The commission voted Monday to approve a 15-year contract with Penn National Gaming Inc., the only applicant to operate a hotel-and casino complex in Cherokee County. The commission then passed the contract to the Kansas Lottery Gaming Facility Review Board, which will determine at its August meeting when to award the contract.
A law enacted last year requires a new casino project to invest at least $225 million plus pay a $25 million gambling fee within 30 days of approval.
Private companies will build and manage the casinos under contracts, which will be owned by the state government. Eleven other states have commercial casinos, and Kansas is now among the few with state-owned facilities.
The commission\'s decision comes as the gambling law is being challenged in the courts, mainly over whether the state really will own and operate the casinos. A court upheld the law in February, and the Kansas Supreme Court will hear arguments later this month.
The new deal calls for Penn National, of Wyomissing, Pa., to make its investment over 12 years, with $125 million invested by the time it opens in May 2010.
Plans for the future include a 200-room hotel, pool, spa and fitness center; a 1,750-seat convention center; and retail and gambling spaces .
The state will receive a total of 22 percent of the first $200 million of revenue; 25 percent between $200 million and $250 million; and 28 percent for over $250 million. Based on Penn National's revenue projections, the state would receive almost $13 million in the casino's first year and $22 million in its fifth year of operation.
Cherokee County will get 2 percent of the revenues and neighboring Crawford will get 1 percent.
Keith Kocher, the Lottery's director of gaming, said that when the law was enacted, state officials assumed and intended that the entire investment be made at same time.
He said the contract meets legal requirements. He also disliked the lack of an environmental compliance statement signed by the parent company, although he said negotiations are continuing on that.
"We've agreed to this contract. We believe it's legally acceptable," he said.
Ed Van Petten, the Lottery's executive director, said, "It's a good contract."
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