Casino in Southeast Kansas on Hold

Gambling News CasinosCasino in Southeast Kansas on Hold

While one can make a very good argument that casinos tend to flourish in times of economic downturn, you would have a hard time selling that argument to Penn National Gaming Incorporated. The company has just pulled out of a deal to create a casino in Southeast Kansas and there are many people in the community that say they were smart to do so.

The story started last year when the Kansas state legislature passed a law that allowed the development of four new casinos inside the state borders. The casinos would be created at a minimum distance from each other which was provided for by the creation of four zones and the allocation of one casino per zone. Three of the four zones have been either wrapped up or completely wrapped up in terms of deciding the company for the casino, but the zone encompassing Cherokee County is still up for grabs.

Penn was going to be the developer responsible for the creation of that casino, but several aspects of the deal rubbed them the wrong way and eventually forced them to abdicate the position. The main reason for the pullout according to Penn was the fact that the Quapaw Tribe owns a casino in Oklahoma although the casino is so close to the state border that the parking lot for the casino is actually inside the Kansas state border. This casino is a $300 million operation and it is already firmly entrenched, making it an uphill battle for any casino built in Cherokee County.

Furthermore, Penn would be forced into paying a tax of 22% to the state for the operation of the casino as well as 5% to the local governments where the casino was located. When this is contrasted with the 6% figure paid by the Quapaw Tribe, it is quite clear to see why Penn decided that it could not be competitive under such a system.

While the departure of Penn from the Kansas casino scene is regrettable since it will force the waiting time for the construction of this casino to go even higher, nobody involved in the project is actually blaming Penn for making the decision they did. In fact, everyone seems to not only understand the situation they are in, but also sympathize with them. For this reason, the government’s negative press is a lot less poignant than it would normally be against a company that pulled out of a deal.

The combination of the competitive casino, the crushing taxes, the fact that the economy is so bad at the moment and the fact that Penn would be required to put up a minimum of $225 million on their own cash was just too much for the company to deal with. They may have turned to other sources of credit in other times, but with a very serious credit crunch going on at the moment there was really no other option available to them.

The Kansas Lottery Commission is now taking new applications from companies seeking to build and manage a casino in the Southeast Zone of Kansas.

July 13, 2011 by : posted in Gambling Abroad No Comments