Pinnacle drops bid in Kansas

• By CHRIS GAUTREAU
• Advocate business writer
• Published: Sep 18, 2008 - Page: 1D - UPDATED: 12:05 a.m.

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Pinnacle Entertainment said it backed out of its bid for a Kansas project, in part, to ensure its proposed south Baton Rouge riverboat casino could proceed.

Citing the roiling financial markets, the Las Vegas gambling company said Tuesday it withdrew its application to build a $624 million casino resort and 500-room hotel in Wyandotte County, Kan.

“The reason we pulled out of Kansas was to improve our likelihood of getting the financing for Baton Rouge,” Pinnacle Chief Executive Dan Lee said Wednesday. “With this sort of financial market, we need to get a little more conservative.”

The company already has stalled on a proposed $2 billion mega-casino on the boardwalk in Atlantic City, N.J., where the former Sands Casino Hotel once stood.

But Lee reaffirmed Pinnacle will go forward with a $250 million complex on the Mississippi River south of the LSU campus.

In a research note to investors Wednesday, Justin Sebastiano, an analyst with Morgan Joseph & Co., said he wasn’t surprised Pinnacle dropped the Kansas project. It was doubtful Pinnacle would have won the bid, he said, because the company may not have the money to start construction “for quite some time.”

On the other hand, Sebastiano said, Pinnacle’s two boats in Lake Charles and the proposed Baton Rouge casino would likely generate higher returns than the Kansas project.

Shares of Pinnacle dropped $1, or 10 percent, Wednesday, closing at $9.09 on the New York Stock Exchange.

Part of the retreat stemmed from key analysts who downgraded the stock, citing the temporary closure of Pinnacle’s Sugarcane Bay resort in Lake Charles that was forced to close by the recent hurricanes. Sugarcane Bay reopened Wednesday night.

The storms caused minimal damage, but analysts said the state’s gambling market likely would suffer from the disruptions.

Pinnacle’s Baton Rouge boat was approved in a parishwide vote in February. The company said it would open by 2010, but work on the proposed site near Gardere Lane and River Road hasn’t started.

Lee said Wednesday that because of lingering delays and the turmoil on Wall Street, the Baton Rouge boat may not open until late 2010 or early 2011.

He said Pinnacle still must finalize zoning and permitting with the city-parish. The company has not pushed those issues, Lee said, considering potential changes after this fall’s Metro Council elections.