pinnacle sept 3 presentation

Kansas Lottery Gaming Kansas Lottery Gaming Facility Review BoardFacility Review Board

September 3, 2008September 3, 2008

GVA Marquette Revenue Projections

Pinnacle

(r) (r)

Atlantis Paradise Island, BahamasAtlantis Paradise Island, Bahamas

Pinnacle/Schlitterbahn SeparationPinnacle/Schlitterbahn Separation

400 AcresConnected by RiverSeparated by Road

San Antonio San Antonio RiverwalkRiverwalk

Quality Matters

Riviera Las Vegas Wynn Las Vegas

Location Las Vegas Strip Las Vegas Strip

Hotel Rooms 2,072 2,716

Slot Machines 994 1,972

Annual Gaming Revenue $54 Million $640 Million

Build a Better Mousetrap

L’Auberge Du Lac

Coushatta (est) 37.1%

Delta Downs 16.6%

Isle of Capri 25.3%

L'Auberge Du Lac 20.9%

Coushatta (est) 25.3%

Delta Downs 19.2%

Isle of Capri 18.4%

L'Auberge Du Lac 37.2%

Gaming Positions Gaming Revenue

Pinnacle Fair-Share Premium = 178%

13

Pinnacle Casino Corporate Structure

County: WyandotteProperty Name: Pinnacle CasinoCompany Name: PNK KansasParent Company:

Pinnacle Entertainment Inc. 100% owner

14

Pinnacle Casino Sources of Funds for Proposal

Total proposal costs: $650,000,000Intention is to fund this project like all of development projects: from a combination of existing cash resources ($203 million cash balance at 3/31/08), credit facility (currently set at $625 million), ongoing cash flow generated by current and future operations, and/or additional capital raises from the financial markets.

15

Assuming Current Market Requirements of 35% Equity

Total proposal costs $650 m35% equity contribution $227.5 m65% debt $422.5 m

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Financial Viability

A review of the last four years has found a huge swing in earnings from year to year. While revenues have continued to grow, expenditures are growing at a faster rate. Pinnacle has opened several properties in the last several years resulting in large amounts of Pre-opening costs and interest costs

17

Financial Viability

While Exhibit 1 show losses every other year, CFO has been positiveCFO decreased 35% between 2006 and 2007 in CFO from $207 million to $153 millionLast four years show major reduction in Debt/Equity RatioA low Debt/Equity ratio provides the company with financing flexibility

18

Financial Viability

Capital expenditures and free cash flow figures point to the need for future caution. 2007 capital expenditures $546 m2007 CFO $153 m

19

Pinnacle Credit Facilities

As of March 31, 2008, Pinnacle had a $625 million revolving credit facility that matures in December 2010. Utilization of the Credit Facility is currently limited to $350 million by the indenture governing the 8.75% senior subordinated notes due 2013. As of March 31, 2008, Pinnacle had $203 million of cash and cash equivalents and approximately $178 million of availability under the Credit Facility.

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Current Committed Projects By Pinnacle

Pinnacle Projects 2008 2009 2010 TotalSt. Louis County - River City 127,094,442$ 191,535,248$ 318,629,689$ Lake Charles - Sugarcane Bay $16,500,000 $137,392,576 $184,558,753 $338,451,328Baton Rouge - Rivere $11,444,444 $99,377,963 $129,446,476 $240,268,883

Total Cash Flow of Projects 155,038,886$ 428,305,786$ $314,005,229 897,349,901$

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Performance for 6 months ending June 30, 2008

Revenues increased by approximately 12.5%. It went from $466 million to $524 million Income from continuing operations before taxes dropped from $6.6 million to a loss of $75.0 million. EBITDA dropped 20% (from $89,779,000 to $72,519,000 in 2008). Cash and cash equivalents dropped from $191 million down to $129 million.

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Comments by Pinnacle

In order to fully execute the current development pipeline, additional funding will be needed. If the credit markets do not improve, it may be in the shareholders’ best interests to temporarily delay some of the construction projects.

Source: March 31, 2008 Quarterly Report

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Pinnacle Bank Financing

Company is trying to be flexible in terms of possible debt and equity mix. At the August 13, 2008 meeting

Pinnacle indicated that Entertainment Properties Trust (EPR) was interested in working the Pinnacle proposal.

