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Question of the Day - 06 January 2017

Q:
What do you know about the new casino opening in Kansas next year? It is supposed to be in the process of being built.
A:

You're talking about Kansas Crossing. It is the last of four casinos owned by the state lottery, but built and run by private operators. These were authorized under 2007's Kansas Expanded Lottery Act and the state began selecting operators the next year. Initially, Penn National Gaming dibbed the southeastern zone of the Sunflower State (casinos having been assigned one apiece to four zones), but backed out, citing tribal competition just over the border in Oklahoma.

For this reason, the southeastern-zone license went begging until 2015 (after the state had been persuaded to reduce the minimum required investment from $250 million to $55.5 million), when the process was reopened. There were three applicants, one of them being favorite-son Phil Ruffin. He proposed Camptown Casino, a conversion of his Camptown Greyhound Park, in Frontenac, in tandem with the Quapaw Tribe. Even though Ruffin estimated he could get gambling up and running in six months (Camptown was already wired for slot machines), he came up empty-handed, not getting a single vote from the Lottery Review Board.

American Casino & Entertainment Properties, owners of the Stratosphere, also got into the running with a proposal called Castle Rock, a $145 million casino. However, Castle Rock encountered skepticism due to its aggressive revenue projections -- $101 million in year one compared to state consultant White Sand Gaming's estimate of $83 million. The project was also hobbled by its proximity to tribal Downstream Casino, literally feet away across the Oklahoma border.

Kansas Crossing, by contrast, planned only to invest $70 million in its casino, but held a trump card: location. It sits at the junction of US 400 and US 69 (hence the name), with 22,000 vehicles passing every day.

The Lottery Review Board ultimately thought that Kansas Crossing's cost and revenue projections were the most realistic of all that had been presented. It also didn't hurt that the Kansas Crossing investment group included a number of backers of existing casinos in Dodge City and Mulvane.

Having gotten the go-ahead in June 2015, Kansas Crossing didn't break ground for another 11 months, due to legal challenges from Cherokee County and Castle Rock, which disputed the bidding process.

After winning the preliminary rounds, Kansas Crossing started construction, even though the litigation hadn't worked its way fully through the court system.

At the May 2016 groundbreaking, Pittsburg Mayor John Ketterman said, "If it hadn't been for all that [litigation], we'd probably be ready to do the ribbon cutting."

Ketterman's estimate of the time it would take to build Kansas Crossing was on the mark. It is presently ramping up for a March 2017 opening.

As Kansas Crossing's cost indicates, it will be a small-scale casino, at least at first. The casino's website promises 625 slots, 16 table games, a 120-seat restaurant, and a Hampton Inn. There has been some budget-creep in the cost, which inched up to $80 million, following a redesign of the casino interior.

Kansas Crossing remains a bit of a gamble, though. A spokesman for the Kansas Supreme Court says the litigation, while remanded by the high court, is "still in the briefing stage" and there's no timeline for it to be argued before the justices. Will Kansas Crossing prevail? Will it be forced to close its doors? Or will there be some form of financial settlement? Not even the state Supreme Court knows yet.

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