Penn National Gaming Inc. is embroiled in its second legal battle after deciding last month to walk away from a contract to manage a state-owned casino in Cherokee County.
At issue in U.S. District Court in Topeka is whether Kansas Penn Gaming LLC, whose sole member is Penn National, owes $37.5 million to HV Properties of Kansas, which wanted to sell about 200 acres for the casino site in the southeast corner of the state.
"They were required to go through with their state contract and they just announced they wanted to pull out," said HV Properties attorney Bill Modrcin of Kansas City, Mo.
The day after Penn's Sept. 11 announcement, attorneys for HV Properties sent the casino company a letter maintaining it was in default of its sales contract and demanding promised payments of $17.5 million and $20 million. Penn already had paid $2.5 million.
Penn responded with a federal lawsuit on Sept. 23, seeking a ruling that it didn't violate its agreement.
On Monday, Modrcin filed a motion maintaining that Penn violated its agreement and asking the court to award HV the full $37.5 million.
Penn said the sales contract allow it to withdraw prior to final approval of its proposal the Kansas Racing and Gaming Commission if it gave notice to HV Properties, which it said was done.
Penn spokesman Eric Schippers didn't return calls to his cell phone or an e-mail seeking comment Monday.
A separate lawsuit, filed last month by the Cherokee County Commission state court, claims Penn National breached a contract after it announced it wasn't going to build the casino. Penn said it couldn't compete against a nearby Oklahoma tribal casino.
A judge in Shawnee County, where that lawsuit was filed, granted the commission a temporary order blocking return of a $25 million privilege fee Penn paid the state after being picked by the Lottery Gaming Facility Review Board. Penn wants its money back, saying it didn't violate its agreement with the county because its casino contract hadn't received final approval from the Racing and Gaming Commission.
Penn argues the agreement with Cherokee County would have become binding only after it received final approval from the state. The company said it withdrew before the Racing and Gaming Commission gave such approval.
Cherokee County counters that the final approval was never given because Penn withdrew before the process reached the Racing and Gaming Commission.
