Casino execs tackle negatives in hearing

TOPEKA — The top executives of two companies bidding to build Sumner County's casino tackled negative issues surrounding their proposals Thursday when they spoke to the state casino review board that will choose the winner.

John Elliott, CEO of Global Gaming Solutions, said the board's financial consultants used flawed methodology when they projected more revenue for the opposing site near Mulvane, 14 miles closer to Wichita than his company's site near Wellington.

Distance to gambling facilities matters, he said, but "the difference here is, the distance isn't great."

When it was his turn, Peninsula Gaming's CEO, Brent Stevens, again denied any wrongdoing related to misdemeanor charges that he and chief operating officer Jonathan Swain made contributions in somebody else's name to the failed re-election campaign of Iowa Gov. Chet Culver.

"We're looking for a positive resolution to this issue, and we're looking for it very soon," Stevens said.

The two companies are vying for a single casino contract in Sumner County. Global plans a $280 million casino for Wellington's turnpike exit. Peninsula plans a $260 million casino for one of two alternate sites near Mulvane.

The state casino review board is scheduled to choose the winner Dec. 15.

The board spent eight hours Thursday listening to consultants and to representatives of both bidders. In the morning, they heard two financial consultants say that Peninsula's Mulvane casino would produce much greater gaming revenue than Global's Wellington project.

Elliott said the consultants' estimates don't reflect what would happen in the real world. Wichita residents would have only one casino choice, excluding a potential tribal casino that has been proposed for Park City, he said.

Elliott, whose company is based in Oklahoma, said customers from Edmond, Okla., north of Oklahoma City, visit Global's Riverwind Casino south of Norman more often than the casino at Remington Park, which is closer, because Riverwind satisfies their needs better.

He also pointed out that 1.5 percent of the customers in the Riverwind database are from Wichita.

Later, the board asked Stevens about the charges in Iowa, where Peninsula has its headquarters. Board member Jack Brier asked what would happen to Peninsula's plans for its Kansas Star casino if the two men were convicted.

"It goes on. It will be built," Stevens said. "Peninsula Gaming will build the Kansas Star."

Responding to a question from board chairman Matt All, Stevens said any member of the company who fails a background check by the Kansas Racing and Gaming Commission after the board makes its selection will step aside.

All said in an interview later that character issues will be taken up by the commission, not the review board.

"We're not equipped or qualified to make those judgments," he said. "It's just not what we do."

Kansas' gambling law charges the review board to base its decision on the best possible casino contract.

"I think we have to focus on the proposals themselves," All said.

Travel's effects

The first financial consultant to address the board was Will Cummings of Cummings Associates, who said a Mulvane casino would draw $53 million more in annual gaming revenue when fully built in 2016 than a Wellington casino in the same year.

The major difference? More gamblers from Wichita, who would travel a shorter distance, he said.

"The closer, the better," he said. "It costs time and money to go farther, and whether one makes a conscious calculation of this or not, it does affect behavior."

Cummings said Peninsula's Kansas Star would produce up to $213 million in gaming revenue in 2016 as opposed to $160 million at Global's WinSpirit casino.

Richard Wells of Wells Gaming Research estimated Peninsula's revenue at $209.5 million and Global's at $120.5 million by the same year.

Both base their forecasts on models that include factors such as distance, size of facility, power ratings, demographics and location of competing casinos.

Elliott said the consultants' models were flawed because they don't simulate real-world behavior.

He also said the consultants underestimated the revenue impact of the travel plaza Global plans to build at its site.

Board member Bob Boaldin said he disagreed with the consultants that driving distance matters to gamblers, and argued that gamblers don't calculate those costs before going to a casino.

Cummings said a large number of gamblers do make those calculations and visit casinos less often if the costs hurt their finances.

Consultant William Eadington, a professor at the University of Nevada-Reno, said the potential for DUIs and traffic accidents would increase if customers have longer trips home from a casino.

Non-gaming amenities

Dean Macomber of Macomber International gave Peninsula's non-gaming amenities — such as food, beverages, entertainment and hotels —"marginally" higher overall ratings.

Global's planned auto track for Wellington is "a big unknown," Macomber said, although not as attractive as a NASCAR track is at other casinos.

Elliott offered to provide the board with information showing that racetrack customers are gaming customers.

Macomber also said he preferred Peninsula's larger hotel, and liked that its equestrian/events center had multiple uses. He said Peninsula also was more committed to marketing its casino than Global.

Grant Govertsen of Union Gaming Analytics said both companies were financially capable of funding their entire projects.

Other consultants presented reports showing Peninsula's casino would come out ahead in economic impact and in most fiscal impacts on state and local governments.