Kansas Casino Project Running Scared of Close Competition

Penn is concerned that a potential $250 million investment may have trouble returning much of a profit.

The Quapaw Tribe of Oklahoma has apparently done such a successful job opening its Downstream Casino on the Kansas border that a project scheduled to be owned by the state of Kansas and run by Penn National Gaming may be in jeopardy.

Just minutes ago, Penn spokesman Eric Schippers testified before the Kansas Lottery Gaming Facilities Review Board that the competition may be too fierce in Cherokee County for Penn to continue with plans for a casino, unless Kansas sweetens the pot by awarding Penn the more desirable Sumner County contract as well.

Penn is the only bidder for Cherokee; several other casino operators are vying for the Sumner contract, near Wichita.

The Downstream Casino opened July 5th, and drew crowds up to 35,000. Lines were long for available slot machines, and the venue's five restaurants were packed.

Penn is concerned that a potential $250 million investment may have trouble returning much of a profit. Penn's estimate shows the proposed casino grossing $100 million by the third year; the state's figures project it might be five years to reach that amount.

Both Penn and Kansas are to blame for the mess in which they find themselves. Kansas has run a convoluted process to decide licensees, taking the better part of a year to make almost no progress, while the Quapaw moved expeditiously. Meanwhile, Penn seems to feel it should be treated as a government monopoly, receiving exclusivity and freedom from competition.

Indeed, Kansas Lottery consultant Richard Schuetz stated he found Penn's reaction "curious" , and wondered why Penn would "seem to be admitting defeat before the first punch was even thrown.”

If the Kansas casino is to compete with the Downstream, both Penn and Kansas need to raise their games considerably.