disappointed by the comments made by the speaker and can only assume they are politically motivated.”
Under the 2007 law, the lottery will own the rights to the new gambling and the gambling equipment, and the state will claim 22 percent of the revenues. Peninsula would be guaranteed the only state-owned casino in the Wichita area, though an Indian tribe based in Oklahoma is trying to get permission from the federal government to build one north of the city.
Gambling opponents and foes of Peninsula’s project have repeatedly used the criminal case in Iowa as a reason it can’t go forward. But the company has promised that its top executives would step away from the project if necessary, and most Racing and Gaming Commission members were comfortable in giving their permission.
Critics of the project also are citing concerns about zoning because two lawsuits filed by local residents in November are still pending in Sumner County District Court. They say the litigation had to be resolved before a contract was issued.
Senate Vice President John Vratil, a Leawood Republican and an attorney, called O’Neal’s allegations about the contract’s validity “flimsy.” Vratil said he doubts Schmidt will want to intervene and saw O’Neal’s comments as an attempt to influence budget negotiations.
“It’s just blowing smoke,” Vratil said. “I just think he’s trying to gain a political advantage.”
And House Minority Leader Paul Davis, a Lawrence Democrat, said: “I just don’t see a role for the Legislature in this.”
House Judiciary Committee Chairman Lance Kinzer, an Olathe Republican and O’Neal ally who opposes gambling, acknowledged there are questions about whether legislators can intervene but said many are interested.
“It’s still in flux,” Kinzer said. “I’m definitely in discussions with a lot of folks about it.”