November 18, 2008 - Harrah's Entertainment, Mulvane KS

The odds of big-time gambling coming to Sumner County dropped Monday after Harrah's Entertainment announced that the nation's economic downturn forced the company to cancel plans for a $560 million resort-casino.

"We truly regret that we must withdraw our gaming application as a result of circumstances beyond our control, that do not permit us to meet the proposed schedule for the project," said a written statement by Jeffrey Ungerer, manager of Sumner Gaming Joint Venture, a partnership of Harrah's and Sumner Gaming and Resorts.

He said the company might rebid if the business climate improves.

Harrah's was the winning bidder among three companies that sought to develop and operate the casino that would have been just off the Kansas Turnpike south of the Sedgwick-Sumner county line.

The company's pullout means the state, which will technically own and operate the casino, will have to start fresh and rerun the bid process, which is expected to delay the final development at least eight months to a year and potentially much longer.

Complicating matters is that the other two companies that sought the casino contract are not eager to replace Harrah's.

Chance for Wellington?

Harrah's and Sumner Gaming had worked as partners on the $560 million casino project.

The state law authorizing casinos requires a developer to invest at least $250 million -- $225 million in construction and $25 million for a license fee.

The state will return the $25 million fee the project's backers paid in June, because the state had not completed a background check, said Kansas Lottery spokeswoman Sally Lunsford.

Kansas Lottery executive director Ed Van Petten was somewhat upbeat about the eventual development of a casino.

"While this is a challenging time for the gaming industry as a whole, we believe a gaming facility in Sumner County will eventually become a reality," he said.

The state Racing and Gaming Commission will meet by early next month to formalize the withdrawal. After that technicality, the Lottery Commission can reopen the application process, Lunsford said. The new application deadline would likely be in the first quarter of 2009.

Mulvane had outmaneuvered the neighboring city of Wellington to land the casino.

The state selected a Harrah's casino at the Mulvane exit of the Kansas Turnpike over two proposals for the Wellington exit.

Supporters of locating a casino in Wellington said Harrah's departure gives them a reprieve they intend to capitalize on.

"Our group remains intact and unified in our support of this project," said Wellington City Manager Gus Collins.

Prospects for rebidding

It's hard to say whether there will be any takers on the Mulvane site.

Neither of the other two companies that bid for the casino in Sumner County -- Marvel Gaming and Penn National Gaming -- are anxious to step in.

The ongoing economic slump has slashed casino earnings and issues in the credit market will make it far more difficult for any casino company to gather the $250 million up-front investment required under state law.

Roger Wagner, president and chief executive of Marvel Gaming, said it would cost 40 to 50 percent more to borrow money for a Sumner County casino than casino proponents initially planned.

In addition, a casino developer would probably have to put a 40- to 50-percent down payment to secure a loan, compared to 10 to 20 percent a few months ago.

He said the company will probably at least consider rebidding, but added that "it's probably not something we'll get real excited about. We're facing a lot of the same problems Harrah's has."

Eric Schippers, a vice president with Penn, said the company just found out about Harrah's pulling out and hasn't settled on a course of action.

Penn won the rights to develop a smaller casino in southeast Kansas but withdrew from that project after the company didn't get the nod for Sumner County.

Commenting on whether the company will try again is "sort of premature for us at this juncture," Schippers said.

Wagner and Schippers said their companies would need to see details of the rebidding process before deciding how to proceed.

A let-down for Mulvane

News that Harrah's withdrew was met with disappointment Friday in Mulvane, which expected the casino to generate hundreds of jobs and millions in tax revenue.

Kent Hixson, Mulvane city administrator, held out hope another developer could try again with the same site.

"Just because this developer is leaving doesn't mean this isn't a viable site and that others won't be interested," he said.

He said city officials are "disappointed but not devastated" and it shouldn't immediately affect the city's budget.

"We did not build our 2009 budget based on this being reality," he said. "We didn't get too far ahead of ourselves."

Mulvane Mayor Jim Ford said he was sorry to see the casino go.

"It's a lost opportunity for our city but considering the financial situation, it is not completely unexpected," he said.

Outside City Hall, business people had been looking forward to an influx of commerce when the casino opened.

"I'm shocked," said Luciano Mottola, owner of Luciano's Italian restaurant. "We were supposed to have new water and electricity and streets. Is that still going to happen?"

Mike Williams, owner of Mike's Towing, said he didn't know what to think.

"We were counting on them going in," Williams said. "We thought it would give us more towing business. We've only been here since July. Now, I don't know what we will do."

Linda Parker, spokeswoman for economic development in Mulvane, said she would like to see the state grant Harrah's more time.

"Who knew in August this (economic downturn) was going to hit? Nobody," she said. "Let's see where the economy is in six months or nine months and open it back up. I don't want to go through another year and a half of waiting."

Original story - Kansas.com