Kansas gambles on state-owned casino

Marketplace Staff Feb 1, 2010

Kansas gambles on state-owned casino

Marketplace Staff Feb 1, 2010


Tess Vigeland: It’s a truism that during recessions, lottery sales spike. The lure of unspeakable riches from a one-dollar scratch ticket is only magnified by tough times. And the same can be said, apparently, of strapped governments. States around the country are turning to casinos to close huge budget holes. But Kansas has gone a step beyond allowing private companies to set up one-armed bandits. You might be shocked — shocked! — to learn that the state is the owner-operator of those bandits.

From station KCUR, Sylvia Maria Gross reports on the plan’s odds for success.

Sylvia Maria Gross: Thanks to the TV show “Gunsmoke,” Dodge City, Kan., is best known for gunslinging, poker-playing cowboys.

But after the 1800s gambling houses were banned in Dodge City. Until now.

Today, Dodge City’s cowboys are mostly steel cut-outs, but thanks to state legislators, the gambling houses are coming back. Kansas is the first state to run its own casino. It opened the new Boot Hill Casino and Resort on the outskirts of the city a little over a month ago.

Jessi McNiece works at the casino. She’s says it’s been packed since the day it opened.

JESSI MCNIECE: It’s hard to get through, I mean, there’s a big crowd in here today.

The place has a wild west theme, complete with swinging saloon doors and antique six shooters.

Jesse Urtiaga wears a big cowboy hat, and chops on a cigar, as he works the slots.

JESSE URTIAGA: I’m from Amarillo, Texas.

GROSS: Did you drive up just to come to the casino?

URTIAGA: Yes, I sure did, so I better win.

If Urtiaga doesn’t win, Kansas will. Now that casino gambling is allowed outside reservations and now that the state owns the house.

Kansas is hardly a stranger to gambling. It has several racetracks, four Indian casinos, and has run a lottery for 24 years.

But despite its colorful frontier past, it’s still a conservative place: Legislators blocked the law allowing casinos for 14 years before it passed in 2007.

State Senator John Vratil says it was all about padding the state budget.

JOHN VRATIL: Every little bit helps. I don’t think any legislator wants to raise taxes, and to the extent that we can find other ways of enhancing our revenue, we need to do that.

Other states that have allowed casinos benefit by taxing the casino operators. But Kansas couldn’t do that. Its constitution says private companies aren’t allowed to own lotteries or gaming operations. Changing the constitution would have taken years, and a voter referendum. Rather than roll the dice, the government decided to set up shop itself.

Ed Van Petten is director of the Kansas Lottery. He says because state money is involved, the lottery’s keeping the operation as transparent as possible.

ED VAN PETTEN: The financial issues, and the operational issues are much more public than in a normal casino situation in other states.

BILL THOMPSON: It’s a little bizarre.

Bill Thompson researches casinos and public policy at the University of Nevada, Las Vegas. He says this is a strange setup: the private companies own the buildings, but the state says it owns the slot machines, and even the cards and the dice.

THOMPSON: The private operators pay property taxes to the state, and yet the state maintains that, the state owns the casino. It’s a fiction.

Fiction or not, Kansas will collect 22 percent of the casino revenue, and the local governments receive an additional 5 percent. That’s about what other states get, a few tax at an even higher rate. Thompson says the state budget might benefit, but few casinos lead to real economic development.

THOMPSON: It’s local residents, and the money they’re gambling in the casino is money they otherwise would spend at the store. And that doesn’t help an economy at all.

The economy isn’t helping Kansas. The state’s original plan was to build four casinos. The Boot Hill Casino opened on schedule, but the state hasn’t even broken ground on the other three.

In Dodge City, Kan., I’m Sylvia Maria Gross for Marketplace.

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