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Business overview of Pinnacle Entertainment

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Background

Pinnacle Entertainment (PNK) is the successor to the Hollywood Park Turf Club, which was formed in 1938. In 1981, the Hollywood Turf Club was incorporated under the name Hollywood Park Realty Enterprises Inc. Hollywood Park Realty Enterprises Inc. changed its name to Hollywood Park Inc. in 1992. Seven years later, Churchill Downs (CHDN)—a diversified provider of pari-mutuel horse racing, casino gaming, and entertainment—purchased Hollywood Park racetrack and casino assets from Hollywood Park Inc. Hollywood Park Inc. became Pinnacle Entertainment in February 2000.

Based in Nevada, Pinnacle Entertainment is a part of ETFs (or exchange-traded funds) like VanEck Vectors Gaming (BJK).

Business overview

PNK owns and operates a poker tour as well as various gaming entertainment properties. These properties feature gaming spaces, dining facilities, hotels, retail outlets, and other amenities. Also, PNK manages a racetrack.

In August 2013, PNK completed the acquisition of Ameristar Casinos Inc. in a deal valued at $2.8 billion. Other noteworthy casino deals that happened in 2013 include the acquisition of WMS Industries by Scientific Games (SGMS) and the purchase of Shuffle Master by Bally Technologies (BYI).

This series will cover the following things about Pinnacle Entertainment:

  • revenue-generating properties
  • how the company earns its gaming revenue
  • capital expenditures strategy
  • why PNK’s leverage ratio could be a concern for investors
  • why the company’s capital is not employed effectively
  • acquisition of Ameristar
  • how REITs (or real estate investment trusts) enhance PNK’s shareholder value
  • why shorting PNK’s stock could be difficult to cover
  • how institutional investors dominate PNK
  • key management executives

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