Microsoft Word document of news release

DATE: December 5, 2008
CONTACT: Sally Lunsford (785) 296-5708, sally.lunsford@kslottery.net

Kansas Entertainment, LLC Withdraws Application in Northeast Zone

TOPEKA, KAN. – The Kansas Lottery has been notified by Kansas Entertainment, LLC (Hard Rock) that it is withdrawing its Gaming Application from consideration for a gaming license in the Northeast Gaming Zone.

In a letter addressed to Ed Van Petten, Executive Director of the Kansas Lottery, and delivered to Lottery headquarters in Topeka, Joseph S. Weinberg of Kansas Entertainment wrote, in part:

“As you are aware, in the three months since the decision of the Lottery Gaming Facility Review Board, there has been an unprecedented crisis and disruption in the global financial and economic markets. Notwithstanding, Kansas Entertainment remains in a strong financial position, and is prepared immediately to commence development of the $400 million Hard Rock-branded casino outlined in our presentations. However, economic conditions necessitate that we have the flexibility potentially to phase in at a later date the construction of the non-gaming retail and hotel amenities of the project (the Ancillary Lottery Gaming Facility Operations), in the event financial markets do not recover in the near term.

We recognize that the potential phasing we now require is not permitted within our existing Agreement. We must therefore reluctantly withdraw our Application for Lottery Gaming Facility Manager from consideration for the Northeast Kansas gaming zone.

We remain fully committed to the opportunity to bring a first-class casino development to the State and Wyandotte County, along with seeking the realignment of a second NASCAR Sprint Cup race and the construction of a road course at the Kansas Speedway. It is absolutely our intention to re-apply for a license in the Northeast zone, with the phased development plan outlined here, upon the State re-opening bidding for this zone.

We greatly appreciate the professionalism of all the State and Unified Government employees and representatives throughout the review process. Their conduct has been exemplary.”

Kansas Entertainment requested a refund of the $25,000,000 privilege fee it paid June 26, 2008. The Kansas Lottery is processing the refund through the State Treasurer’s Office.

“Hard Rock’s withdrawal is another unfortunate result of the worldwide crisis that has plagued the financial markets and hit the gaming industry especially hard,” said Kansas Lottery Executive Director Ed Van Petten. “We will reopen the application process in the Northeast zone and invite applicants to apply with proposals they feel fit the current economic climate. We are confident that we can and will find a manager to develop a destination casino in Wyandotte County.”

Citing the “unprecedented disruption in world financial markets,” Sumner Gaming Joint Venture (Harrah’s) on November 17 withdrew its application for a proposed destination casino in Sumner County. Penn National Gaming, Inc. withdrew its application in the Southeast Gaming Zone September 11.

Bids have been reopened in the Southeast zone, with a deadline of January 21 for applications to be received. The Kansas Lottery Commission will discuss reopening bids in the South Central and Northeast zones when it meets December 11.

Butler National Service Corporation is still planning to build a destination casino in Dodge City in the Southwest Gaming Zone. The Kansas Racing & Gaming Commission has been conducting background investigations of the developer and will consider final approval of the contract Dec. 5.