Credit crunch threatens A.C. casino plan

ATLANTIC CITY - Deteriorating credit markets could force Pinnacle Entertainment Inc. to abandon a $2 billion casino project on Atlantic City's Boardwalk, the company's chairman said yesterday.

"I've been asked, 'How the hell are you going to build in Atlantic City?' " chairman and chief executive officer Daniel Lee said in a conference call to discuss the company's year-end earnings. "The answer is, if credit markets don't improve, we won't build. We're not going to go broke building in Atlantic City."

However, Lee said, he expects lending conditions to improve before the anticipated groundbreaking on the project in late 2009.

Pinnacle, of Las Vegas, bought the former Sands Hotel Casino and demolished it in October to make way for a large casino-hotel project on the Boardwalk.

"We're still at the point of compiling our dreams of what can go into that property. . . . It's a big part of this company's future," Lee said.

The company could stall until conditions have improved, he said, but the current environment is not good.

"That can't be good for Atlantic City," said Joe Weinert, senior vice president for Spectrum Gaming Group L.L.C., of Linwood, N.J., as news of Lee's remarks spread yesterday at the Pennsylvania Gaming Congress in Harrisburg. The two-day conference gave an overview of which other Pennsylvania casinos will soon open.

Weinert said any delays in development did not bode well for the seaside resort as Pennsylvania continued to ramp up its slots capacity. The seven Pennsylvania slots parlors did about $1 billion of revenue last year, some of which came from customers who used to frequent Atlantic City.

The credit problem began last year with sharply rising defaults on home mortgages, but banks then became more stringent in their standards for making any type of loans.

"The credit market is essentially closed," Pinnacle's Lee said. "We have competitors with half-built buildings that they can't finish."