Fri, Nov 27 2009
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Published September 12, 2008 08:14 pm - COLUMBUS, Kan. — The Cherokee County Commission is seeking a damage award of $53 million in a breach-of-contract lawsuit against Penn National Gaming. Cherokee County seeks $53 million in lawsuit against Penn National By Roger McKinney
rmckinney@joplinglobe.com COLUMBUS, Kan. — The Cherokee County Commission is seeking a damage award of $53 million in a breach-of-contract lawsuit against Penn National Gaming. Eric Schippers, Penn National’s vice president for public affairs, said the company won’t comment on the litigation. Penn National announced Thursday that it was withdrawing from its plan to build and manage a $225 million casino and hotel in Cherokee County. The company initially was to invest $125 million in the state-owned casino, with future investment of $100 million in a hotel and other amenities. Schippers said competition from the $301 million Downstream Casino Resort, which opened this summer south of Penn National’s planned casino, made withdrawal a necessary business decision. The company also is seeking a refund of its $25 million privilege fee to the state. The lawsuit was filed in Shawnee County District Court in Topeka late Thursday by David Cooper and Teresa Watson with the Topeka law firm Fisher, Patterson, Sayler & Smith. Cooper has served as the county’s attorney on casino matters, with the county’s costs for Cooper’s fees reimbursed by Penn National. That arrangement is no longer in place, and Cooper’s fees will come from the county budget. “I don’t think they’ll pay us to sue them,” said Commissioner Pat Collins. The lawsuit states that Penn National and Kansas Penn Gaming, the name under which the company was operating in Kansas, by withdrawing, did not fulfill requirements of a predevelopment agreement and amended predevelopment agreement with the county. The lawsuit states that as a consequence of the company’s breach of contract, the county has suffered the following damages: n Loss of gaming tax revenues to the county of at least $28.9 million over the life of the contract. n Loss of property tax revenues to the county of $1.5 million per year, for a total of $22.5 million over the life of the contract. n Loss of sales tax revenues to the county of at least $1.5 million over the life of the contract. The amended predevelopment agreement between the county and Penn National required the company to spend $225 million on a casino and hotel, in phases “upon final approval of a management contract.” The Kansas Lottery Commission approved a contract with Penn National for Cherokee County on May 5, and the Kansas Lottery Gaming Facility Review Board on Aug. 22 selected Penn National as the casino manager in the southeast gaming zone. The company withdrew its application as final approval by the Kansas Racing Commission was pending. County commissioners, interviewed individually, said they didn’t specifically direct Cooper to file the lawsuit, but it had been an option they had discussed and they left the action to Cooper’s discretion. 
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