This article first appeared in the St. Louis Beacon, Jan. 29, 2013 - First there was one. Then two. And soon, Pinnacle Entertainment hopes to operate three casinos in the St. Louis area – and four throughout the state.
That would make Pinnacle the largest casino operator in the region and Missouri, facts that the Missouri Gaming Commission and Pinnacle CEO Anthony M. Sanfilippo know well.
Indeed, Sanfilippo told the Beacon in an interview that – should state officials agree -- Missouri will join Louisiana as the two states with the largest Pinnacle presence in the country.
The expansion would be the result of Pinnacle’s announcement a few weeks ago that it plans to acquire Ameristar Casinos, which currently operates the casino in St. Charles as well as another one in Kansas City.
Pinnacle already operates two casinos in the St. Louis area – Lumiere Place and River City. The addition of St. Charles would mean that only one – Hollywood Casino in Earth City (formerly Harrah’s) – is owned and operated by a different company.
And even Hollywood’s new owner -- Penn National Gaming – is familiar with the St. Louis area. Penn National also operates Argosy Casino in Alton, Ill.
Vin Narayanan, editor in chief of Casino City, a trade publication covering the industry, said that consolidation of ownership isn't unusual, and has its pluses and minuses.
In Atlantic City, for example, there's a dozen casinos. But Narayanan said the majority are owned by Caesars Casino. In Las Vegas, he added, "Caesars and MGM dominate the strip."
"It could be a net positive,'' he said. As examples, Narayanan observed that the casinos owned by Pinnacle might share a common "loyalty program'' and engage in other practices -- such as using the same "player cards'' -- that can encourage customers to easily visit the various properties within the St. Louis area.
"Where it can be a net negative is in the service level,'' he continued. "Where's the competition to improve the service level? If you don't have competition, will service be hurt?"
Narayanan added that Pinnacle had a strong reputation. "They're a pretty well-run company with a lot of smart people,'' he said.
Pinnacle chief executive Anthony M. Sanfilippo repeatedly emphasized that Lumiere Place, River City and Ameristar St. Charles serve different markets. The quest of Pinnacle, he said, will be to improve the environment and experience for customers at all three.
Such consolidation amid the gaming industry, in Missouri and elsewhere, comes amid a stagnation in the overall casino business.
Of Missouri’s 13 operating casinos, only Pinnacle’s River City – in Lemay and among the state’s newest – saw a significant increase in business in 2012, compared to 2011.
River City an exception to state gaming trend
River City’s overall gain was in the single digits and came despite a slight drop in admissions, state gaming figures show.
Lumiere downtown saw a slight decline in overall income in 2012. Its drop in admissions, though, was 15 percent, according to state gaming figures.
The fortunes of River City and Lumiere are linked because of an unusual provision in the casinos’ contracts that calls for River City to give $1 million annually to St. Louis to cover any loss in Lumiere’s business because the two casinos are geographically close.
The St. Charles Ameristar casino saw its numbers slightly up in 2012, compared to 2011, but that may be tied to the drop in business at the nearby Hollywood casino, which saw admissions drop by 9 percent and overall income down by 8 percent.
Mike Winter, executive director of the Missouri Gaming Association – which represents the owners – said the state’s slight drop in business in 2012 isn’t so bad compared to many other states. “There’s a lot of gaming states that have seen double-digit declines,’’ he said in a recent interview.
Casino City editor Narayanan said the gaming industry overall is "holding steady,'' with differences depending on the market. For instance, he said that business is stronger in Pennsylvania at the moment than in Atlantic City.
Pinnacle’s Sanfilippo said he was optimistic about the future of gaming, adding that the company’s heightened presence in St. Louis reflects that view.
“We believe that the three casinos that we would have ownership of serve really different sections” of the region, Sanfilippo said. “Lumiere serves downtown,” while River City and Ameristar St. Charles serve different suburbs.
Lumiere’s visitors, in particular, tend to include more out-of-state visitors in town for conventions or sports events.
He pointed to River City’s $82 million in related construction, including a parking garage and hotel, and complimented the amenities already offered at the Ameristar St. Charles casino, at the southern edge of St. Charles’ riverfront.
Overall, Sanfilippo called the properties “three complementary facilities.”
A spokeswoman for the state Gaming Commission said no timetable had yet been set on discussing Pinnacle’s heightened presence in Missouri, with its acquisition of Ameristar. But the fact that the expansion would make Pinnacle the dominant casino owner in the state will be considered by the commission during its deliberations, she said.
Speaking in general, Narayanan said it was unlikely that a firm operating several casinos would shut any of them down. Rather, casino firms -- and state gaming boards -- prefer to sell some off, if there is concern about one firm owning too many in a geographic area, he said.
Pinnacle’s donations to St. Louis projects
The lack of gaming-industry growth, in Missouri and the St. Louis region, provides a backdrop to Lumiere’s decision in early December to dole out close to $20 million in money or real estate to aid various St. Louis development projects, including improvements of the Arch grounds.
The action came right before the five-year deadline for fulfilling a provision of the city’s 2007 contract with Pinnacle that called for the company to be a partner in $50 million worth of downtown development.
St. Louis Mayor Francis Slay and chief of staff Jeff Rainford say the contributions comply with the contract’s requirements.
Alderman Antonio French, D-21st Ward, disagrees, contending in a December interview that Lumiere should be required to spend $50 million on the projects. He also called for aldermanic hearings on the matter.
So far, no hearings have been scheduled, and French has declined to offer additional comments on the subject. Board of Aldermen President Lewis Reed, who is challenging Slay in the March 5 primary, also hasn’t focused on the casino issue.
Rainford said the contract's provisions make clear that the casino firm was not expected to come up with the entire $50 million in investment, but was expected to forge partnerships.
Sanfilippo said that the projects were chosen with the advice from Slay's administration. “We worked closely with the mayor’s office, including (city development chief) Rodney Crim," he said. "We really based those donations, those contributions, on what would be impactful.”
When asked, Sanfilippo said that Lumiere was the only Pinnacle-owned casino that had a contract calling for such investments in non-casino developments and observed that it was rare within the industry.
“The one in downtown St. Louis is unique in that fashion,” the executive said.
The St. Louis projects include:
- $5 million to the CityArchRiver 2015 foundation, which is focusing on improving the Arch grounds, and improving pedestrian routes between the Arch and nearby entertainment districts, including Lumiere.
- $6 million for the estimated $20 million cost to develop a National Blues Museum at Sixth Street and Washington Avenue, as part of the larger Mercantile Exchange development.
- Donation of real estate -- purchased by Pinnacle for $7 million and situated east of Lumiere Place – to go to the Great Rivers Greenway. The group is seeking to improve Leonor K. Sullivan Boulevard, which runs along the riverfront.
- $500,000 over five years to St. Louis to help pay for additional police for the riverfront area, including Lumiere and the Arch.
- Earlier investments of $2.6 million in a building on Cass Avenue, north of Lumiere, and $2 million on casino parking lots.
Sanfilippo said that Pinnacle had always planned to comply with the contract’s provisions and was particularly excited about improvements to the Arch grounds, just south of the Lumiere property.
“I believe the Arch is a national treasure,” he said. “It really stirs emotions in anyone who sees it.
“We see ourselves at Lumiere Place as a part of downtown, an option from an entertainment standpoint,” Sanfilippo continued. “Anything that can be done to enhance the viability of people spending time downtown, we’re very supportive of.”
