Kansas high court is urged to resolve questions on casino gambling

TOPEKA | Kansas Attorney General Paul Morrison filed a lawsuit Thursday that could determine the fate of casino gambling in the state.

Morrison, in a “friendly” lawsuit, asked the state’s highest court to decide whether the new casino gambling law violated the Kansas Constitution.

A favorable ruling would clear the way for the state and developers to build casinos in four areas — Wyandotte, Sumner and Ford counties and either Crawford or Cherokee county.

A ruling against the law would derail current efforts to expand gambling in Kansas and protect, at least for now, profits earned by Missouri riverboat casinos.

And if the high court declined to take up the lawsuit, that could leave the law open to other legal challenges.

The Kansas Expanded Lottery Act, passed in March, also allows slot machines at The Woodlands race track in Wyandotte County and a pari-mutuel dog track in Frontenac.

“It is critical that this constitutional question be answered by the Kansas Supreme Court quickly,” Morrison wrote. “Investors and communities must be able to plan and move forward with economic development related to expanded gaming.”

Morrison conceded, however, that there was no guarantee the Supreme Court will take the case. The court recently turned down a request to examine a funeral picketing law.

Hal Walker, chief counsel for Wyandotte County Unified Government, said deadlines require host communities to endorse casino developers for state licensing by the end of this year.

He said the process could hit a dead end without a clear-cut ruling from the high court.

“If I were a big Las Vegas outfit, I’d want to delay any spending on this until these questions are resolved,” he said.

Under the law, Wyandotte County is in line for a casino resort plus at least 800 slot machines at The Woodlands.

Opponents of the law have argued that it is unconstitutional because the Kansas Lottery would contract with private companies to operate the casinos. Under the lottery amendment to the state constitution passed in 1986, lotteries or gambling must be “owned and operated” by the state.

Morrison’s challenge goes to the heart of those words.

In strong language, the lawsuit insists the act fails to meet those definitions and is a sham that, in effect, sells the state’s control over casino gambling “to the highest bidder.”

“The state of Kansas will neither own nor operate the casinos and the race tracks it allows to be built,” the lawsuit stated.

The state’s role, Morrison said, essentially would be to collect tax revenue and enact regulations.

Under a management contract, he noted, the private manager could decide what games will be played, the payout rates for slot machines, advertising and marketing promotions and the employees who will run the games.

The new law only requires the state to “retain full control over all decisions concerning lottery gaming facility games.”

Morrison also told the court that Kansas doesn’t appropriate any state funds for the casinos themselves or the purchase of casino games. In addition, he argued, the law doesn’t explain how the state will take ownership of the programs and equipment purchased by the casino manager.

“The act declares the state as the owner of these facilities completely out of thin air,” the petition stated.

The lawsuit also noted that the state shields itself from legal liability in all gambling activities and, instead, places that risk on the shoulders of its hired casino managers.
Walker praised Morrison’s strongly worded challenge, which was required under the law.

“Clearly, Mr. Morrison represents all the people for and against gambling, and he should not hesitate to make the lawsuit as thorough as possible so there is no cause later for him to be criticized for throwing the Supreme Court a softball,” Walker said.

Rep. Lance Kinzer, an Olathe Republican and an opponent of the act, also applauded the strong approach.

“I really do believe the law that passed is inconsistent and essentially gives a wink and a nod to the constitution,” he said.

Walker, however, said he expected the law to be upheld.

The Kansas Lottery currently runs the state’s lottery system but has contracts with private companies for the lottery machines and scratch tickets.

“I don’t see an ounce of difference between this and Powerball,” Walker said.

Missouri riverboat casino operators are watching with keen interest as the Kansas case unfolds.

Michael G. Winter, executive director of the Missouri Gaming Association, estimated that Kansas casinos could drain $181 million or more from western Missouri casinos alone.

Winter said “as much as 40 to 50 percent of Kansas patrons will shift to a Kansas casino or race track. Additionally … 15 percent of the Missouri patrons will shift to Kansas to escape the hassle of Missouri’s loss limits.”

Missouri law restricts gamblers’ buy-in to $500 every two hours. Kansas casinos will have no such lid.

Kansas Indian tribes also have a stake.

At least two of the state’s four tribes with their own casinos are expected to apply for a management license to jointly operate a state-owned casino in Wyandotte County. A third has threatened a lawsuit challenging the new law.

News Added: 24 August, 2007

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