10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-13641

____________________________

PINNACLE ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-3667491
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

8918 Spanish Ridge Avenue

Las Vegas, NV 89148

(Address of principal executive offices) (Zip Code)

(702) 541-7777

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

As of the close of business on May 4, 2011, the number of outstanding shares of the registrant’s common stock was 61,918,913.

PINNACLE ENTERTAINMENT, INC.

TABLE OF CONTENTS

PART I
Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2011 and 2010	3
Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010	4
Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2011 and 2010	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Executive Summary	21
Results of Operations	22
Liquidity and Capital Resources	28
Contractual Obligations and Other Commitments	31
Critical Accounting Policies	31
Forward-Looking Statements	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	35
PART II
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 6. Exhibits	37
Signature Page	39
Exhibit 10.6
Exhibit 10.7
Exhibit 11
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I

Item 1.Financial Statements

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(amounts in thousands, except per share data)

	For the three months ended March 31,
	2011			2010
Revenues:
Gaming	$	253,878		$	230,766
Food and beverage	16,428			15,286
Lodging	8,324			8,398
Retail, entertainment and other	9,104			8,109
	287,734			262,559
Expenses and other costs:
Gaming	143,425			129,833
Food and beverage	16,816			15,708
Lodging	5,320			5,198
Retail, entertainment and other	5,426			4,568
General and administrative	56,354			54,590
Depreciation and amortization	26,699			25,890
Pre-opening and development costs	2,236			8,884
Write-downs, reserves and recoveries, net	692			(6,035		)
	256,968			238,636
Operating income	30,766			23,923
Interest expense, net of capitalized interest	(26,190		)	(20,952		)
Loss on early extinguishment of debt	—			(1,418		)
Other non-operating income	92			27
Income from continuing operations before income taxes	4,668			1,580
Income tax expense	(68		)	(679		)
Income from continuing operations	4,600			901
Income (loss) from discontinued operations, net of income taxes	(2,239		)	35,842
Net income	$	2,361		$	36,743
Net income per common share—basic
Income from continuing operations	$	0.07		$	0.01
Income (loss) from discontinued operations, net of income taxes	(0.03		)	0.60
Net income per common share—basic	$	0.04		$	0.61
Net income per common share—diluted
Income from continuing operations	$	0.07		$	0.01
Income (loss) from discontinued operations, net of income taxes	(0.03		)	0.59
Net income per common share—diluted	$	0.04		$	0.60
Number of shares—basic	61,824			60,107
Number of shares—diluted	62,384			60,936

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

3

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

	March 31, 2011			December 31, 2010
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	143,021		$	194,925
Accounts receivable, net of allowance for doubtful accounts of $3,450 and $2,810	16,491			19,318
Inventories	7,933			7,787
Prepaid expenses and other assets	15,841			17,166
Assets of discontinued operations held for sale	58,859			60,120
Total current assets	242,145			299,316
Restricted cash	6,452			6,452
Land, buildings, riverboats and equipment: (Note 1)
Land and land improvements	261,782			259,402
Buildings, riverboats and improvements	1,299,182			1,290,820
Furniture, fixtures and equipment	472,914			464,427
Construction in progress	77,886			47,111
	2,111,764			2,061,760
Less: accumulated depreciation	(612,155		)	(588,145		)
	1,499,609			1,473,615
Goodwill	52,546			16,742
Intangible assets, net (Note 1)	18,516			18,516
Other assets, net	67,430			69,153
Total assets	$	1,886,698		$	1,883,794
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	32,770		$	28,472
Accrued interest	26,460			21,290
Accrued compensation	38,927			47,164
Accrued taxes	14,993			17,426
Other accrued liabilities	45,294			50,886
Deferred income taxes	3,287			3,287
Current portion of long-term debt (Note 2)	97			95
Liabilities of discontinued operations held for sale	5,010			5,425
Total current liabilities	166,838			174,045
Long-term debt less current portion (Note 2)	1,176,927			1,176,622
Other long-term liabilities	21,834			22,204
Deferred income taxes	3,553			3,553
Total liabilities	1,369,152			1,376,424
Commitments and contingencies (Note 7)
Stockholders’ Equity
Preferred stock—$1.00 par value, 250,000 shares authorized, none issued or outstanding	—			—
Common stock—$0.10 par value, 61,911,713 and 61,592,135 shares outstanding, net of treasury shares	6,392			6,360
Additional paid in capital	1,036,363			1,032,548
Retained deficit	(505,474		)	(511,798		)
Accumulated other comprehensive loss	355			350
Treasury stock, at cost, 2,008,986 of treasury shares for both periods	(20,090		)	(20,090		)
Total stockholders’ equity	517,546			507,370
	$	1,886,698		$	1,883,794

See accompanying notes to the unaudited Condensed Consolidated Financial Statements

4

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(amounts in thousands)

	For the three months ended March 31,
	2011			2010
Cash flows from operating activities:
Net income	$	2,361		$	36,743
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	26,699			26,757
Gain (loss) on disposal of assets	(232		)	514
Impairment of buildings, riverboats, and equipment	—			2,971
Impairment of land and development costs	301			—
Other write-downs, reserves, and recoveries	—			(8		)
Amortization of debt issuance costs	1,869			1,831
Share-based compensation expense	1,452			1,447
Change in income taxes	(2,444		)	(1,548		)
Changes in operating assets and liabilities:
Receivables, net	2,927			2,899
Prepaid expenses and other	1,859			2,711
Other long-term assets	211			(3,050		)
Accounts payable	(505		)	(10,081		)
Accrued interest	5,170			(5,451		)
Other accrued liabilities	(10,971		)	(3,988		)
Other long-term liabilities	(404		)	(17,965		)
Net cash provided by operating activities	28,293			33,782
Cash flows from investing activities:
Capital expenditures	(38,293		)	(65,908		)
Purchase of River Downs racetrack	(45,193		)	—
Change in restricted cash	—			667
Proceeds from sale of property and equipment	923			1,463
Net cash used in investing activities	(82,563		)	(63,778		)
Cash flows from financing activities:
Proceeds from credit facility	10,000			165,379
Repayments under credit facility	(10,000		)	(122,298		)
Payments on other secured and unsecured notes payable	(24		)	(9		)
Proceeds from common stock options exercised	2,361			15
Proceeds from issuance of common stock	—			1,081
Debt issuance and other financing costs	—			(6,447		)
Net cash provided by financing activities	2,337			37,721
Effect of exchange rate changes on cash and cash equivalents	—			(58		)
Increase (decrease) in cash and cash equivalents	(51,933		)	7,667
Cash and cash equivalents at the beginning of the period	195,387			129,576
Cash and cash equivalents at the end of the period	$	143,454		$	137,243
Supplemental Cash Flow Information:
Cash paid for interest, net of amounts capitalized	$	19,162		$	24,584
Cash (received) payments related to income taxes, net	(352		)	358
Increase (decrease) in construction-related deposits and liabilities	5,577			(30,493		)

See accompanying notes to the unaudited Condensed Consolidated Financial Statements

5

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation and Organization Pinnacle Entertainment, Inc. (“Pinnacle”) is an owner, operator and developer of casinos and related hospitality and entertainment facilities. We operate casinos located in southeastern Indiana (“Belterra Casino Resort”); Lake Charles, New Orleans and Bossier City, Louisiana (“L’Auberge du Lac,” “Boomtown New Orleans” and “Boomtown Bossier City,” respectively); Reno, Nevada (“Boomtown Reno”) and St. Louis, Missouri (“River City Casino” and “Lumière Place Casino and Hotels”). In addition, we own and operate a racetrack facility in southeast Cincinnati, Ohio ("River Downs"), which was purchased in January 2011 for approximately $45.2 million. We view each property as an operating segment, with the exception of our properties located in St. Louis, Missouri, which are aggregated into the “St. Louis” reporting segment. References in these footnotes to “Pinnacle,” the “Company,” “we,” “our” or “us” refer to Pinnacle Entertainment, Inc. and its subsidiaries, except where stated or the context otherwise indicates.

We have classified certain of our assets and liabilities as held for sale in our unaudited Condensed Consolidated Balance Sheets and include the related results of operations in discontinued operations. For further information, see Note 6, Discontinued Operations.

We are also developing a casino-hotel in Baton Rouge, Louisiana, which is subject to various regulatory approvals. Management currently expects our Baton Rouge project to open in the summer of 2012. However, the ultimate opening date is dependent upon the Mississippi River water levels and obtaining regulator approvals, among other factors.

Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions of the Securities and Exchange Commission (“SEC”) to the Quarterly Report on Form 10-Q and, therefore, do not include all information and notes necessary for complete financial statements in conformity with the instructions for generally accepted accounting principles in the United States (“GAAP”). The results for the periods indicated are unaudited, but reflect all adjustments that management considers necessary for a fair presentation of operating results. The unaudited Condensed Consolidated Financial Statements include the accounts of Pinnacle Entertainment, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for interim periods are not indicative of a full year of operations. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2010.

Use of Estimates The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities and mychoice customer rewards programs, estimated cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and intangible assets, contingencies and litigation, and estimates of the forfeiture rate and expected life of share-based awards and stock price volatility when computing share-based compensation expense. Actual results may differ from those estimates.

Fair Value Effective January 1, 2008, we adopted the authoritative guidance for fair value measurements, which guidance provides companies the option to measure certain financial assets and liabilities at fair value with changes in fair value recognized in earnings each period. We have elected not to measure any financial assets and liabilities at fair value that were not previously required to be measured at fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value framework requires the categorization of assets and liabilities into three levels based upon assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

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• Level 1: Quoted market prices in active markets for identical assets or liabilities.

• Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

• Level 3: Unobservable inputs that are not corroborated by market data.

We measure our liability for deferred compensation on a recurring basis. As of March 31, 2011, our liability for deferred compensation had a balance and fair value of $1.5 million and was valued using Level 1 inputs.

Land, Buildings, Riverboats and Equipment Land, buildings, riverboats and equipment are stated at cost. Land includes land not currently being used in our operations, which totaled $44.8 million at March 31, 2011 and December 31, 2010. We capitalize the costs of improvements that extend the life of the asset. Construction in progress at March 31, 2011 relates primarily to our Baton Rouge project. Interest expense is capitalized on internally constructed assets at our overall weighted average cost of borrowing.

	For the three months ended March 31,
	2011		2010
	(in millions)
Depreciation expense	$	25.8	$	24.4
Capitalized interest	$	0.8	$	3.5

We expense maintenance and repairs costs as incurred. Gains or losses on the dispositions of land, buildings, riverboats and equipment are included in the determination of income.

Goodwill and Other Intangible Assets Goodwill and other indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter, or more frequently if there are indications of possible impairment, by applying a fair-value-based test. There were no impairments to goodwill during the three months ended March 31, 2011 and 2010. In January 2011, we acquired goodwill totaling $35.8 million related to the purchase of River Downs.

Gaming Taxes We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate, subject to applicable jurisdictional adjustments. These gaming taxes are an assessment on our gaming revenues and are recorded as a gaming expense in the unaudited Condensed Consolidated Statements of Operations.

	For the three months ended March 31,
	2011		2010
	(in millions)
Gaming taxes	$	75.3	$	67.9

Pre-opening and Development Costs Pre-opening and development costs are expensed as incurred. For the three months ended March 31, 2011 and 2010, they consist of the following:

	For the three months ended March 31,
	2011		2010
	(in millions)
River City	$	0.1	$	8.2
Baton Rouge	1.0		0.2
Sugarcane Bay (a)	0.2		0.4
Other	0.9		0.1
Total pre-opening and development costs	$	2.2	$	8.9

(a) We canceled our Sugarcane Bay project in April 2010. The continuing costs relate to the cost to terminate the project and costs to restore the site to its original state. In April 2011, we agreed to resolve our litigation in regards to issues related to the cancellation of our Sugarcane Bay project. We expect to incur no additional material cash costs as a result of the settlement.

7

Comprehensive Income Our comprehensive income is as follows:

	For the three months ended March 31,
	2011		2010
	(in millions)
Net income	$	2.4	$	36.7
Foreign currency translation loss	—		(0.3		)
Post-retirement plan benefit obligation, net of income taxes (a)	—		0.1
Comprehensive income	$	2.4	$	36.5

(a) Included in the balance are benefit obligations related to both the executive deferred compensation plan and directors’ health and medical plan.

Earnings per Share Diluted earnings per share assume exercise of in-the-money stock options (those options with exercise prices at or below the weighted average market price for the periods presented) outstanding at the beginning of the period or at the date of issuance. We calculate the effect of dilutive securities using the treasury stock method. As of March 31, 2011 and 2010, our share-based awards issued under our stock option plans consisted primarily of common stock option grants, restricted stock units and phantom stock units.

Recently Issued Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (the “FASB”) issued new authoritative guidance regarding disclosures about fair value measurements. An entity is now required to disclose separately the amounts of significant transfers in and out of Level 1 and 2 fair value measurements, and describe the reasons for the transfers, and additional disclosure is required regarding purchases, sales, issuances and settlements of Level 3 measurements. The guidance is effective for interim and annual periods beginning after December 15, 2009, except for the additional disclosure of Level 3 measurements, which is effective for fiscal years beginning after December 15, 2010. The adoption of this guidance did not have a material effect on our unaudited Condensed Consolidated Financial Statements.

In April 2010, the FASB issued authoritative accounting guidance for companies that generate revenue from gaming activities that involve base jackpots, which guidance requires companies to accrue for a liability at the time the company has the obligation to pay the jackpot and record such obligation as a reduction of gaming revenue accordingly. The guidance is effective for interim and annual reporting periods beginning on or after December 15, 2010. We adopted this guidance effective January 1, 2011 and reduced our progressive jackpot liability by approximately $4.0 million and recorded a corresponding credit to our beginning retained earnings account.

In December 2010, the FASB issued guidance to improve disclosures of supplementary pro forma information for business combinations. The guidance specifies that if an entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. This guidance also expands the supplemental pro forma disclosures required to include a description of the nature and amount of material nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The guidance is effective prospectively for business combinations for which the acquisition date is on or after annual reporting periods beginning after December 15, 2010. We expect that the adoption of this guidance may have an impact on our consolidated financial statements, in the event that we acquire a company significant to our operations in the future.

A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of any such proposed or revised standards would have on our unaudited Condensed Consolidated Financial Statements.

8

Note 2—Long-Term Debt

Long-term debt at March 31, 2011 and December 31, 2010 consists of the following:

	March 31, 2011			December 31, 2010
	(in millions)
Senior Secured Credit Facility	$	—		$	—
8.75% Senior Notes due 2020	350.0			350.0
8.625% Senior Subordinated Notes due 2017	444.7			444.5
7.50% Senior Subordinated Notes due 2015	381.6			381.5
Other secured and unsecured notes payable	0.7			0.7
	1,177.0			1,176.7
Less current maturities	(0.1		)	(0.1		)
	$	1,176.9		$	1,176.6

Senior Secured Credit Facility: On February 5, 2010, we entered into an amended and restated credit agreement for a $375 million revolving credit facility (the “Credit Facility”), which matures on March 31, 2014. As of March 31, 2011, we had no borrowings outstanding under the Credit Facility, and had $9.3 million committed under letters of credit for various self-insurance programs.

Loss on Early Extinguishment of Debt: During the three months ended March 31, 2011, we had no losses on early extinguishment of debt. During the three months ended March 31, 2010, we incurred a loss on early extinguishment of debt of $1.4 million related to the write off of unamortized debt issuance costs related to the execution of our Credit Facility.

Interest expense, net of capitalized interest was as follows:

	For the three months ended March 31,
	2011			2010
	(in millions)
Interest expense before capitalization of interest	$	27.0		$	24.4
Less: capitalized interest	(0.8		)	(3.5		)
Total interest expense, net of capitalized interest	$	26.2		$	20.9

We stopped capitalizing interest on our River City Casino upon its opening in March 2010, contributing to the decrease in capitalized interest. We began capitalizing interest on our Baton Rouge project during the fourth quarter of 2010.

Fair Value of Financial Instruments: The estimated fair value of our long-term debt at March 31, 2011 was approximately $1.2 billion, with a book value of $1.2 billion. At December 31, 2010, the estimated fair value was approximately $1.3 billion, with a book value of $1.2 billion. The estimated fair value of our senior notes and senior subordinated notes was based on quoted market prices on or about March 31, 2011 and December 31, 2010.

Note 3—Income Taxes

Our effective income tax rate for continuing operations for the three months ended March 31, 2011 was an expense of $0.1 million, or 1.5%, as compared to an expense of $0.7 million, or 42.9% for the prior year period. Our tax rate differs from the statutory rate of 35.0% due to the effects of permanent items and the recording of a valuation allowance against a portion of our deferred tax assets generated in the current year. It is reasonably possible that the total amount of unrecognized tax benefits may increase by approximately $0.5 million to $2.0 million during the next twelve months.

