Tribes, Governor Reach Accord on Kansas City, Kan., Casino Plan

A proposal to build a tribal casino near the Kansas Speedway area -- and reshape the region's gambling industry in the process -- took clearer shape on Monday.

But it still faces legislative and regulatory hurdles in both Kansas and Washington.

At news conferences in Topeka and Kansas City, Kan., Matt All, chief counsel to Gov. Kathleen Sebelius, unveiled terms of a proposed agreement with the Kansas-based Kickapoo and Sac and Fox tribes that he said was the result of "months of painstaking negotiations."

The tribal partners, operating as the Kansas City Intertribal Gaming Management Consortium, propose a $210 million casino and tourism complex on 40 acres at the northeast corner of 118th Street and State Avenue. The project would include a 250-room hotel, a conference center and 1,000 restaurant seats in multiple areas from snack bars to fine dining.

A consultant to the tribes has estimated the complex would win at least $171 million annually from gamblers, carving out a 26.4 percent share of the $614 million metropolitan gambling pie. Some of the tribal casino's winnings would go to local and state government.

In a prepared statement, Sebelius hailed the agreement as good for the tribes and good for Kansas.

"This project will create hundreds of jobs, attract thousand of tourists and generate millions of dollars for the state and local governments," she said. State officials estimate the casino could generate $40 million or more annually for the state.

The proposed agreement sets out an unusual deal that trades some tribal sovereignty for state protection from would-be competitors. The tribes, for example, agreed to "waivers of sovereign immunity" over tribal lands and adherence to state law. In exchange, the state promised to strictly limit gambling competition on the Kansas side of the metropolitan area.

Competitors and would-be competitors were not happy with the announcement.

"It is not in the best interests of the state of Kansas to limit the development of destination resort casinos in Wyandotte County to just one proposal," said Fred Gillmann, president and chief executive of Las Vegas-based Gillmann Group.

The Gillmann Group is proposing to build a $250 million casino project on behalf of the Oklahoma-based Delaware tribe within view of the consortium project near the same 118th Street intersection.

"We never speak out against expansion," said Troy Stremming, an executive at the Ameristar Kansas City Casino and Hotel and president of the Missouri Riverboat Gaming Association. "The industry will welcome them into a highly competitive market.

"But," added Stremming, "I don't know if it's good, sound fiscal policy for the state to enter into monopolies with any industry. I find that concerning.

"If the state is willing and ready to approve this type of gambling expansion, I wish they would just open it up to the marketplace, for tribal or commercial gaming, or whatever is best for the state."

The new casino is no sure thing. The plan must be approved by various state and federal bodies before construction can begin, starting with Kansas lawmakers.

"This is not a done deal," said All. "This is a first step in the process."

The consortium was not represented at the news conference. But a spokesman released a brief statement later Monday that praised Sebelius and her staff for their cooperation "that has been extraordinarily deliberate and fair."

Tribal officials did not respond to interview requests Monday.

The 82-page document, structured as a contract between the state and the tribes, will be presented Wednesday to the Kansas Legislature's Joint Committee on Tribal-State Relations.

All said that committee will decide whether to approve the agreement for legislative debate next session or move quickly and forward the agreement to the Legislative Coordinating Council. That seven-member panel is empowered to act on behalf of the state when the Legislature is not in session.

Two Kansas City, Kan., lawmakers present at the news conference who represent the area around the casino differed on what should happen next.

Sen. Chris Steineger said he hoped the Coordinating Council would approve and forward the agreement to the U.S. Interior Department with the state's endorsement.

While he acknowledged that state lawmakers have been almost evenly split over the issue for a decade, "most realize gambling is happening anyway," said Steineger. "The question is do we harness it and regulate it?

"I think a majority would approve of a tribal casino in Wyandotte County that captures gambling dollars for Kansas and hampers any other gambling expansion in the state."

But Rep. Margaret Long, also a Democrat, disagreed. She said the full Kansas Legislature should debate the issue in January.

"This is too important for a select few to make the decision," she said.

