December 24, 2011

Who all gets a piece of casino money?

The one thing a casino does well is make money, and the new Kansas Star Casino in Mulvane which opens Monday isn’t likely to be any different.

The one thing a casino does well is make money, and the new Kansas Star Casino in Mulvane which opens Monday isn’t likely to be any different.

Consultants and the state, which will own the casino games, predict it will begin making millions within the first year and see its revenue rise steadily for the next few years.

A year ago, before the state selected the Kansas Star over a proposal for a casino in Wellington, revenue consultant Will Cummings projected the Kansas Star would earn $159 million in its first year and $213.4 million when the permanent casino and hotel are completed in 2015. That final projection would drop to $141 million if a tribal casino proposed for Park City opens. The proposal, by the Wyandotte Nation of Oklahoma, is tied up in federal court.

In April, the state issued a consensus revenue estimate that is more conservative than the Cummings estimate. It forecast revenue from the Kansas Star at $56.5 million for fiscal 2012, $147.1 million for 2013, $163.3 million for 2014 and $188.7 million for 2015.

Where does the money go?

By state law, the casino’s manager, Peninsula Gaming, of Dubuque, Iowa, will keep 73 percent of the gambling revenue, while 22 percent will go into a new state fund created by the 2007 law that allowed for state-owned casinos in four gambling zones.

The Expanded Lottery Act Revenue Fund is to be used for reducing state debt, reducing local property taxes, and improving state infrastructure, such as roads and the Statehouse renovation. The fund also will hold the state’s share of the gambling revenue from the Boot Hill Casino in Dodge City and the Hollywood Casino at the Kansas Speedway in Wyandotte County. There hasn’t yet been a viable bidder in the fourth zone in southeast Kansas.

Boot Hill, which opened in mid-December 2009, with fewer than half the number of slot machines and gaming tables than the Kansas Star, has contributed $17.3 million to the fund from $78.7 million in revenue. The Hollywood Casino, scheduled to open early next year, is projected to earn $203.3 million its first year and $261 million when completed with 3,000 slots.

The Kansas Star will open with 1,310 slots and 32 gaming tables in an interim casino inside a building that eventually will become an events/convention/equestrian center. Its permanent casino will have 2,000 slots and 50 tables.

One percent of the Kansas Star’s gambling revenue will go to Sumner and Sedgwick counties and to the city of Mulvane. According to the state’s estimate, that would come to about $565,000 for each entity for fiscal 2012, $1.47 million for 2013, $1.63 million for 2014 and $1.8 million for 2015.

Another 2 percent of the casino’s revenue will go to a state problem gambling and addictions fund.

Sedgwick County’s share of the revenue will go into its general fund. No specific policy has been put in place for how to use the money, according to David Miller, budget director. Until that occurs, the money will contribute to reducing existing operating deficits, Miller said.

Mulvane will put half of its share in its general fund and the rest in a contingency line item as unrestricted money to add resources as needed, said Kent Hixson, city administrator. The City Council will begin evaluating projects for the money such as repaving streets and improving sewage and drainage systems. The city also should see benefits of a property tax base expansion, he said.

The city’s goal is to lower the mill levy and stabilize electric rates, Hixson said. Mulvane provides electricity to its residents and operates its own utility.

Other costs, benefits

But the casino will create costs to the city as well, he said. The city probably will use some of the gambling money to build a water tower at the site and add police and other public safety personnel, Hixson said.

“The money we’ll be gaining isn’t all gravy,” he said.

Officials with Sumner County couldn’t be reached.

The project already has provided an economic impact to the region from the 1,600 jobs created through construction, and wages for 500 permanent employees at opening, which will grow to 800 by its completion.

Ekay Economic Consultants estimated last year that over its first seven years, the casino will have a total economic impact of $289.3 million on the state, $24.9 million on Sumner County, $11 million on Sedgwick County, $12.8 million for Mulvane, and $20.3 million on the Mulvane school district, USD 263.

That comes from gaming revenue, property taxes, sales and use taxes, income taxes, and contributions from the developer.

Peninsula Gaming also will contribute $1.5 million annually to an education fund for all school districts in Sumner County and Mulvane.

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