9

Note 4—Employee Benefit and Other Plans

Share-based Compensation: As of March 31, 2011, we had approximately 5.3 million share-based awards issued, 204,801 of which are restricted stock awards and the rest of which are common stock options, and approximately 2.1 million share-based awards available for grant.

We recorded share-based compensation expense as follows:

	For the three months ended March 31,
	2011		2010
	(in millions)
Share-based compensation expense	$	1.5	$	1.4
Unamortized compensation costs	$	16.9	$	18.7

The weighted average period over which the costs are expected to be recognized is approximately three years.

The aggregate amount of cash we received from the exercise of stock options is described below. The associated shares were newly issued common stock.

	For the three months ended March 31,
	2011		2010
	(in millions)
Cash received from exercise of stock options	$	2.3	$	—

The following table summarizes information related to our common stock options under our stock option plans:

	Number of Stock Options			Weighted Average Exercise Price
Options outstanding at January 1, 2011	5,604,916			$	13.69
Granted	397,800			$	13.56
Exercised	(310,669		)	$	7.60
Cancelled, Forfeited	(344,100		)	$	12.78
Options outstanding at March 31, 2011	5,347,947			$	14.09
Vested or expected to vest at a point in the future as of March 31, 2011	4,949,242
Options exercisable at March 31, 2011	2,779,497			$	16.25
Weighted-average value per granted option calculated using the Black-Scholes option-pricing model for options granted during the three months ended March 31, 2011	$	7.05

Note 5—Write-downs, reserves and recoveries, net

Write-downs, reserves and recoveries, net consist of the following:

	For the three months ended March 31,
	2011		2010
	(in millions)
Loss on disposal of assets	$	0.7	$	0.5
Legal settlement recoveries	—		(6.5		)
Write-downs, reserves and recoveries, net	$	0.7	$	(6.0	)

Loss on disposal of assets: During the first quarter of 2011, we sold various slot equipment at our properties for a net loss of $0.7 million, as compared to a net loss of $0.5 million in the prior year period.

Legal settlement recoveries: During March 2010, we received a $6.5 million legal settlement related to the recovery of

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legal fees.

Note 6—Discontinued Operations

Discontinued operations as of March 31, 2011 consist of our Atlantic City operations, our former President Casino operations, our former Casino Magic Argentina operations, our former Casino Magic Biloxi operations and our former operations at The Casino at Emerald Bay in The Bahamas.

Atlantic City: In the first quarter of 2010, we made the decision to sell our Atlantic City operations. We have reflected our Atlantic City operations as discontinued operations and the related assets and liabilities as held for sale.

President Casino: We closed the President Casino on June 24, 2010, and have reflected the entity in discontinued operations and the remaining assets and liabilities as held for sale. In October 2010, we sold The Admiral Riverboat, on which the President Casino formerly operated.

Casino Magic Argentina: On April 29, 2010, we entered into an agreement to sell our Argentina operations. On June 30, 2010, we completed the sale of our Argentina operations for approximately $40.0 million.

Casino Magic Biloxi: Casino Magic Biloxi closed after significant damage from Hurricane Katrina in 2005. In February 2010, we settled all remaining insurance claims in exchange for a final payment of approximately $23.4 million. We received payments totaling approximately $215 million from our insurers related to this asset. Prior insurance advances that exceeded the book value of destroyed assets and certain insured expenses were recorded as a deferred gain of $18.3 million. As a result of this final settlement, we recognized this deferred gain in February 2010 in addition to the gain associated with the proceeds.

The Casino at Emerald Bay: The Casino at Emerald Bay in The Bahamas was closed during the first quarter of 2009. In February 2011, we completed the sale of the final asset and we recorded a gain on sale of $0.1 million. After this sale, we should incur no further costs associated with this entity.

Revenue, expense and net income for entities and operations included in discontinued operations are summarized as follows:

	For the three months ended March 31,
	2011			2010
	(in millions)
Revenues	$	0.2		$	15.0
Operating loss	(2.2		)	(5.8		)
Non-operating income	—			41.7
Income (loss) before income taxes	(2.2		)	35.9
Income tax expense	—			(0.1		)
Income (loss) from discontinued operations	$	(2.2	)	$	35.8

Net assets for entities and operations included in discontinued operations are summarized as follows:

	March 31, 2011		December 31, 2010
	(in millions)
Assets:
Property and equipment, net	$	38.0	$	38.0
Other assets, net	20.8		22.1
Total assets	$	58.8	$	60.1
Liabilities:
Total liabilities	5.0		5.4
Net assets	$	53.8	$	54.7

11

Note 7—Commitments and Contingencies

Redevelopment Agreement: In connection with our Lumière Place Casino and Hotel ("Lumière Place"), we have a redevelopment agreement which, among other things, commits us to oversee the investment of $50.0 million in residential housing, retail or mixed-use developments in the City of St. Louis within five years of the opening of Lumière Place. Such investment can be made with partners and partner contributions and project debt financing, all of which count toward the $50.0 million investment commitment. We are also obligated to pay an annual fee of $1.0 million to the City of St. Louis, which obligation began after our River City Casino opened in March 2010. The redevelopment agreement also contains certain contingent payments in the event of certain defaults. If we and any development partners collectively fail to invest $50.0 million in residential housing, retail, or mixed-use developments within five years of the opening of the casino and hotels, we would be obligated to pay an additional annual service fee of $1.0 million, less applicable credits, in year six, $2.0 million in years seven and eight, and $2.0 million annually thereafter, adjusted by the change in the consumer price index.

Lease and Development Agreement for River City Casino: In connection with our River City Casino, we have a lease and development agreement with the St. Louis County Port Authority which, among other things, commits us to lease 56 acres for 99 years (subject to certain termination provisions). We have invested the minimum requirement of $375.0 million to: (a) construct a gaming and multi-use facility, which opened on March 4, 2010; (b) perform environmental remediation on the site of the project, which remediation has been completed; (c) contribute $5.1 million for the construction of community and recreational facilities, which amount has been paid; and (d) construct a roadway into the project, which construction is complete. We are still required to develop and construct a hatch shell on the adjoining property within eighteen months of March 4, 2010. We were required to pay rent in the amount of $2.5 million from May 1, 2009 to March 31, 2010, which amount has been paid. From April 1, 2010 through the expiration of the term of the lease and development agreement, we are required to pay to St. Louis County as annual rent the greater of (a) $4.0 million, or (b) 2.5% of annual adjusted gross receipts, as that term is defined in the lease and development agreement. We are also required to invest at least an additional $75 million into a second phase that would include a hotel with a minimum of 100 guestrooms and other amenities, to be mutually agreed upon by us and St. Louis County. The second phase must be opened within three years after March 4, 2010. In each of the five subsequent years that the second phase is not opened, the amount of liquidated damages begins at $2.0 million for the first year and increases by $1.0 million each subsequent year: hence, $3.0 million in year two, $4.0 million in year three, $5.0 million in year four and $6.0 million in year five. As a result, the maximum total amount of such liquidated damages that we would have to pay if the second phase is not completed is $20.0 million.

Self-Insurance: We self-insure various levels of general liability and workers' compensation at all of our properties and medical coverage at most of our properties. Insurance reserves include accruals for estimated settlements for known claims, as well as accruals for estimates of claims not yet made, which are included in “Accrued compensation” and “Other accrued liabilities” on the Condensed Consolidated Balance Sheets.

Legal

Union Proceedings: On October 15, 2010, UNITE HERE local 74 (the “Union”) filed unfair labor practice charges with the National Labor Relations Board (the “NLRB”) against Casino One Corporation, a wholly-owned subsidiary of the Company, which is doing business as Lumière Place Casino and Hotels.  The Union alleges that Lumière Place had failed and refused to bargain collectively with the Union.   On January 28, 2011, the NLRB issued a complaint alleging that Lumière Place unlawfully failed to bargain in good faith and unilaterally modified the terms of employment for bargaining unit employees.  A trial before an administrative law judge of the NLRB is scheduled to commence on May 9, 2011.   In addition, Region 14 of the NLRB has requested authorization from the NLRB to seek an injunction in federal district court, requiring compliance with the National Labor Relations Act and restoration of the status quo that existed prior to Lumière Place's alleged unilateral modifications of the terms of employment.  The NLRB sought an order requiring Lumière Place to bargain in good faith, reinstate work rules, and reinstate with back pay employees who were discharged for violating the modified rules.  Lumière Place and the NLRB executed a settlement agreement resolving all outstanding issues associated with the changes, which was approved by the NLRB on April 28, 2011. 

On May 11, 2010, a former President Casino employee filed an unfair labor practice with the NLRB against (1) Casino One Corporation doing business as Lumière Place; (2) PNK (River City), LLC, a wholly-owned subsidiary of Pinnacle, doing business as River City; (3) President Riverboat Casino-Missouri, Inc., a wholly-owned subsidiary of Pinnacle, doing business as President Casino; and (4) Pinnacle Entertainment, Inc. The former employee alleges that Lumière Place, River City, President Casino and Pinnacle Entertainment, Inc. are a single employer, which unlawfully refused to hire President Casino employees for River City and Lumière Place.

12

Madison House Litigation: On December 23, 2008, Madison House Group, L.P. (“Madison House”) filed suit in Superior Court of New Jersey, Chancery Division, Atlantic County against the Company, ACE Gaming, LLC, a wholly owned subsidiary of the Company (“ACE”), and one other defendant. We acquired ACE as part of our acquisition of the entities owning the former Sands Hotel & Casino (the “Sands”) in Atlantic City, New Jersey in November 2006. The lawsuit arises out of a lease dated December 18, 2000 between Madison House as landlord and ACE as tenant for the Madison House hotel in Atlantic City, New Jersey. The lawsuit alleges in part that ACE breached certain obligations under the lease, including, among other things, by failing to operate and maintain the hotel as required by the lease, which was alleged to have resulted in substantial damages to the hotel. The lawsuit further alleges that the Company, as the ultimate parent entity of ACE, should be jointly and severally liable with ACE for the damages sought, and separately alleges independent actions against the Company as described more fully in the lawsuit. The lawsuit seeks specific performance of ACE's obligations under the lease, including restoration of the hotel, as well as unspecified compensatory and exemplary damages, and attorneys' fees, against the Company and ACE. ACE continues to make its payment obligations under the lease, which expires in December 2012.

On March 17, 2010, Madison House moved to dismiss its complaint and ACE's counterclaim without prejudice, which motion was heard on April 28, 2010. The court ruled that it was granting the motion to dismiss Madison House's complaint, without prejudice, but that it was denying the motion to dismiss ACE's counterclaim. The court also ruled that the case would be moved from the Chancery Division to the Law Division. On September 20, 2010, Madison House moved to dismiss ACE's counterclaim, which was heard on October 15, 2010. On January 13, 2011 the court denied Madison House's motion to dismiss the counterclaim. While the Company cannot predict the outcome of this litigation, it intends to pursue its counterclaim vigorously.

Indiana Tax Dispute: In 2008, the Indiana Department of Revenue (“IDR”) commenced an income tax examination of the Company's Indiana income tax filings for the 2005 to 2007 period. In February 2010, the Company received a notice of proposed adjustment from the field agent in the amount of $7.3 million, excluding interest and penalties of $2.3 million, challenging the treatment of income and gain from certain asset sales, including the sale of the Hollywood Park Racetrack in 1999, and other transactions outside of Indiana, such as the Aztar merger termination fee in 2006, which we reported on our Indiana state tax returns for the years 2000 through 2007. In March 2010, the Company timely filed a protest with the IDR requesting abatement of all tax, interest and penalties. In September 2010, a hearing was held with the IDR where the Company restated significant facts and positions which the Company believed the field agent had not taken into consideration in issuing the assessment. On March 30, 2011, the IDR issued a Letter of Findings ("LOF") from the IDR denying all issues protested. The LOF provides that the Company demonstrated reasonable cause and agreed with the Company that the imposition of the negligence penalty is not appropriate. Accordingly, the Company's request for waiver of the penalty is sustained. The Company has requested a rehearing with the IDR. If the request for rehearing is denied, the Company may appeal the decision to the tax court.

Indiana State Sales Tax Dispute: In 2002, following a sales and use tax audit of Belterra Casino Resort, we received a proposed assessment for approximately $3.1 million, including interest and penalties. We filed a protest in December 2002. In March 2006, the IDR conducted an administrative hearing of our protest, and, in April 2006, the IDR denied our protest with respect to nearly the entire assessment. In May 2006, we filed an appeal of the IDR's findings with the Indiana Tax Court and conceded a portion, of which $0.8 million was paid in July 2006. In February 2009, the Indiana Tax Court issued its final determination and concluded that Belterra Casino Resort was not liable for the tax. In April 2009, the IDR filed a Petition to Review with the Indiana Supreme Court. The Indiana Supreme Court heard oral arguments on October 29, 2009. On October 5, 2010, the Indiana Supreme Court reversed the Indiana Tax Court's ruling and ruled against the Company in a 3-2 decision. Following the Indiana Supreme Court's ruling, we received a final demand in the amount of approximately $3.3 million which the Company promptly paid. On November 4, 2010, the Company filed a petition for rehearing with the Indiana Supreme Court. On February 9, 2011, we received the Indiana Supreme Court's order affirming its original decision. However, the Indiana Supreme Court granted rehearing with respect to the penalty portion, which was $246,000, and remanded that issue back to the Indiana Tax Court.

Other: We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.

13

Note 8—Consolidating Condensed Financial Information

Our subsidiaries (excluding a subsidiary with approximately $10.5 million in cash and cash equivalents as of March 31, 2011; a subsidiary with approximately $66.3 million in cash and cash equivalents as of March 31, 2011; and certain non-material subsidiaries) have fully and unconditionally and jointly and severally guaranteed the payment of all obligations under the 7.50% Notes, 8.625% Notes and 8.75% Notes, as well as our Credit Facility. Our Atlantic City entities do not guarantee our Credit Facility. Separate financial statements and other disclosures regarding the subsidiary guarantors are not included herein because management has determined that such information is not material to investors. In lieu thereof, we include the following:

	Pinnacle Entertainment, Inc.			100% Owned Guarantor Subsidiaries(a)			100% Owned Non- Guarantor Subsidiaries(b)		Consolidating and Eliminating Entries			Pinnacle Entertainment, Inc. Consolidated
	(in millions)
For the three months ended March 31, 2011
Statement of Operations
Revenues:
Gaming	$	—		$	253.9		$	—	$	—		$	253.9
Food and beverage	—			16.4			—		—			16.4
Other	—			17.4			—		—			17.4
	—			287.7			—		—			287.7
Expenses:
Gaming	—			143.4			—		—			143.4
Food and beverage	—			16.8			—		—			16.8
General and administrative and other	10.2			59.1			—		—			69.3
Depreciation and amortization	0.9			25.8			—		—			26.7
Write-downs, reserves and recoveries	0.5			0.2			—		—			0.7
	11.6			245.3			—		—			256.9
Operating income (loss)	(11.6		)	42.4			—		—			30.8
Equity earnings of subsidiaries	37.8			0.4			—		(38.2		)	—
Interest expense and non-operating income, net	(27.0		)	0.8			—		—			(26.2		)
Loss on early extinguishment of debt	—			—			—		—			—
Income (loss) from continuing operations before inter-company activity and income taxes	(0.8		)	43.6			—		(38.2		)	4.6
Management fee & inter-company interest	3.2			(3.2		)	—		—			—
Income tax expense	—			—			—		—			—
Income (loss) from continuing operations	2.4			40.4			—		(38.2		)	4.6
Income (loss) from discontinued operations, net of taxes	—			(2.7		)	0.5		—			(2.2		)
Net income (loss)	$	2.4		$	37.7		$	0.5	$	(38.2	)	$	2.4

