Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Settlement resolving FTC challenge to casino operator combination awaiting Commission review, (Aug 7, 2013)

By Jeffrey May, J.D.

Casino operator Pinnacle Entertainment, Inc. and the staff of the FTC Bureau of Competition have asked the Commission to sign off on an agreement that would resolve the agency's concerns over Pinnacle's proposed acquisition of competitor Ameristar Casinos, Inc. On August 5, the Commission issued an order withdrawing the matter from administrative adjudication so that it could consider a proposed consent agreement. Thus, proceedings before the administrative law judge will be stayed pending the Commission's review of the settlement (In the Matter of Pinnacle Entertainment, Inc., FTC File No. 131 0064, Docket No. 9355).

In May, the FTC issued an administrative complaint, challenging Pinnacle Entertainment’s proposed $2.8 billion acquisition of Ameristar Casinos. The agency alleged that the proposed deal would reduce competition and lead to higher prices and lower quality for customers in the St. Louis, Missouri, and Lake Charles, Louisiana, areas.

In the St. Louis area, where Pinnacle and Ameristar are direct competitors, the acquisition would reduce the number of casino service providers from four to three. In the Lake Charles area, Pinnacle operates one casino, while Ameristar is building a new casino set to open in 2014 that will be located directly adjacent to the existing Pinnacle casino—L'Auberge Lake Charles Casino Resort.

Pinnacle and Ameristar are both Nevada-based companies that own and operate casinos in a number of markets throughout the country. Pinnacle owns and operates nine casinos and horse racing facilities in five states. Ameristar owns and operates eight casinos in six states and is in the process of building its ninth casino.

The Commission granted the parties' July 31 motion for withdrawal. However, the parties filed a motion on August 6, superseding the original motion. The proposed consent order remains confidential while the Commission considers whether to approve it for public comment.

Pinnacle has, however, publicly announced that it has agreed to a series of divestitures in order to resolve the FTC's concerns. Pinnacle would sell its Lumiere Place Casino and Hotels in St. Louis and Ameristar's Lake Charles development project. Golden Nugget is the potential buyer for the Ameristar Lake Charles development project if the FTC approves the deal. Pinnacle expects to reach a definitive agreement for its disposition of the Lumiere Place Casino and Hotels in the third quarter of 2013. Pinnacle has reportedly obtained all required state gaming regulatory approvals needed to complete the planned acquisition of Ameristar.

Attorneys: Jeremy P. Morrison for FTC. W. Stephen Smith (Morrison & Foerster LLP) for Pinnacle Entertainment, Inc. Adam J. Di Vincenzo (Gibson, Dunn & Crutcher LLP) for Ameristar Casinos, Inc.

Companies: Ameristar Casinos, Inc.; Pinnacle Entertainment, Inc.

News: Antitrust FederalTradeCommissionNews