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Ex Exec engages Pinnacle in legal battle over proposed casino

Posted on December 20th, 2010

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Casino operator Pinnacle Entertainment Incorporated, formerly Hollywood Park Entertainment has been sued by its former top honcho. Pinnacle, a hospitality, gambling and entertainment company with assets of over $2,193.54 million and employees of more or less 8,590, caused quite a stir when it filed a lawsuit against Ex Chief Executive Officer Dan Lee, against violations of agreement not to compete with the company. The company is seeking more than $10,000 in damages. Lee resigned at Pinnacle amidst criticisms after the St. Louis County Council where Lee gave in to an outburst after the Council favored the competition.

The lawsuit states that Lee has provided information to third parties about Pinnacles activities and that a plan is underway for Lee to develop a casino which would directly compete with Pinnacle. According to the lawsuit, “This term sheet outlined Lee and Creative Casino’s strategies regarding Pinnacle and Mojito Pointe.” Mojito Pointe Casino, is the brain child of Dan Lee, to be built in Lake Charles, La. It is to be a Caribbean themed casino hotel which will feature 400 hotel rooms in two hotels with lavish spas and pools, 1,500 slot machines, 40 game tables, a convention and entertainment center. It is to be built next to an 18-hole golf course.

But Lee does not plan to sit and mope. He has filed a lawsuit to counter Pinnacle last Friday. Mr. Lee seeks to develop his Mojito Pointe project that would sit near the L’Auberge casino, which is owned and operated by Pinnacle. The company has already suffered major setbacks as D. Kent Savoie, a Louisiana judge, denied Pinnacle’s request to cease Lee’s cooperation with Lake Charles Port. Lee’s company, Creative Casinos LLC, has developed plans for the Sugarcane Bay Casino site which is owned by Pinnacle. Confusing as it may seem, as an Ex CEO for Pinnacle, Dan Lee has championed Sugarcane Bay. But Lee is yet to win Lake Charles’ 15th and last gambling license. “We think we can grow the market. Lake Charles is the most underserved gaming market in the United States.” says Lee. Lee is competing with three other companies against the license; one of them is Hard Rock Casino Hotel. Hard Rock’s William Trotter says, his company will generate 1,500 jobs and create revenues of up to $50 million.

Pinnacle, despite the setback, is keen on fighting Lee. They plan to take deposition from several witnesses. Lee’s legal counsel however fought back and charged Pinnacle in engaging in a “no-holds-barred attempt to obstruct Lee” in obtaining the sought after license along with his company Creative Casinos LLC. They claim that what Pinnacle is doing is “wholesale abuse of the legal process.” and that the said company is in “conspiracy with others, including undertaking illegal and prohibited trade practices by attempting to secure agreements from others that they do not do business with Creative.” In the complaint by Pinnacle, it states that Lee has sent a term sheet for his proposed casino to the port “This term sheet outlined Lee and Creative Casino’s strategies regarding Pinnacle and Mojito Pointe,” says the lawsuit. Attached is a “theoretical term sheet for discussion purposes” supposedly sent in by Lee. It claims that “Creative Casinos LLC enters into an exclusive option with the Port of Lake Charles to lease approximately 220 acres of land … on essentially the same terms as the Sugarcane Bay lease between the port and Pinnacle Entertainment.”

Pinnacle is also the operator of the Atlantic City Project which was cancelled, River City Casino,
President Casino Laclede’s Landing, Belterra Casino Resort & Spa, Boomtown Bossier City, Boomtown Casino & Hotel Reno, Lumière Place (casino and hotels), Casino Magic San Martin de los Andes and Casino Magic Neuquén the last two located in Argentina has been sold in which Pinnacle greatly profited. Pinnacle has said that Lee is allowed to compete with them but it has to be in a fair manner.

One of the charges in Lee’s complaint said that Pinnacle has sued the port due to false and frivolous claims. Pinnacle maintains that Lee is bound by the “not compete with the company” clause of the contract.