Pinnacle Entertainment puts casino project on indefinite hold

The challenging economy and Gulf Coast hurricanes sank the fortunes of Las Vegas-based Pinnacle Entertainment in the third quarter.

The casino operator also officially pulled the plug on a planned multimillion-dollar casino complex in Atlantic City, saying the project was on indefinite hold due to credit market conditions and increased competition.

Pinnacle, which operates casinos primarily in the south and Midwest, said it had a net loss of $11.8 million, or 20 cents a share, in the period that ended Sept. 30, compared with net income of $5 million or 8 cents a share in the same period a year ago.

Analysts polled by Thomson Reuters expected the company to report a loss of 8 cents a share.

In August and September, hurricanes Gustav and Ike closed Pinnacle’s casinos in New Orleans and Lake Charles, La., for several days.

“We were pleased with the overall performance of our properties in the third quarter despite the hurricane-related disruptions,” Pinnacle Chairman and CEO Dan Lee said.

Revenue in the third-quarter revenue rose to $262.8 million compared with $237.6 million a year earlier.

Lee said Pinnacle would benefit from Tuesday’s election in Missouri where voters approved a ballot initiative that removed wagering limits. The company operates Lumiere Place in downtown St. Louis and is building a second resort in the city’s suburbs.

“With a generally in-line quarter, the more favorable landscape in Missouri and the formal announcement of the indefinite delay of the Atlantic City project, the stock should stabilize in the near term,” Oppenheimer gaming analyst David Katz told investors.

Shares of Pinnacle closed at $5.78 on the New York Stock Exchange Thursday, down 53 cents or 8.40 percent.

The decision to shelve its Atlantic City project was not a surprise, gaming analysts said. Lee said the nearly non-existent credit markets made it impossible to fund the project, while additional competition is clouding the landscape.

Maryland voters on Tuesday approved 15,000 slot machines for the state while the construction of three casinos in and around Philadelphia and the possibility of Atlantic City allowing resort development on the site of the former Bader Field airport could impact the entire Boardwalk market.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.