Harrah's once again has snubbed Sumner County after a long flirtation. The Vegas giant yanked its application to build a $260 million casino near Mulvane on Wednesday, just a few hours before it was to make a presentation to the Kansas Lottery Commission.
That left the commission to consider proposals from just two casino companies. It approved contracts for both: Global Gaming Partners' plans for the Wellington turnpike exit and Peninsula Gaming Partners' plans for the Mulvane turnpike exit.
The contracts will be sent to a seven-member casino review board, which will have 60 days to select the winner.
But it was Harrah's that had people talking Wednesday.
The company offered no reasons for pulling out a second time.
The company won the bidding process for a $560 million casino in Sumner County in 2008 but backed out when the economy soured. It reassured county officials earlier this summer that it was committed to the market.
The move stumped Lottery officials. The Lottery's executive director, Ed Van Petten, said the staff had been negotiating with Harrah's as late as Tuesday afternoon.
"All the parties have had various issues come up, but we didn't have any indication this would happen today," he said.
"They considered the totality of the circumstances and decided they would not be pursuing this opportunity," Keith Kocher, the Lottery's gaming facilities director, told commissioners at the meeting.
Harrah's local attorney, Kyle Steadman , walked into Mulvane's city offices at 11 a.m. Wednesday to announce the withdrawal, according to City Administrator Kent Hixson.
"I didn't ask why," Hixson said. "After three years of working on this issue, they don't need to tell me why."
Steadman declined to comment, referring questions to Harrah's officials.
A statement from Trevor Busche, vice president of development for Harrah's, didn't shed much light on the decision.
"After careful consideration and discussion with the Kansas Lottery Commission, Harrah's has decided to withdraw its application," Busche said.
The withdrawal comes a day after The Eagle reported the Wyandotte Nation had purchased a commercial lot in Park City as part of its planned casino in that area.
Rep. Vince Wetta, D-Wellington, who fought to get Sumner County included in the state's expanded gaming law, and who champions a Wellington location for the casino, said he wasn't surprised.
"I just didn't feel like they brought their 'A' game. With the way everything developed — and, obviously, with their financial situation that everybody's read about — I couldn't believe they stayed as long as they did," he said.
Harrah's announcement came about a month after the company posted a $274 million loss for the second quarter of this year. Harrah's also reported that at the end of March, it was carrying more than $22 billion in debt, though none of it was due before 2015.
Peninsula and Global Gaming executives said they didn't know why Harrah's withdrew, but acknowledged that it cleared out some of the competition.
"The number dropped from three to two. Now there's a distinction between sites," said Scott Cooper of Peninsula, the only remaining bidder for Mulvane. "Gaming revenue consultants have consistently favored the 33 exit over 19 the last two years."
Hixson said the size of the proposed project makes any decision to proceed tenuous.
"That's a lot of money," he said. "You want to be darn sure that you know what you're doing.
"We have no hard feelings toward Harrah's. They're a good group.... We have quality proposals still on the table and we'll continue on."
History of proposals
Harrah's and a partner, Equity Ventures of Topeka, won the bid to manage a Sumner County casino in 2008 but later withdrew, citing economic conditions.
Harrah's officials assured county officials in early August that the company had money to finance the casino itself this time around.
"We're prepared to stand behind the project, and the balance sheet can support it," Busche said at a presentation in Sumner County.
"We're back for a second time because we really believe in this market. We wouldn't be back if we didn't intend to follow through."
At the time, Busche also said the Wyandotte Nation's plan to build a casino in Park City, about nine miles north of Wichita, wasn't a concern.
"We're not afraid to compete in markets where we have to compete against other operators," he said. "We don't know what they're going to build, but we're building a full casino."
The Wyandottes hope to break ground on a bingo-based casino along I-135 later this year. The tribe is awaiting approval of its application to have the U.S. Department of Interior put its Park City land into trust for gambling.
Peninsula and Global Gaming executives said they were prepared to meet the competition from a tribal casino near Wichita.
"You've got factors such as, when will it happen, and what will the quality of it be?" said John Elliott, chief executive of Global Gaming. "You're potentially talking about building a Class II facility versus a Las Vegas Class III facility. You're potentially talking about a small facility versus a large, more sophisticated facility. And it's also against the background of a reasonably deep market (in Wichita)."
Cooper, general manager of the Peninsula's Diamond Joe casino in Iowa, said the company is used to competition at its casino locations in Iowa.
"We believe we'll be the market leader," he said. "I believe it will be a good project for the company.
"We're here to stay."
Global Gaming's plan
During its presentation to the Lottery Commission, Elliott cited Global Gaming's experience operating gambling facilities along the I-35 corridor in Oklahoma.
It is based in Ada, Okla., and its properties include the Riverwind Casino in Norman and the Winstar casino near the Texas border.
Elliott said his market research shows no difference in the amount of gambling revenue that would be earned by a casino in Wellington and one near Mulvane.
Global Gaming plans a total investment at Wellington's exit of more than $280 million over 12 years of phased-in developments. Elliott said 80 percent of the investment would be built within five years.
The casino would open within 14 months after construction begins. The first phase would include 1,300 slot machines, 40 gaming tables and 20 poker tables. By year five, there would be 500 more slots.
The first phase also would include a buffet, sports bar, food court, performance lounge, 80-room hotel and improvements to Wellington's existing golf course.
A 1,400-seat entertainment center, parking garage and vintage auto racetrack —which could be used for other purposes, such as police training — would be built in seven to 12 years.
Peninsula, based in Dubuque, Iowa, plans a $260 million total investment, which includes a third-party hotel with 150 rooms. It would open an interim facility in November 2011, complete a first phase by November 2012, and complete a second phase by 2014.
Cooper said the interim facility would have 1,310 slot machines, 32 gaming tables, and several food and beverage kiosks.
As the first phase is built, the number of slots would increase to 1,500 and the number of tables to 42. Peninsula also would include a VIP lounge, poker room, buffet, steak house, food court, and indoor equine facility in the first phase.
The second phase would increase the number of slots to 2,000 and number of tables to 50, double the size of the hotel to 300 rooms, expand the equine facility, and add a new sports bar.
A third phase would depend on market demand, Cooper said. Plans call for adding another hotel and retail development, expanding the equestrian center, and increasing the RV park to 100 full-service spaces.
Peninsula also plans to provide a $100 scholarship for school supplies for all K-12 students in Sumner County, and $1,000 scholarships for graduating seniors in the county who plan to go to college.
The approval of Peninsula's contract is subject to the Lottery receiving evidence that the company has met zoning and planning requirements for its site at Mulvane's Exit 33. Peninsula was scheduled to meet with the Sumner County Planning Commission on Wednesday night.