Archive for Tuesday, November 24, 2015

Hollywood Casino pushes back against requests of Woodlands owner

Group presented its case to USD 240 school board, seeks support in WyCo

November 24, 2015

The Hollywood Casino at Kansas Speedway is proactively opposing a movement to reopen The Woodlands with the help of reduced taxes and incentives.

Representatives of the casino last week attended the meeting of the USD 204 Board of Education, which is the home school district for the casino. They said that legislation, which has passed the Senate and will be considered by the House of Representatives next year, would be unfair given the investment casinos were required to make.

Karen Bailey Chapman, a lobbyist representing Penn National Gaming, said they felt that meeting the developer’s requests would mean the state was reneging on its contract with the casinos.

“To put it mildly, you are looking at opening a can of worms,” she told the school board.

In addition to Chapman, representatives attending the meeting included Chris Carter of Hollywood Casino and Jeff Boerger of the Kansas Speedway. They said they were basing their arguments both on legislation passed by the Kansas Senate last spring and statements Woodlands owner Phil Ruffin or his representatives have made to the media about additional legislative changes and incentives order to develop The Woodlands as a combination race track and casino, or "racino."

The Ruffin team has said the tax rate on racinos’ gaming revenues is too high to operate them successfully. The legislation was backed by Leavenworth Republican Sen. Steve Fitzgerald, whose district also covers Bonner Springs, and would let the racino keep 64.5 percent of income for the first two years and 60.5 percent every year after that.

Boerger and Chapman said this contradicted what the racetracks agreed to in the 2007 Kansas Expanded Lottery Act.

“That’s what we based our investments on, that’s what we based our commitments on,” Chapman said, later adding, “One of the things we pride ourselves on and continue to pride ourselves on is promises made, promises kept. Everything we put together in our proposal, we’ve delivered on.”

Under the current law, "destination casino resorts" like the Hollywood Casino pay about 27 percent of revenue in taxes to the state and local government. Boerger said The Woodlands, with slot machines, would pay a 40 percent rate, but this was in line with racinos operating elsewhere in the country.

Boerger and Chapman pointed out that while the casinos have a lower tax rate, they were required to pay a $25 million fee and make a minimum capital investment of $225 million. Hollywood Casino also has a contract with the Unified Government that requires charitable giving of about $4 million annually.

Racinos don’t have such investment requirements to move in slots, they said.

Chapman said they saw allowing changes in gaming laws for racinos as reneging on the contract with destination casinos, giving the casino the right to ask for its $25 million fee back from the state.

“Should new legislation come up and change the gaming rules, we believe we have the standing to renegotiate our contract, so that puts all of this money (given to the state and county) at risk,” Chapman said.

They said they also felt it would be bad for the state’s budget, which would be bad for schools.

“As the state continues to struggle for additional revenues, we find it a little bit hard to believe it would provide such a significant tax break to an entity, especially when it relates to gaming, since we weren’t allowed any kind of tax incentives with regard to our investment,” Chapman said.

The impact the casino expects locally if the Woodlands opens would be 10 to 15 percent, she said. She said if the state is seen as reneging on a contract, it likely would hurt economic development.

The school board members seemed to be in support of the casino, which pays about $1.5 million in property taxes to USD 204. Boerger said Unified Government Mayor Mark Holland and seven county commissioners have given their support to the casino.


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