14

	Pinnacle Entertainment, Inc.			100% Owned Guarantor Subsidiaries(a)			100% Owned Non- Guarantor Subsidiaries(b)			Consolidating and Eliminating Entries			Pinnacle Entertainment, Inc. Consolidated
	(in millions)
For the three months ended March 31, 2010
Statement of Operations
Revenues:
Gaming	$	—		$	230.8		$	—		$	—		$	230.8
Food and beverage	—			15.3			—			—			15.3
Other	—			16.5			—			—			16.5
	—			262.6			—			—			262.6
Expenses:
Gaming	—			129.8			—			—			129.8
Food and beverage	—			15.7			—			—			15.7
General and administrative and other	9.8			64.0			(0.6		)	—			73.2
Depreciation and amortization	1.4			24.4			0.1			—			25.9
Write-downs, reserves and recoveries	(6.4		)	0.4			—			—			(6.0		)
	4.8			234.3			(0.5		)	—			238.6
Operating income (loss)	(4.8		)	28.3			0.5			—			24.0
Equity earnings of subsidiaries	63.7			1.1			—			(64.8		)	—
Interest expense and non-operating income, net	(24.4		)	3.4			—			—			(21.0		)
Loss on early extinguishment of debt	(1.4		)	—			—			—			(1.4		)
Income (loss) from continuing operations before inter-company activity and income taxes	33.1			32.8			0.5			(64.8		)	1.6
Management fee & inter-company interest	4.3			(4.3		)	—			—			—
Income tax expense	(0.7		)	—			—			—			(0.7		)
Income (loss) from continuing operations	36.7			28.5			0.5			(64.8		)	0.9
Income from discontinued operations, net of taxes	—			34.6			1.2			—			35.8
Net income (loss)	$	36.7		$	63.1		$	1.7		$	(64.8	)	$	36.7

15

	Pinnacle Entertainment, Inc.		100% Owned Guarantor Subsidiaries(a)		100% Owned Non- Guarantor Subsidiaries(b)		Consolidating and Eliminating Entries			Pinnacle Entertainment, Inc. Consolidated
	(in millions)
As of March 31, 2011
Balance Sheet
Current assets	$	26.2	$	80.2	$	76.9	$	—		$	183.3
Property and equipment, net	17.0		1,482.2		0.4		—			1,499.6
Other non-current assets	57.9		87.0		—		—			144.9
Investment in subsidiaries	1,652.5		—		—		(1,652.5		)	—
Assets of discontinued operations held for sale	—		59.5		—		(0.6		)	58.9
Inter-company	1.2		—		—		(1.2		)	—
	$	1,754.8	$	1,708.9	$	77.3	$	(1,654.3	)	$	1,886.7
Current liabilities	46.6		115.1		0.1		—			161.8
Notes payable, long term	1,176.3		0.6		—		—			1,176.9
Other non-current liabilities	14.3		11.1		—		—			25.4
Liabilities of discontinued operations held for sale	—		5.0		—		—			5.0
Inter-company	—		—		1.2		(1.2		)	—
Equity	517.6		1,577.1		76.0		(1,653.1		)	517.6
	$	1,754.8	$	1,708.9	$	77.3	$	(1,654.3	)	$	1,886.7
As of December 31, 2010
Balance Sheet
Current assets	$	84.0	$	78.1	$	77.2	$	—		$	239.3
Property and equipment, net	13.0		1,460.1		0.5		—			1,473.6
Other non-current assets	59.3		51.4		—		—			110.7
Investment in subsidiaries	1,585.3		—		—		(1,585.3		)	—
Assets of discontinued operations held for sale	—		60.5		0.3		(0.6		)	60.2
Inter-company	1.2		—		—		(1.2		)	—
	$	1,742.8	$	1,650.1	$	78.0	$	(1,587.1	)	$	1,883.8
Current liabilities	45.1		123.4		0.1		—			168.6
Notes payable, long term	1,176.0		0.7		—		—			1,176.7
Other non-current liabilities	14.3		11.4		—		—			25.7
Liabilities of discontinued operations held for sale	—		5.4		—		—			5.4
Inter-company	—		—		1.2		(1.2		)	—
Equity	507.4		1,509.2		76.7		(1,585.9		)	507.4
	$	1,742.8	$	1,650.1	$	78.0	$	(1,587.1	)	$	1,883.8

16

	Pinnacle Entertainment, Inc.			100% Owned Guarantor Subsidiaries(a)			100% Owned Non- Guarantor Subsidiaries(b)			Consolidating and Eliminating Entries		Pinnacle Entertainment, Inc. Consolidated
	(in millions)
For the three months ended March 31, 2011
Statement of Cash Flows
Cash provided by (used in) operating activities	$	(55.7	)	$	84.4		$	(0.4	)	$	—	$	28.3
Cash provided by (used in) investing activities Capital expenditures and other	(4.9		)	(78.1		)	0.4			—		(82.6		)
Cash provided by (used in) investing activities	(4.9		)	(78.1		)	0.4			—		(82.6		)
Cash provided by financing activities Change in notes payable and other	2.3			—			—			—		2.3
Cash provided by financing activities	2.3			—			—			—		2.3
Increase (decrease) in cash and cash equivalents	(58.3		)	6.3			—			—		(52.0		)
Cash and cash equivalents, beginning of period	76.9			41.6			76.9			—		195.4
Cash and cash equivalents, end of period	$	18.6		$	47.9		$	76.9		$	—	$	143.4
For the three months ended March 31, 2010
Statement of Cash Flows
Cash provided by (used in) operating activities	$	(30.9	)	$	66.3		$	(1.6	)	$	—	$	33.8
Cash used in investing activities Capital expenditure and other	(1.0		)	(62.8		)	—			—		(63.8		)
Cash used in investing activities	(1.0		)	(62.8		)	—			—		(63.8		)
Cash provided by financing activities Change in notes payable	37.7			—			—			—		37.7
Cash provided by financing activities	37.7			—			—			—		37.7
Effect of exchange rate changes on cash	—			—			(0.1		)	—		(0.1		)
Increase (decrease) in cash and cash equivalents	5.8			3.5			(1.7		)	—		7.6
Cash and cash equivalents, beginning of period	1.5			56.7			71.4			—		129.6
Cash and cash equivalents, end of period	$	7.3		$	60.2		$	69.7		$	—	$	137.2

_______________________ 

(a) The following material subsidiaries are identified as guarantors of the 7.50% Notes, 8.625% Notes and 8.75% Notes: Belterra Resort Indiana, LLC; Boomtown, LLC; PNK (RENO), LLC; Louisiana-I Gaming; PNK (LAKE CHARLES), L.L.C.; Casino Magic Corp.; Biloxi Casino Corp.; PNK (BOSSIER CITY), Inc.; Casino One Corporation; PNK (ES), LLC; PNK (ST. LOUIS RE), LLC; AREP Boardwalk Properties LLC; PNK (Baton Rouge Partnership; PNK (River City), LLC, PNK (SCB), L.L.C.; PNK Development 7, LLC; PNK Development 8, LLC; PNK Development 9, LLC; PNK Development 13, LLC; PNK (Ohio), LLC, PNK (Ohio) II, LLC, PNK (Ohio) III, LLC, President Riverboat Casino-Missouri, Inc.; and ACE Gaming, LLC. In addition, certain other immaterial subsidiaries are also guarantors of the 7.50% Notes, 8.625% Notes and 8.75% Notes.

(b) PNK Development 11, LLC, which, as of March 31, 2011, held approximately $66.3 million in cash and cash equivalents, is our only material non-guarantor of the 7.50% Notes, 8.625% Notes and 8.75% Notes. Other non-guarantor subsidiaries include, but are not limited to, a subsidiary with $10.5 million in cash and cash equivalents as of March 31, 2011.

17

Note 9—Segment Information

We use Adjusted EBITDA (as defined below) to compare operating results among our segments and allocate resources. The following table highlights our Adjusted EBITDA and reconciles Adjusted EBITDA to income from continuing operations for the three months ended March 31, 2011 and 2010.

	For the three months ended March 31,
	2011			2010
	(in millions)
Revenues:
L'Auberge du Lac	$	88.8		$	86.4
St. Louis (a)	93.5			71.8
Boomtown New Orleans	36.9			34.8
Belterra Casino Resort	36.7			36.3
Boomtown Bossier City	23.1			24.4
Boomtown Reno	7.6			8.8
River Downs	1.1			—
Total Revenue	$	287.7		$	262.5
Adjusted EBITDA (b):
L'Auberge du Lac	$	25.6		$	24.0
St. Louis (a)	20.0			15.5
Boomtown New Orleans	13.0			10.6
Belterra Casino Resort	6.4			6.5
Boomtown Bossier City	5.8			6.5
Boomtown Reno	(0.7		)	(1.0		)
River Downs	(0.3		)	—
	69.8			62.1
Corporate expenses (c)	(8.0		)	(8.0		)
	61.8			54.1
Other benefits (costs):
Depreciation and amortization	(26.7		)	(25.9		)
Pre-opening and development costs	(2.2		)	(8.9		)
Non-cash share-based compensation	(1.5		)	(1.4		)
Write-downs, reserves and recoveries, net	(0.7		)	6.0
Interest expense, net of capitalized interest	(26.2		)	(20.9		)
Loss on early extinguishment of debt	—			(1.4		)
Other non-operating income	0.1			—
Income tax expense	—			(0.7		)
Income from continuing operations	$	4.6		$	0.9

18

	For the three months ended March 31,
	2011		2010
	(in millions)
Capital expenditures:
L'Auberge du Lac	$	3.5	$	1.3
St. Louis (a)	3.0		48.8
Boomtown New Orleans	1.0		0.7
Belterra Casino Resort	0.3		1.5
Boomtown Bossier City	1.0		2.6
Boomtown Reno	0.1		0.1
Corporate and other, including properties under development (d)	29.4		10.9
	$	38.3	$	65.9

	March 31, 2011		December 31, 2010
	(in millions)
Assets
L'Auberge du Lac	$	306.9	$	314.8
St. Louis (a)	791.9		790.0
Boomtown New Orleans	63.3		64.0
Belterra Casino Resort	183.9		188.6
Boomtown Bossier City	87.2		88.9
Boomtown Reno	39.3		40.5
River Downs	45.2		0.0
Corporate and other, including development projects and discontinued operations	369.0		397.0
	$	1,886.7	$	1,883.8

(a) Our St. Louis segment consists of Lumière Place (which includes the Lumière Place Casino, the Pinnacle-owned Four Seasons Hotel St. Louis and HoteLumière) and River City.

(b) We define Adjusted EBITDA for each segment as earnings before interest income and expense, income taxes, depreciation, amortization, pre-opening and development expenses, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, gain (loss) on sale of certain assets, loss on early extinguishment of debt, loss on sale of discontinued operations, and discontinued operations. We use Adjusted EBITDA to compare operating results among our properties and between accounting periods.

(c) Corporate expenses represent unallocated payroll, professional fees, travel expenses and other general and administrative expenses not directly related to our casino and hotel operations.

(d) Includes capital expenditures for our various development projects not yet reflected as operating segments, including the following:

	For the three months ended March 31,
	2011		2010
	(in millions)
Sugarcane Bay	$	0.2	$	7.4
Baton Rouge	24.4		1.8

19

Note 10—Subsequent Events

Pursuant to prior discussions, we donated land with a book value of $5.7 million to the City of Lake Charles in April 2011 and we expect to receive certain benefits from this transaction.

20

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, the unaudited Condensed Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q, the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

EXECUTIVE SUMMARY

Pinnacle Entertainment, Inc. is an owner, operator and developer of casinos and related hospitality and entertainment facilities. We operate seven casinos: L'Auberge du Lac in Lake Charles, Louisiana; River City Casino (which opened March 4, 2010) and Lumière Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. In addition, we own and operate a racetrack facility in southeast Cincinnati, Ohio ("River Downs"), which was purchased in January 2011 for approximately $45.2 million. We are also developing a casino-hotel in Baton Rouge, Louisiana, which is subject to various regulatory approvals. In April 2010, we canceled our Sugarcane Bay project in Lake Charles, Louisiana. On June 24, 2010, we closed our President Casino facility in St. Louis, Missouri, and on June 30, 2010, we completed the sale of our Argentina operations for approximately $40 million.

In Louisiana, we have commenced foundation work on our Baton Rouge project, the opening of which is subject to various regulatory approvals. In addition, the casino vessel hulls are complete. During construction, we have faced unusually high volatility of the Mississippi River's water levels in Baton Rouge. Earlier this year, unusually low river levels prevented construction progress on the wet side of the flood levee. Currently, due to unusually high water levels for this time of year, construction on the dry side of the flood levee, mainly the hotel, is delayed until river levels recede. As a result, we expect our Baton Rouge project to open in the summer of 2012. However, the ultimate opening date is dependent upon the Mississippi River water levels and obtaining regulator approvals, among other factors.

We operate casino properties, all of which include gaming and dining facilities, and some of which include hotel, retail and other amenities. In addition, we operate one racetrack. Our operating results are highly dependent on the volume of customers at our properties, which, in turn, affects the price we can charge for our hotel rooms and other amenities. While we do provide casino credit in several gaming jurisdictions, most of our revenue is cash-based, with customers wagering with cash or paying for non-gaming services with cash or credit cards. Our properties generate significant operating cash flow. Our industry is capital-intensive and we rely on the ability of our resorts to generate operating cash flow to pay interest, repay debt costs and fund maintenance capital expenditures.

Our mission is to increase stockholder value. We intend to accomplish this through our long-term strategy of providing our guests with their favorite games in attractive surroundings with high-quality guest service; maintaining and improving each of our existing properties; and building or acquiring new casinos or resorts that are expected to produce favorable returns above our cost of capital. Hence, we continually focus on customer service; we are maintaining and improving our existing properties with disciplined capital expenditures; we are developing a new, high-quality gaming property in an attractive gaming market; and we may make strategic acquisitions, either alone or with third parties, when and if available, on terms we believe are reasonable.

21

RESULTS OF OPERATIONS

The following table highlights our results of operations for the three months ended March 31, 2011 and 2010. As discussed in Note 8 to our unaudited Condensed Consolidated Financial Statements, we report segment operating results based on revenues and Adjusted EBITDA. Such segment reporting is on a consistent basis with how we measure our business and allocate resources internally. See Note 8 to our unaudited Condensed Consolidated Financial Statements for more information regarding our segment information.

	For the three months ended March 31,
	2011			2010
	(in millions)
Revenues:
L'Auberge du Lac	$	88.8		$	86.4
St. Louis (a)	93.5			71.8
Boomtown New Orleans	36.9			34.8
Belterra Casino Resort	36.7			36.3
Boomtown Bossier City	23.1			24.4
Boomtown Reno	7.6			8.8
River Downs	1.1			—
Total Revenue	$	287.7		$	262.5
Operating income	$	30.8		$	23.9
Income from continuing operations	$	4.6		$	0.9
Adjusted EBITDA: (b)
L'Auberge du Lac	$	25.6		$	24.0
St. Louis (a)	20.0			15.5
Boomtown New Orleans	13.0			10.6
Belterra Casino Resort	6.4			6.5
Boomtown Bossier City	5.8			6.5
Boomtown Reno	(0.7		)	(1.0		)
River Downs	(0.3		)	—

(a) Our St. Louis segment consists of Lumière Place (which includes the Lumière Place Casino, the Pinnacle-owned Four Seasons Hotel St. Louis and HoteLumière) and River City.

(b) We define Adjusted EBITDA for each segment as earnings before interest income and expense, income taxes, depreciation, amortization, pre-opening and development expenses, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, gain (loss) on sale of certain assets, loss on early extinguishment of debt, loss on sale of discontinued operations, and discontinued operations.

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Segment comparison of the three months ended March 31, 2011 and 2010

L'Auberge du Lac

	For the three months ended March 31,				Percentage Increase/ (Decrease)
	2011		2010		2011 vs. 2010
	(in millions)
Gaming revenues	$	79.2	$	77.1	2.7	%
Total revenues	88.8		86.4		2.8	%
Operating income	20.2		16.7		21.0	%
Adjusted EBITDA	25.6		24.0		6.7	%

L'Auberge du Lac, our largest property, saw increase in Adjusted EBTIDA, as a result of increased revenues and reflecting the benefits of a heightened focus on operating efficiencies and effective marketing spend.

St. Louis  

	For the three months ended March 31,					Percentage Increase/ (Decrease)
	2011		2010			2011 vs. 2010
	(in millions)
Gaming revenues	$	81.5	$	60.9		33.8	%
Total revenues	93.5		71.8			30.2	%
Operating income (loss)	6.5		(3.1		)	NM
Adjusted EBITDA	20.0		15.5			29.0	%

NM — Not Meaningful

The St. Louis segment consists of Lumière Place (which includes the Lumière Place Casino, the Pinnacle-owned Four Seasons Hotel St. Louis and HoteLumière) and River City. The significant increase in revenues is due to the opening of River City in March 4, 2010. Each property in this segment saw increases in Adjusted EBITDA, reflecting the benefits of a heightened focus on operating efficiencies and realized through our shared services in this market.

Boomtown New Orleans

	For the three months ended March 31,				Percentage Increase/ (Decrease)
	2011		2010		2011 vs. 2010
	(in millions)
Gaming revenues	$	35.6	$	33.3	6.9	%
Total revenues	36.9		34.8		6.0	%
Operating income	11.2		8.7		28.7	%
Adjusted EBITDA	13.0		10.6		22.6	%

Adjusted EBITDA increased versus the prior-year period as a result of revenue growth due to an improving operating environment and heightened focus on operating efficiencies and more effective marketing programs.

