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Kansas Liberty: 27 June 2008

Kansas Liberty analysis: State Supreme Court's response to the budget crisis is 'Shuffle up and deal!' Will it work? Phil LaCerte calls their bluff.

Kansas can only win by making losers out of Kansans

A state that once vigorously pursued and prosecuted bingo parlors will now, thanks to a decision by the Kansas Supreme Court Friday, “own and operate” casinos whose sole purpose is to fleece unsuspecting patrons so the state will have more money to spend.

Kansas will earn an estimated $80 million in the first full year of casino operations. How, you ask, can Kansas know this before even a single dice is rolled?

It’s because casinos are rigged enterprises, where a patron must overcome overwhelming odds to walk away a winner.

Sure, some people get lucky, buck the odds and win from time to time, but the fact is, in every game that will be offered at Kansas casinos, the state will have the mathematical drop on the player. That's the state's strategy for paying its bills.

It won't work that way for you and me. To illustrate, consider slot machines. The aptly nicknamed one-armed bandits, and their more modern electronic counterparts, usually pay back about 90 cents for every dollar wagered.

Odds in other so-called games of chance are similarly stacked against the player. And, even in poker, where players square off against one another and the casino is not a direct participant in the game, the casino takes a percentage of the pot (the rake), thus ensuring it will come out a winner regardless of the cards that are dealt.

Kansas, as an owner of gaming institutions, over time will be a sure winner, and that’s certainly a comfortable risk environment for the owner of any enterprise. From a financial perspective, the state, which faces a looming budget crisis, can certainly use the money that will flow from the can’t-lose racket it has created with the blessing of the Supreme Court.

The ruling was critical, since under the Expanded Lottery Act, to be constitutional, the lottery, and by extension casinos, have to be state-owned and operated.

The Supreme Court, in a decision written by Justice Eric S. Rosen, ruled that even though the state would incur no risk, nor would it own casino buildings or gaming apparatus like slot machines, it would still be the technical owner of what he called the gaming "scheme."

"While the state is not the exclusive owner and operator of all aspects of the lottery enterprise under KELA (Kansas Expanded Lottery Act), the state owns and operates the enterprise by itself and owns and operates key elements of the lottery," Rosen wrote.

The Kansas Supreme Court: "It is unnecessary that the state own the physical plant ... It suffices that the state own the game, or the scheme.

"It is unnecessary that the state own the physical plant associated with the lottery," he claimed. "It suffices that the state own the game, or the scheme, or the enterprise. Such a definition is consistent with a standard review favoring the constitutionality of KELA."

Lance Kinzer, an Olathe Republican who opposed the Expanded Lottery Act that paved the way for casino gaming, said he was disappointed with the decision and its effect.

The state representative said he found it “objectionable” that Kansas will become the only state to ‘own and operate’ its own casinos.

“I wouldn’t have supported private casinos either, but they would have been less objectionable to me than state-owned and operated casinos,” he said.

However, Kinzer noted that it’s not unprecedented for the state to operate an enterprise that takes advantage of consumers.

He pointed to the sucker’s bet of all sucker’s bets – the Kansas Lottery. That operation pays back a minimum of 45 percent to players. That means that less than half the money wagered is paid back to participants, far worse odds than a slot machine that pays back 90 cents for every dollar wagered.

Lance Kinzer: “The state has become addicted to the dollars generated by the lottery.”

Kinzer said he was one of the only members of the Kansas Legislature who would have allowed the Kansas Lottery to expire, rather then extending it.

The state has become addicted to the dollars generated by the lottery,” he said.

Kansas Gov. Kathleen Sebelius said the revenue flow from the state’s gambling enterprise is much needed.

"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," Sebelius said in a written statement.

Regardless of the high court ruling, Kinzer said he still believed most Kansans never suspected when they voted in favor of a constitutional amendment allowing a state lottery that the vote would ultimately lead to state-owned and operated casinos.

“That’s more than a stretch in my opinion,” he said. “If we really wanted casino gaming, we should have amended the constitution like we did with the lottery.”

House Speaker Melvin Neufeld, R-Ingalls: "I was in the Kansas Legislature in 1986 and I can assure you that was not the intention of the amendment voters approved."

In a written statement, Neufeld said that when the constitution was amended more than 20 years ago to allow for the creation of a state lottery, it wasn't the intention of Kansans "to allow casinos in our state. I was in the Kansas Legislature in 1986 and I can assure you that was not the intention of the amendment voters approved. There is a tremendous difference between a scratch ticket and a slot machine.”

Kinzer noted that the ruling “established the state as the owner of an enterprise that will generate dollars by preying on those who in some cases can least afford it."

According to the state Labor Department's review, poverty in Kansas under the Sebelius administration is growing far more rapidly than it is elsewhere in America, and the biggest growth category for jobs involves work requiring minimal skills and doing menial tasks for little more than a minimum wage.

Many wonder if pitting the state against its poorest citizens is a smart, or ethical, thing to do.

That translates into more poor people with more desperate dreams turning to gambling as a way out of poverty. Many wonder if pitting the state against its poorest citizens is a smart, or ethical, thing to do.

“Kansans will be deciding whether to spend $3 for a gallon of milk or put it into a slot machine,” Neufeld said. (See the related Kansas Liberty news story here.)

He added that he hoped “most will choose to provide for their families, " and most Kansans - those make-believe owners of gambling casinos and slot-machine parlors - will almost certainly agree with him, especially if they've grown a little poorer in order to make the state a little richer.