Compromise Pushed In Kansas Racino Bill

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By John Celock

The top budget writer in the Kansas House is calling for both sides in the debate over whether to open racetracks with slot machines to develop a compromise solution.

House Appropriations Committee Chairman Troy Waymaster (R-Russell) called on both sides in the debate to develop a compromise solution following a contentious 90-minute long meeting Wednesday morning. Waymaster said that a solution can be found over the course of this year to the issue, which is being debated to allow a casino operator to reopen shuttered racetracks. Supporters are noting that the bill is an economic development engine for the state’s horse and greyhound breeding industries, while opponents note that the bill would guarantee litigation from operators at the state owned casinos.

“After many years of hearing the same story I implore those on both sides to put together a compromise where the state would not be in any litigation,” Waymaster said. “I implore everybody who is for or against to work in compromise.”

Waymaster then recessed the Appropriations Committee without a vote on the legislation. The committee scheduled to come back Wednesday afternoon to make a final decision on the legislation.

Prior to Waymaster calling for a compromise, the committee adopted a large amendment from Rep. J.R. Claeys (R-Salina) that would establish the legislative intent behind the law for the likely lawsuits, along with changing the funding of several accounts related to the bill and giving the state attorney general the first right to file a lawsuit, while establishing the state Supreme Court as the venue for such a suit. The committee also adopted an amendment from Rep. Brenda Landwehr (R-Wichita), which would extend the state’s smoking ban for private businesses to the four state owned casinos.

The likelihood of litigation and the Claeys amendment setting up a state position for such litigation set the stage for much of the committee’s discussions. Lawmakers are anticipating that the lottery gaming managers of the state-owned casinos would likely file suit against the state for expanding gaming to the racetracks. State Attorney General Derek Schmidt (R) has warned lawmakers that this is likely and recommended against the bill.

The likely litigation would come from the operators of the state owned casinos arguing that their contracts with the state do not allow for more gaming facilities, like the “racinos” proposed in the bill to be opened.

Under the Claeys amendment, Schmidt would have the first right to file such a lawsuit to block the bill, with an Oct. 1 deadline to file the suit. If Schmidt does not act by the deadline, then the casino operators would be able to file a lawsuit.

Rep. Bradley Ralph (R-Dodge City) cautioned against the bill because of the likely litigation. He said that there will be costs that the state will never get back from the litigation, primarily in the time that lawyers would need to focus on the issue. He said that the bill would force quick decisions and that the litigation will not be quick, noting that it will not be good for the state. Ralph described the bill as a “losing proposition.”

“We are forcing people to make a quick decision and file litigation in some fashion. It will be lengthy,” Ralph said. “The appellate process never goes slowly. There will just be the uncertainty that will flow over that.”

Ralph said that any estimated revenue gains for the state under the bill, would likely be lost from the costs involved in the litigation from both sides. The likely litigation would arise

Ralph, who serves the city attorney in Dodge City, also cautioned lawmakers against acting against the advice from Schmidt.

“I am concerned that we appear to be ignoring the attorney general’s consideration in this manner,” Ralph said. ”That is legal advice and by passing this we are saying we are rejecting the legal advice. Rejecting legal advice never ends well.”

Landwehr said that casinos are “not a stable industry number one” and said that with the pending litigation issues the stability is further called into question. Noting that her opinion of casinos is “not good” Landwehr said that caution should be in any decision.

Claeys argued that lawmakers would be setting a dangerous precedent by saying that they are backing away from legislation because someone threatened litigation. He noted that litigation has been threatened on other issues in the past and is part of the process. He said that courts are routinely called into play to make issue rulings on new laws.

“I would hope that the this body would never have the threat of litigation be the deciding factor in deciding legislation,” Claeys said. “Anyone with $15 can threaten litigation and kill the legislation.”

Landwehr was able to place an amendment on the bill that would ban smoking at the state-owned casinos, a move similar to what the state has placed on private businesses. Landwehr noted that the casinos were exempt from the smoking ban over fear that the casinos could lose money, an argument brought up Wednesday. Tarwater argued that Kansans could end up traveling to Oklahoma to be able to smoke in casinos and that will cost the state revenue.

Committee members said that the current law is a “double standard” and said that the exemption for the state-owned casinos was nonsensical. Landwehr said that private businesses have been hurt financially from the decision.

“It could impact the revenue to the state if we ban the smoking in the state owned casinos, but no one cared about the fiscal impact to businesses and their revenue,” Landwehr said. “There have been some folks in small businesses because of it. Primarily our small bars and bingo halls have gone out of business because of that.”

The committee rejected an amendment from Landwehr relating to the use of escrow funds related to the legislation. The committee also rejected a move from Claeys to fast track the bill through the Legislature this year. Claeys had attempted to place the bill in to a previously passed Senate bill, a process known as “gut and go.” If the move had passed the committee, if the measure passed the full House, the bill would go to the Senate for an up and down vote, with no committee hearings or possibility for Senate amendments.

The racing bill has had a circuitous route this year, with the bill passing the House Federal and State Affairs Committee in February, only to have House Speaker Ron Ryckman (R-Olathe) send the bill to the Appropriations Committee, rather than go before the full House. The bill is a priority for House Federal and State Affairs Committee Chairman John Barker (R-Abilene), who has argued that it will help the greyhound breeding industry in his district.

Supporters argued that the bill will help the economy and promote competition. Tarwater noted that when he was in college he bartended in an area with a large nightlife industry. He said that the opening of new bars caused worry among bartenders but that crowds grew as more people came to the area at night. He said that by opening racetracks near casinos, more people will come to the area and patronize both facilities and stay in hotels nearby.

Tarwater said that reopening a racetrack near a casino in Kansas City would likely lead to a long promised hotel coming to the facility, which also has a speedway and outlet shopping center nearby. He noted that positive impact the bill will have on rural areas of the state.

“If this bill passes, this is 4,400 jobs for Kansas in rural Kansas,” Tarwater said. “We’ve talked all year long about how rural Kansas is suffering.”

Claeys said that the original intent was to have competition for the casinos. He said that the bill should be viewed as an economic development bill.

“The economic growth that comes with this bill being passed is substantial for the state. We are losing. We are losing in terms of the horse breeding industry and we are losing in Abilene for the greyhound industry,” Claeys said. “If those industries leave we will lose millions. Let’s keep them in our state, that’s what economic development is all about.”

Waymaster said that he believes a compromise can be reached. He said that he would like the two sides to have the discussions over the remainder of this year and deliver a plan to him in 2018 for consideration by the Legislature.

A similar approach was used this year by both sides of the issue to allow beer sales in supermarkets. Gov. Sam Brownback (R) recently signed the bill to allow beer sales in supermarkets starting in 2019, following the passage of compromise legislation.

“I’ve talked to many of the individuals whether they are for or against,” Waymaster said. “I can say that we can come to some kind of compromise.”


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