Castle Rock Accuses Kansas Crossing

A lawsuit filed by the developers of the proposed Castle Rock casino (l.), has halted construction on the $70.2 million Kansas Crossing Casino in the Southeast Gaming Zone. Among other allegations, the lawsuit accuses Kansas Crossing of improperly offering $100,000 to a tourism group connected to a member of the review board that recommended Kansas Crossing to the Kansas Racing and Gaming Commission.

The lawsuit filed this summer by Castle Rock Casino Resort that put the brakes on construction of the .2 million Kansas Crossing Casino and Hotel in Pittsburg, Kansas, alleges state regulators’ decision to give the Southeast Gaming Zone contract to Kansas Crossing was “arbitrary, capricious and unreasonable.” It claims the 5 million Castle Rock’s proposal “unquestionably presented the highest gross revenue, the most tourists, the highest tax revenue, the most amenities, and the most jobs.” The lawsuit, pending in Shawnee County District Court and combined with a similar lawsuit filed by Cherokee County officials, requests that the state tear up the Kansas Crossing contract and start the casino selection process over again.

Now there’s a new wrinkle in the case. Recent revelations allege Kansas Crossing developers improperly offered a $100,000 “sweetener” to Southeast Kansas Tourism Region, an organization of area tourism directors with connections to businessman Don Alexander, a member of the Kansas Gaming Facility Review Board, which forwarded its choice of Kansas Crossing to the Kansas Racing and Gaming Commission for a final decision. The Kansas Racing and Gaming Commission is named as a defendant in the lawsuit. Alexander voted for Kansas Crossing.

The lawsuit also states review board officials allowed the proposed contribution on June 23, more than two months after the April 15 incentives deadline. “I was a little bit more impressed with Kansas Crossing bringing tourism into the state and working with the partnerships,” Alexander said during a review board meeting in June.

Kansas City attorney Russell Jones, representing Castle Rock, said that comment indicates the weight of Kansas Crossing’s proposed $100,000 contribution. “If we’re connecting the dots, it appeared to us that it had a fairly significant impact,” Jones said. Alexander is president of SouthEast Kansas Inc., a regional business alliance, which the lawsuit claims is “affiliated” with the Southeast Kansas Tourism Region.

However, Jim Zaleski, vice president of the Southeast Kansas Tourism Region, said the two groups do not have a close relationship. “I honestly think they’re grasping at straws,” Zaleski said.

All three state-owned casino proposals included incentives. Castle Rock would have funded several scholarships and teacher awards. Las Vegas billionaire Phil Ruffin’s Camptown Casino would have given $50,000 a year for 10 years to Frontenac schools.

Kansas Crossing was expected to open in July 2016 but earlier this month the Kansas Lottery granted Kansas Crossing a 90-day extension to open the casino. Topeka attorney Clinton Patty, representing Kansas Crossing, said, “This unprecedented action by Cherokee County and Castle Rock adversely impacts Kansas Crossing’s ability to perform its responsibilities under the contract due to the uncertainty created by the allegations and relief sought by Cherokee County and Castle Rock in the pending litigation.” Patty said Kansas Crossing already has spent $12 million on the casino project.

Kansas Crossing spokeswoman Carrie Tedore said “the entire process was handled in a fair and legal manner. The allegation was made as part of litigation which is still pending. So, we’ll address it accordingly.”

Kansas Crossing will offer 625 slot machines and 16 gaming tables and attract an estimated 500,000 visitors a year. Houston developer Bruce Christenson is the lead investor. The proposed Castle Rock in Cherokee County would have featured1,400 slot machines, 35 table games and a 16-table poker room, and was expected to attract 1 million or more visitors a year. Wichita brothers Rodney and Brandon Steven are the lead investors.