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Belterra Casino Resort  

	For the three months ended March 31,				Percentage Increase/ (Decrease)
	2011		2010		2011 vs. 2010
	(in millions)
Gaming revenues	$	32.0	$	31.6	1.3	%
Total revenues	36.7		36.3		1.1	%
Operating income	3.2		3.2		—	%
Adjusted EBITDA	6.4		6.5		(1.5	)%

In the first quarter of 2011, Belterra achieved results consistent with the prior-year period despite difficulties resulting from soft general economic conditions and increased snowfall and difficult weather conditions, as well as the negative impact of decreased customer traffic.

Boomtown Bossier City

	For the three months ended March 31,				Percentage Increase/ (Decrease)
	2011		2010		2011 vs. 2010
	(in millions)
Gaming revenues	$	21.7	$	23.0	(5.7	)%
Total revenues	23.1		24.4		(5.3	)%
Operating income	4.2		5.0		(16.0	)%
Adjusted EBITDA	5.8		6.5		(10.8	)%

Boomtown Bossier City Adjusted EBITDA decreased for the three months ended March 31, 2011 due to the competitive Bossier City/Shreveport gaming market and expanded Native American gaming facilities in Oklahoma, many of which are located closer to our Dallas feeder market. We have attempted to offset the additional competition through a refinement of the property's marketing efforts and certain cost-cutting measures.

Boomtown Reno 

	For the three months ended March 31,						Percentage Increase/ (Decrease)
	2011			2010			2011 vs. 2010
	(in millions)
Gaming revenues	$	3.9		$	4.8		(18.8	)%
Total revenues	7.6			8.8			(13.6	)%
Operating loss	(1.3		)	(1.7		)	(23.5	)%
Adjusted EBITDA (loss)	(0.7		)	(1.0		)	(30.0	)%

Boomtown Reno decreased its Adjusted EBITDA loss for the three months ended March 31, 2011. The Reno market continues to be adversely affected by significant competition from the northern California Native American gaming market, as well as soft economic conditions in both the Reno and northern California markets.

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River Downs

	For the three months ended March 31,					Percentage Increase/ (Decrease)
	2011			2010		2011 vs. 2010
	(in millions)
Gaming revenues	$	—		$	—	NM
Total revenues	1.1			—		NM
Operating loss	(0.5		)	—		NM
Adjusted EBITDA (loss)	(0.3		)	—		NM

NM — Not Meaningful

In January 2011, we completed the purchase of River Downs racetrack, located in southeast Cincinnati, Ohio for approximately $45.2 million. River Downs is situated on approximately 160 acres of land, 40 of which are undeveloped, and offers live thoroughbred horse racing from mid-April through Labor Day, as well as simulcast wagering throughout the year, broadcast on more than 500 monitors throughout the facility. If video lottery terminals (VLTs) at Ohio's racetracks become operational, we plan to move quickly to invest in and revitalize River Downs to develop a new gaming, racing and entertainment destination facility for the Cincinnati market.

Other factors affecting income from continuing operations

The following is a description of the other costs and benefits for the three months ended March 31, 2011 and 2010, respectively:

	For the three months ended March 31,						Percentage Increase/ (Decrease)
	2011			2010			2011 vs. 2010
	(in millions)
Other benefits (costs):
Corporate expenses	$	(8.0	)	$	(8.0	)	—	%
Depreciation and amortization	(26.7		)	(25.9		)	3.1	%
Pre-opening and development costs	(2.2		)	(8.9		)	(75.3	)%
Non-cash share-based compensation	(1.5		)	(1.4		)	7.1	%
Write-downs, reserves and recoveries, net	(0.7		)	6.0			NM
Other non-operating income	0.1			—			NM
Loss on early extinguishment of debt	—			(1.4		)	NM
Interest expense, net of capitalized interest	(26.2		)	(20.9		)	25.4	%
Income tax expense	—			(0.7		)	NM

NM — Not Meaningful

Corporate expenses represent unallocated payroll, professional service fees, rent, travel expenses and other general and administrative expenses not directly incurred by our casino and hotel operations. Included in the balance for the three months ended March 31, 2011 is $2.4 million of severance, as compared to $0.4 million in the prior year period. Corporate expenses decreased during the first quarter of 2011, excluding severance charges, as compared to the same period in 2010 due to improved operational efficiencies.

Depreciation and amortization expense increased during the three months ended March 31, 2011 compared to the prior year period due to the increased basis in depreciable assets with the opening of River City on March 4, 2011 and the purchase of River Downs in January 2011.

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Pre-opening and Development Costs for the three months ended March 31, 2011 and 2010 consist of the following:

	For the three months ended March 31,
	2011		2010
	(in millions)
River City	$	0.1	$	8.2
Baton Rouge	1.0		0.2
Sugarcane Bay	0.2		0.4
Other	0.9		0.1
Total pre-opening and development costs	$	2.2	$	8.9

Non-cash Share-based Compensation Expense was $1.5 million and $1.4 million for the three months ended March 31, 2011 and 2010, respectively. Non-cash share-based compensation expense relates to the theoretical value of options on the date of issuance and is not related to actual stock price performance.

Write-downs, reserves and recoveries, net consist of the following:

	For the three months ended March 31,
	2011		2010
	(in millions)
Loss on disposal of assets	$	0.7	$	0.5
Legal settlement recoveries	—		(6.5		)
Write-downs, reserves and recoveries, net	$	0.7	$	(6.0	)

Loss on disposal of assets: During the first quarter of 2011, we sold various slot equipment at our properties for a net loss of $0.7 million as compared to $0.5 million in the prior year period.

Legal settlement recoveries: In March 2010, we received a $6.5 million legal settlement related to the recovery of legal fees.

Interest expense was as follows:

	For the three months ended March 31,
	2011			2010
	(in millions)
Interest expense before capitalization of interest	$	27.0		$	24.4
Less: capitalized interest	(0.8		)	(3.5		)
Total interest expense, net of capitalized interest	$	26.2		$	20.9

The increase in interest expense before capitalized interest for the three months ended March 31, 2011 from the same 2010 period was due to higher debt levels and the replacement of less expensive revolver borrowings with new, long-term notes. We believe the longer maturity, fixed interest rate and less-restrictive covenants of the new, long-term notes warranted the higher debt levels and interest rate. We stopped capitalizing interest on our River City Casino upon its opening in March 2010, contributing to the decrease in capitalized interest. Capitalized interest for the three months ended March 31, 2011 relates to our Baton Rouge project.

Loss on early extinguishment of debt: During the three months ended March 31, 2010, we incurred a loss on early extinguishment of debt of $1.4 million for the write off of unamortized debt issuance costs related to the modification of our Credit Facility. During the first quarter of 2011, we had no such costs.

Income Tax Our effective income tax rate for continuing operations for the three months ended March 31, 2011 was an expense of $0.1 million, or 1.5%, as compared to an expense of $0.7 million, or 42.9% for the prior year period. Our tax rate differs from the statutory rate of 35.0% due to the effects of permanent items and the recording of a valuation allowance against

26

a portion of our deferred tax assets generated in the current year. It is reasonably possible that the total amount of unrecognized tax benefits may increase by approximately $0.5 million to $2.0 million during the next twelve months.

Discontinued Operations Discontinued operations as of March 31, 2011 consist of our Atlantic City operations, our former President Casino operations, our former Casino Magic Argentina operations, our former Casino Magic Biloxi operations and the former operations at The Casino at Emerald Bay in The Bahamas.

Atlantic City: In the first quarter of 2010, we made the decision to sell our Atlantic City operations. We have reflected our Atlantic City operations as discontinued operations and the related assets and liabilities as held for sale.

President Casino: We closed the President Casino on June 24, 2010 and have reflected the operations in discontinued operations and the remaining assets and liabilities as held for sale. In October 2010, the Admiral Riverboat, on which the President Casino formerly operated, was sold.

Casino Magic Argentina: On June 30, 2010, we completed the sale of our Argentina operations for approximately $40 million and recognized a loss on disposal of approximately $0.2 million. We expect no continuing costs from this operation.

Casino Magic Biloxi: Casino Magic Biloxi closed after significant damage from Hurricane Katrina in 2005. In February 2010, we settled all remaining insurance claims in exchange for a final payment of approximately $23.4 million. We received payments totaling approximately $215 million from our insurers related to this asset. Prior insurance advances that exceeded the book value of destroyed assets and certain insured expenses were recorded as a deferred gain of $18.3 million. As a result of this final settlement, we recognized this deferred gain in February 2010, in addition to the gain associated with the proceeds.

The Casino at Emerald Bay: The Casino at Emerald Bay in The Bahamas was closed during the first quarter of 2009.

In February 2011, we completed the sale of the final asset for $0.4 million, resulting in a gain of $0.1 million. We expect no continuing costs with this entity.

Revenue, expense and net income for entities and operations included in discontinued operations are summarized as follows:

	For the three months ended March 31,
	2011			2010
	(in millions)
Revenues	$	0.2		$	15.0
Operating loss	(2.2		)	(5.8		)
Non-operating income	—			41.7
Income (loss) before income taxes	(2.2		)	35.9
Income tax expense	—			(0.1		)
Income (loss) from discontinued operations	$	(2.2	)	$	35.8

Net assets for entities and operations included in discontinued operations are summarized as follows:

	March 31, 2011		December 31, 2010
	(in millions)
Assets:
Land, buildings, riverboats and equipment, net	$	38.0	$	38.0
Other assets, net	20.8		22.1
	$	58.8	$	60.1
Liabilities:
Total Liabilities	5.0		5.4
	5.0		5.4
Net Assets	$	53.8	$	54.7

27

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2011, we held $143 million of cash and cash equivalents, not including $6.5 million of restricted cash. We estimate that approximately $70 million is needed to fund our casino cages, slot machines and day-to-day operating and corporate accounts. On February 5, 2010, we entered into a $375 million amended and restated credit facility, which facility matures in March 2014 (the “Credit Facility”). As of March 31, 2011, we had no borrowings under the Credit Facility and had $9.3 million committed under various letters of credit. We have a deposit in escrow with the Louisiana Gaming Control Board of $25.0 million related to the construction of our Baton Rouge project. We anticipate additional borrowings in the future to fund development and expansion projects and other general corporate needs.

We generally produce significant cash flows from operations, though this is not always reflected in our reported net income due to large non-cash charges such as depreciation. However, our ongoing liquidity will depend on a number of factors, including available cash resources, cash flow from operations, funding of construction of our development projects and our compliance with covenants contained in the Credit Facility and bond indentures.

	For the three months ended March 31,						Percentage Increase/ (Decrease)
	2011			2010			2011 vs. 2010
	(in millions)
Net cash provided by operating activities	$	28.3		$	33.8		(16.2	)%
Net cash used in investing activities	$	(82.6	)	$	(63.8	)	29.5	%
Net cash provided by financing activities	$	2.3		$	37.7		(93.8	)%

Operating Cash Flow

Our cash provided by operating activities in the three months ended March 31, 2011, as compared to the prior-year period decreased slightly. This decrease resulted from the prior-year cash receipt related to the Hurricane Katrina settlement and current year payments of accrued severance.

Investing Cash Flow

Investing cash flows include capital expenditures offset by the sale of property and equipment. During the three months ended March 31, 2011 and 2010, our significant capital expenditures were as follows:

	For the three months ended March 31,
	2011		2010
	(in millions)
Baton Rouge	$	24.4	$	1.8
L’Auberge du Lac	3.5		1.3
Lumière Place Casino	2.2		1.3
Boomtown Bossier City	1.0		2.6
River City	0.8		44.8
Boomtown New Orleans	1.0		0.6
Belterra	0.3		1.5
Boomtown Reno	0.1		—
Sugarcane Bay	0.2		7.4
Atlantic City	—		0.1
President	—		2.7
Other	4.8		1.8
Total capital expenditures	$	38.3	$	65.9

In January 2011, we completed the purchase of all of the assets of River Downs racetrack in southeast Cincinnati, Ohio for approximately $45.2 million. This asset purchase, funded with cash on hand, positions us to benefit from the possible

28

legalization of video lottery terminals ("VLTs") at Ohio's racetracks. If VLTs become operational, we plan to invest in and revitalize River Downs to develop a new gaming, racing and entertainment destination facility.

In April 2010, we canceled our planned Sugarcane Bay project and surrendered the related gaming license to the Louisiana Gaming Control Board. In April 2011, we agreed to resolve our litigation in regards to issues related to the cancellation of our Sugarcane Bay project. We expect to incur no additional material cash costs as a result of the settlement.

Our intention is to use existing cash resources, expected cash flows from operations and funds available under our Credit Facility to fund operations, maintain existing properties, make necessary debt service payments and fund the development of our Baton Rouge project, and explore other growth opportunities. In the event that our future cash flows from operations do not match the levels we currently anticipate, whether due to downturns in the economy or otherwise, we may need to raise funds through the capital markets, if possible. Our ability to borrow under our Credit Facility is contingent upon, among other things, meeting customary financial and other covenants. If we are unable to borrow under our Credit Facility, or if our operating results are adversely affected because of a reduction in consumer spending, or for any other reason, our ability to maintain our existing properties or complete our Baton Rouge project may be affected unless we sell assets, enter into leasing arrangements, or take other measures to find additional financial resources. There is no certainty that we will be able to do so on terms that are favorable to the Company or at all.

In addition to the effect that the global financial crisis has already had on us, we may face significant challenges if conditions in the economy and financial markets worsen. The credit crisis has adversely affected overall consumer demand, which has had a negative effect on our revenues. Furthermore, the effects of the recent disruption to the overall economy could adversely affect consumer confidence and the willingness of consumers to spend money on leisure activities. Because of the current economic environment, certain of our customers may curtail the frequency of their visits to our casinos and may reduce the amounts they wager and spend when compared to similar statistics in better economic times. All of these effects could have a material adverse effect on our liquidity.

For further discussion of our projects and associated capital needs, see the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources” within our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Financing Cash Flow

Credit Facility

On February 5, 2010, we amended and restated our Credit Facility, which reduced our revolving credit facility from $531 million to $375 million. As of March 31, 2011, we had no outstanding borrowings and had $9.3 million committed under various letters of credit under our Credit Facility. The Credit Facility matures on March 31, 2014.

The Credit Facility permits us, in the future, to increase the commitments under the revolving credit facility and to obtain term loan commitments, in each case from existing or new lenders that are willing to commit to such an increase, so long as we are in pro-forma compliance with a consolidated senior secured debt ratio and a consolidated total leverage ratio.

The proceeds of the Credit Facility may be used for general corporate purposes, including the payment of certain expenditures associated with the construction and development of our Baton Rouge project.

The Credit Facility does not have any debt repayment obligations prior to 2014. We are obligated to make mandatory prepayments of indebtedness under the Credit Facility from the net proceeds of certain debt offerings, certain asset sales and dispositions and certain casualty events, subject in certain cases to our right to reinvest proceeds. In addition, we will be required to prepay borrowings under the Credit Facility with a percentage of our “excess cash flow” (as defined in the Credit Facility, and reduced for cash flow applied to permitted capital spending). We do not believe such payments will be required in the foreseeable future. We have the option to prepay all or any portion of the indebtedness under the Credit Facility at any time without premium or penalty.

The interest rate margins for revolving credit loans under the Credit Facility depend on our consolidated total leverage ratio, which, in general, is the ratio of consolidated total debt (less excess cash, as defined in the Credit Facility) to annualized adjusted EBITDA, as defined in the Credit Facility. The Credit Facility bears interest, at our option, at either a LIBOR rate plus a margin ranging from 3.00% to 4.75% or at a base rate plus a margin ranging from 1.50% to 3.25%, in either case based on our consolidated total leverage ratio. The undrawn revolver facility bears a commitment fee for unborrowed amounts of 0.25% to 0.75% per annum based on our consolidated total leverage ratio.

29

The Credit Facility has, among other things, financial covenants, capital spending limits and other affirmative and negative covenants, including a required minimum consolidated interest coverage ratio, a maximum permitted consolidated total leverage ratio and a maximum permitted consolidated senior secured leverage ratio. The Credit Facility also has certain covenants regarding construction projects, including, among other requirements for the Baton Rouge project, requirements that an “in-balance” test be satisfied and we enter into a guaranteed maximum price contract, reasonably acceptable to the Administrative Agent, prior to the spending of $100 million or more after January 1, 2010 (excluding certain costs such as land acquisition costs, costs to obtain a gaming license and capitalized interest).

