Harrah’s Gaming says it won’t build its planned USD 500 million casino and resort near Mulvane, the Kansas Lottery said Monday.

In a news release, the lottery says a representative from the casino development company informed the agency of its decision this afternoon in a letter.

Jeffrey Ungerer, of Sumner Gaming Joint Venture, wrote: “We truly regret that we must withdraw our gaming application as a result of circumstances beyond our control that do not permit us to meet the proposed schedule for the project. In the event the financial climate improves, we may be interested in reapplying for a gaming license should the process in the South Central zone be reopened for bids.”

Harrah’s teamed with a Topeka development firm on its project near Mulvane. The investment group, Sumner Gaming, was one of four that applied for a casino license in Sumner County under a 2007 expanded gambling law.

But after Sumner Gaming was selected as the state’s preferred developer in Sumner County, the national economy has deteriorated. Financing for development projects has gotten difficult to obtain as the nation’s financial institutions have struggled.

“We are, of course, disappointed that Harrah’s has withdrawn its plans for a casino in Sumner County for financial reasons,” said Kansas Lottery Executive Director Ed Van Petten in a statement. “They tell us it is not feasible for them to move forward with the project at this time, and we have to respect their decision. The lottery will be taking steps to re-open bids in the South Central zone. While this is a challenging time for the gaming industry as a whole, we believe a gaming facility in Sumner County will eventually become a reality.”

The state’s gaming law, which took more than a decade for the Legislature to pass, was designed to spur economic development and generate state tax revenues by permitting four “destination” casinos in Kansas. But the law has struck tough times. Already, Penn National Gaming has backed out of plans to build a casino near Pittsburg.

Other casinos are planned near Kansas City, Kan., and Dodge City.

The lottery plans to solicit new developers for both the Pittsburg and Sumner County areas.