Faced with betting big or playing it safe, the state board charged with recommending a casino for southeast Kansas decided on a near sure thing.

The Kansas Lottery Gaming Facilities Review Board, at its meeting Tuesday at the Ramada Hotel and Convention Center in Topeka, chose Kansas Crossing Casino, the smallest of three proposed casinos for the area. The other two were the similarly-sized Camptown Casino and the much larger Castle Rock Casino Resort.

Kansas Crossing, valued at $70 million, is backed by many of the same people who won the bids for the Dodge City and Mulvane casinos. The Kansas Crossing investors have $26 million in cash and will borrow $44 million. The casino would be built on U.S. 400 and U.S. 69 just south of Pittsburg.

The lead investor is Topeka commercial developer Bruce Christianson. Other investors include HDT Cameron Hotels, Bruce McPherson, Michael McPherson, Nancy Seitz, James Walker, Jonathan Swain, Natalie Schramm and Brent Stevens. The group also includes Wichita developer George Laham.

Tense moments

The moment of selection was packed with drama. The teams had just sat through an 11-hour meeting, and seats were filled with anxious supporters, many wearing T-shirts showing which proposal they supported.

The Castle Rock supporters’ nerves were stretched tight by having to defend their estimates from criticism by the board’s consultants.

When the roll was called, just before 8 p.m., five of the seven board members voted for Kansas Crossing, calling it right-sized for the area and lauding the experience of the management. Two others voted for the ambitious Castle Rock casino.

The decision, said the majority, came down to picking a casino project they felt confident would prosper and deliver taxes to the state coffers.

“The words that keep coming back to me are the ‘project sized for the market,’ ” board member Kevin Cook said.

The well-organized Kansas Crossing team emphasized how conservative their estimates were and how experienced their team was. That proved a contrast to the Castle Rock team, which has spent weeks battling concerns about whether their revenue and profit estimates were simply too high to be realistic.

“I’m extremely proud of the project and the team,” Christianson, lead developer and investor in the Kansas Crossing project, said in his presentation to the board.

He said after the meeting that the team’s efforts to connect with locals in the Pittsburg area were critical.

“I’m grateful for all the support from Crawford County,” he said. “We plan to follow through on everything we promised.”

The group will donate money to Southeast Kansas Tourism, Pittsburg State University and the Crawford County Convention and Visitors Bureau. It would break ground in July and take 12 months to build.

Tribal competition

On the other side of the aisle, Brandon and Rodney Steven and the others on the Castle Rock team sat grim-faced as board members spoke.

“I’m shocked, completely shocked,” Brandon Steven said afterward. “The law … is very clear on this. It’s the establishment with the biggest impact. I don’t see how they could have voted the way they did.”

The biggest drawback for the Castle Rock proposal was the intense competition from tribal casinos in Oklahoma, particularly the Qupaw-owned Downstream Casino Resort located just a few feet across the state line from the proposed Castle Rock site.

Consultant Will Cummings of Cummings and Associates said the Downstream casino does have a permanent advantage because it doesn’t have to pay state taxes. The Kansas casinos have to pay 22 percent of their revenue to the state, 3 percent to local governments and 2 percent to fund gambling addiction programs.

Cummings said the tax, 27 percent, is “very reasonable” but will make a difference in the competition between the two.

“Tax rates do matter; they matter substantially,” he said.

But the most telling critic of the Castle Rock proposal was consultant Michael Greene of Union Gaming Analytics, who was hired by the board to provide an independent analysis of the casino claims.

Greene said at a board meeting on June 10 that his estimate of visitors and revenue was far less than the Castle Rock backers’ estimates, and therefore it made making the payments on a $95 million debt load too high.

On Tuesday, the Stevens said they went back to their investors and got commitments for all $145 million in cash, although they preferred to borrow the $95 million.

Even with a smaller amount to be financed, Greene pronounced the debt load “onerous enough to call into question the ability to operate as a going concern.”

Again and again, the Castle Rock proponents changed numbers, clarified what they were committing to or explained what they were doing. They produced a banker during their final presentation Tuesday to prove they really did have a $95 million loan.

Number of jobs

But the board’s consultants had so turned against Castle Rock that the Kansas Crossing team felt safe enough in its presentation to ignore the Castle Rock project and to spend its time trying to differentiate the project from Camptown.

Camptown Casino was an $84 million reconstruction of the long-vacant Phil Ruffin Sr.-owned Camptown dog track in Frontenac, just north of Pittsburg. Ruffin, a billionaire casino magnate with deep roots in Wichita, said he would pay for the project in cash.

Phil Ruffin Jr. described the project as the “cleanest” of the proposals: no financing needed, the land is already bought, no unhappy neighbors or potential environmental problems.

But Brent Stevens of JNB Gaming, who would manage the Kansas Crossing Casino, scored points with the board when he said his project would have nearly twice the number of construction jobs, 25 percent more casino jobs and twice the hotel rooms as Camptown.

A clearly disappointed Phil Ruffin Jr. was gracious after the vote.

“The board chose what it thought was the best proposal,” he said. “I know Kansas Crossing will do a fantastic job.”