After recently settling with the state of Missouri over a casino license issue, Pinnacle Entertainment announced that it was canceling plans to expand its L’Auberge du Lac casino complex near Lake Charles, Louisiana. The project, named Sugarcane Bay, carried an estimated cost of US$305 million and would have included a new riverboat casino to go alongside the land-locked L’Auberge resort.
Instead, the company announced that it would focus on its other Louisiana properties, including its Boomtown casino in Shreveport. Pinnacle also announced that it would continue with plans to develop a casino resort complex in Baton Rouge, which would include more than a thousand slot machines, fifty table games and more than a hundred hotel rooms.
A spokesman for Pinnacle Chief Executive Officer Anthony Sanfilippo said that the decision was part of the company’s new policy of “disciplined capital spending and expansion”. Mr. Sanfilippo took over as Pinnacle CEO in March and replaced interim CEO John Giovenco, who in turn replaced Daniel Lee after Mr. Lee resigned his position last November. Mr. Lee also engaged in a heated argument with St. Louis County officials over a proposed new casino in the area.
Recent decreases in revenue, including a dismal fourth quarter report, may have led to the decision to halt the Sugarcane Bay project. The company reportedly lost more than US$240 million in 4Q09 and announced that they would trim costs to make up for the revenue shortfalls. Although the company’s stock closed lower after the news, industry experts expect it to pick up value as executives focus on more conservative growth estimates.
The cancellation of the Sugarcane Bay project is the latest symptom of the overall decline in the gaming industry since the economic downturn started in late 2008. Shares of casino giants Harrah’s Entertainment, MGM Mirage and Wynn Resorts have all suffered major losses in the last eighteen months. Las Vegas, long considered the mecca of legalized gambling, has an unemployment rate at nearly fourteen percent.
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