In addition, there is a provision in the Credit Facility that we cannot spend more than $25 million on the Baton Rouge project after January 1, 2010 unless we have received at least $40 million in the aggregate from various non-debt capital sources. The Company has the funds to meet this requirement.

The obligations under the Credit Facility are secured by most of our assets and the assets of our restricted subsidiaries, including a pledge of the equity interests in our subsidiaries and, if and when formed or acquired, by a pledge of up to 66% of the then outstanding equity interests of our foreign restricted subsidiaries. Our obligations under the Credit Facility are also guaranteed by our domestic restricted subsidiaries and are required to be guaranteed by our foreign restricted subsidiaries, if and when such foreign restricted subsidiaries are formed or acquired, unless such guarantee causes material adverse tax, foreign gaming or foreign law consequences. The subsidiaries that own our Atlantic City site, a subsidiary that holds approximately $10.5 million in cash and cash equivalents, and a subsidiary that holds approximately $66 million in cash and cash equivalents are currently unrestricted subsidiaries for purposes of the Credit Facility.

Senior and Senior Subordinated Indebtedness

As of March 31, 2011, we had outstanding $450 million aggregate principal amount of 8.625% senior notes due 2017 (“8.625% Notes”), $385 million aggregate principal amount of 7.50% senior subordinated notes due 2015 (“7.50% Notes”) and $350 million aggregate principal amount of 8.75% senior subordinated notes due 2020 (“8.75% Notes”).

The 8.625% Notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future senior debt, including debt under our Credit Facility. The 8.625% Notes are, however, effectively subordinated to our Credit Facility, which is secured by a first priority lien, as well as any other secured debt which may be issued in the future. The 8.625% Notes are guaranteed on a senior basis by certain of our current and future domestic restricted subsidiaries. The 8.625% Notes rank senior to our existing 7.50% Notes and 8.75% Notes.

The 7.50% Notes and 8.75% Notes are unsecured senior subordinated obligations and rank subordinate in right of payment to all of our and our subsidiary guarantors’ existing and future indebtedness, except indebtedness that expressly provides that it ranks equal or subordinate in right of payment to the 7.50% Notes and 8.75% Notes. The 7.50% Notes and 8.75% Notes are guaranteed on a senior subordinated basis by certain of our current and future domestic restricted subsidiaries. The 7.50% Notes and the 8.75% Notes are subordinated to our 8.625% Notes and to our Credit Facility.

Under the indenture governing the 8.625% Notes, among other debt baskets, we are permitted to incur the greater of $750 million or 3.5x Consolidated EBITDA (as defined in the indenture) in senior indebtedness and secured indebtedness, which debt basket excludes the 8.625% Notes. Under the indentures governing the 7.50% Notes and 8.75% Notes, we are permitted to incur the greater of $1.5 billion or 2.5x Consolidated Adjusted EBITDA (as defined in the indentures) in senior indebtedness. Under these senior secured indebtedness baskets, we are permitted in certain circumstances to incur senior unsecured indebtedness. In addition, the indentures governing the 8.625% Notes, the 7.50% Notes and the 8.75% Notes include other debt incurrence baskets, including a permitted refinancing basket and a general debt basket, the most restrictive of which permits the greater of $250 million or 5% of Consolidated Total Assets (as defined in the indentures). Under all three indentures, we may also incur additional indebtedness if, after giving effect to the indebtedness proposed to be incurred, our Consolidated Coverage Ratio (essentially, a ratio of adjusted EBITDA to interest) for a trailing four-quarter period on a pro forma basis (as defined in our indentures) would be at least 2.0 to 1.0.

The 7.50% Notes, 8.625% Notes and 8.75% Notes become callable at a premium over their face amount on June 15, 2011, August 1, 2013 and May 15, 2015, respectively. Such premiums decline periodically as the notes progress towards their respective maturities. All of our notes are redeemable prior to such times at a price that reflects a yield to the first call that is equivalent to the applicable Treasury bond yield plus 0.5 percentage points.

30

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

During the three months ended March 31, 2011, there were no material changes to our contractual obligations and commitments as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

CRITICAL ACCOUNTING POLICIES

A description of our critical accounting policies and estimates can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. For a more extensive discussion of our accounting policies, see Note 1, “Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. There were no newly identified significant changes in the first quarter of 2011, nor were there any material changes to the critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

FORWARD LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. Except for the historical information contained herein, the matters addressed in this Quarterly Report on Form 10-Q, as well as in other reports filed with or furnished to the SEC or statements made by us, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, we may provide oral or written forward-looking statements in our other periodic reports on Form 10-K, Form 8-K, press releases and other materials released to the public. All forward-looking statements made in this Quarterly Report on Form 10-Q and any documents we incorporate by reference are made pursuant to the Act. Words such as, but not limited to, “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “could,” “may,” “will,” “should,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements, which may include, without limitation, expected results of operations, adequacy of resources to fund development and expansion projects, liquidity, financing options, including the state of the capital markets and our ability to access the capital markets, the state of the credit markets, the state of the economy, anticipated completion and opening schedule of our Baton Rouge project, anticipated results for our Baton Rouge project, expansion plans, construction schedules, video lottery terminals becoming operational at Ohio racetracks, cash needs, cash reserves, operating and capital expenses, expense reductions, the sufficiency of insurance coverage, anticipated marketing costs at various projects, the future outlook of Pinnacle and the gaming industry and pending regulatory and legal matters, are all subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated by us. This can occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Factors that may cause our actual performance to differ materially from that contemplated by such forward-looking statements include, among others, the various risk factors discussed above, in addition to general domestic and international economic and political conditions, as well as market conditions in our industry. For more information on the potential factors that could affect our operating results and financial condition in addition to the risk factors described above, review our other filings (other than any portion of such filings that are furnished under applicable SEC Rules rather than filed) with the SEC.

All forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that may cause our actual performance to differ materially from that contemplated by such forward-looking statements include, among others:

• our business is particularly sensitive to reductions in consumers’ discretionary spending as a result of recent downturns in the economy or other changes we cannot accurately predict;

• the global financial crisis and recession has affected our business and financial condition, and may continue to affect us in ways that we currently cannot accurately predict;

• our substantial development plans for capital-intensive projects will require us to borrow significant amounts uder our amended and restated credit facility and, depending on which projects are pursued to completion, may cause us to incur substantial additional indebtedness;

• our present indebtedness and projected future borrowings could adversely affect our financial health; future cash flows may not be sufficient to meet our obligations, and we might have difficulty obtaining additional financing; and we

31

may experience adverse effects of interest-rate fluctuations;

• our indebtedness imposes restrictive covenants on us;

• servicing our indebtedness will require a significant amount of cash, and our ability to generate sufficient cash depends on many factors, some of which are beyond our control;

• insufficient or lower-than-expected results generated from our new developments and acquired properties may negatively affect the market for our securities; our new properties may compete with our existing properties;

• rising operating costs at our gaming properties could have a negative impact on our business;

• we are engaged from time to time in one or more construction and development projects, and many factors could prevent us from completing them as planned, including the escalation of construction costs beyond increments anticipated in our construction budgets;

• our operations are largely dependent on the skill and experience of our management and key personnel. The loss of management and other key personnel could significantly harm our business, and we may not be able to effectively replace members of management who have left the company;

• the gaming industry is very competitive and increased competition, including competition by Native American gaming facilities and internet gaming, could adversely affect our profitability;

• our industry is highly regulated, which makes us dependent on obtaining and maintaining gaming licenses and subjects us to potentially significant fines and penalties;

• potential changes in the regulatory environment could harm our business;

• we may not meet the conditions for the maintenance of the license that we plan to utilize for our Baton Rouge project;

• we are subject to extensive governmental regulations that impose restrictions on the ownership and transfer of our securities;

• we operate in a highly taxed industry and it may be subject to higher taxes in the future. If jurisdictions in which we operate increase gaming taxes and fees, our operating results could be adversely affected;

• subsequent phases to certain of our existing projects and potential enhancements at our properties may require us to raise additional capital;

• we derived 52% of our revenues in 2010 from our casinos located in Louisiana and are especially subject to certain risks, including economic and competitive risks, associated with the conditions in that area and in the state from which we draw patrons;

• adverse weather conditions, road construction, gasoline shortages and other factors affecting our facilities and the areas in which we operate could make it more difficult for potential customers to travel to our properties and deter customers from visiting our properties;

• our results of operations and financial condition could be materially adversely affected by the occurrence of natural disasters, such as hurricanes, or other catastrophic events, including war and terrorism;

• our gaming operations rely heavily on technology services and an uninterrupted supply of electrical power. Our security system and all of our slot machines are controlled by computers and reliant on electrical power to operate;

• natural disasters have made it more challenging for us to obtain similar levels of Weather Catastrophe Occurrence/Named Windstorm, Flood and Earthquake insurance coverage for our properties compared to the levels before the 2005 hurricanes;

• we may incur property and other losses that are not adequately covered by insurance, which may harm our results of operations;

• climate change, climate change regulations and greenhouse effects may adversely impact our operations and markets;

• work stoppages, organizing drives and other labor problems could negatively impact our future profits;

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• we are subject to litigation which, if adversely determined, could cause us to incur substantial losses;

• we face environmental and archaeological regulation of our real estate; and

• we face risks associated with growth and acquisitions.

For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, please see the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section contained in this Quarterly Report on Form 10-Q, as well as the “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operations” sections contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and review our other filings (other than any portion of such filings that are furnished under applicable SEC rules rather than filed) with the SEC, which are hereby incorporated by reference into this Quarterly Report on Form 10-Q. All forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 3.Quantitative and Qualitative Disclosures about Market Risk

At times, we are exposed to market risk from adverse changes in interest rates with respect to the short-term floating interest rate on borrowings under our Credit Facility. As of March 31, 2011, we had $9.3 million committed under various letters of credit. Under our Credit Facility, any borrowings outstanding accrue interest at LIBOR plus a margin determined by our current consolidated leverage ratio, which margin was 3.75% as of March 31, 2011. We had no borrowings outstanding as of March 31, 2011 under our Credit Facility. As of March 31, 2011, if LIBOR rates were to increase or decrease by one percentage point, our interest expense would not increase or decrease, assuming constant debt levels.

The table below provides the principal cash flows and related weighted average interest rates by contractual maturity dates for our debt obligations at March 31, 2011. At March 31, 2011, we did not hold any material investments in market-risk-sensitive instruments of the type described in Item 305 of Regulation S-K.

Liabilities	2011			2012			2013			2014			2015			Thereafter			Total			Fair Value
	(in thousands)
7.50% Notes	$	—		$	—		$	—		$	—		$	385,000		$	—		$	385,000		$	391,738
Fixed Rate	7.50		%	7.50		%	7.50		%	7.50		%	7.50		%	7.50		%	7.50		%
8.625% Notes	—			—			—			—			—			$	450,000		$	450,000		$	489,375
Fixed Rate	8.625		%	8.625		%	8.625		%	8.625		%	8.625		%	8.625		%	8.625		%
8.75% Notes	—			—			—			—			—			$	350,000		$	350,000		$	363,125
Fixed Rate	8.75		%	8.75		%	8.75		%	8.75		%	8.75		%	8.75		%	8.75		%
All Other	$	72		$	102		$	110		$	118		$	127		$	197		$	726		$	726
Avg. Interest Rate	7.25		%	7.25		%	7.25		%	7.25		%	7.25		%	7.25		%	7.25		%

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Item 4.Controls and Procedures

The Company’s management, with the participation of the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2011. Based on this evaluation, the Company’s management, including the CEO and the CFO, concluded that, as of March 31, 2011, the Company’s disclosure controls and procedures were effective, in that they provide a reasonable level of assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure.

Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to disclose material information otherwise required to be set forth in the Company’s periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.

No change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

Item 1.Legal Proceedings

The following are material developments and material updates to the litigation described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 under the heading “Legal Proceedings” and to which reference should be made.

Jebaco Litigation: On August 9, 2006, Jebaco, Inc. ("Jebaco") filed suit in the U.S. District Court for the Eastern District of Louisiana against Harrah's Operating Co., Inc., Harrah's Lake Charles, LLC, Harrah's Star Partnership, Players LC, LLC, Players Riverboat Management, LLC, Players Riverboat II, LLC, and Pinnacle Entertainment, Inc. The lawsuit arises out of an agreement between Jebaco and Harrah's (as successor in interest to the various Players defendants) whereby Harrah's was obligated to pay Jebaco a fee based on the number of patrons entering Harrah's two Lake Charles, Louisiana riverboat casinos. In November 2006, we acquired the Harrah's Lake Charles subsidiaries, including the two riverboats. The lawsuit filed by Jebaco asserts that Harrah's, in ceasing gaming operations in Lake Charles and ceasing payments to Jebaco, breached its contractual obligations to Jebaco and asserts damages of approximately $34.0 million. Jebaco also asserts that our agreement with Harrah's violates state and federal antitrust laws. The lawsuit seeks antitrust damages jointly and severally against both us and Harrah's and seeks a trebling of the $34.0 million in damages Jebaco alleges it has suffered. The defendants answered the complaint, denying all claims and asserting that the lawsuit is barred, among other reasons, because of the approval of our transaction with Harrah's by the Louisiana Gaming Control Board and the lack of antitrust injury to Jebaco. In January 2007, all of the defendants moved to dismiss all of the claims of the complaint, which motions were heard on July 18, 2007. The motions to dismiss were granted with prejudice as to the federal antitrust claims and the state-law claims were dismissed without prejudice. Judgment of dismissal was entered on March 5, 2008. Jebaco appealed the dismissal of the federal antitrust claims to the U.S. Court of Appeals for the Fifth Circuit. Further, on March 13, 2008, Jebaco filed a new lawsuit against the same parties in the Louisiana district civil court for Orleans Parish. This lawsuit seeks unspecified damages arising out of the same circumstances as the federal lawsuit based on claims for breach of the duty of good faith, negligent breach of contract, breach of contract, unfair trade practices, unjust enrichment, and subrogation to Harrah's insurance proceeds. In May 2009, the Louisiana district civil court extended the stay of the state case indefinitely pending the decision of the Fifth Circuit on Jebaco's appeal. On October 30, 2009, the Fifth Circuit affirmed the district court's dismissal of the federal antitrust claims. We moved for dismissal of the state-court claims. On January 29, 2010, the state court judge dismissed Jebaco's complaint in its entirety. On April 16, 2010, Jebaco moved the civil district court for leave to appeal the dismissal of its claims. On April 23, 2010, the district court granted Jebaco's motion for an order of appeal.  The parties briefed the appeal, and on January 12, 2011, the Louisiana Court of Appeal affirmed the district civil court's judgment of dismissal.  On February 11, 2011, Jebaco filed an application for discretionary review of the Court of Appeal's decision with the Louisiana Supreme Court. On April 1, 2011, the Louisiana Supreme Court denied Jebaco's application for discretionary review and therefore, the Louisiana Court of Appeal's decision to affirm the district civil court's judgment of dismissal is final.

Union Proceedings: On October 15, 2010, UNITE HERE local 74 (the “Union”) filed unfair labor practice charges with the National Labor Relations Board (the “NLRB”) against Casino One Corporation, a wholly-owned subsidiary of the Company, which is doing business as Lumière Place Casino and Hotels.  The Union alleges that Lumière Place had failed and refused to bargain collectively with the Union.   On January 28, 2011, the NLRB issued a complaint alleging that Lumière Place unlawfully failed to bargain in good faith and unilaterally modified the terms of employment for bargaining unit employees.  A trial before an administrative law judge of the NLRB is scheduled to commence on May 9, 2011.   In addition, Region 14 of the NLRB has requested authorization from the NLRB to seek an injunction in federal district court, requiring compliance with the National Labor Relations Act and restoration of the status quo that existed prior to Lumière Place's alleged unilateral modifications of the terms of employment.  The NLRB sought an order requiring Lumière Place to bargain in good faith, reinstate work rules, and reinstate with back pay employees who were discharged for violating the modified rules.  Lumière Place and the NLRB executed a settlement agreement resolving all outstanding issues associated with the charges, which was approved by the NLRB on April 28, 2011.  

