Harrahs and Pinnacle to Swap Casinos
21 December 2007Last week an agreement was signed between Las Vegas-based companies Harrah’s Entertainment and Pinnacle Entertainment, entailing a swap of the two corporations’ hurricane-damaged riverboat casinos.
Pinnacle’s Mississippi-based Casino Magic in Biloxi will be handed over to Harrah’s, while Pinnacle will take over Harrah’s twin floating casinos in Lake Charles, Louisiana.
While the agreement is still subject to approval by the appropriate regulatory bodies, both companies signed a non-binding letter of intent. Both companies have declined to comment on the details of the arrangement, but a spokesperson for Harrah’s reportedly commented that the deal would not be a simple straight swap of casinos.
In the aftermath of Hurricane Rita, which severely damaged Harrah’s two riverboat casinos on Lake Charles, the company announced its intention to exit the Lake Charles industry. The deal will see Harrah’s handing over the two casinos as well as their 263-room Lake Front Hotel to Pinnacle.
Anthony Sanfilippo, president of Harrah’s Central Division, reportedly stated that since the company is working on focussed efforts at their Gulf Coast development efforts in Biloxi, it makes a lot of sense for Harrah’s to sell the two casinos and pull out of Lake Charles.
Pinnacle currently operates the Lake Charles L’Auberge du Lac, which is the one of the main casinos in Louisiana, dominating the state’s western gaming industry since its opening almost a year ago.
Despite the fact that Pinnacle has yet to make a comment on the deal, industry analysts expect that the company will utilise the new riverboat casinos to further develop and expand the L’Auberge du Lac complex, as well as at the company’s Bossier City operations.
Since the Casino Magic in Biloxi was destroyed in August last year by Hurricane Katrina, Pinnacle has been hesitating to decide what to do with the property. Also destroyed by Hurricane Katrina was Harrah’s Grand Casino Biloxi, which the company has been busy renovating and rebuilding to include a 35,000-square-foot casino and 500- room hotel in time for a summer re-opening. The swap with Pinnacle will give Harrah’s a stronger presence in the rebuilding of the Mississippi Gulf Coast casinos industry.
According to a Harrah’s spokesperson, the company has a strong faith in the value of the Mississippi Gulf Coast casinos market, with the intention to announce plans for development of a new gaming destination in Biloxi later this year. The new deal with Harrah’s will combine its 27 acre Grand Casino site with Pinnacle’s adjacent 18 acre Casino Magic site, giving the company an increased stance in the vibrant Biloxi casinos industry and creating greater flexibility to provide an encompassing entertainment experience.
Early announcements of the planned swap showed a quick jump in shares in Harrah’s, however the growth was lost by the end of the day, with shares down 4 cents at $79.51, while Pinnacle’s stock prices rose dramatically in the day’s trading, rising 5.53% to $30.71, an increase of $1.61.
Tags: casino magic, casinos in lake charles, gaming industry, riverboat casinos