- Associated Press - Tuesday, June 23, 2015

TOPEKA, Kan. (AP) - A state board Tuesday night selected a group with ties to two other Kansas casinos to build and manage a new one in the state’s southeast corner, passing over a bigger project designed to compete head to head with the largest tribal casino in far northeast Oklahoma.

A majority of casino review board members concluded that the $70 million Kansas Crossing proposal - the least expensive of three plans - would be the right size for the market. Board members also said its principals had strong partnerships with local officials and noted that key investors and executives were also involved in casinos in Dodge City and south of Wichita.

The new casino would be built south of Pittsburg, at the junction of U.S. 400 and U.S. 69 south. Its casino and 120-room hotel are expected to open next summer.

“I just feel it’s the right fit,” said board member Jeff Oakes, the general manager of a hunting resort in Fall River. “It’s the right size.”

The seven-member board chose the developer-and-manager group for the last of four, nontribal casinos allowed under a 2007 Kansas law. Casinos already operate in Dodge City, south of Wichita and in Kansas City, Kansas. In an arrangement unique among U.S. states, the Kansas Lottery is the legal owner of the casinos, and the state receives at least 22 percent of the gambling profits.

The casino will be regulated by the state Racing and Gaming Commission, and it must sign off on the project. It is scheduled to meet next week.

The casino review board split 5-2 between Kansas Crossing’s proposal and a $145 million project 28 miles to the south.

Castle Rock Casino Resort’s larger gambling hall and 200-room hotel would have been on U.S. 400 in Cherokee County and within 2 miles of the Downstream Casino in northeast Oklahoma. The Quapaw Tribe opened Downstream in 2008 - so close to the state line that the parking lot is in Kansas.

The third proposal was an $84 million project from Frontenac Development north of Pittsburg at the site of the long-closed Camptown Greyhound Park. Its principal figure, Phil Ruffin Sr., is a Wichita businessman who owns the Treasure Island casino in Las Vegas.

Castle Rock’s partners included 25 business owners and executives, including two members of the Kansas Chamber of Commerce’s board. Castle Rock officials had been confident that the casino review board would be attracted to the largest project because it would generate the most tax revenue for the state.

And board member Lisa Pleasure, a Shawnee accountant, said the Castle Rock proposal had “a lot of wow to it.”

But consultants hired by the review board were the most skeptical of Castle Rock’s revenue projections, and one suggested it would not be profitable enough to cover payments on $95 million in potential debt helping finance the project. Castle Rock partners strongly disputed that assessment.

“I’m shocked, completely shocked,” said Brandon Steven, one of the principal investors.

Castle Rock officials also argued that their site was the best for drawing visitors from Arkansas, Missouri and Oklahoma and saw the Quapaw Tribe’s locating a casino nearby as proof. The Downstream Casino stymied development of a Kansas casino until legislators dropped the required minimum investment in 2013.

But there also are 11 other tribal operations within 70 miles of the three developers’ sites.

“There’s a whole zoo out there of competition, not just one critter,” said Will Cummings, a Boston-area consultant hired by the casino review board.

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Online:

Casino review board: https://1.usa.gov/1BKYTuq

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna

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