Ten proposals to manage three state-owned casinos were endorsed Tuesday by the Kansas Lottery Commission and forwarded to a review board that will make the final selections.


TOPEKA (AP) — Ten proposals to manage three state-owned casinos were endorsed Tuesday by the Kansas Lottery Commission and forwarded to a review board that will make the final selections.

Developers of an 11th proposal dropped out of the competition to operate a casino in Sumner County, and the commission rejected a second proposal offered by Penn National Gaming Inc. for the same county.

The commission endorsed proposed contracts for two projects in Ford County, three in Sumner County and five in Wyandotte County. Earlier this month, it endorsed a contract with Penn National as the sole bidder for a Cherokee County casino.

“We’re not done yet, but this is a big step,” Keith Kocher, Lottery director of gaming, told the commission.

The next step for the creation of resort casinos under last year’s expanded gambling law will be scrutiny by the Kansas Lottery Gaming Facility Review Board. It will conduct its own study with its consultants and staff and have public hearings.

The review board will pick the managers for the Cherokee and Sumner casinos on Aug. 21-22 and the Ford and Wyandotte casinos on Sept. 18-19. All must pass a background check by the Kansas Racing and Gaming Commission.

Dropping out of the running was a partnership of MGM Mirage Inc., of Las Vegas, and Foxwoods Development Co., of St. Louis, for a casino at Mulvane. Its statement said only that negotiations didn’t result in a contract they were willing to sign.

There are commercial casinos in 12 states, but only Kansas would have state-owned and operated facilities, according to the American Gaming Association. The state has four tribal casinos on reservations in northeast Kansas.

“All they told us is that after further evaluation it didn’t make financial sense for them to go forward,” said Ed Van Petten, Lottery executive director. “We knew of the probability for a week. They weren’t negotiating.”

That decision left three proposals endorsed by the commission for Sumner County — Harrah’s Entertainment in Mulvane, and Marvel Gaming and Penn National at Wellington.

Also approved were five developers who want to operate the casino in Wyandotte County, all near or at Kansas Speedway: Golden Gaming Inc.; Kansas Entertainment Inc.; Pinnacle Entertainment; Legends Sun; and Sands Kansas.

Two developers for Ford County — Dodge City Resort and Gaming Co., and Butler National Service Corp. — also advanced to the review board.

The law requires a minimum investment by the developers plus a privilege fee paid within 30 days of contract approval. For Cherokee, Sumner and Wyandotte counties, it’s a $225 million investment and a $25 million fee. For Ford County, a developer must invest $50 million and pay a $5 million fee.

All the proposals had the state’s share starting at the minimum 22 percent required by law, with higher percentages tied to specific revenue amounts. They also include 3 percent for local governments and 2 percent for the problem gambling and addictions fund.

After the commission’s vote endorsing the 10 contracts, Penn National asked the panel to also endorse a second Sumner County proposal that would have given ownership of the buildings to the state. Commissioners adjourned without commenting or voting on the proposal.

“It attempts to build on and strengthen the concept of state owned,” Penn National attorney John Petersen told the commission. “It gives the review board another avenue.”

Commissioner Joni Franklin, a Wichita attorney, said after the meeting there were questions among the commissioners about whether the proposal was a binding contract. She also said there were concerns that it was proposed two weeks ago and the Lottery staff didn’t have enough time to properly review it.

Lottery attorney Dan Biles recommended against endorsing the second proposal.

“It transferred the risk of operation to the state,” Biles said. “It transferred to the state the ongoing responsibility of bricks and mortar.”

Legislators enacted the law allowing the casinos last year. The law says the new gambling will be owned by the state, but it allows the Lottery to contract with developers to build and operate the casinos. The state hopes to eventually collect some $200 million a year from the new gambling.

The gambling law still is under review by the Kansas Supreme Court, chiefly over the question of whether the casinos truly would be owned by the state. The court has given no indication when it will rule, although its next scheduled day for decisions is June 27.

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