Casinos Won’t Solve Kansas’ Fiscal Problems, Taxpayer Advocates Say

Published November 1, 2007

State and national fiscal policy groups say Kansas lawmakers are wrong to embrace state-run casinos to solve the state’s budget problems.

“State-run casinos are merely a backdoor method of filling government coffers in a time of skyrocketing government spending,” said Pete Sepp, vice president for communications for the National Taxpayers Union (NTU) in Washington, DC, in a press statement. “If Kansas politicians were truly interested in boosting a lackluster economy, they would consider cutting property taxes and income taxes to spur investment and make the state more attractive for businesses.”

The concerns of taxpayer groups including NTU and the Kansas Taxpayers Network stem from the enactment earlier this year of Senate Bill 66, which authorizes four casinos to be built in the state.

On August 31 Pennsylvania-based Penn National Gaming Inc., which owns 18 casinos nationwide, became the first company to send a casino application to the Kansas Lottery Commission. The company is proposing a $295 million casino and 250-room resort hotel complex in Cherokee County, in the southeast corner of the state.

State Must Own, Operate

Under SB 66, the state will hire casino managers who must pay for construction and cover operating costs. Critics contend this violates a Kansas Supreme Court ruling that a 1986 constitutional amendment authorizing a state lottery means gambling must be “owned and operated” by the state.

Kansas Attorney General Paul Morrison (D) filed a “friendly” lawsuit in August to clarify the constitutionality, and at least one American Indian tribe with a casino near Topeka has threatened a lawsuit.

The state plans to assign monopoly casinos in four counties. Voters in each county where a casino would be located must give their approval before a casino can be built, but there has never been a statewide referendum on casino gambling. The Kansas Lottery Commission would oversee the casinos.

Votes Are In

Voters in Cherokee, Ford (Dodge City), Sumner (Wellington, south of Wichita), and Wyandotte (Kansas City area) Counties approved a casino in their communities. In addition, slot machines at race tracks were approved in southeast Kansas and the Kansas City area.

On August 7 voters in Sedgwick County (Wichita), the last county to vote on gambling, rejected both a casino and racetrack slot machines. The next day the owner of the Wichita Greyhound Park announced he would be closing his facility within 90 days.

Revenues Fall Short

Many studies have criticized state-sponsored gambling operations for their inefficiency and modest tax revenue gains.

A study published last year by the Oklahoma Council of Public Affairs showed in 2006 casino gaming in Oklahoma was projected to bring in only 28 percent of the revenues the state expected to receive when it entered into a casino gambling compact in 2004.

Illinois casino revenues have fallen in the past several years, while receipts in Colorado and Mississippi have been flat, the report notes.

“Gambling hasn’t proven to be a cure-all for declining state revenues, yet Topeka can’t seem to grasp this fact,” Sepp said in his statement. “Rather than control the business of gambling and take the matter out of citizens’ hands, Kansas officials should encourage private competition and get into the business of controlling government expenditures. With an estimated increase of 10.4 percent in the most recently approved budget, there’s plenty to pare back.”

Karl Peterjohn ([email protected]) is executive director of the Kansas Taxpayers Network.

For more information …

“Promised Revenues Not Showing Up,” June 2006, the Oklahoma Council of Public Affairs: