TOPEKA, Kansas (Legal Newsline)-The Kansas Supreme Court heard arguments Wednesday in the gambling case between the state attorney general and the Kansas Lottery.

The case is to decide the question of what the phrase "state-owned and operated" means when it comes to casinos.

Under a law passed last year, casinos in Kansas must be "owned and operated" by the state. The law extends to the Kansas Lottery, which contracts with developers to build and operate casinos.

The agreements make clear that the facilities are state-owned and operated. With the expanded gaming, state lawmakers hoped to eventually collect about $200 million a year.

In February, a Shawnee County District Court judge ruled the state's expanded gambling law is constitutional.

Democratic Gov. Kathleen Sebelius, who supports the plan, asked Attorney General Stephen Six to challenge the plan to make sure it was legal.

The attorney general did just that and appealed the lower court's decision, claiming the lottery doesn't have ownership.

He said for there to be ownership, it has to be acquired and there must be a risk of loss to own something, and the state doesn't have that.

The lottery disagrees. If the case is upheld, Kansas would be the first state in the nation to allow state-owned and operated casinos.

The state has plans for casinos in Wyandotte, Cherokee, Sumner and Ford counties and for slot machines at racetracks in Kansas City and Frontenac.

The Lottery Commission last week approved its first contract with a developer. It unanimously approved a 15-year agreement with Penn National Gaming Inc.

The Supreme Court's next scheduled date for issuing opinions is June 27. The case is State ex rel Stephen N. Six v. Kansas Lottery and Ed Van Petten, No. 99,957.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.