Wow. I am stunned. Despite defiant proclamations that he would fight the Federal Trade Commission in court, Pinnacle Entertainment CEO Anthony Sanfilippo capitulated in swift order. This morning, J.P. Morgan reported that Pinnacle had reached an agreement in principle to sell both its own Lumiere Place and Ameristar Casinos‘ Lake Charles project. The accord is subject to various other conditions (such as the assent of the Missouri Gaming Commission) but removes a huge obstacle to the Pinnacle/Ameristar deal and improves the prospects of closing the sale by its late-summer deadline. Pinnacle describes interest in its package of properties (which includes a Four Seasons hotel) as “pretty robust” already.
It’s not clear what prompted Sanfilippo’s volte-face but I suspect there was pressure from the Ameristar side of the table to get on with the sale instead of duking it out with the FTC. (Missouri regulators, after all, were likely to reach the same conclusion as the feds.)
Strangely, Morgan analyst Joseph Greff had been queried by some investors about why Pinnacle wouldn’t rather unload Ameristar St. Charles
(above) or its own River City. Like, duh! Clearly, these are people who don’t read monthly reports or they’d know that both of the aforementioned considerably outgross Lumiere Place. Greff thinks Lumiere could still fetch a $240 million, down from a previous estimate of $306 million. However, he thinks Pinnacle could recoup the $144.5 million already spent — soon to be $228 million — on the Lake Charles site by cutting a deal with Churchill Downs: estimated price, $245 million. Carlo Santarelli of Deutsche Bank differs with Greff on the some of the dollar figures but agrees that any uncertainty about the takeover is now removed.
While we’re on the subject of Missouri, all four of the Kansas City 
casinos bounced back in May, showing remarkable resilience in the face of Penn National Gaming‘s Kansas Speedway casino. Ameristar Kansas City was flat with 2012, but lost no ground. Second-place Harrah’s North Kansas City was up 4%, while Penn’s Argosy Riverside and Isle of Capri Casinos‘ Isle of Capri Kansas City were up 2% each. In a month where the St. Louis market performed unimpressively (-5%), the news from Kansas City was all the more remarkable.
An unexpected source of disappointment is Isle of Capri’s new casino in Cape Girardeau. Analysts were unimpressed by Isle’s most recent quarterly numbers. Santarelli forecast a “meaningfully slower than anticipated” growth in revenue for the casino. However, he remained bullish on the stock, hinting that Isle would be a takeover target for Penn National once the latter completes its REIT conversion.
I could excuse Greff’s comments had they come when River City first opened but anyone with any knowledge of the St Louis area could have told you it was only a matter of time until River City was going to sail by Lumiere and highly unlikely either would ever catch Ameristar St Charles. Saying it now, after much of this has already been proven by the monthly numbers you mentioned, makes him look ill-informed at best and negligent as an analyst at worst.
After re-reading your story I take back my comments on Mr. Greff and assign them to the investors asking him the question. Wonder if those investors are some of those hedge funds in the S&G Hall of Shame.