Harrah’s withdraws proposal for state-owned casino in south-central Kansas; 2 others remain

Harrah’s drops south-central Kansas casino bid

TOPEKA, Kan. — Harrah’s Entertainment Inc. on Wednesday dropped its proposal to build a casino south of Wichita, leaving two smaller regional companies to compete for a contract with the Kansas Lottery.

The Las Vegas-based gambling company didn’t say why it withdrew its proposal to build a $260 million complex, including a 100-room hotel, near Mulvane. Trevor Busche, Harrah’s vice president for development, said only that the decision came after “careful consideration.”

The announcement came about a month after the company posted a $274 million loss for the second quarter of this year. Harrah’s also reported that at the end of March, it was carrying more than $22 billion debt, though none of it was due before 2015.

“There wasn’t one factor in play,” company spokeswoman Jacqueline Peterson said. “The decision was based on many data points.”

Harrah’s withdrew its plan on the same day that the Kansas Lottery Commission reviewed proposals for the new casino in south-central Kansas.

The commission endorsed the two remaining proposals. One is from a subsidiary of Dubuque, Iowa-based Peninsula Gaming, and the other from a subsidiary of Ada, Okla.-based Global Gaming Solutions, which is owned by the Chickasaw Nation.

Proposals endorsed by the commission will to be forwarded to a state review board to determine which developer builds and manages the casino. Peninsula’s plan also must be approved by local zoning officials.

“We would like to send as many qualified applicants as we could, sure, but I think we have two very qualified applicants here,” said Ed Van Petten, the lottery’s executive director.

Under a 2007 state law, the lottery will own the rights to the new gambling and the equipment, down to the cards and dice, and the state will claim 22 percent of the revenues.

Van Petten said Harrah’s didn’t tell the lottery exactly why it was withdrawing. The company and lottery officials had been negotiating the details of a proposed contract Tuesday afternoon, he said.

But state Rep. Vince Wetta, a Wellington Democrat, said he wasn’t surprised Harrah’s dropped out. He said its financial issues are well-known.

“I just had an idea from day one that they didn’t bring their ‘A’ game,” Wetta said after the Lottery Commission meeting. “They’re in deep trouble.”

An internal analysis for the lottery concluded Harrah’s had the “financial wherewithal” to go through with its project, given its available cash and credit.

But it also described Harrah’s as “substantially leveraged” and said the interest payments on its debt meant the firm “has essentially left the company working for its debt holders.”

Peninsula’s $260 million complex would be located off of the Kansas Turnpike near Mulvane, about 20 miles south of Wichita. Harrah’s site was at the same turnpike exit.

Its proposal includes a 150-room hotel and a 3,000-seat indoor horse show arena.

Spokeswoman Kathy Damron said that while Harrah’s decision obviously increases the chances of becoming the casino’s developer, “We feel that our proposal was the strongest proposal, regardless.”

Global Gaming’s site for its $280 million complex would be off the turnpike near Wellington, about 15 miles further south of Wichita. Its plans include an 80-room hotel, a travel plaza and a new golf course.

“We’re confident in our own project, so we’re sort of focused on what we need to do to move forward,” said John Elliott, Global’s chief executive officer.

Online:

Harrah’s Entertainment Inc.: www.harrahs.com/

Global Gaming Solutions: www.globalgamingsol.com/

Peninsula Gaming: www.peninsulagaming.com/

(This version CORRECTS figure for size of Global Gaming project, to reflect latest estimate of $280 million.)