Pinnacle Hedges on Mega-Casino/Resort

ATLANTIC CITY, NJ-Pinnacle Entertainment is in the planning stages for a new mega-casino resort carrying an estimated price tag of $2 billion, but it might not happen, company officials say. Chairman Daniel R. Lee of the Las Vegas-based company cast significant doubt over the future of the project this week, citing current credit market woes as the reason.

“I have been asked, ‘how are you going to build in Atlantic City?’” Lee told analysts in this week’s earnings conference call. “The answer to that question is that if the credit markets don’t start to improve, we can’t build. We’re not planning to go broke building in Atlantic City.”

The proposed casino/resort, as yet unnamed, was to be the company’s entry into this market. Besides Nevada, Pinnacle also operates properties in Indiana, Louisiana, Missouri and, outside of the US, in the Caribbean and Argentina. To clear the way for that entry, Pinnacle in late 2006 bought the Sands Casino Hotel and a contiguous 18 acres from affiliates of Carl Icahn for $250 million as GlobeSt.com reported. The 600-room Sands was subsequently closed, and in October, was imploded. The boardwalk site currently sits cleared and vacant.

The project not moving forward is a worst-case scenario, and Lee did tell analysts that he expects the credit markets to improve enough for Pinnacle to build. “I feel confident enough that the markets will get better before our architects are finished designing the building,” he said. “We’re still in the process of defining what can go into the property.

“It’s a big part of our company’s future,” he continued. “We can wait awhile to begin this project. We don’t have a gun to our heads.”