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Friday, August 22, 2008
Kan. board picks Harrah's for Sumner Co. casino
By CARL MANNING
Associated Press Writer
TOPEKA, Kan. (AP) _ Kansas has picked Harrah's Entertainment Inc. to build and manage a state-owned casino in Sumner County.
The Lottery Gaming Facility Review Board made the selection Friday on a 4-3 vote. Others in the running for the 15-year contract were Marvel Gaming and Penn National Gaming. Marvel got two votes and Penn got one.
The board first chose Penn to manage the Cherokee County facility on a 5-2 vote. Penn was the only bidder in southeast Kansas, and company officials have said they would have to rethink the Cherokee County plan if Penn didn't get the Sumner County proposal. In Cherokee County, Penn faces competition from a tribal casino just across the state line in Oklahoma.
"We need to digest it and see where we need to go. It's obviously disappointing," Penn spokesman Eric Schippers said, adding that the company's board of directors will have to decide whether to proceed in Cherokee County.
Marvel Gaming President Roger Wagner said the company would look for other opportunities.
Board Chairman Matt All said he felt two key considerations in the outcome were Harrah's higher revenue projections and what it offered in terms of the casino and ancillary facilities, such as a 175-room hotel and five restaurants.
Other commission members mentioned that its location at Mulvane was closer to the Wichita area.
Both Penn and Harrah's now must clear a background check by the Kansas Racing and Gaming Commission, which could take months.
"The most important thing is to get it done correctly than quickly," said Stephen Martino, the commission's executive director.
Harrah's spokeswoman Jacqueline Peterson said the company was "happy" with the outcome and looked forward to starting work on the project.
Harrah's estimates it will take two years to construct the facility in Sumner County.
A law enacted last year created four state-owned casinos. The other two are in Wyandotte and Ford counties, and the review board will vote on applicants for those on Sept. 18-19.
A dozen states have commercial casinos, but Kansas is the only one with state-owned facilities.
The Kansas Supreme Court ruled in June that state would truly own and operate the new gambling, ending any constitutional question about the law.
Consultants estimate first-year revenue for Harrah's at $186.5 million, with Harrah paying 22 percent of its first $300 million of revenue to the state. The percentage go up as revenues increases to a maximum of 30 percent for revenues above $500 million.
The consultants' estimates were lower than the applicants in every case, and Harrah's estimated its first year revenues at $206 million.
Consultants estimated Marvel's first-year revenue at $132.6 million and Penn's at $123 million.
In Cherokee County, consultants estimate revenue for Penn at $30.2 million, and the state's share would be 22 percent. Penn had projected revenues of $57.4 million.
On Tuesday, the Prairie Band Potawatomi Nation filed a lawsuit against Harrah's, alleging the company violated a noncompete agreement with the tribe by seeking the contract for a proposed facility near Mulvane. A hearing is set for Aug. 29 in Shawnee County District Count on the tribe's request for a court order to keep Harrah's from moving forward.
"We believe we have studiously complied with the agreement," Charles Atwood, vice president of Harrah's board, told the review board Thursday.
All and other board members said the lawsuit wasn't a factor in their decision.
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On the Net:
Lottery Gaming Facility Review Board: http://www.ksracing.org
Kansas Lottery: http://www.kslottery.com
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