Protect the Partnership is a coalition of local business and civic leaders and community organizations opposed to the re-opening of the Kansas Expanded Lottery Act and the reduction in gaming taxes at The Woodlands. Changing the laws to provide a tax break to the new Woodlands owner, Phil Ruffin, will hurt education, local charities, community organizations and would send a signal to businesses that Kansas is not a trusted business partner.

The push to reopen The Woodlands at a lower tax rate is being led by billionaire Phil Ruffin, from Las Vegas and a small group of non-Wyandotte County horse and dog-racing interests that do not have a stake in the future of Wyandotte County. They continue to try and persuade legislators in Topeka that this action must be taken in order to open the Woodlands and save their industry. However, what they don’t tell the public is that they can re-open racing and install slot machines at the Woodlands today under the current law. But their push to cut their taxes will be to the detriment of other businesses who have already committed and invested in this community.

HISTORY

Kansas Expanded Lottery Act (KELA)

In 2007, the Kansas State Legislature passed SB66, the Kansas Expanded Lottery Act (KELA). This legislation allowed for four destination casinos to be built in four separate casino zones. It also allowed for the state’s horse and greyhound racetracks to install slot machines in order to support horse and dog racing operations.

While the pari-mutuel operators in the state were awarded the slots licenses outright and could begin gaming operations immediately, casino developers had to compete for the four destination casino licenses and had to invest a minimum $250 million in their respective casino developments ($225 million in capital investment plus a $25 million privilege fee).

In 2009, International Speedway Corporation and Penn National Gaming won the right to develop and operate the casino here in Wyandotte County on turn two of the Kansas Speedway. The partnership, Kansas Entertainment, invested over $300 million and opened Hollywood Casino at Kansas Speedway in February 2012.

REVENUE SHARING

As part of their bid for the license, the Hollywood Casino project proposed additional revenue sharing programs above and beyond the state’s and local government’s share outlined in KELA.

1% annually to the Unified Government for distribution to community organizations throughout Wyandotte County. For more information about the Hollywood Casino grant fund, visit: www.wycokck.org – This equates to ~$1.4 million annually.

1% annually to the Unified Government until construction commences on a hotel. This
equates to ~$1.4 million annually.

$500,000 in additional funds for charitable organizations in Wyandotte County
$500,000 annually split among non-host school districts (Turner, USD 500 and Piper)
$100,000 annually to Wyandotte County Parks & Recreation
$25,000 annually to Wyandotte County Conventions & Visitors Bureau
$10,000 annually to Kansas City Chamber of Commerce

2 free billboards at Kansas Speedway promoting Kansas Tourism.

All totaled, Hollywood Casino generates over $4 million

above and beyond what is required by state law, every year to Wyandotte County agencies, school districts and community organizations.

RISKS

to Wyandotte County & Surrounding Community

Changing the rules to better suit the Woodlands’ new owner is a bad signal to businesses looking to do business in Kansas and even worse, here in Wyandotte County. As a community we are invested in the success of Hollywood Casino – nearly $4 million in revenues (not including property and other non-gaming taxes) come to local agencies and community organizations as a result of the agreement we have with Hollywood Casino. If the current rules are changed for the Woodlands, we face the followings risks:

  • If provided a tax advantage, the Woodlands would severely reduce the revenues at Hollywood Casino and in turn, hurt the revenues that we receive from them – particularly the 1% for the Hollywood Casino Grant Fund, the 1% hotel fee and the 3% host community fee paid to the UG from the state’s share of gaming revenues.
  • It provides grounds for Hollywood Casino to seek a refund of the its $25 million application fee from the State of Kansas.
  • It could also negate the contract the state has with Hollywood Casino and provide a basis for the casino to re-negotiate its contract with the State and us here in Wyandotte County.
  • This means the $500,000 payment made annually to the Piper, Turner and USD 500 school districts are at risk.
  • It puts future economic development prospects for Wyandotte County at risk – who wants to do business with a State that backs out of its contracts and agreements?
  • Jobs created by the Woodlands new and lower tax rate will only be offset by job losses at Hollywood Casino.
  • International Speedway Corporation will reconsider their events strategy at Kansas Speedway.

The bottom line:

How can we support legislation that would cause a negative impact to state revenues, state education dollars, local charitable dollars and our economic development prospects? The answer is, we can’t

THE REALITY

of Horse and Dog Racing

Under current law, the Woodlands racetracks could open today and install slot machines almost immediately. They only need a nominal amount of capital investment to do this under state law. The state requires $2,500 of capital investment per machine at racetracks. This equates to approximately $1.5 million to install 600 machines. They do not need additional legislative action to do this.

