Pinnacle’s AC casino plans on ‘indefinite’ hold

Associated Press

Thursday, Nov. 6, 2008 | 3:46 p.m.

Pinnacle Entertainment's plan to build a mega-casino worth as much as $2 billion on the Atlantic City Boardwalk is on "indefinite hold" due to worsening competition and the poor economy.

The company also said Thursday it would consider selling its land here "if someone made us a decent offer."

The Las Vegas-based casino developer cited the continuing tight credit market, which is making it nearly impossible to borrow money, as well as increasing competition in Pennsylvania and Maryland.

Maryland voters this week approved 15,000 slot machines in five locations, which will further eat into Atlantic City's customer base.

"With Atlantic City, we recognize that this isn't an environment to go dream big," said Daniel Lee, the company's chairman and CEO. "We are going to sit in Atlantic City. We may be sitting there for a very long period of time."

On a conference call to discuss third quarter earnings, Lee said Pinnacle wants to make sure its existing projects do well before building in Atlantic City.

"If that means we have to put off the Atlantic City project for years and years and years in order to make sure what we're doing is bulletproof and strong, then so be it," he said. "It's the right thing to do."

Lee also said Pinnacle is open to selling its prime land on and near the Boardwalk, including 18 oceanfront acres.

"Obviously, if someone made us a decent offer for the land, we'd consider it," he said.

The company is also not happy that Atlantic City is soliciting plans from developers to build casinos on the former Bader Field airport site, further increasing competition within Atlantic City.

"We said over a year ago that if they did that, it would be a problem for us," Lee said. "They did it; it's a problem for us."

Pinnacle bought the former Sands Hotel Casino and demolished it in October 2007 to make way for its beach house-themed casino-hotel project on the Boardwalk. But shortly afterward, the economy started worsening, credit dried up, and the land sat vacant, to the dismay of city officials and Atlantic City residents.

The company on Thursday reported a third quarter loss of $11.8 million, or 20 cents per share, compared with net income of $5 million, or 8 cents per share, a year ago. Revenue rose 10.6 percent to $262.8 million.

In addition to Pinnacle, MGM Mirage has also put another mammoth Atlantic City casino-hotel plan on hold. MGM's proposed $5 billion project in the Marina district near the Borgata Hotel Casino and Spa, which would have had three towers, is also on indefinite hold for many of the same reasons.

Atlantic City is dueling the twin dragons of out-of-state slots parlors that are stealing its customers, and a bad economy that leaves them with less money to gamble. The city recently put off a total smoking ban on the casino floor for at least a year because things have gotten so bad here.

For the first nine months of the year, Atlantic City casinos won $3.6 billion, down 6.3 percent from the same period in 2007. September saw the worst-ever monthly decline in revenues, which were down 15.1 percent.