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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Pinnacle cuts back plans for casino in Louisiana

25 November 2009

LAS VEGAS, Nevada -- Pinnacle Entertainment scaled back plans for a Louisiana casino project, the first changes to the project since the departure of Las Vegas-based company's chief executive officer this month.

In a statement Tuesday, company executives said the Sugarcane Bay development in Lake Charles, La., would be integrated into the company's existing flagship L'Auberge du Lac casino.

The project's budget has been reduced from an estimated $407 million to $305 million.

Pinnacle has already spent $54 million on Sugarcane Bay, and the announcement was seen as a way to assure the Louisiana Gaming Control board the company was committed to the project. It will include a single-level riverboat casino, a 400-room hotel, restaurants and a spa.

A hearing is slated for Dec. 15.

Pinnacle said it plans to open the casino portion of Sugarcane Bay late next year.

"Sugarcane Bay at L'Auberge du Lac is an important part of Pinnacle's development plans, and we're pleased to reaffirm the board of directors' commitment to the state of Louisiana and the Lake Charles market," Pinnacle interim Chief Executive Officer John Giovenco said in a statement.

He said the company is proceeding with plans for a $260 million resort in Baton Rouge that would include a riverboat casino, a 100-room hotel, restaurants and entertainment.

Pinnacle is looking for a new CEO after the resignation this month of Dan Lee, who stepped down after a public incident at a St. Louis council meeting that is being investigated by Missouri gaming regulators.

Lee was also chairman of the company's board.

Giovenco, a member of the board and the retired president of Hilton Gaming Corp., told analysts last week at the Global Gaming Expo the company hoped to have a new CEO in place with in 90 days.

Wall Street believes Pinnacle could face further scrutiny once a new CEO is hired.

"The ongoing search for a new CEO, could be accompanied by other management changes," Oppenheimer gaming analyst David Katz told investors. "Our view is that a measured approach to launching these projects would be the most prudent, although this approach would lower the growth profile of the company."

Pinnacle plans to open a casino project in suburban St. Louis next year.