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del.icio.usWellington casinos have say with review board
BY FRED MANN
The Wichita Eagle
TOPEKA - Gambling consultants told the state's casino review board Friday that a Harrah's casino near Mulvane would generate more gambling revenue than two Wellington proposals, and have greater economic impact in construction, jobs and wages.
But the Wellington bidders, Penn National Gaming and Marvel Gaming, offered spirited rebuttals. Each argued that the board should select its project.
After two days of consultant reports, yet another consultant concluded that each of the proposals would do well in Sumner County.
"Any one of the bidders would do what they have to do to make this work, because the county offers a regional monopoly which is very attractive to bidders," said William Eadington of the University of Nevada-Reno.
Consultant Richard Wells of Wells Gaming Research said Harrah's would have a mid-range projection of $203.9 million in gaming revenue by the third year, Marvel Gaming $138.3 million, and Penn National Gaming $125.7 million.
The difference is that the Harrah's site is closer to Sedgwick County, he said.
That echoed a report Thursday by consultant Will Cummings of Cummings Associates.
Steve Snyder, vice president for corporate development at Penn National, said the way consultants figured the distance that potential customers travel to a casino is flawed. Casinos derive up to 40 percent of their revenue from ranges beyond where consultants focus their attention, he added.
The drive time between the Mulvane and Wellington exits of the Kansas Turnpike, where the casinos would be built, wouldn't create a large difference in revenue when the county would have one casino, he said.
Also, casinos ramp up more quickly than the consultants projected, and Penn's proposal leaves room for 500 more slots and more tables as the market grows, Snyder said.
Penn's "southern strategy" of managing casinos in Cherokee and Sumner counties -- using a common players' card for both casinos and advertising in Oklahoma -- would produce an estimated $10.8 million more in gambling revenue for the state than the consultants predict, he said.
Marvel Gaming president Roger Wagner said the consultants didn't give enough credence to the monopoly a Wellington site would enjoy, nor to the potential draw of Oklahoma gamblers.
Downgrading revenue projections for Marvel, he said, is "like handicapping a pro golfer to a duffer."
He disagreed that the distance between the two turnpike exits creates a large difference in projections, and said that his experience shows casino operators almost always beat revenue projections by consultants.
Jon Wolfe, Marvel's executive vice president for operations, said its management group, composed of former Horseshoe gaming executives, has a history of achieving its projections. He contended Marvel would provide the largest cumulative economic benefit in revenue share, jobs and voluntary contributions.
Harrah's cons, pros
John Mills of the University of Nevada-Reno said Marvel and Penn were well suited financially to build their projects.
He raised questions about the finances of Harrah's and its partner, Sumner Gaming and Resorts, but then said they still had the ability to build their development at Mulvane.
Mills questioned whether Sumner Gaming and Resorts, a Kansas company, can meet its commitment to provide $98 million in equity, its required share. Sumner Gaming officials said the $98 million is available, and they'd provide the board with detailed information about it next week.
He also said Harrah's, the minority partner in the Mulvane project with 40 percent, is highly leveraged from expansions, will have a negative cash flow for the next three years, and carries a large amount of debt after being acquired in January by Hastings Holding, while rising interest rates will affect borrowing.
But Harrah's also has a $9.2 billion credit line to draw from, with $1.6 billion immediately available, he said.
And since Harrah's is the largest casino company in the world, with an impressive track record and confidence among banks, the negatives won't make any difference for Sumner County, Mills said.
"There should be no question about our ability to finance our project," Harrah's board vice chairman Charles Atwood told the board.
Harrah's would generate more economic impact from construction, employment and wages based on its plans and amenities, according to a report presented by a representative of Civic Economics. It also would draw $100 million in new spending by Kansans for gambling, while the Wellington projects would earn $40 million less, he said.
The board will hold a teleconference with the consultants and developers on Aug. 5. It is scheduled to select the winning applicant at a meeting Aug. 21-22 in Topeka.
