Sumner casino planners announce hotel

TOPEKA _ After listening for two hours to consultants' concerns that Sumner County's casino would lack a hotel, the state casino review board found out that wasn't true.

Developers of the Chisholm Creek Casino Resort told the board late Monday that they had signed a contract over the weekend with Topeka-based Double Down Development to have a hotel operating six months after the casino opens in 2012.

Tim Cope, president of Lakes Entertainment, which would build and manage the casino, told the board the hotel will feature at least 100 rooms, as well as a swimming pool, exercise room and 5,000 square feet of meeting and conference space.

The announcement surprised the seven-member Kansas Gaming Facilities Review Board, which was hearing about the hotel for the first time.

The board had been meeting all day to review consultants' reports about the casino, planned for the Mulvane exit off the Kansas Turnpike, and a casino for Wyandotte County.

Board members had just listened to a large group of consultants discuss the Chisholm Creek plan. Several had supplied figures that were based on the assumption that no hotel would be built in the project's first phase.

One consultant had graded the project's nongaming amenities as "weak," in part because it wouldn't have a hotel to draw tourists.

Cope's announcement was met with mixed feelings by the board.

"There's new information that sounds positive," Matt All, board chairman, told Cope, "but you need to get on the same page as our consultants. We're in the late stages in this process."

All said the board needed to feel comfortable with the project before approving it, and warned that if questions aren't cleared up, the board would vote it down.

The board is scheduled to decide on the proposal at a meeting in Topeka Dec. 1-2.

Cope said the addition of the hotel made the Chisholm Creek project a true destination resort as required by the state's expanded gambling law.

He said the hotel would be "something like a Hampton Inn quality" facility.

He didn't know whether it would be connected to the casino directly.

"My estimate is that it would not have a common wall but an entryway of some kind," Cope said.

Double Down Development, which would build and manage the hotel, is a Topeka-based company that is building the Boot Hill Casino Resort in Dodge City.

Lakes and its partners plan a $150 million first-phase, all-cash investment in the casino. Half of the financing would come from Och-Ziff Real Estate of New York, 33 percent from Clairvest Group of Canada, and 17 percent from Minnesota-based Lakes.

Raving Consulting, which reviewed the nongaming amenities, had graded the project low because it didn't have a hotel and lacked the number of food, beverage, and entertainment amenities to meet the minimum standards Raving recommends for the market.

"I would suggest it's likely to fall short of its goal of maximizing revenue and tourism," said Scott Cooper, a Raving consultant.

But, he added, he'd approve the project "in a New York minute" because of Lakes' experience developing casinos in other areas of the country.

Civic Economics forecast a total economic impact of $140 million in the first phase and $220 million when the casino is fully built.

It said half the gaming revenue would come from Kansas residents.

Will Cummings of Cummings Associates said the casino would produce annual gaming revenue of $163 million in phase one and $192.8 million when completed.

The first-phase estimate was higher than Lakes' forecast of $121 million, but the final number was lower than the $230 million projected by Lakes.

Richard Wells of Wells Gaming Research predicted the casino would produce $144 million in annual gaming revenue in phase one and $206 million when completed.

Consultants for Union Gaming Group vouched for the financial viability of the partners.

Grant Govertsen and Bill Lerner said their only questions concerned Lakes' ability to borrow enough equity to meet its $25 million commitment, and whether it was earning enough cash from its current operations.

But they said all three partners had the financial wherewithal to fund their shares.

In a worst-case scenario, Och-Ziff and Clairvest could cover any shortfall by Lakes, they said.