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Kansas gold loses some glitter

Jul 29, 2008 7:00 PM

by Ray Poirier | A couple of years ago when Kansas lawmakers approved legislation that would permit four casinos licenses, as well as slot machines at racetracks, gaming companies rushed to get in on the act.

The new law specified that the casinos would be state-owned. Also, it spelled out where the casinos would be located. The Lottery Gaming Facility Review Board was established with the responsibility of reviewing the applications and deciding on the license winners.

It looked like a win/win for both the state and the lucky license holders.

But in rapid fashion, times have changed. A slumping national economy and potential competition from other states has altered the gambling landscape in Kansas.

First, casino owner Phil Ruffin, who sold his New Frontier Hotel/Casino on the Las Vegas Strip to the Elad Group for the highest price paid per acre for any gaming parcel, failed to negotiate a beneficial slots contract for his Camptown Greyhound Park in Frontenac, and walked away.

Last week, the owners of Woodlands racetrack in Kansas City ran into the same problems negotiating a slots pact for 800 machines and decided to close the facility.

About the same time, Las Vegas Sands Corp. (LVS) said it was withdrawing its application for a casino license in Wyandotte County. In May, MGM MIRAGE Inc. (MGM) and its partner Foxwoods Development Co. also pulled out of the running.

A spokesman for Las Vegas Sands blamed the current credit markets and the potential change in gambling restrictions in nearby Missouri for the company’s decision.

"It now appears that proposed statutory changes in Missouri will allow gaming operators there to significantly increase the amounts being wagered at their competing facilities," said Bill Weidner, Las Vegas Sands president.

"This change, together with the increased borrowing costs in today’s financial marketplace, significantly decreases the expected returns from our proposed development in Kansas and limits our ability to generate appropriate risk-adjusted returns on the proposed investment vis-à-vis our expected returns on our other global investment opportunities," he said.

And, most recently, Penn National Gaming Inc. (PENN), the only applicant for in Cherokee County, has indicated that if it is not successful in its bid for a second license in Sumner County, it may scrap plans for Cherokee County.