What they are asking for are significant tax breaks, from the state’s share, in order to open at a lower tax rate.

Breakdown of the Woodlands racetrack tax:

0
%
to the live horse racing purse funds
0
%
to the live greyhound racing purse funds
0
%
to the Unified Government of Wyandotte County
0
%
to the state’s problem gambling fund
0
%
to the Kansas Horse Fair Racing funds
0
%
is returned to the racetrack operator for “gaming expenses” as determined by an agreement between the Kansas Lottery and the racetrack operator.
0
%
to the racetrack operator as their management fee or owner’s hold
0
%
to the state

In reality:

The racetrack owner receives 40% of the gross gaming revenue generated from slots at the racetrack. If the state cuts the tax rates for the Woodlands, that means it will come from the state’s share of the gaming revenues and not the other recipients of the gaming dollars.

SB192 OVERVIEW

  • Amends Kansas Expanded Lottery Act (KELA)
  • Increases total number of slot machines available for pari-mutuel locations from 2,200 to 2,800
  • Under current law, the number of machines is capped 2,200 but allows for an additional 600 machines to be bid for, once management agreements for all four destination casinos are in place and binding.
  • Removes the destination casinos’ ability to bid on the 600 “extra” machines
  • Removes the requirement for the Wyandotte County pari-mutuel facility to conduct at least 100 live greyhound races each calendar year for the same number of weeks raced during CY2003 in order to get a gaming license at the facility.
  • It also amends the simulcasting rules (the ability to broadcast and collect wagers on racing from other racetracks around the country). Under current law, the racetrack must conduct at least 150 days of live racing in order to get simulcast racing license. Proposed law drops that requirement to at least 60 days of live racing in a calendar year.
  • Amends the following tax rates in the NE Gaming Zone (i.e. Wyandotte County) for racetrack slot machine revenue:
0
%
The UG’s slot revenues are cut by 33%
0
%
The State’s slot revenues are cut by 45%
0
%
Revenues to the problem gambling funds are cut by 75%
While
0
%
The horse racing purse fund increases by 40% in the first 2 years and doubles beginning year 3
0
%
Increases revenue to Phil Ruffin, the racetrack operator, by over 255% for the first two years
0
%
Increases revenue to Phil Ruffin, the racetrack operator, by over 240% beginning in year 3
  • Current Law
  • Racetrack operator receives 25% of slot revenue
  • Racetrack operator receives an additional 15% of slots revenues thus allowing the racetrack operator to receive a total of 40% of slot revenues
  • 7% of slot revenue to Horse Racing Purse Fund
  • 7% of slot revenue to Greyhound Racing Purse Fund
  • State receives 40% of slot revenue
  • UG receives 3% of slot revenue
  • Problem gambling fund receives 2% of slot revenue
  • 1% goes to Kansas Horse Fair Racing Benefit Fund
  • Caps the maximum amount of slots revenues going to the racing purse fund at an average of $3,750 per machine per location in all gaming zones
  • SB192
  • Racetrack operator receives 64.5% of slot revenue in year 1 and 2.
  • Racetrack operator no longer receives 15% slot revenue but increases management fee portion to 64.5% (as noted in the first row of this table)
  • 10% of slot revenue to Horse Racing Purse Fund in year 1 and 2.
  • 0% to Greyhound Purse Fund
  • State receives 22% of slot revenue
  • UG receives 2% of slot revenue
  • Problem gambling fund receives 0.5% of slot revenue
  • No change
  • Removes the cap for horse racing purse fund
  • Additional Changes
  • Racetrack operator receives 60.5% of slot revenues in year 3 and beyond.
  • 14% of slot revenue to Horse Racing Purse Fund in year 3 and beyond.

WYANDOTTE COUNTY’S CASINO

About

About Wyandotte County’s Casino

703 Current employee count
63% Employees who live in Kansas
34% Employees who live in Wyandotte County
18% Employees live in Johnson County
39% Employees are minorities
$2 million+ Is spent with Kansas-based vendors annually

The casino has: 2,000 slot machines, 40 table games and 12 poker tables

Potential Impacts to Wyandotte County’s Casino if the Woodlands is granted a tax bailout

$6.7MM-$7.7MM Annual reduction in direct spending and tax revenue to the Kansas state economy
$4.7MM-$5.4MM Reductions in state and local gaming tax revenues
50-70 Jobs lost at the casino
$1.4MM-$1.6MM Elimination of payroll wages and taxes
$638,000-$737,000 Reduction in spending with local vendors
$240,000,000/YR Threatens Kansas Speedway’s long-term event strategy and associated economic impacts.

Total economic impact: $6.7 million – $7.7 million plus threatens Kansas Speedway’s long-term event strategy.