June 27, 2008 / 9:15 PM / in 10 years

Kansas high court upholds state's gambling law

CHICAGO, June 27 (Reuters) - The Kansas Supreme Court ruled on Friday that a gambling law allowing state-owned casinos and slot parlors is constitutional, upholding a previous ruling on the law.

The case was filed in 2007 by former Kansas Attorney General Paul Morrison on behalf of the state in an attempt to test the law’s constitutionality and clear any potential legal hurdles. The ruling means plans for casinos and slots owned by the state can go forward.

Opponents had argued the law was not constitutional because the real estate, buildings and equipment related to the gambling could be privately controlled.

But the court rejected that notion, saying the state maintains substantial ownership of the process: “While the state is not the exclusive owner and operator of all aspects of the lottery enterprise ... the state owns and operates the enterprise itself and owns and operates key elements of the lottery.”

The law is aimed at attracting investors to set up new gaming operations in Kansas that the state estimates could raise millions of dollars for state and local governments.

Kansas Republicans have opposed the law, which was signed by Democratic Gov. Kathleen Sebelius in 2007.

“I would certainly prefer to sit down and find a way to make our state financially secure without literally staking our future on a bet,” said Kansas House Speaker Melvin Neufeld, a Republican, in a statement. “Construction of the casinos will give us some room to breathe. However, once the casinos are operating, the potential for these predicted revenues to fall is a real concern.”

Sebelius said in a statement that she was pleased with the decision.

“The additional income to the state comes at a time when the national economic news is not good, and will help us keep our commitments for strategic investments in a bright future for Kansas,” she said.

Bidders for property include Penn National Gaming Inc (PENN.O), Pinnacle Entertainment Inc PNK.N and Las Vegas Sands Corp (LVS.N), according to a May research note from UBS AG. (Reporting by Erin Zureick; Editing by Leslie Adler)

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