Wichita investors sue to overturn southeast Kansas casino decision

The mostly Wichita investors who lost a bid to build a casino in southeast Kansas have filed suit to reverse the state’s decision.

Castle Rock Casino filed a lawsuit July 31 in Shawnee County against the Kansas Gaming Facility Review Board, the Kansas Racing and Gaming Commission and members of both groups. The Kansas Lottery and its executive director are also named in the lawsuit.

The review board in June chose the smaller $70 million Kansas Crossing Hotel & Casino near Pittsburg in Crawford County after lengthy hearings and consultant reviews instead of the much larger $145 million Castle Rock Casino complex in Cherokee County. The gaming commission confirmed the board’s selection on July 2.

Five of the seven review board members said the smaller casino complex is the right size for the market and that its main investors had a proven track record at two of the other state-owned casinos. Two consultants hired by the review board expressed concern over Castle Rock’s revenue projections, and at least one questioned whether it would ever be profitable enough to cover any debt payments.

The southeast Kansas casino is the last of four state-owned casinos allowed under a 2007 Kansas law, along with casinos in Mulvane, Dodge City and Kansas City. The Kansas Lottery owns the casinos and the state receives 22 percent of the gambling profits.

Castle Rock contends that the state boards didn’t follow the state law.

“We think Kansas law requires the board to pick the best contract, the one that maximizes employment, tourism, revenue and hotel rooms,” said Russell Jones, an attorney for Castle Rock. “Ours was the one that fits the most metrics, and we think the board did not follow Kansas law in picking the other contract.”

Castle Rock’s investment partners, led by Wichita businessmen Brandon and Rodney Steven, declined to comment.

A Kansas Crossing representative on Friday declined to comment.

Fred Waller, an enforcement agent and spokesman for the Kansas Racing and Gaming Commission, said the review board used proper procedures.

“We used the same procedure as we used in the first (casino) selection,” he said. “It’s a different board but the same process. So we’re satisfied.”

Waller said if the judge rules in Castle Rock’s favor, the selection process would start over, but Jones said that would depend on the specifics of the judge’s ruling. Jones said it is unlikely the lawsuit would go to trial until next year.

Castle Rock wants to combine its lawsuit with one filed earlier in July by the Cherokee County Board of Commissioners, which makes similar arguments.

But the Cherokee County action has already suffered an early defeat. Along with the suit, Cherokee County sought a temporary restraining order to keep the Kansas Crossing proposal from going forward.

Earlier this week, Shawnee County Judge Larry Hendricks rejected the restraining order. He said that it’s not his role to review the evidence and re-decide the selection; instead, he weighed in on whether the selection process was adequate and fair. He judged that the review board’s methods were thorough and its conclusion based on a substantial amount of the evidence it heard.

Pittsburg City Manager Daron Hall said it was unfortunate the lawsuits have been filed.

“The difficult thing about everybody suing everybody else it is limits the opportunity to talk,” he said. “What we need is to sit down and talk with Cherokee County (about what’s good for the area.)”

Contributing: Dan Voorhis of The Eagle and Associated Press