On Wednesday, the Kansas Lottery Gaming Facilities Review Board heard the findings of a nearly half-million dollar analysis by its consultants.
Now, the three casino bids for the Southeast Gaming Zone and those that heard the consultants are reacting to the numbers and figures put out by Union Gaming Analytics and Cummings Associates.
Perhaps the most surprising finding of the consultants was the difference between the casinos’ revenue projections and the projections of Union Gaming and Cummings Associates.
While all three casino bids were considered too high by those analytics, the projections by Camptown Casino and Kansas Crossing were both within 10-20 percent.
The same could not be said for Castle Rock Casino, which expected $83 million in revenue. Union Gaming projects revenues of $47.8 million, and Cummings projected $59.9 million.
Castle Rock officials called the consultants’ reports “flawed” and said they would issue a written rebuttal by Monday, the statutory deadline for a rebuttal. Castle Rock says their projections are based on “multiple market demand and feasibility studies conducted by leaders in the industry.” They also claim to have “in-depth evaluations by financial institutions that have led to committed financing from three national banks that specialize in the gaming industry.”
“Our team doesn’t feel like that question was adequately answered,” said Rodney Steven II, Castle Rock partner. “We actually were wondering the same thing. Now that we have the consultants’ reports – provided at the close of the daylong meeting – we can see that Union Gaming used an across-the-board formula that led to some faulty assumptions. Included in that is a big misconception that with the 27 percent cut the State of Kansas takes, Castle Rock cannot be competitive, particularly against Downstream Casino. However, Downstream must pay a high interest rate on its nearly $400 million in debt as well as paying defined stipends to each tribal member. This creates an effective tax rate that very likely exceeds the Kansas gaming tax rate. We’re not afraid of the tribal casinos to our south. In fact, we see them as an advantage, because they’ve generated a strong gaming market.”
On the other hand, the Crawford County Convention and Visitors Bureau feels the consultants’ reports are vindication for their study completed by Jay Sarno Associates. That study predicted Castle Rock would generate about $48.9 million in revenues, and Castle Rock also came out against the methodology and objectivity of that study.
“We weren’t surprised by the findings from the consultants because we were confident in the numbers provided by the study that we had conducted. We are hopeful that the commission will listen to those numbers and it will help them make the right decision,” said B.J. Harris, Crawford County Convention and Visitors Bureau executive director. “I think that’s why they’ll ultimately choose to put a casino in Crawford County.”
Harris said that despite the idea that the two Crawford County casino bids — by nature of being smaller — would be more of a “regional” casino rather than a “destination” casino, both of the Crawford County bids are more attuned to the Southeast Kansas region.
As evidence of that, he cited a recent agreement between the Kansas Crossing bid and the Southeast Kansas Tourism Region to provide $10,000 a year for 10 years in funding to promote regional tourism.
“I’m not sure I see [the Crawford County bids] as not destination. I think they all will be a destination from a visitor standpoint. The two in Crawford County are more devoted to Southeast Kansas, looking at their proposals through the eyes of operating in Southeast Kansas and providing benefits to Southeast Kansas. If you look at what they’re offering the community and business development and giving back, they’re interested in the benefit of Southeast Kansas in general,” Harris said.
The LGFRB will hear one last 30-minute pitch by the three applicants on June 23, after which the board will conduct a ballot vote to pick a winner.