FTC Requires Pinnacle to Sell Two Casino Properties as Condition for Acquiring Rival Ameristar

Pinnacle Entertainment, Inc. and Ameristar Casinos, Inc. have agreed to sell casino properties in St. Louis, Missouri and Lake Charles, Louisiana, to settle Federal Trade Commission charges that Pinnacle’s $2.8 billion merger with Ameristar would be anticompetitive.

“The proposed order announced today is an example of the Commission’s continuing efforts to preserve competition on behalf of consumers,” said Deborah Feinstein, Director of the FTC’s Bureau of Competition. “This agreement will preserve competition in these areas, ensuring casino patrons benefit from competitive pricing and amenities.”

The Commission initiated administrative litigation in May, alleging that the merger would reduce competition and lead to higher prices and lower quality for casino customers in St. Louis, where the two companies are direct competitors, and in the Lake Charles area, where they will compete beginning in 2014 after the opening of Ameristar’s new casino.

In particular, the transaction would have increased Pinnacle’s ability and incentive to raise prices post-acquisition, in the form of less favorable hold rates, rake rates, table game rules and odds, and lower player reinvestments. The complaint also alleged that the transaction would have reduced Pinnacle’s incentive to maintain or improve the quality of services and amenities. In the St. Louis market, the complaint alleged that the transaction also would have substantially increased the likelihood of coordinated interaction.

Under the terms of the order, Pinnacle will sell its Lumiere Place Casino and all associated assets in St. Louis to a buyer approved by the Commission within six months. If the Lumiere Place Casino is not divested to an approved buyer within six months, the proposed order allows the Commission to require instead that Pinnacle divest the Ameristar Casino Resort Spa St. Charles. In addition, the company will sell its interest in the casino and resort property that Ameristar is developing and had planned to open in Lake Charles in 2014, to a Commission-approved buyer within six months. If that casino property under development is not divested to an approved buyer within six months, the proposed order allows the Commission to require instead that Pinnacle divest Pinnacle’s L’Auberge Casino Resort in Lake Charles. Each sale would also include all of the assets required to operate each divested casino as a separate business.

The proposed consent order also contains a separate order to preserve assets, which is designed to maintain the two casino properties being sold as viable, competitive, and ongoing businesses.

Under the proposed order issued for public comment, Pinnacle can complete its acquisition of Ameristar immediately.
            
The Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 4-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through Sept. 11, 2013, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section.

Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. Comments can also be submitted electronically.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.