Kansas City, Kansas (Reuters) – Developers of a USD 705 million hotel, casino and entertainment complex have pulled out of a deal with the state of Kansas, blaming a rocky economy for the need to revise the project.

The joint venture of an International Speedway Corp unit and Cordish Co cited „an unprecedented crisis and disruption in the global financial and economic markets“ in pulling out. The group asked the state to refund USD 25 million in fees paid after the developers won the right to develop and operate the state-owned casino and entertainment complex in Wyandotte County, Kansas, last summer.

The 1.5 million square-foot Hard Rock Hotel and Casino was to have included a 300-room luxury hotel, a casino with 3,000 slot machines and 140 gaming tables, and a 275,000-square-foot retail, dining and entertainment facility. It was expected to attract 8 million tourists annually to Kansas.

The group said it intended to reapply for a state license and was prepared to move forward with the USD 400 million casino. Timing for the rest of the project is questionable because of economic concerns, said International Speedway spokesman Wes Harris.

„We need to be able to secure some financing. These credit markets are a mess right now,“ Harris said.

Kansas Gov. Kathleen Sebelius said on Friday the withdrawal was a disappointment and that the state hoped to receive revised proposals.

The setback for the project, which was expected to generate more than USD 200 million in annual revenues, comes as Kansas is facing a budget shortfall pegged at more than USD 1 billion by June 2010.

„Nearly every industry across our nation is being impacted by the economic downturn and unfortunately Kansas is seeing the effects as well,“ Sebelius said in a statement.

Last month, a similar casino development planned elsewhere in Kansas was withdrawn by Penn National Gaming, a partnership that included Harrah’s Entertainment Inc. Penn similarly cited the disruption in world financial markets.