Jeff Simpson on Pinnacle’s smooth moves, including purchase of Trop parent

Sunday, March 19, 2006 | 7:26 a.m.

Pinnacle Entertainment made a savvy move last week when it bought Tropicana parent Aztar Corp. for $2.1 billion. Pinnacle has flown under the radar in recent years while Chairman and CEO Dan Lee has built Louisiana's sweetest casino resort and set the company up to build two casinos in the St. Louis area.

The Lake Charles, La., property, L'Auberge du Lac, is a resounding success, and the almost $800 million the company is investing in the two Missouri projects will be money well spent.

The Aztar deal puts Pinnacle squarely in the casino industry's major league. Adding the Tropicana properties in Atlantic City and Las Vegas is the biggest coup, with the redevelopment potential of the Strip property's 34-acre site key.

"We're paying a pretty full price, but we know what we're doing with (the Aztar assets)," Lee told me Friday. He emphasized that he and his creative team will not hurry the design and redevelopment process for the Tropicana Las Vegas site, and said he's confident despite plans by bigger competitors to open upscale resort complexes up and down the Strip.

"Projects have a way of getting spaced out," Lee said. "We'll start it when we're ready."

Today is the 75th anniversary of the most recent legalization of casino gambling in Nevada, and it couldn't be more clear that the move three-quarters of a century ago has defined the state.

Wide-open gambling remains the straw that stirs the state's tourism drink. While Las Vegas resorts garner increasing shares of revenue from nongambling sources - hotel rooms, restaurants, retail, nightclubs, shows and spas - gambling winnings have always been the revenue stream that flows most readily from the top to the bottom line.

Strip and Las Vegas locals casinos are in the midst of a boom, and another major surge in Strip development is just getting under way. Legalized casino gambling allowed entrepreneurs to win the money to build bigger resorts with better amenities. Those nicer resorts draw more and wealthier visitors, and the money they spend allows the growth cycle to continue.

It took nearly five decades for other states to compete in the casino business, a head start that has allowed the Strip and visionary developers to easily fend off competitors in Atlantic City, mid-America and tribal venues with our tough-to-top array of hotel rooms, easy airport access, convention spaces and attractions.

So, as you flip your omelettes and sip your Bloody Marys while reading the Sun this morning, raise your glass and toast the state lawmakers who hatched Nevada's golden goose - and the casino developers and tourists who have allowed it to thrive.

Missouri gaming regulators have developed a reputation in recent years as being the toughest around, developing innovative strategies to combat problem gambling and fining operators big bucks for violations that in Nevada would barely merit a scowl.

Last week Kevin Mullally, the executive director of the Missouri Gaming Commission for the last five years, announced that he was resigning his post to become the general counsel and director of government affairs for Gaming Laboratories International, an independent tester of slots and slot software for regulatory agencies.

The move is a major loss for Missouri; Mullally is highly respected by his regulatory peers and by many casino business insiders. I spoke to him after he announced his plans, and the good news is that Mullally's new regulatory job will bring him to live in Las Vegas next year. Expect him to help GLI become an even bigger player in its field.