KANSAS CITY, Kan. (AP) - Operators of an eastern Kansas casino said this week “ongoing attempts” in the state Legislature to make it easier for the nearby Woodlands racetrack to install slot machines played a role in their decision to delay a $200 million hotel project.
Kansas Entertainment, one of two entities that run Hollywood Casino adjacent to Turn 2 at Kansas Speedway, said Monday proposed changes in property tax laws for casino operators also figured into the decision to postpone construction, which was scheduled to begin this week.
Instead of breaking ground on the 248-room hotel, the casino will pay a penalty of 1 percent of its revenues for the past year to the Unified Government of Wyandotte County and Kansas City, Kansas. It will pay the same 1 percent penalty each year it fails to start construction, according to the casino contract signed four years ago.
The Unified Government estimated it will receive about $1.4 million this year.
“While I’m disappointed the hotel project is not moving forward at this time, I’m pleased the Unified Government will receive significant new revenues from the casino operator for as long as the project is postponed,” Unified Government Mayor Mark Holland said Monday.
The casino’s reason for delaying the project had several prominent Kansas lawmakers scratching their heads, since there appears to be little support in the conservative Legislature for expanding gambling. The only tax proposal involves a measure that would forbid gambling enterprises from appealing a decision by the state’s Board of Tax Appeals to district court.
“That’s just an excuse,” said Sen. Ralph Ostmeyer, chairman of the Senate Federal and State Affairs Committee. “With the economy the way it is, I don’t think people have a lot of confidence right now.”
Ostmeyer’s committee conducted a hearing early last month on a bill that would have allowed up to 2,800 slot machines at the state’s racetracks, including the Woodlands 5 miles northeast of Hollywood Casino. No action was taken, and Ostmeyer - who voted against the bill that legalized casino gambling in 2007 - told racetrack supporters they would have to get Gov. Sam Brownback’s blessing to expand gambling, which isn’t likely.
Penn National Gaming, the second operator at Hollywood Casino, also owns Argosy Casino just across the state line in Kansas City, Missouri. Both casinos are concerned about lost revenue if the Woodlands were allowed to have slots.
Rep. Steve Brunk, a Wichita Republican who is chairman of the House Federal and State Affairs Committee, said he refuses to even hold hearings on two House bills that would add slots at the racetracks.
“With the existing contracts, there is a claw-back mechanism that says if the state of Kansas allows for any other competition on the slots outside of the existing casinos, there would be penalties the state would have to pay,” Brunk said. “If we allow slots in the Woodlands or in Wichita, there would be a penalty of up to $110 million or $120 million. That’s just not going to happen.”
Unified Government spokesman Mike Taylor said in the short term, the Unified Government gets a bigger financial benefit from receiving the 1 percent penalty than it would if the hotel were being built.
“But in the long run, building the hotel is what we’d rather see,” he said.
Please read our comment policy before commenting.