Item 1A.Risk Factors

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

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Item 6.Exhibits

Exhibit
Number	Description of Exhibit
3.1	Restated Certificate of Incorporation of Pinnacle Entertainment, Inc., as amended, is hereby incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on May 9, 2005. (SEC File No. 001-13641).
3.2	Restated Bylaws of Pinnacle Entertainment, Inc., as amended, are hereby incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on March 7, 2011. (SEC File No. 001-13641).
4.1	Third Supplemental Indenture, dated as of January 26, 2010, governing the 7.50% Senior Subordinated Notes due 2015, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.21 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.2	Fourth Supplemental Indenture, dated as of January 28, 2010, governing the 7.50% Senior Subordinated Notes due 2015, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.22 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.3	Fifth Supplemental Indenture, dated as of January 28, 2010, governing the 7.50% Senior Subordinated Notes due 2015, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.23 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.4	Second Supplemental Indenture, dated as of January 26, 2011, governing the 8.625% Senior Notes due 2017, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.27 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.5	Third Supplemental Indenture, dated as of January 28, 2011, governing the 8.625% Senior Notes due 2017, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.28 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.6	Fourth Supplemental Indenture, dated as of January 28, 2011, governing the 8.625% Senior Notes due 2017, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.29 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.7	First Supplemental Indenture, dated as of January 26, 2011, governing the 8.75% Senior Subordinated Notes due 2020, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.33 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.8	Second Supplemental Indenture, dated as of January 28, 2011, governing the 8.75% Senior Subordinated Notes due 2020, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.34 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.9	Third Supplemental Indenture, dated as of January 28, 2011, governing the 8.75% Senior Subordinated Notes due 2020, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.35 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

37

10.1†	Amended and Restated Employment Agreement, dated March 1, 2011, by and between Pinnacle Entertainment, Inc. and Anthony M. Sanfilippo is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 7, 2011.
10.2†	Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan, as amended and restated effective January 1, 2011 is incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on March 7, 2011.
10.3†	Form of Grant of Other Stock Unit Awards for the Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan is incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on March 7, 2011.
10.4†	Employment Agreement, dated March 28, 2011, between Pinnacle Entertainment, Inc. and Carlos Ruisanchez is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 29, 2011
10.5†	Separation Agreement and General Release, dated March 3, 2011, between Pinnacle Entertainment, Inc. and Stephen H. Capp is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 4, 2011.
10.6*†	Separation Agreement and General Release, dated March 3, 2011, between Pinnacle Entertainment, Inc. and Clifford D. Kortman.
10.7*†	Pinnacle Entertainment, Inc. Director Health and Medical Incentive Plan.
10.8	Fifth Amendment to the Redevelopment Agreement dated February 23, 2011 by and between Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is incorporated by reference to Exhibit 10.62 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
11*	Statement re: Computation of Earnings Per Share.
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32**	Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
101**	The following financial statements from Pinnacle Entertainment, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, formatted in XBRL (eXtensible Business Reporting Language):
	(i)	unaudited Condensed Consolidated Balance Sheets — March 31, 2011 and December 31, 2010.
	(ii)	unaudited Condensed Consolidated Statements of Operations—Three Months Ended March 31, 2011 and 2010.
	(iii)	unaudited Condensed Consolidated Statements of Cash Flows —Three Months Ended March 31, 2011 and 2010.
	(iv)	Notes to unaudited Condensed Consolidated Financial Statements — March 31, 2011.

 ________________

*	Filed herewith.
**	Furnished herewith.
†	Management contract or compensatory plan or arrangement.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			PINNACLE ENTERTAINMENT, INC. (Registrant)
Dated:	May 6, 2011	By:	/s/ Carlos A. Ruisanchez
			Carlos A. Ruisanchez
			Executive Vice President and Chief Financial Officer (Authorized Officer, Principal Financial Officer and Principal Accounting Officer)

39

EXHIBIT INDEX

Exhibit
Number	Description of Exhibit
3.1	Restated Certificate of Incorporation of Pinnacle Entertainment, Inc., as amended, is hereby incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on May 9, 2005. (SEC File No. 001-13641).
3.2	Restated Bylaws of Pinnacle Entertainment, Inc., as amended, are hereby incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on March 7, 2011. (SEC File No. 001-13641).
4.1	Third Supplemental Indenture, dated as of January 26, 2010, governing the 7.50% Senior Subordinated Notes due 2015, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.21 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.2	Fourth Supplemental Indenture, dated as of January 28, 2010, governing the 7.50% Senior Subordinated Notes due 2015, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.22 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.3	Fifth Supplemental Indenture, dated as of January 28, 2010, governing the 7.50% Senior Subordinated Notes due 2015, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.23 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.4	Second Supplemental Indenture, dated as of January 26, 2011, governing the 8.625% Senior Notes due 2017, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.27 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.5	Third Supplemental Indenture, dated as of January 28, 2011, governing the 8.625% Senior Notes due 2017, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.28 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.6	Fourth Supplemental Indenture, dated as of January 28, 2011, governing the 8.625% Senior Notes due 2017, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.29 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.7	First Supplemental Indenture, dated as of January 26, 2011, governing the 8.75% Senior Subordinated Notes due 2020, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.33 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.8	Second Supplemental Indenture, dated as of January 28, 2011, governing the 8.75% Senior Subordinated Notes due 2020, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.34 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
4.9	Third Supplemental Indenture, dated as of January 28, 2011, governing the 8.75% Senior Subordinated Notes due 2020, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference to Exhibit 4.35 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

40

10.1†	Amended and Restated Employment Agreement, dated March 1, 2011, by and between Pinnacle Entertainment, Inc. and Anthony M. Sanfilippo is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 7, 2011.
10.2†	Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan, as amended and restated effective January 1, 2011 is incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on March 7, 2011.
10.3†	Form of Grant of Other Stock Unit Awards for the Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan is incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on March 7, 2011.
10.4†	Employment Agreement, dated March 28, 2011, between Pinnacle Entertainment, Inc. and Carlos Ruisanchez is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 29, 2011
10.5†	Separation Agreement and General Release, dated March 3, 2011, between Pinnacle Entertainment, Inc. and Stephen H. Capp is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 4, 2011.
10.6*†	Separation Agreement and General Release, dated March 3, 2011, between Pinnacle Entertainment, Inc. and Clifford D. Kortman.
10.7*†	Pinnacle Entertainment, Inc. Director Health and Medical Incentive Plan.
10.8	Fifth Amendment to the Redevelopment Agreement dated February 23, 2011 by and between Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is incorporated by reference to Exhibit 10.62 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
11*	Statement re: Computation of Earnings Per Share.
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32**	Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
101**	The following financial statements from Pinnacle Entertainment, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, formatted in XBRL (eXtensible Business Reporting Language):
	(i)	unaudited Condensed Consolidated Balance Sheets — March 31, 2011 and December 31, 2010.
	(ii)	unaudited Condensed Consolidated Statements of Operations—Three Months Ended March 31, 2011 and 2010.
	(iii)	unaudited Condensed Consolidated Statements of Cash Flows —Three Months Ended March 31, 2011 and 2010.
	(iv)	Notes to unaudited Condensed Consolidated Financial Statements — March 31, 2011.

 _________________

*	Filed herewith.
**	Furnished herewith.
†	Management contract or compensatory plan or arrangement.

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EX-10.6

Exhibit 10.6

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement (the "Separation Agreement") is made as of this 3^rd day of March, 2011 by and among Pinnacle Entertainment, Inc. (the "Company") and Clifford D. Kortman ("Executive," and together with the Company, the "Parties").

WHEREAS, Executive has been employed by the Company under terms set forth in the Amended and Restated Employment Agreement dated as of December 22, 2008 as amended by the First Amendment to Amended and Restated Employment Agreement dated December 18, 2009 and the Amendment to Stock Option Agreements and Employment Agreement dated December 22, 2009 by and between Executive and the Company (collectively, the "Employment Agreement");

WHEREAS, Executive's employment with the Company will end by Executive's separation of employment (the "Separation") on March 11, 2011 (the "Separation Date"); and

WHEREAS, the Parties desire to enter into this Separation Agreement in order to set forth the definitive rights and obligations of the Parties in connection with the Separation.

NOW, THEREFORE, in consideration of the mutual covenants, commitments and agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Parties intending to be legally bound hereby agree as follows:

1. Acknowledgment of Separation. The Parties acknowledge and agree that the Separation will occur on the Separation Date and that the Separation shall be treated as a termination without cause other than in connection with a change of control for all purposes under the Employment Agreement (other than with respect to surviving provisions of the Employment Agreement as set forth below). In addition, notwithstanding anything to the contrary, the Parties acknowledge and agree that all provisions of the Employment Agreement will terminate effective as of the Separation Date (including specifically, but not limited to, Appendix A relating to tax gross-up payments), with the exception of the provisions of Sections 4.4, 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 9.7, 9.8., 9.14, 9.15 and Article 8 of the Employment Agreement (collectively, the "Surviving Employment Agreement Provisions"), which shall survive the Separation and the effectiveness of this Separation Agreement and will remain in full force and effect after the Separation Date in accordance with their terms, regardless of the reason for this termination of employment. The post-separation provisions of the Employment Agreement, including specifically Sections 7.3, 7.4, 7.5, 7.6 and 7.7, with respect to periods after the "Term" (as such term is used in the Employment Agreement) shall be considered effective as of and shall run from the Separation Date. Upon the Separation, Executive shall be treated as having resigned from all positions Executive held with the Company and its subsidiaries, whether as a director, officer, manager or any other position.

2.Executive's Acknowledgment of Consideration. Executive specifically acknowledges that the obligations and payments set forth in Section 3(a) below were agreed to by the Parties upon entering into the Employment Agreement, and the other obligations and payments of the Company set forth in Section 3 hereof and the release of the Company granted in Section 6 hereof are being provided by the Company in consideration for the release granted by Executive in Section 6 hereof.

3. Payments and Benefits Upon and After the Separation.

(a)Accrued Salary, Expenses and Bonus. The Company shall pay or cause to be paid to Executive all accrued but unpaid base salary. In addition, promptly upon submission by Executive of

his unpaid expenses incurred prior to the Separation Date as described in Article 5 of the Employment Agreement, reimbursement for such expenses shall be made. The Company shall pay these amounts within ten (10) days of the Separation Date. In addition, Executive shall receive an annual bonus for the year 2010 in the amount of Five Hundred Twenty Four Thousand Dollars ($524,000), payable along with other management bonuses no later than March 15, 2011. Executive shall not be eligible for any bonus for the year 2011 or any subsequent year.

(b) Severance. The severance to be paid to Executive shall be Executive's annual base salary of Four Hundred Twenty Five Thousand Dollars ($425,000), payable in equal semi-monthly installments over twelve (12) months immediately following the Separation Date in accordance with the Company's regular salary payment schedule from time to time.

(c) Stock Options, Restricted Stock and Restricted Stock Units. All of Executive's vested stock options as of the Separation Date shall survive the Separation Date until the earlier of (i) June 8, 2012 or (ii) the expiration of the original ten-year term of the vested stock options (the “Exercise Period”). During the Exercise Period, Executive may exercise such vested stock options and any of such stock options which remain unexercised shall expire thereafter and be cancelled and terminated. All unvested stock options, unvested restricted stock and unvested restricted stock units on the Separation Date are hereby cancelled and terminated.

(d)Other Stock Unit Awards. Effective March 1, 2010, Executive was granted Other Stock Unit Awards covering 22,500 Shares under the Company's 2005 Equity and Performance Incentive Plan (the “Plan”) to vest in two annual equal installments on the first and second anniversaries on the date of the grant (the “2010 Grant”). Fifty-percent (50%) of the Other Stock Unit Awards which vested on March 1, 2011 and the 11,250 Shares corresponding to such vested portion of the 2010 Grant shall be issued to Executive within ninety (90) days of the second anniversary of the grant date, subject to the provisions of the 2010 Grant and the Plan. The remaining portion of the 2010 Grant that would otherwise vest on March 1, 2012 if Executive were still employed is hereby cancelled and terminated.

(e)Other Benefits Payments. The Company shall pay or make available to Executive all benefits described under Section 6.5.3(c) of the Employment Agreement with respect to "Health and Disability Coverage Continuation" described therein for a maximum period of twelve (12) months from the Separation Date, conditioned upon Executive's timely election of COBRA coverage. Executive shall promptly advise the Company if he becomes covered under other insurance plans. Any reimbursement that is taxable to the Executive shall be made not later than December 31 of the calendar year following the calendar year in which Executive or family member incurred the expense.

(f) Tax Withholding. The Company shall be entitled to withhold from any amounts otherwise payable hereunder to Executive any amounts required to be withheld in respect of federal, state or local taxes and Executive shall be responsible for all taxes on amounts received under or related to this Separation Agreement.

(g)No Duty to Mitigate. The payments contemplated herein shall not be subject to any duty of mitigation by Executive nor to offset for any income earned by Executive following Separation.

4.Consulting Services; Cooperation.

(a)Consulting. For a period of twelve (12) months beginning on the Separation Date (the "Consulting Period"), the Company will retain Executive to act on a part-time basis as an independent consultant (for no additional compensation), as reasonably directed by the Company, in assisting the Company as determined in the discretion of the Chief Executive Officer, including, but not limited to the

Company's Baton Rouge project. If Executive takes another executive position during the Consulting Period (subject to his non-competition restrictions as set forth in Section 7.4 of his employment agreement), Executive shall have the right to terminate his obligation to provide consulting services upon written notice to the Company. Executive shall make himself reasonably available during the Consulting Period, but the parties agree that said commitment shall not exceed twenty-five (25) hours per month. The Company expressly agrees that Executive shall only be liable for breach of Executive's obligations under this Section 4(a) to the extent Executive engages in gross negligence or willful misconduct with respect to those services and, in such event, the Company expressly agrees that it shall not be entitled to seek money damages in excess of $10,000 for all such breaches.

(b)Reimbursement of Expenses; Independent Contractor Status. The Company agrees to reimburse Executive for all reasonable out-of-pocket costs and expenses incurred in connection with the consulting services provided under this Section upon presentation of appropriate documentation thereof. In connection with the Executive's activities on behalf of the Company as an independent consultant pursuant to this Section, Executive acknowledges and agrees that he is acting as an independent contractor, engaged in the conduct of his own separate business and is not a partner, joint venturer, an agent or employee of the Company for any purpose. Executive also acknowledges and agrees that Executive has no right or authority or ability to enter into any contracts or assume any obligations or give any warranties or make any representations on behalf of the Company or to bind the Company in any way, and Executive will not convey or represent that he has any such authority. Executive agrees that, other than the consulting services described in this Section, Executive will not otherwise hold himself out as acting for or on behalf of the Company. The Company shall indemnify and hold Executive harmless from any claim or liability arising from actions taken by Executive in good faith in performing the services required under this Section 4 , including any costs of defense or attorney's fees; provided that (1) the Company shall have the right, at its expense, to assume or participate in the defense of any claim or action covered by such indemnity, (2) the Company shall not be liable for any settlement or compromise of any claim or action covered by such indemnity unless the Company has consented in writing to such settlement or compromise (which consent shall not be unreasonably withheld) and (3) the Company shall not be liable under this indemnity to the extent that it is determined in a final judgment by a court of competent jurisdiction or final arbitration proceeding that such claim or liability resulted from any acts or failures to act undertaken or omitted to be taken by Executive through his gross negligence or willful misconduct.

(c) Cooperation. Executive also agrees to cooperate with the Company and its attorneys in any current or future litigation or claims involving the Company or any of its subsidiaries in which Executive might be a witness or for which Executive may have material information including, but not limited to, any and all meetings, depositions, arbitrations, mediations, trials, etc. This cooperation obligation shall be limited to forty (40) hours per year and it shall expire on March 11, 2014.

5. Confidential Information; Prohibitions on Certain Actions by Executive; Cooperation.

(a)Disclosure of Separation Agreement. In addition to and without limiting the provisions of Section 7.1 of the Employment Agreement, the Executive shall, and the Company agrees to cause each of the Chief Executive Officer, Chief Financial Officer, General Counsel and any executive and senior vice president of the Company (the "Designated Company Executives") to, keep this Separation Agreement, and the terms and subject matter hereof, strictly confidential, and no disclosure or public announcement will be made by any of them (except as required by applicable law, including but not limited to any securities laws and the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC")) with respect to this Separation Agreement (including the existence thereof, or the terms or subject matter hereof) without the prior agreement of the other Party; provided, however, that

(i) the Company may issue a mutually agreed upon press release announcing Executive's departure and from time to time may comment on, or make public disclosures regarding, the Separation in a manner consistent with such press release; (ii) the Company and Executive may provide this Separation Agreement to and share such information with applicable gaming regulatory authorities; and (iii) the Company and Executive may share such information with their legal, tax and accounting advisors. Executive agrees to direct all inquiries concerning Executive's employment with the Company to the Company's Chief Executive Officer or General Counsel, who will represent that Executive resigned to pursue other opportunities. Executive acknowledges that the Company intends to file this Separation Agreement with the SEC as an exhibit to its periodic reports filed with the SEC and to describe its terms in its SEC filings. The Company acknowledges that Executive may disclose the existence of this Separation Agreement and any details related thereto to the extent that such information has been filed by the Company with the SEC or if the Company has otherwise released such information to the public.

