Casino law in Kansas takes effect today

The Kansas Lottery Commission on Wednesday unveiled timetables for what happens next in the creation of an unprecedented state-owned casino industry.

Many questions remain unanswered, including whether the seven-casino plan signed last week by Gov. Kathleen Sebelius will survive a constitutional challenge. But it’s clear the roulette ball in Kansas has started to roll and is gaining speed.

“We’ll be moving quickly,” said Assistant Attorney General Keith Kocher, the lottery’s chief counsel, who is overseeing the creation of the state’s three-headed casino management bureaucracy.

The legislation will take effect today with scheduled publication in the Kansas Register, Kocher told commission members.

Under the law the lottery now has 30 days to publish, also in the Kansas Register, guidelines and procedures for how applicants will go about bidding for a state casino management contract.

Up to four companies or organizations eventually will be selected to manage state-owned “lottery gaming facilities” in Wyandotte County, Ford County near Dodge City, and either Crawford or Cherokee counties in the southeast region, and Sedgwick or Sumner counties in the Wichita area.

Holders of state licenses for three current racetrack and pari-mutuel betting operations, including The Woodlands in Wyandotte County, are eligible to seek a license for a Kansas “racetrack gaming facility” limited to slot machines and other electronic gaming devices.

The Lottery Commission is expected to meet the first week of May to ratify the application rules to meet a May 7 printer’s deadline for publication of the rules before May 19.

The rules also will set a deadline for applications. The Lottery Commission has 90 days from that date to approve or reject individual applicants’ eligibility and negotiate management contracts with each.

That’s when things really get interesting.

Each applicant selected at that point will be considered a “prospective lottery gaming facility manager” and, for most of the casinos, must post a mandatory $ 25 million gambling “privilege fee” with the state. Any selected applicant who doesn’t ultimately win the job will get the money back — without interest. The privilege fee for the Ford County casino is $ 5.5 million. Racetrack slot parlors would pay a one-time fee of $ 7 million.

All prospective management firms then must be reviewed by a new agency, the Lottery Gaming Facility Review Board. Three members of that seven-member panel are to be named by Sebelius, plus two each by the House speaker and Senate president.

The Review Board then has 120 days to choose one successful applicant for each of the four casino gambling zones.

It then forwards those four names to the Kansas Racing and Gaming Commission for background review and approval. The Racing and Gaming Commission also regulates the pari-mutuel industry. Background checks include criminal histories and other “fitness” standards for key executives, employees and any person who owns 0.5 percent or more of the management firm.

Kocher told Lottery Commission members Wednesday that the law appears unclear whether the Racing and Gaming Commission can reject a management applicant for unacceptable background reasons only, or for any reason. “You can read it two different ways,” he said.

Meanwhile, under the law the Lottery Commission retains “ultimate” control over all casino operations and management decisions.

Sebelius can extend certain review deadlines for up to 60 days.

Of course, all bets are off if the law is found unconstitutional.

During her four-city bill-signing tour April 11, Sebelius indicated that she would ask Attorney General Paul Morrison to seek an expedited review of the law by the Kansas Supreme Court.

There’s no decision yet on how, when or if that will proceed.

“We’re still evaluating the options on how to achieve a ruling on the constitutionality of the bill,” Morrison spokeswoman Ashley Anstaett said Wednesday.

At least one American Indian tribe with a casino in Kansas has indicated it will challenge the law on constitutional grounds.

The Kansas Constitution prohibits gambling unless it is “owned and operated” by the Kansas Lottery.

Critics have challenged numerous aspects of the 78-page casino law, including that voters never envisioned Las Vegas-style casinos in 1986 when they authorized the Kansas Lottery.

“There are legal issues and there’s going to be an argument that the lottery is the same as gambling and slots,” state Sen. Julia Lynn of Olathe said Wednesday.

“This thing was shoved through with no public debate,” said Lynn, a Republican who voted against the bill.

However, Lynn said she didn’t foresee a campaign by any anti-gambling lawmakers to try to thwart the law in the Legislature or in court.

“We have a lot of powerful forces that are working against us,” she said.