HOLD THE SWEETENER? Review Board debates casino add-ons

The Kansas Lottery Gaming Facility Review Board on Tuesday continued to grapple with the issue of how to accommodate “sweeteners,” or additions casino applicants have made to their proposals during the last few months.

Review board members heard testimony from Dr. William Eadington, a University of Nevada-Reno professor hired as a consultant for the casino review process, on whether the board should consider additions the casino applicants have made to their proposals after the groups reached contracts with the Kansas Lottery Commission in late May.

“(Sweeteners) can be problematic,” Eadington told the board, “where (the casino applicants) are in effect in a poker game, calling and raising” the other proposals.

The issue of sweeteners is of particular importance to Wyandotte County’s four proposals.

Over the course of the last month, officials representing the Kansas Entertainment proposal – a partnership of Kansas Speedway-International Speedway Corporation and the Cordish Co. – have attempted to stir in a number of sweeteners into the review board’s cup of coffee, including the promise that if their proposal is selected they would seek to host a second NASCAR Sprint Cup Series racing weekend and build an infield road course.

On Tuesday, review board member Jim Bergflak said that while he wasn’t trying to encourage applicants to increase the breadth of their bids, if the promises are in writing, it would be tough for the seven-member board to ignore them.

“I’d hate to totally ignore it,” Bergfalk said. “I think we should at least look at it if it is in writing.”
Board Chairman Matt All cautioned, however, that if the board doesn’t rule out the possibility that it would review sweeteners, it would start to give the appearance that the review board is holding an auction.

“We’re not a negotiating body,” All said. “We’re supposed to review contracts that have already been negotiated by (the Kansas Lottery Commission).”

If the board limits its review to those contracts, the additional sweeteners would be left off the table – at least for the review board.

All called for an executive discussion this week – Tuesday’s series of meetings will continue today – to evaluate what policy the board should adopt in dealing with sweeteners.

Eadington advised the board they have three general options: 1) To ignore the sweeteners completely; 2) To treat them as written promises outside of the scope of the contract; or 3) To allow for an arrangement between the applicants and the local government to reach a memorandum of understanding on what additional amenities a specific proposal would include.

The third option would hold the local governments accountable for enforcing negotiated sweeteners because it would not be under the review of the Kansas Lottery, which is responsible for enforcing the contracts reached in May.

From a technical standpoint, option three has been used recently, when the review board asked Edwardsville officials to negotiate a pre-development agreement with Golden Gaming. The agreement, reached last week, could set a framework for developers to work with Edwardsville and the Unified Government to add additional items to their proposals.

But it remains unclear, given the tight timeframe the review board has to make its decision – the group plans to name the single Wyandotte County casino winner on Sept. 19 – if local governments would have time to essentially renegotiate concepts of the proposals in enough time to allow proper review.

It also remains unclear, given the changing nature of the credit markets, whether the review board will allow applicants to modify the structure of their financing as conditions warrant.