Review board sets dates for awarding Kansas casino contracts

TOPEKA, Kan. _ The decisions on who will run the four state-owned and operated casinos likely will be made in August and September by the Kansas Lottery Gaming Facility Review Board.

The board decided its timetable Thursday and agreed to ask Gov. Kathleen Sebelius for a 60-day extension on its current deadline. That would allow the board to decide on Aug. 21-22 for Cherokee and Sumner counties and Sept. 18-19 for Ford and Wyandotte counties.

The governor is expected to extend the deadline. She already has done so for the Kansas Lottery Commission, which is negotiating contracts with 12 potential developers. The board's extension actually would be until Sept. 5 for Cherokee County and Sept. 26 for the other three venues.

"We need more time. It's a Herculean task," said Stephen Martino, executive director of Kansas Racing and Gaming Commission, whose staff works with the independent review board. "That's our schedule, but if we have a hiccup on the schedule, we will have some flexibility."

A law enacted last year allows four resort casinos with the Lottery owning the gambling but private companies building and managing the casinos under contracts with the state. There are 11 other states with commercial casinos, but Kansas would be the only one with state-owned operations.

The selection process is in its first phase with the Lottery still negotiating contracts. It can sign as many contracts as it wants and forward them to the review board to make the selections for the final four.

Sebelius last month gave the Lottery a 90-day extension to reach agreements, pushing deadlines to May 5 for Cherokee County and May 17 for the other counties.

There are five prospective operators for Wyandotte County; four for Sumner County and two for Ford County. There's only one in Cherokee County — Penn National Gaming Inc., of Wyomissing, Pa., but that could change.

Penn National wants to phase in its development which the law says must be a minimum $225 million investment, the same as Sumner and Wyandotte counties. It's a $50 million minimum investment for Ford County which is seen as having a smaller market.

Ed Van Petten, Lottery executive director, said it's unclear whether the law allows a phased-in development. He said the commission can't change the minimum investment amount nor can it lower the privilege fees of $25 million for operating in all counties except Ford where it's $5.5 million.

"Penn National isn't being confrontational about this. We're only discussing the options," Van Petten said.

The company has said it hasn't ruled out walking away from the project, which would be competing with a nearby Oklahoma tribal casino.

The gambling law is being challenged in the courts, chiefly over whether the state really owns and operates the casinos as constitutionally required. A district court upheld the law in February and the Kansas Supreme Court will hear arguments May 14.

The law also allows slot machines at dog and horse tracks in Kansas City and Frontenac which Van Petten said could be in operation this fall. The state hopes to collect at least $200 million a year from the new gambling.

In other action, the board unanimously agreed there was no conflict of interest because a consultant, Candace Evart, president of Meridan Business Advisors in Reno, Nev., did consulting work in 2004 for the city of Staples, Nev. The city was considering a casino with ties to a development company that's part of a group wanting to run the Wyandotte County casino.

Evart reported the situation to the board when she realized the connection last month after the development company contacted her for additional information. She said her company has severed relations.

Martino said the staff recommended retaining her because they didn't feel it would affect her work in Kansas.

"It's a relatively benign situation, but I'm glad we know about it," said Matt All, review board chairman.

Martino said the staff is coming up with figures on how much the applicants must pay the review board for processing the applications. He estimated the amount will be "in the six figures."


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