The Lottery Gaming Facility Review Board in Kansas has by a narrow margin, 4 votes to 3, selected Harrah’s Entertainment to manage a state-owned casino in Sumner County. Kansas last year passed a law to create four state-owned casinos and the Review Board has already allocated one in Cherokee County to Penn National Gaming. Managers for casinos in the counties of Wyandotte and Ford will be decided next month. All four prospective operators will undergo background checks.

It was recently reported that the private equity owners of Harrah’s Entertainment, Apollo Management and Texas Pacific Group, have written off around US$600 million, possibly the biggest private equity markdown. The losses are thought to be more than 20% of the initial investment. Although Penn was chosen to run the Cherokee County casino the company also wanted to be awarded the one in Sumner County. The company has suggested it may walk away from the Cherokee deal as its bid did not win in Sumner.

The opening last month of the US$300 million Downstream Casino by the Quapaw Tribe just across the border in Oklahoma could mean that the casino in Cherokee County would not be a viable proposition. Penn is said to be very disappointed that it was not awarded the management contract for both casinos. The casino plans are already facing legal challenges but the resorts could be open within two years. The other two casinos will be decided 18-19 September. (E-08.22.08)

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