Tribal casino crowds gambling market

The Oklahoma-based Quapaw Tribe’s USD 200 million Downstream Casino Resort is set to open July 5 on the Kansas state line about seven miles west of Joplin.

A 12-story, 226-room hotel will be the tallest structure for miles around and is scheduled to open in the late fall.

The first of 2,000 slot machines have arrived and are being installed. The casino won’t have craps or roulette, but it will offer blackjack and other table games, mini-baccarat, a poker room and a race book.

The complex will include four dining options as well as two 18-hole golf courses and a spa with an outdoor swimming pool. One very nice touch: The VIP players club will be on the hotel’s top floor, with a sweeping view of the surrounding, albeit barren, landscape.

The Quapaw casino is currently caught up in a legal challenge in part over environmental issues raised by neighboring Cherokee County, Kan., authorities who sued the federal government, which allowed the tribal project.

The county’s legal tab is being picked up by Penn National Gaming, which operates 19 casinos, including the Argosy Casino Hotel & Spa in Riverside.

Not surprisingly, Penn has been nicely positioned for well over a year now to win a contract from Kansas to operate a state-owned casino in Cherokee County. Penn’s site is right across Interstate 44 from the Quapaw’s gambling parlor, which broke ground less than a year ago.

Given that stiff competition next door, which will have a two-year head start wooing area players’ loyalty, Penn officials recently asked Kansas if Penn could reduce its upfront investment by about USD 100 million.

State authorities punted the question to Attorney General Steve Six for a ruling on whether Kansas gambling law can accommodate Penn’s sudden but understandable fiscal skittishness.

I’m betting that Penn is praying Six nixes the request and refuses to let Penn off the hook for the full USD 225 million investment called for in the law — plus a USD 25 million “privilege fee.”

If Six does that, Penn could walk away from what has turned into a risky deal in a very crowded casino neighborhood that includes five small Oklahoma tribal gambling parlors clustered nearby along I-44.

If Penn does flee southeast Kansas, it will be in the footprints left by Wichita businessman Phil Ruffin Sr.

Just a few weeks ago, Ruffin wrote off USD 10 million he’d already spent and walked away from a proffered Kansas contract to operate several hundred slots at his long-defunct Camptown dog track in Frontenac, Kan., just a bit north of the Quapaw site.

Before he spent another USD 10 million, Ruffin appeared to acknowledge there’s a limit to the golden goose’s output.

Others in the gaming industry are coming to the same realization in the wobbly economy of 2008.

Mega-projects in Las Vegas are being canceled amid investment analysts’ increasingly sharp wonderings whether that Nevada desert hamlet can still expand profitably for all. Or has the cannibalization begun?

Missourians can only hope the Gaming Commission is paying attention. Despite interest from only one casino firm when it waved around a license to operate in suburban Sugar Creek in the crowded Kansas City market, the commission still appears to be moving toward expansion — just when the smart money is contracting.