(b)Prohibition on Certain Actions by Executive. Executive acknowledges that, given Executive's position with the Company prior to the Separation, Executive possesses substantial non-public information and other confidential information regarding the Company which has substantial economic value to the Company, including without limitation information relating to the Company's development plans, prospects, and financial, organizational, managerial, administrative, customer and marketing information regarding the Company, much of which the Company considers highly sensitive information. Executive has agreed, pursuant to Section 7.1 of the Employment Agreement, to, among other things, not directly or indirectly disclose, divulge, communicate, use or otherwise disclose any such information. In order to better ensure that such information is not used inappropriately by Executive, in addition to Executive's obligations under Section 7.1 of the Employment Agreement, which survives the Separation and the effectiveness of this Separation Agreement, for a period of three (3) years from the Separation Date, Executive shall not, nor shall it permit any Affiliate or Associate (as such terms are hereinafter defined) or representative of Executive (such Affiliates, Associates and representatives, collectively and individually, the "Executive Affiliates") to, directly or indirectly:

(i) effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in:

(1) any solicitation of proxies or written consents of stockholders, or conduct any other type of referendum (binding or non-binding) with respect to, or from the holders of, the common stock of the Company (the "Common Stock") (other than by voting his or its shares of Common Stock in a way that does not violate this Separation Agreement), or become a participant in any contested solicitation with respect to the Company, including without limitation relating to the removal or the election of directors of the Company or seek representation on the Company's Board of Directors or a change in the composition or size of the Company's Board of Directors;

(2) any acquisition of any securities (or beneficial ownership thereof) or assets of the Company or any of its subsidiaries (other than the exercise by Executive of stock options held by Executive as of the Separation Date , and excluding personal, passive investments by Executive in the Company's securities from time to time),

(3) any tender or exchange offer, merger or other business combination involving the Company or any of its subsidiaries, or

(4) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its subsidiaries; or

(ii) form, join or participate in a partnership, limited partnership, limited liability company, syndicate, person or other group, including without limitation a group as defined under Section 13(d) of the Exchange Act (as defined below), with respect to the Common Stock, or otherwise assist, support or participate in any effort by any person with respect to the matters set forth in subparagraph (i) above, or deposit any shares of Common Stock in a voting trust or subject any shares of Common Stock to any voting agreement;

(iii)  otherwise act, alone or in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company;

(iv) publicly announce any intention to take any action, or take any action which might force the Company to make a public announcement, in either case, regarding any of the types of matters set forth in subparagraph (i) above; or

(v)  enter into any discussions or arrangements with any person with respect to any of the foregoing (including the matters set forth in subparagraph (i) above).

Executive also agrees, on behalf of itself and its Affiliates, Associates and representatives, not to request the Company (or its directors, officers, employees or agents), directly or indirectly, to amend or waive any provision of this Section 8 (including this sentence).

(c)For purposes of this Agreement: the terms "Affiliate" and "Associate"shall have the respective meanings set forth in Rule 12b-2 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (except that the 10% threshold in the definition of "Associate" shall be replaced with 1% and beneficial ownership under such definition shall include the right to acquire securities whether such right is exercisable immediately or only after the passage of time or only after satisfaction of conditions); and the terms "person" or "persons" shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability or unlimited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature.

6. Executive Release and Waiver.

(a) Executive Release. Executive, for and on behalf of himself and each of his heirs, executors, administrators, personal representatives, successors and assigns (the "Releasors"), to the maximum extent permitted by law, hereby fully and forever releases, acquits and discharges the Company, together with its subsidiaries, parents and affiliates, and each of their past and present direct and indirect stockholders, directors, members, partners, officers, employees, attorneys, agents and representatives, and their heirs, executors, administrators, personal representatives, successors and assigns (collectively, the "Releasees"), from any and all claims, demands, suits, causes of action, liabilities, obligations, judgments, orders, debts, liens, contracts, agreements, covenants and causes of action of every kind and nature, whether known or unknown, suspected or unsuspected, concealed or hidden, vested or contingent, in law or equity, existing by statute, common law, contract or otherwise, which have existed, may exist or do exist, through and including the execution and delivery by Executive of this Separation Agreement, including, without limitation, any of the foregoing arising out of or in any way related to or based upon:

(i) Executive's application for and employment with the Company, his being an officer, director or employee of the Company or any of its subsidiaries, or the Employment Agreement or the Separation;

(ii) any and all claims in tort or contract, and any and all claims alleging breach

of an express or implied, or oral or written, contract, policy manual or employee handbook;

(iii)any alleged misrepresentation, defamation, interference with contract, intentional or negligent infliction of emotional distress, sexual harassment, negligence or wrongful discharge; or

(iv)any federal, state or local statute, ordinance or regulation, including but not limited to the Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act and Women's Equity Act of 1991; Sections 1981 through 1988 of Title 42 of the United States Code; the Equal Pay Act of 1963, as amended; the Occupational Safety and Health Act of 1970; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Consolidated Omnibus Budget Reconciliation Act of 1985; the Vocational Rehabilitation Act of 1973; the Worker Adjustment Retraining and Notification Act of 1988; the Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act and the National Labor Relations Act, as amended, and the Older Workers Benefit Protection Act.

(b)Exceptions to Executive Release. Notwithstanding any other provision of this Separation Agreement to the contrary, the release by the Executive does not: (i) limit in any way the Executive's rights under this Separation Agreement and under the Surviving Employment Agreement Provisions, (ii) release any rights under applicable law which cannot be waived or released pursuant to any agreement, (iii) release any rights Executive may have to indemnification under the bylaws or governing documents of the Company or any of its subsidiaries or under applicable law, or (iv) release any rights Executive may have as a direct insured under the Company's directors' and officers' liability insurance policies.

(c)Current or Pending Claims of any Kind and No Relief for Released Claims. Executive and Releasors have not and as of the date of this Separation Agreement will not have filed any civil action, suit, arbitration, administrative charge or legal proceeding against any Releasee, nor has the Executive or any Releasor assigned, pledged or hypothecated any claim as of the Separation Date to any person and no other person has any interest in the claims that Executive or any Releasor is releasing herein. Executive agrees that should any person or entity file or cause to be filed any civil action, suit, arbitration or other legal proceedings seeking equitable or monetary relief concerning any claim released by Executive, neither Executive nor any Releasor will seek or accept any personal relief from or as the result of any action, suit or arbitration or other legal proceeding.

(d)Effect of Executive Release and Waiver. Executive understands and intends that this Section 6 constitutes a general release of all claims except as otherwise provided in Section 6(b), above, and that no reference therein to a specific form of claim, statute or type of relief is intended to limit the scope of such general release and waiver.

(e)Executive Waiver of Unknown Claims. Executive or any Releasor may hereafter discover claims or facts in addition to or different than those which he now knows or believes to exist with respect to the subject matter of this Separation Agreement and which, if known or suspected at the time of entering into this Separation Agreement, may have materially affected this Separation Agreement and his decision to enter into it; nevertheless, Executive hereby waives any right, claim or cause of action that might arise as a result of such different or additional claims or facts.

(f)ADEA Release. Executive agrees and expressly acknowledges that this Separation Agreement includes a waiver and release of all claims which Executive has or may have under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621, etseq. ("ADEA"). The

following terms and conditions apply to and are part of the waiver and release of ADEA claims under this Separation Agreement:

(i)The waiver and release of claims under the ADEA contained in this Agreement do not cover rights or claims that may arise after the date on which Executive executes and delivers this Separation Agreement to the Company.

(ii)This Separation Agreement involves consideration in addition to anything of value to which Executive is already entitled.

(iii)Executive is advised to consult an attorney before signing this Separation Agreement. If Executive executes this Separation Agreement prior to the expiration of the period specified in Section 6(f)(iv) below, Executive does so voluntarily and after having had the opportunity to consult with an attorney.

(iv)Executive is granted twenty-one (21) days after Executive is presented with this Agreement to decide whether or not to sign this Separation Agreement.

(v)Executive will have the right to revoke the waiver and release of claims under the ADEA within seven (7) days after the Separation Date and Executive has reaffirmed this Agreement. This Section 6(f) shall not become effective or enforceable until that revocation period has expired. Executive understands and agrees that Executive shall refund any consideration that has been previously paid to Executive, and shall receive no further consideration, if Executive revokes the waiver and release of ADEA claims.

7.Company Release and Waiver. The Company, on its behalf, and on behalf of all of its subsidiaries and its and their successors and assigns ("Company Parties"), intending to be legally bound, to the maximum extent permitted by law, hereby fully and forever releases, acquits, and discharges Executive, his heirs, executives, administrators, personal representatives, attorneys, agents, successors and permitted assigns, from any and all liabilities, obligations, judgments, orders, debts, liens, contracts, agreements, covenants and causes of action of every kind and nature, whether known or unknown, suspected or unsuspected, concealed or hidden, vested or contingent, in law or equity, existing by statute, common law, contract or otherwise, which have existed, may exist or do exist, up to and including the execution and delivery by Executive of this Separation Agreement, including, without limitation, any of the foregoing arising out of or in any way related to or based upon all causes of action, suits, debts, claims and demands whatsoever in law or in equity, which the Company ever had, now has, or hereafter may have, by reason of any matter, cause or thing whatsoever up to and including the execution and delivery by Executive of this Separation Agreement, and particularly, but without limitation of the foregoing general terms, any claims arising from or relating in any way to Executive's relationship with Company or its subsidiaries as an employee or director, the terms and conditions of that relationship, the termination of that relationship, and any claim that the Executive violated any provision of the Employment Agreement, including, but not limited to, any claims under any federal, state or local common law, statutory, or regulatory provision, now or hereafter recognized. This release is effective without regard to the legal nature of the claims raised and without regard to whether any such claims are based upon tort, equity, implied or express contract or discrimination of any sort.

(a)Scope of Company Release. The Company expressly waives all rights afforded by any statute which limits the effect of a release with respect to unknown claims. The Company understands the significance of its release of unknown claims and its waiver of statutory protection against a release of unknown claims.

(b)Exceptions to Company Release. Notwithstanding any other provision of this Separation Agreement to the contrary, the release by the Company does not: (i) limit in any way the Company's rights under this Separation Agreement and under the Surviving Employment Agreement Provisions, (ii) release any claim based on any other act or omission for which the Company would not have the power to indemnify Executive pursuant to Section 145 of the Delaware General Corporate Law, (iii) release any claim based on any rights under applicable law which cannot be waived or released pursuant to any agreement, or (iv) release any claim to any short-swing trading profits earned by him in violation of the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended.

(c)Current or Pending Claims of any Kind and No Relief for Released Claims. The Company and the other Company Parties have not and as of the date of this Separation Agreement will not have filed any civil action, suit, arbitration, administrative charge or legal proceeding against the Executive, nor have the Company or any of the other Company Parties assigned, pledged or hypothecated any claim as of the Separation Date to any person and no other person has any interest in the claims that the Company and the other Company Parties are releasing herein. The Company and the other Company Parties agree that should any person or entity file or cause to be filed any civil action, suit, arbitration or other legal proceedings seeking equitable or monetary relief concerning any claim released by the Company and the other Company Parties, the Company and the other Company Parties will not seek or accept any personal relief from or as the result of any action, suit or arbitration or other legal proceeding.

(d)Effect of the Company's Release and Waiver. The Company and the other Company Parties understand and intend that this Section 6 constitutes a general release of all claims except as otherwise provided in Section 6(b), above, and that no reference therein to a specific form of claim, statute or type of relief is intended to limit the scope of such general release and waiver.

(e)The Company's Waiver of Unknown Claims. The Company and the other Company Parties may hereafter discover claims or facts in addition to or different than those which they now know or believe to exist with respect to the subject matter of this Separation Agreement and which, if known or suspected at the time of entering into this Separation Agreement, may have materially affected this Separation Agreement and their decision to enter into it; nevertheless, the Company and the other Company Parties hereby waive any right, claim or cause of action that might arise as a result of such different or additional claims or facts.

8. Return of Corporate Property. Executive hereby covenants and agrees to immediately return all Company files, records and other property in Executive's possession, including such Company property located at Executive's home in Las Vegas, Nevada.

9.Non-Disparagement.

(a)Executive agrees that from and after the Separation Date, he will not disparage (or induce or encourage others to disparage) the Company, any of its affiliates or any of its or their officers, directors, executives, employees or stockholders. As used herein, the term "disparage," includes, without limitation, comments or statement to the press, any of the Company's or its affiliates' officers, directors, executives, employees or stockholders or any person with whom the Company or any of its affiliate has a business relationship which is designed to or would reasonably be expected to adversely affect in any manner, the conduct of any of the Company's or any of its affiliates' business or the business or personal reputations of the Company, its affiliates or any of the Company's or its affiliates' officers, directors, executives, employees or shareholders.

(b) The Company shall not permit the Designated Company Executives to disparage (or induce or encourage others to disparage) Executive. As used herein, the term "disparage," includes, without limitation, comments or statement to the press, any of the Company's or its affiliates' officers, directors, executives, employees, or stockholders or any person known to the Company to have a business relationship with Executive which is designed to or would reasonably be expected to adversely affect in any manner the conduct of Executive's business or the personal reputation of Executive.

10. Remedies.

(a)The Parties hereby acknowledge and affirm that in the event of any breach by Executive or the Company of any of the covenants, agreements, and obligations hereunder, monetary damages would be inadequate to compensate the Parties. Accordingly, in addition to other remedies which may be available to the Parties hereunder or otherwise at law or in equity, the Parties shall be entitled to specifically enforce such covenants, obligations and restrictions through injunctive and/or equitable relief, in each case without the posting of any bond or other security with respect thereto. Should any provision hereof be adjudged to any extent invalid by any court or tribunal of competent jurisdiction, each provision shall be deemed modified to the minimum extent necessary to render it enforceable.

(b)Executive hereby acknowledges and affirms that, in the event of a breach by Executive of any of Executive's covenants, agreements, and obligations under this Agreement, in addition to any other remedies which may be available to the Company hereunder or otherwise at law or in equity, the Company shall have the right to terminate any payments due hereunder and to recover of any payments previously made and rights previously granted hereunder.

11.Acknowledgment of Voluntary Agreement. Executive acknowledges that he has entered into this Separation Agreement freely and without coercion, that he has been advised by the Company to consult with counsel of his choice, that he has had adequate opportunity to so consult, and that he has been given all time periods required by law to consider this Separation Agreement, including but not limited to the 21-day period required by the ADEA.

12. Complete Agreement; Inconsistencies. This Separation Agreement, including the Surviving Employment Agreement Provisions and any other documents referenced herein, constitute the complete and entire agreement and understanding of the Parties with respect to the subject matter hereof, and supersedes in its entirety any and all prior understandings, commitments, obligations and/or agreements, whether written or oral, with respect thereto; it being understood and agreed that this Separation Agreement and including the mutual covenants, agreements, acknowledgments and affirmations contained herein, is intended to constitute a complete settlement and resolution of all matters set forth in Sections 6 and 7 hereof.

13.409A Additional Tax. In the event that any compensation with respect to the Executive's termination is "deferred compensation" within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder ("Section 409A"), payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six months from the Separation Date, except in the event of the Executive's death. Within 30 days following the end of such six-month period, or, if earlier, the Executive's death, the Company will make a catch-up payment to the Executive equal to the total amount of such payments that would have been made during the six-month period but for this Section 13. Wherever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A.

14.Arbitration. Except for a claim for injunctive relief, any controversy, dispute, or claim

between the Parties arising out of this Separation Agreement shall be settled exclusively by arbitration pursuant to the provisions of Article 8 of the Employment Agreement, and such provision is incorporated herein by this reference.

15. Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Separation Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application hereto of the laws of any jurisdiction other than the State of Nevada. In furtherance of the foregoing, the internal law of the State of Nevada shall control the interpretation and construction of this Separation Agreement, even though under any other jurisdiction's choice of law or conflict of law analysis the substantive law of some other jurisdiction may ordinarily apply.

16.Notices. All notices, requests, demands and other communications to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served on the party to whom notice is to be given, or 48 hours after mailing, if mailed to the party to whom notice is to be given by certified or registered mail, return receipt requested, postage prepaid, and properly addressed to the party at his address set forth as follows or any other address that any party may designate by written notice to the other parties:

To Executive:Clifford D. Kortman

2704 Red Arrow Drive

Las Vegas, NV 89052

To the Company:Pinnacle Entertainment, Inc.

