Report says Kansas‘ gain from gambling less than projected

Topeka, Kansas – Four state-owned resort casinos and slot machines at race tracks could generate up to USD 739 million in annual revenue even if two Indian casinos operate near the border in Oklahoma, a study prepared for the Kansas Lottery concluded.

The estimate assumes the Quapaw casino will operate south of Cherokee County and the Pawnee tribe will have a casino south of Arkansas City. Without the two casinos, the study said annual revenues could reach USD 811 million.

With the two Oklahoma casinos, Kansas‘ share of gambling proceeds could amount to USD 180 million a year, and USD 196 million without them. Both casinos are being built.

Supporters of expanded gambling estimated last year that the state would realize USD 200 million in additional annual revenue.

A law enacted last year allows casinos in Wyandotte, Cherokee, Sumner and Ford counties and slot machines at the Woodlands dog and horse racing park in Kansas City and Camptown Greyhound Park in Frontenac. The state owns the gambling and the casinos will be operated by developers under contracts with the Lottery.

The state will receive at least 22 percent of gross revenues from casinos and 40 percent from slots at the tracks. The study estimates USD 98 million in track revenues each year.

Keith Kocher, the Lottery’s director of gaming, said Tuesday that the study based its conclusions on certain assumptions, including that all casinos will be operating two years after the slots at the tracks start — something Kocher doesn’t expect to happen.

It also assumes slot revenues at the tracks will decrease after the casinos open.

„When you don’t know how long it will take the casinos to be built, you have to make some assumptions, like the casinos will come on line two years after the tracks,“ he said.

As for whether the study’s estimates are too high or too low, Kocher said, „You hear it both ways, depending on who you’re talking to.“

He said the contracts could be negotiated to include a higher percentage for the state.

„It is our intent and desire to obtain as much for the state of Kansas that we can,“ Kocher said. „We expect there will be higher offers than 22 percent.“

Eleven other states have commercial casinos, but Kansas is the only one with state-owned operations.

The law requires that developers in all but Ford County make a minimum investment of USD 225 million. The minimum investment for Ford County is USD 50 million because it’s a smaller market.

The study by Christiansen Capital Advisors notes that the difference in gross revenue with or without the Oklahoma competition varies depending on whether the Sumner County casino is located near Mulvane or Wellington.

It says that with the Oklahoma casinos, a Mulvane casino could produce USD 209 million in gross revenues each year and the Wellington location would produce USD 156 million. The figures without the Oklahoma casinos are USD 214 million at Mulvane and USD 167 million at Wellington.

Doug Lawrence, a lobbyist who played a leading role in putting together gambling legislation over the past decade, said that the study was extremely conservative in its estimates. He said the study overestimated the impact of the two Oklahoma casinos.

„They assume the Oklahoma casinos offer a competitive product, and the reality is they don’t. There is no roulette table or dice at the Indian casinos,“ said Lawrence, who lobbies for Marvel Gaming, which is competing for a Wellington location.

The study estimates Cherokee County would gross USD 161.6 million without the Quapaw casino and USD 93.9 million with it.

The Lottery Commission is negotiating with 12 applicants wanting to operate one of the casinos and can sign agreements with as many as it wants. The contracts will go to the Kansas Lottery Gaming Facility Review Board, which will decide who gets the four contracts. The independent board works with the Kansas Racing and Gaming Commission, which can veto the selection after a background check.

The review board is conducting is own study of estimated revenues, which should be completed in May or June, said spokesman Mike Deines.

„The board members wanted to see the numbers from their own experts and look at other studies, including the Lottery study,“ Deines said. „They want as much information as possible to make an accurate decision.“