Web posted
Wednesday, July 23, 2008
Consultants give Harrah's an edge
By CARL MANNING
Associated Press Writer
TOPEKA (AP) - Harrah's proposal for a casino in Sumner County would generate more revenue than two other plans from companies vying to run a state-owned facility there, according to consultants for Kansas' casino review board.
Potential revenues a casino would generate for the state will be a factor as the Lottery Gaming Facility Review Board decides which companies will receive management contracts for four state-owned casinos. But the board also will consider which plans would best attract tourism and what's in the state's best interest, a broad category allowing the agency to consider just about whatever it wants, said Matt All, chairman of the seven-member board.
"We have to take in all the information before we can make a decision," All said.
The board will begin two days of meetings Thursday to hear from the casino companies and the two consulting groups that worked with the board. On Aug. 21-22, the board will decide who gets the management contracts in Sumner and Cherokee counties, and on Sept. 18-19, it will make the same decisions for Wyandotte and Ford counties. A law enacted last year allows the casinos.
In a draft report released this month, the two consulting groups projected each casino's revenue for 2011, the first full year of operation. The report showed what each consultant concluded, the average of the two and what the applicants' estimates are.
The average of the two consultants was $186.5 million for the Harrah's Entertainment Inc. project, located at Mulvane, near Wichita. Its contract with the Kansas Lottery Commission calls for it to pay 22 percent of that amount -- $41 million -- to the state general fund.
The report also shows projections for Marvel Gaming at $132.6 million and $123 million for Penn National Gaming, both located in southern Sumner County near Wellington.
Marvel's contract for that amount also is 22 percent, or $29.2 million, while Penn at 25 percent would pay $30.8 million to the state.
The projections differed from the company's estimates. Harrah's projection was $252.4 million; Marvel's was $236.9 million; and Penn National's was $158 million.
In Cherokee County, Penn was the sole bidder for a contract, and the consultants' average revenue projection was $30.2 million. The state's share of 22 percent would be $6.6 million. Penn projected revenues of $57.4 million.
Beyond what's paid to the state, the casinos also would pay 3 percent to local governments and 2 percent to the state's Problem Gambling and Addictions Funds.
Penn National, meanwhile, is pushing what it calls a "southern strategy" of having casinos in both Sumner and Cherokee counties. It hinted at a public hearing earlier this month in Columbus that if it doesn't get the Sumner County site, it may not move ahead in Cherokee County.
If that were to happen, Kansas Lottery officials say the negotiating process would begin anew.
Penn National spokesman Eric Schippers said the proposed Cherokee County casino faces competition from the Quapaw Nation's casino in Oklahoma, just over the state line. But he said Penn's proposal isn't an ultimatum to the board.
"Based on the new competition from the Quapaw casino and based on that new environment, it would be hard to justify a move forward in Cherokee County on a stand-alone basis," Schippers said.
All, who was at the Columbus meeting, said he doesn't take Penn's proposal as any type of threat.
"I didn't read it to be an ultimatum or anything like that," All said. "They did seem to link the two. What I took away was they would be more likely to build in Cherokee if they got the two."
He said law doesn't say whether the board must consider the proposals separately or together.
"We are asked to look at each zone and decide which is the best contract. We will have to use own judgment on what is best for each zone," All said.
On the Net:
Kansas Racing and Gaming Commission: www.ksracing.org
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