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Conclusions

Pinnacle has the ability to fund the Kansas proposal based on

Cash holdingsAvailable credit facilitiesCash flow from operations

Income From Continuing OperationsIncome From Continuing Operations

For first 6 months 2008 vs 2007 ($ million)

2008 2007 DifferenceDepreciation & Amortization 60 40 20Pre-Opening Expenses 31 25 6Ameristar Stock Decline 23 0 23Two Surplus Riverboats 7 0 7Interest Expense, Net 24 16 8

64

EBITDA 72 89 -1781

Income from Continuing Operations -75 6 81

Pinnacle Entertainment Quarterly FilingPinnacle Entertainment Quarterly Filing

Gaming Industry LeverageGaming Industry Leverage

11.4x

9.9x9.2x

8.6x 8.3x7.5x

5.1x 5.0x 4.7x 4.6x3.5x 3.3x

2.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

TRMP Station LVS Tropicana Harrah's ISLE MGM ASCA BYD PNK PF PNK WYNN PENN

Average6.8x

Net Debt / LTM EBITDA

(1) (2)(3)

___________________________1. Adjusted to include 50% of Borgata debt and operating income.2 . Pro forma for termination of merger agreement. 3. Assumes normalized St. Louis City EBITDA of $50 million.

Recent Capital Raising HistoryRecent Capital Raising History

May 2003 $240 million credit facilitySept 2003 $135 million senior subordinated notesDec 2003 $300 million credit facilityFeb 2004 $128 million equity offeringMar 2004 $200 million senior subordinated notesAug 2004 $400 million amended credit facilityDec 2004 $100 million senior subordinated notesDec 2004 $84 million equity offeringDec 2005 $750 million credit facilityJan 2006 $189 million equity offeringNov 2006 $1 billion amended credit facilityJan 2007 $368 million equity offeringJune 2007 $385 million senior subordinated notes

TOTAL $4.3 Billion

Financing Plan Financing Plan ($ millions)($ millions)

Anticipated Uses of Funds

Sources of Fundsas of June 30, 2008

Capital Funding Needs = Approximately $780 Million

Cash and cash equivalents 129Available credit facility 203 $625M line restricted to $350M by bond indentures

332

River City 280 Remaining spend on $375M total budgetSugarcane Bay 350 Baton Rouge 250 Kansas 235 $650M X 40% equity less $25M license fee

1,115

Financing Scenario Financing Scenario ($ millions)($ millions)

Planned Sources of Funds

***

*EBITDA has been defined by JPMorgan as earnings before, net interest expense and other, depreciation and amortization, , income tax (benefit), pre-opening expense, early retirement of debt/other, discontinued operations, net of tax.

Est. Insurance Recovery 40 2H08 EBITDA 90 2009 EBITDA 201 2010 EBITDA 245 Less Interest Expense, Net (108) Less Maintenance CAPEX (88) Maint capex = ~$35m/yrLiquidity from Bond Refinancings 275 Bonds are callable 10/15/08Credit Facility Increase to $750M 125 Credit facility was $1B until mid '07

781$

JPMorganEquity Research ReportAugust 6, 2008

Alternative Financing ScenariosAlternative Financing Scenarios

Asset SalesSold California gaming assets in 2006 for $40.7 million

Equity IssuanceFeb 2004 $128 millionDec 2004 $84 millionJan 2006 $189 millionJan 2007 $368 million

Convertible BondsPartnerships

Experience MattersExperience Matters

Major Casinos

Tribal Casinos Racinos Countries/

StatesHotel Rooms

Slot Machines

Table Games

Pinnacle 9 0 0 6 2,634 10,695 360Cordish 0 0 1 1 0 2,000 0Golden Gaming 4 0 0 2 70 1,668 40Mohegans 0 1 1 2 1,176 8,400 318

Pinnacle ExperiencePinnacle Experience

Financing experienceOver $4 billion in capital raised in last 5 years

Operating experienceProven track record operating successful casino resorts in highly-competitive gaming marketsNational MyChoice program with 4.7 million gamers

Development experienceOver $1 billion of casino construction in past 4 years

ConclusionConclusion

Anyone can build you a bigger mousetrap;

Who will build you the BEST mousetrap?

Kansas Lottery Gaming Kansas Lottery Gaming Facility Review BoardFacility Review Board

September 3, 2008September 3, 2008