Under the agreement, the casino would pay the state 12 percent of gross income from gambling on the first $100 million of revenue, and 22 percent after that.

The tribes also would pay the Unified Government of Wyandotte County 4.2 percent of gross for seven years, and 6.5 percent thereafter.

In exchange, the state would agree to sharply limit the number of competing slots on the Kansas side of the state line.

If the state allowed more than 500 slot machines within 100 miles of the new casino, tribal payments to the state would be reduced, based on the number of competing machines in play. If the total reached 1,200, All said, the tribal payment would drop to zero.

"Five hundred slots doesn't excite us very much," said Larry Seckington, a top executive with Kansas Racing that operates The Woodlands, which for years has unsuccessfully sought state approval for a casino and resort hotel.

"It would depend on what kind of tax rate they're talking about for us," Seckington said. "But it's hard to justify the expenses for remodeling, for very expensive gaming machines and surveillance and slot tracking equipment and all the other expenses involved for 500 machines."

Other parts of the agreement set restrictions for up to 1,500 slots outside the 100-mile radius.

The agreement also pledges the state will not consent to any other tribal casino proposal on Indian trust land within 100 miles of the consortium facility.

That didn't please the landless Delaware tribe, which on Monday said it would later this week formally request federal approval of an 80-acre tract, also near 118th Street and State Avenue, as restored tribal reservation land. The tribe settled in this area in the 19th century and relocated to Oklahoma in 1867, but has never had its own reservation.

If the Kansas land is approved, the Delaware propose to build a $250 million casino resort, RV park and automobile museum.

Both plans require approval of the Interior Department and the National Indian Gaming Commission.

The state's stance, however, could be fatal to other tribal proposals. All said Monday that non-Kansas tribes can expect a cold shoulder from Sebelius in any casino talks "as of today."

He said the governor's position is unchanged from prior administrations that have negotiated only with Kansas-based tribes.

"I don't have enough fingers to count the number of Oklahoma tribes that want to open casinos in Kansas," All said.

The consortium would cover the costs of state regulation of the tribal facility up to $1.7 million a year. The agreement sets up the state as the casino's principal regulator, with a new five-member appeals agency to be established with three members appointed by the governor and two by the tribes.

Under the agreement, the state could fine the casino for compact violations and other problems. The state also would publicly report casino revenues, slot machine payback rates and other data typically held private by tribal casinos.

"This is the most visible location in the state," said All. "There will be transparency as to the finances of this casino, down to individual games."

The tribes also agreed to abide by state and local building, fire and life safety codes, minimum wage and other worker rights laws. The tribes also agreed to be covered by the Kansas Tort Claims Act.

The agreement also calls for the two tribes' existing casinos on their reservations in northeast Kansas to begin paying 4 percent of gross when the new casino opens. Those casinos then would cease operations as full-scale Class III tribal casinos after seven years.

It was unclear, however, whether the tribes could continue operating those reservation casinos as Class II facilities that, under federal law, could offer bingo and bingo odds-based slot machines.

The tribes' marketing consultant, GVA Marquette Advisors, last year estimated the consortium's proposed 2,500 slots and 60 table games could win $171 million from gamblers its first year of operation, with that figure growing to $198 million by the fifth year.

A study earlier this year by the Kansas Lottery pegged annual casino revenues as high as $288 million a year.

Either way, a significant percentage of the total likely would come from the bottom lines of the four commercial casinos on the Missouri side of the market, which last year grossed $614 million in gambling winnings.

The Proposal, At A Glance:

--$210 million casino and hotel at 118th Street and State Avenue.

--State laws would apply, unusual for a casino on tribal land, but tribes would get a near monopoly on casino gambling on the Kansas side of the metro area.

--12 percent of the casino's first $100 million of gambling revenues would go to the state, and 22 percent after that. The state estimates that could be $40 million in revenue.

--Wyandotte County would get 4.2 percent of the gambling gross for seven years, and 6.5 percent thereafter.

--Approval still needed, and far from guaranteed, from Kansas legislators and federal agencies.