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Revenue dips at Kansas Star, Boot Hill casinos

People play the slots at the Kansas Star Casino in Mulvane.
People play the slots at the Kansas Star Casino in Mulvane. File photo

Kansans are spending more on lottery tickets and less on gambling at two of the state-owned casinos.

Income at the Kansas Star Casino in Mulvane dropped in fiscal year 2014 and is expected to decline further this year, according to reports to the Legislature on Tuesday.

Net gaming revenue for the casino was $181 million for fiscal year 2014, down from almost $192.2 million in fiscal year 2103, according to lottery officials.

The current revenue estimate for the casino this fiscal year is $179.5 million, but recent improvements at the casino are expected to push revenue back up to about $185 million by 2017.

Those numbers emerged during and after the annual report on the lottery from executive director Terry Presta to the Senate Federal and State Affairs Committee. The House Appropriations Committee also discussed the decline in casino revenue, which has reduced the state’s income from expanded gambling.

Presta said casino revenues are down across the country and overall, Kansas casinos fared better than most.

In the Appropriations Committee, Legislative Research fiscal analyst Dezeree Hodish said that the dip at the Kansas Star is part of the natural life cycle of a casino.

When a casino opens, “people who normally wouldn’t attend the casino (go) just to check it out and visit,” she said.

Now, that “has leveled off and really hit a plateau, and now we’re to just around where we think the revenue will be for that market,” she said.

The Kansas Star opened with a limited gaming operation in December 2011 and generated $98.9 million for the 2012 fiscal year, according to Legislative Research reports.

The department is projecting slight revenue increases for 2016 and 2017 because of the completion of amenities at the casino that are expected to bring in more traffic. The improvements include recent completion of conference space, an equestrian center and the world’s largest Hampton Inn and Suites hotel.

Overall, revenue from the state’s three lottery-owned casinos was down from $360.5 million to $353 million from fiscal year 2013 to 2014, a dip of about $6.5 million.

The Hollywood Casino in Kansas City was the only casino with a 2014 revenue increase, rising from about $125 million to $132 million.

That helped to offset the declines at the Kansas Star and at the Boot Hill Casino in Dodge City. Boot Hill’s revenue dropped from $43.3 million to $39.9 million.

About $257 million of the statewide casino income went to the companies that run the casinos under license to the state, which technically owns the casinos.

The state receives 22 percent of the income from the casinos and saw its overall casino income dip from about $79.4 million to slightly less than $78 million.

While casino revenue is sliding, Kansans continue to love their lottery tickets.

So much so that they spent almost a million dollars more for them last year than in 2013, according to the Kansas Lottery’s annual report to a state Senate committee.

Sales of traditional lottery tickets for fiscal 2014 totaled $245.7 million, the second-highest amount in the 27-year history of the lottery, lottery executive director Presta told the senate committee.

About half of the money from lottery ticket sales was paid out in prizes, totaling $124.6 million.

Winners paid $1.15 million in income taxes to the state. In addition, the Department of Administration diverted about $200,000 from prizes to pay off those players’ pre-existing debts to the state.

Retailers who sell lottery tickets received $14.1 million in commissions.

The lottery transferred $74.3 million to the state, just slightly less than a record amount, Presta said.

In the second quarter of last year, lottery ticket sales increased 15 percent, the biggest increase among the 45 states that have a lottery, Presta said.

The trend appears to be continuing this fiscal year.

In July, August and September – the start of the new fiscal year – sales were up about 13 percent. Figures aren’t yet finalized for October through December, but the lottery is projecting an increase in the 12-13 percent range, Presta said.

Presta said the lottery will be introducing a bill with four provisions, designed to increase ticket sales overall while keeping tickets out of the hands of minors.

The bill would:

▪ Allow the lottery to advertise on-site at state university events, especially KU and Wichita State basketball and K-State football games.

▪ Allow the lottery to use electronic ticket dispensers. Lottery officials say that would allow retailers to cut lines and labor costs.

▪ Allow the lottery to sell tickets directly to the public. At present, all sales must go through a retail merchant.

▪ Make it illegal for minors to purchase tickets. Under current law, there’s no prohibition on minors buying tickets and no prohibition on retailers selling to them, unless the seller knows the buyer is underage.

Reach Dion Lefler at 316-268-6527 or dlefler@wichitaeagle.com.

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