Pinnacle Entertainment said Friday it will sell its Lumière Place casino and hotel complex on the St. Louis riverfront to Tropicana Entertainment for $260 million.
The price is about half what Pinnacle spent to build the glitzy complex that opened in late 2007. Revenue at the Lumière Place casino has slipped in recent months as part of a downward trend in the St. Louis area’s gambling market.
Pinnacle sold the complex, which includes a luxury Four Seasons hotel and the HoteLumière, under pressure from federal antitrust officials.
The Federal Trade Commission required Pinnacle to sell one of its two St. Louis-area casinos as a condition of Pinnacle’s $2.8 billion purchase of rival Ameristar Casinos. Pinnacle completed the Ameristar purchase this week.
Pinnacle’s chief executive, Anthony Sanfilippo, said in a statement that the company is pleased to have reached the Lumière Place deal with Tropicana “and to sell the high quality assets underlying this transaction to an equally high quality operator of gaming entertainment properties.”
After selling Lumière Place, Pinnacle will own the River City casino complex in Lemay and the Ameristar St. Charles casino in the St. Louis market.
Tropicana and Pinnacle are regional gaming companies based in Las Vegas.
Lumière Place will be Tropicana’s second-largest gambling hall after its Tropicana Atlantic City Casino and Resort. Its six other casinos are in non-Las Vegas regional markets in Nevada, plus Mississippi, Indiana, Louisiana and a small property in Aruba.
According to Tropicana’s annual report, the company focuses on low-tax jurisdictions and slot machine play. The company had revenue of $612 million last year and profits of $51.7 million, hurt by weak performance in Atlantic City.
Icahn Enterprises, headed by investor Carl Icahn, owns 68 percent of Tropicana. Icahn bought most of the Tropicana properties out of bankruptcy in 2010 for $200 million.
Sanfilippo said the Lumière Place sale does much to resolve the FTC’s concerns over “the competitive dynamics of the St. Louis gaming market” and completing the divestiture conditions the agency set. Pinnacle will use the “substantial cash proceeds” from the sales of Lumière Place and Ameristar’s Lake Charles, La., casino project to pay down debt, the company said.
FTC misgivings about Pinnacle’s takeover of Ameristar arose in May, when the agency moved to block the deal. The FTC said a merger of the Las Vegas-based rivals would hurt competition and consumers in the St. Louis area — Missouri’s biggest gambling market — and Lake Charles.
Regulators said that absent a divestiture in St. Louis, Pinnacle would own three of the market’s six casinos. It also would have an overwhelming market share in Lake Charles.
Pinnacle responded by agreeing to sell Lumière Place and Ameristar’s casino project in Lake Charles.
The company reached a deal in July to sell the Lake Charles project to Golden Nugget, which is owned by Houston-based Landry’s Inc. Golden Nugget will pay the $213.9 million already spent on the Lake Charles project, less a $37 million credit. Pinnacle said it expects to complete the transaction by the end of the year.
Lumière Place will be accounted for as a “discontinued” Pinnacle operations beginning in the third quarter this year, Pinnacle said. The sale is expected to be completed by the end of March and is subject to approval by the Missouri Gaming Commission and the FTC, as well as customary closing conditions. Pinnacle said that Lumière Place’s “book carrying value” on June 30 was $401.5 million.
Leann McCarthy, the state gaming commission’s spokeswoman, said Tropicana must submit an application for a Missouri casino license, just like any other new operator. The commission and the Missouri Highway Patrol will investigate the company’s background and executives before deciding whether to award it the Lumière Place gaming license, she said. That process typically takes several months, especially in cases — such as with Tropicana — in which the company does not already have a property in Missouri.
Tropicana briefly dipped into the St. Louis market in 2010 when it partnered with the Koman family on a proposed casino in north St. Louis. The gaming commission instead awarded the license to Creve Coeur-based Isle of Capri for its Cape Girardeau, Mo., casino that opened last year.