The Joplin Globe, Joplin, MO

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September 17, 2012

Cherokee County wins lawsuit against Penn National Gaming

COLUMBUS, Kan. — A Shawnee County judge has ruled in Cherokee County’s favor in its breach-of-contract lawsuit against Penn National Gaming.

Cherokee County sued for $53 million in 2008, but the amount will be determined by the judge at an upcoming trial.

Cherokee County filed the lawsuit in response to the company’s decision to back out on a deal to build a state-owned casino after being awarded the contract to manage the Southeast Kansas region’s casino.

Penn National officials cited competition from the Quapaw Tribe’s Downstream Casino resort in its decision to withdraw.

“It kind of justifies our efforts, I believe,” said County Commissioner Pat Collins of the ruling.

Both Collins and Commissioner Richard Hilderbrand said the judge’s ruling in the four-year legal battle put their minds at ease and lifted a burden.

“It’s not a matter of if we win, it’s how much,” Hilderbrand said. “I’m looking forward to getting this behind us and using the money to keep Cherokee County moving in a positive direction.”

David Cooper, the county’s lead attorney in the lawsuit, said he was “very gratified” by the ruling.

“We look forward to further proceedings so we can get this matter resolved,” he said.

The judge, Franklin Theis, wrote in the Friday ruling that he wouldn’t automatically accept the county’s claims for the damage amount. He said the claim regarding lost tax revenues is a question that must be resolved.

“That caveat is not to the fact such damages could be recoverable, but rather to questions that go to the soundness of the proof that could be offered, particularly well into the future,” Theis wrote.

Cooper said he expects Penn National to dispute every penny, but he’s confident.

“He just expects evidence,” Cooper said of the judge. He said he didn’t know when the trial would be scheduled.

Theis previously had warned Penn National to make another settlement offer to the county before he ruled. No settlement offer was forthcoming.

The county’s argument was that Cherokee County entered into a contract with Penn National’s subsidiary, Kansas Penn Gaming, in return for Cherokee County agreeing to endorse Kansas Penn Gaming’s effort to get the state contract as casino manager.

“After receiving nearly all of the approvals necessary to open its doors in Cherokee County, KPG withdrew its application to be a lottery gaming facility (casino) manager in the Southeast Zone,” reads the county’s memorandum in support of summary judgment. “Because executives at PNG believed there was more money to be made elsewhere in Kansas, PNG made the calculated decision to abandon the Cherokee County project.”

The casino company argued in its motion that Kansas Penn Gaming didn’t obtain a management contract from the state with acceptable terms and conditions, thus negating the agreement with Cherokee County.

No return call

Officials with Penn National Gaming didn’t immediately return phone calls seeking comment.

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