The Kansas Supreme Court heard arguments Wednesday on the constitutionality of the Kansas Expanded Lottery Act that purports to allow state-owned casinos in Kansas. The state is gambling hundreds of millions of dollars in revenues that the court will rule it constitutional for the state of Kansas to own and operate gambling casinos.

A ruling is expected June 27.

The case was brought forward by Gov. Kathleen Sebelius who asked the attorney general's office to test the legality of state-owned casinos in order to calm jitters from outside gaming industry investors.

Attorneys for the state sought to determine whether the supreme court would uphold an earlier decision by a Shawnee district court judge, Charles Andrews, allowing casinos to move forward. 

In 2007, the Legislature, at the urging of the Sebelius administration, passed the expanded lottery law without debate. Lawmakers soon learned that the expanded lottery act had been written by representatives of the gaming industry.

If the court agrees with Andrews' decision, it will allow the Kansas Racing and Gaming Commission to own and operate the casinos independently and without legislative oversight. As previously reported by Kansas Liberty, Attorney general Seteven Six has said any inquiry by a state official or lawmaker into the commission's gambling operation would be a violation of the law.

During arguments, Deputy Attorney General Michael Leitch contended that the Kansas Legislature, in constructing the 2007 law, used a “pocket thesaurus” to create language to sidestep a constitutional amendment that requires casinos in Kansas to be owned and operated by the state.

But an attorney for the Kansas Lottery Commission, Dan Biles, countered that the Legislature had in effect created a lottery entity owned by the state, but managed under contract to private parties in the gaming industry.

Indeed, the definition of ownership is at the center of the case. In 1986 Kansas voters approved a constitutional amendment that allowed a “state owned and operated lottery.” In 1994, the supreme court ruled that a "lottery" was “any state owned and operated game, scheme, gift, enterprise, or similar contrivance wherein a person agrees to give valuable consideration for the chance to win a prize or prizes." That broad interpretation and the “state owned and operated” language were used in the Kansas Expanded Lottery Act of 2007.

Leitch argued, however, that the state couldn’t claim ownership by simple legislative decree. He said that the state would make no investments in real estate, gaming machines or equipment, and it would not suffer any risk of loss. Leitch also said that state employees would not operate the casinos.

Biles said the state would own the gaming enterprise in Kansas whether or not it owned real estate or other assets. He said the state would determine the games that were offered, the rules, the odds and the prizes awarded, and the state would have regulatory authority over casinos and racinos.

Biles added that contracting gaming industry insiders to manage the casinos would be like a private business hiring temporary employees.

Justice Robert E. Davis, responding to Biles’ argument, said he believed the Legislature had exhibited “wisdom” in soliciting the management skills of experienced gaming industry companies, even though the expanded lottery law had been created by the gaming industry.

A court clerk said the ruling would be posted on the Supreme Court's website within hours of its release next month.

• More: Read Andrews' ruling here.
• Correction: A Kansas Liberty email update claimed Davis had praised the use of the gaming industry to fashion Kansas' new gambling laws. His praise was for using the management skills of gaming industry companies. We regret the error.