8918 Spanish Ridge Avenue

Las Vegas, NV 89148

Attn: General Counsel

Telephone: 702 541-7777

Facsimile: 702 541-7773

17. Severability. The invalidity or unenforceability of any provision of this Separation Agreement shall not affect the validity or enforceability of any other provision of this Separation Agreement, which shall otherwise remain in full force and effect.

18. Counterparts. This Separation Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

19. Successors and Assigns. The Parties' obligations hereunder shall be binding upon their successors and permitted assigns. The Parties' rights and the rights of the other Releasees shall inure to the benefit of, and be enforceable by, any of the Parties' and Releasees' respective successors and permitted assigns. Executive may not assign any of his rights and obligations under this Separation Agreement, except as may be agreed to in writing by the Company. The Company may assign all rights and obligations of this Separation Agreement to any successor in interest to the assets of the Company. In the event that the Company is dissolved, all obligations of the Company under this Agreement shall be provided for in accordance with applicable law.

20. Amendments, Waivers and Delay. The failure or delay on the part of the Company, or

Executive to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof. No amendment to or waiver of this Separation Agreement or any of its terms shall be binding upon any Party unless consented to in writing by such Party.

21. Headings. The headings of the sections and subsections hereof are for purposes of convenience only, and shall not be deemed to amend, modify, expand, limit or in any way affect the meaning of any of the provisions hereof.

22.Construction. All terms and definitions contained herein shall be construed in such a manner that shall give effect to the fullest extent possible to the express or implied intent of the parties hereby.

23. Attorneys' Fees. In the event a Party commences an action to enforce the terms of this Separation Agreement, or for damages for a breach arising out of or relating to this Separation Agreement, the prevailing Party shall be entitled to an award of reasonable attorneys' fees.

24.Counsel. Executive has been advised by the Company that he should consider seeking the advice of counsel in connection with the execution of this Agreement and Executive has had an opportunity to do so. Executive has read and understands this Agreement, and has sought the advice of counsel to the extent he has determined appropriate. The Company shall reimburse Executive for the reasonable fees and expenses of Executive's counsel in connection with this Agreement.

25.Community Property. Without prejudice to the actual rights of the spouses as between each other, for all purposes of this Separation Agreement, the Executive shall be treated as agent and attorney-in-fact for that interest held or claimed by his spouse with respect to this Agreement. This appointment is coupled with an interest and is irrevocable.

IN WITNESS WHEREOF, the Parties have executed this Separation Agreement effective as of the date of the first signature affixed below or as otherwise provided in this Separation Agreement.

DATED: March 3^rd, 2011

PINNACLE ENTERTAINMENT, INC.

By: /s/ Anthony Sanfilippo

Anthony Sanfilippo

President & Chief Executive Officer

READ CAREFULLY BEFORE SIGNING

I have read this Separation Agreement and have had the opportunity to consult legal counsel and my own tax advisors prior to my signing of this Separation Agreement. I understand that by executing this Separation Agreement, I will relinquish any right or demand I may have against the Releasees or any of them, unless otherwise provided in this Separation Agreement and/or the surviving terms of my Employment Agreement.

DATED: March 3^rd, 2011

By: /s/ Clifford D. Kortman

CLIFFORD D. KORTMAN

SPOUSAL CONSENT

By her signature below, the spouse of Clifford D. Kortman agrees to be bound by all of the items and conditions of the foregoing Separation Agreement and General Release (including those relating to the appointment of Clifford D. Kortman as her attorney-in-fact).

DATED: March 3, 2011

By: /s/ Cynthia J. Kortman

CYNTHIA J. KORTMAN

EX-10.7

Exhibit 10.7

PINNACLE ENTERTAINMENT, INC.

DIRECTOR HEALTH AND MEDICAL INSURANCE PLAN

Effective January 1, 2011

1. Purposes of the Plan. The purposes of this Plan are to attract and retain qualified individuals to serve as members of the Company's Board of Directors and to provide them and their Dependents with health and medical insurance coverage as additional incentive for such service.

2. Definitions. For the purposes of this Plan, the following terms will have the following meanings:

(a)“Board” means the Board of Directors of the Company.

(b)“Change of Control” means

(i)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this clause (i), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company; (ii) any acquisition by the Company; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary; or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (b)(iii)(A); (iii)(B) and (iii)(C);

(ii)Any time at which individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii)Consummation of a reorganization, merger, consolidation or a sale or other disposition of all or substantially all of the assets of the Company (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(iv)Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(c)“COBRA Coverage” means group health care continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and which is codified at Section 4980B of the Code and Sections 601 through 608 of ERISA or other coverage provided by the Company under similar terms and conditions.

(d)“Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

(e)“Company” means Pinnacle Entertainment, Inc., a Delaware corporation, and any successor as

provided in Section 7(a).

(f)“Covered Period” means the period during which Plan benefits will be provided to a Plan Participant, consisting of-

(i)the period of a Director's active service on the Board; and

(ii)in the case of an Existing Director and his or her Dependents, the specified period following the earlier of the date of Termination of the Existing Director or the date of a Change in Control:

(A)as to the Existing Director-

(1)who has attained age 70 or older on the date of such event, five years;

(2)who has not yet attained age 70 on the date of such event, one year for every two years that the Director served on the Board, up to a maximum of five years of Plan coverage;

(B)as to a Spouse of the Existing Director, the Existing Director's Covered Period or, in the event of the Existing Director's death, the period that would have been calculated for the Existing Director had he or she survived, in either case ending on the last day of such period, or if earlier, the date on which (1) the Spouse's divorce from the Existing Director is final, or (2) the Spouse remarries following the death of the Existing Director; and

(C)as to a Dependent Child of the Existing Director, the Existing Director's Covered Period or, in the event of the Existing Director's death, the period that would have been calculated for the Existing Director had he or she survived, in either case ending on the last day of such period, or if earlier, the date on which such child no longer qualifies as a Dependent Child.

(g)“Dependent Child” or “Dependent Children” means a child or children of the Director who has or have been born prior to or during the time Director is actively serving as a Director; provided, however, that such child or children shall cease to be a Dependent Child or Dependent Children on the date on which they reach their twenty-sixth birthday, or in the case of a child who is physically or mentally disabled, the date on which such child is no longer eligible for coverage as a dependent under the applicable Insurance Plan, if later.

(h)“Dependent” means the Spouse and one or more Dependent Children of a Director.

(i)“Director” means a member or former member of the Board who served on the Board on or after January 1, 2011, including an Existing Director as well as an individual who becomes a member of the Board after January 1, 2011.

(j)“Existing Director” means a member or former member of the Board who was actively serving on the Board as of January 1, 2011.

(k)“Eligible Medical Expenses” means copayments, coinsurance and deductibles.

(l)“General Health Plan” means the Company's health and medical insurance plan (whether comprised of one or more component plans) that is generally applicable to its employees, as such plans may be amended from time to time.

(m)“Insurance Plans” means the health and medical insurance plans of the Company, including the General Health Plan (whether or not under insurance policies) in effect from time to time covering its employees during the Covered Period, including any successor plan; provided, however, that if at any time during the Covered Period, the Company does not have any such plans, it shall secure, at the Company's expense, health and medical insurance coverage for Plan Participants from an insurance carrier rated A or higher providing health and medical coverage in the aggregate no less favorable than that provided as of the date the Plan Participants become entitled to medical and health insurance coverage hereunder.

(n)“Plan” means this Director Health and Medical Insurance Plan, as it may be amended from time to time.

(o)“Plan Participant” means each Director and each Dependent during his or her Covered Period.

(p)“Section 409A” means section 409A of the Code and the regulations and guidance promulgated thereunder.

(q)“Spouse” means and shall be limited to the Director's spouse during the Director's active service and at the date of the Director's Termination.

(r)“Termination” means the date on which a Director no longer serves on the Board for any reason, including but not limited to death, retirement, or resignation or removal from the Board, or is not nominated for re-election for any reason. In each instance, Termination shall satisfy the meaning of “separation from service” under Section 409A.

3. Plan Coverage.

a.During Active Service. During a Director's active service on the Board, the Director and his or her Dependents shall participate in the Insurance Plans, under the terms and conditions of the Insurance Plans, and also receive the reimbursement benefits described in Section 4.

b.Following Termination.

i.Beginning on the date of Termination, a Director and his or her Dependents shall have the

right to elect COBRA Coverage under the Insurance Plans at their own cost for the available period of COBRA Coverage.

ii.During an Existing Director's Covered Period following Termination, the Existing Director and his or her Dependents shall participate in the Insurance Plans, under the terms and conditions of the Insurance Plans, and receive the reimbursement benefits described in Section 4. Such coverage shall be coordinated with the COBRA Coverage period pursuant to Section 5.

c.Following a Change of Control.

i.Following a Change of Control, a Director and his or her Dependents shall have the right to elect COBRA Coverage under the Insurance Plans at their own cost for the available period of COBRA Coverage.

ii.During an Existing Director's Covered Period following a Change in Control, the Existing Director and his or her Dependents shall-

A.participate in the Insurance Plans, under the terms and conditions of the Insurance Plans, provided, however that the Company shall use its best efforts to cause such coverage to be provided under insurance policies written by third party insurance carriers that is in the aggregate no less favorable than the coverage provided as of the date the Existing Director and his or her Dependents become entitled to coverage under the Plan, and that the Company shall provide copies of such policies to such Plan Participants; and

B.receive the reimbursement benefits described in Section 4.

4. Reimbursement Benefits.

a.Reimbursement of Certain Eligible Medical Expenses. Each calendar year, the Company shall reimburse, or pay service providers on behalf of, each Director all Eligible Medical Expenses incurred for out-of-network services received by any Plan Participant during the Covered Period; provided however, that each Director shall be responsible for the first $5,000 of Eligible Medical Expenses incurred in the aggregate for the Director and his or her Dependents each calendar year.

b.Timing of Reimbursement. The payment or reimbursement by the Company of any reimbursable Eligible Medical Expense shall be made by December 31 of the calendar year following the calendar year in which such Eligible Medical Expense was incurred.

c.Terms of Reimbursement. Any amount reimbursed in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year. The right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. The cost of Plan benefits shall be borne by the Company and paid with general assets of the Company. Except as provided herein, Plan Participants shall be responsible for all taxes, including any imputed income taxes, related to coverage under the Plan and any Insurance Plan.

d.Indemnification. If for any reason the Company shall fail to maintain any Insurance Plan while this Plan exists, the Company shall indemnify and hold Plan Participants harmless from all cost, loss, liability or expense that is caused by such failure and would otherwise be covered by an Insurance Plan. Any payment or reimbursement of benefits under the Insurance Plans, or paid by the Company by way of indemnification for failure to maintain any Insurance Plan, that is taxable to a Plan Participant shall be made by December 31 of the calendar year following the calendar year in which the Plan Participant incurred the expense.

5. Concurrent with COBRA Coverage. COBRA Coverage shall run concurrently with coverage under the Plan following Termination. The provision of Plan benefits for any period of time following a Director's Termination shall not extend the period for which the Director and/or his or her Dependents are eligible for COBRA Coverage. At the end of the Covered Period, each Plan Participant shall be eligible to purchase COBRA Coverage at the full rate for the COBRA Coverage period, if any, that remains following the termination of Plan coverage; provided that all required premiums are timely paid. It shall be the responsibility of qualified beneficiaries to keep the monthly premium payments current to ensure COBRA Coverage does not lapse.

6. Insurance Offset. If at any time during the Covered Period a Plan Participant is insured under other health or medical plans or under Medicare, then the Insurance Plans shall provide supplemental coverage to the extent permitted by law to the extent that such other plans do not provide full coverage for any given claim. The Plan Participant shall notify the Company's human resources office upon request of his or her coverage under any such other plans or Medicare but, except as provided herein shall have no obligation to seek any such coverage. If eligible for Medicare coverage, a Plan Participant shall enroll in Medicare and remain enrolled through the Covered Period.

7. Miscellaneous.

a.Successors and Assigns. This Plan will be binding upon and inure to the benefit of the parties and, in the case of the Company, its successors and assigns. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform the Company's obligations under the Plan in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place, but such successor's obligation to do so shall not be dependent on such express assumption. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform

this agreement by operation of law or otherwise.

b.Governing Law/Jurisdiction. This Plan and the rights and obligations of the Company and the Plan Participants shall be governed by and construed in accordance with the laws of the State of Delaware in all respects, including all matters of construction, validity and performance, without regard to the conflict of law rules of such state.

c.Modification and Waiver. No provisions of this Plan will be amended, waived or modified except by an instrument in writing and no such amendment, waiver or modification shall adversely affect any rights of Plan Participants to health and medical insurance coverage as provided for herein.

d.Attorneys' Fees. Any dispute, controversy or claim arising out of this Plan or the rights and obligations of the Company and any Plan Participant shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and judgment on the award rendered by the arbitrators may be entered into any court having jurisdiction. If any arbitration is instituted to remedy, prevent or obtain relief from a default in the performance by the Company or a Plan Participant of its obligations under this Plan, or to recover damages from a breach of a representation or warranty, the prevailing party will recover all of such party's attorneys' fees incurred in each and every such arbitration, including any and all appeals or petitions therefrom. As used in this section, attorneys' fees means the full and actual costs of any legal services actually performed in connection with the matters involved calculated on the basis of the usual fee charged by the attorney performing such services and will not be limited to “reasonable attorneys' fees” as defined in any statute or rule of court.

e.Claims Procedure. The claims procedure for benefits under this Plan shall be the Claims Procedure under the applicable Insurance Plan.

f.Required Delay For Certain Deferred Compensation and Section 409A. In the event that any compensation with respect to the Director's Termination is “deferred compensation” within the meaning of Section 409A, the stock of the Company or any affiliate is publicly traded on an established securities market or otherwise, and the Director is determined to be a “specified employee,” as defined in Code Section 409A(a)(2)(B)(i), payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six months from the date of the Director's Termination, except in the even of the Director's death. Within 30 days following the end of such six-month period, or, if earlier, the Director's death, the Company will make a catch-up payment to the Director equal to the total amount of such payments that would have been made during the six-month period but for this Section 7(f). Wherever payments under this Plan are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A.

g.Notices. Any notice, request, demand, instruction or other communication to be given to the Company or a Plan Participant shall be in writing and shall be hand delivered or sent by Federal Express or comparable overnight courier or mail service, or mailed by U.S. or certified mail, return receipt requested, postage prepaid, to such person at the most current address in the Company's records.

h.Third Party Beneficiaries. Each Plan Participant is an express beneficiary hereunder and may enforce his or her rights under the Plan. The Company shall provide each Director and each Plan Participant notice of his or her participation in the Plan, but such participation shall not be dependent upon such notification.

i.Taxation. The Company makes no commitment or guarantee that any amounts paid to or for the benefit of a Plan Participant will be excludable from gross income for federal or state income tax purposes. Notwithstanding any provision to the contrary, all taxes associated with any amounts paid to or for the benefit of a Plan Participant under the Plan shall be borne by the Plan Participant.

j.Effective Date. The Effective Date of the Plan, as amended and restated and set forth herein, shall be January 1, 2011.

EX-11

Exhibit 11

Pinnacle Entertainment, Inc.

Computation of Earnings Per Share

	For the three months ended March 31,
	Basic					Diluted (a)
	2011			2010		2011			2010
Average number of common shares outstanding	61,824			60,107		61,824			60,107
Average common shares due to assumed conversion of stock options	—			—		560			829
Total shares	61,824			60,107		62,384			60,936
Income (loss) from continuing operations, net	$	4,600		$	901	$	4,600		$	901
Income (loss) from discontinued operations, net	(2,239		)	35,842		(2,239		)	35,842
Net income	$	2,361		$	36,743	$	2,361		$	36,743
Per share data:
Income (loss) from continuing operations, net	$	0.07		$	0.01	$	0.07		$	0.01
Income (loss) from discontinued operations, net	(0.03		)	0.60		(0.03		)	0.59
Net income per share	$	0.04		$	0.61	$	0.04		$	0.60

(a)    When the computed diluted values are antidilutive, the basic per share values are presented on the face of the Consolidated Income Statements.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Anthony M. Sanfilippo, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Pinnacle Entertainment, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 6, 2011

/s/ Anthony M. Sanfilippo

Anthony M. Sanfilippo

President and

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Carlos A. Ruisanchez, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Pinnacle Entertainment, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 6, 2011

/s/ Carlos A. Ruisanchez

Carlos A. Ruisanchez

Executive Vice President and

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Pinnacle Entertainment, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), each of the undersigned hereby certifies, in his capacity as an officer of the Company, for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

1.    The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 6, 2011

	/s/ Anthony M. Sanfilippo
Name:	Anthony M. Sanfilippo
Title:	President and Chief Executive Officer
	/s/ Carlos A. Rusianchez
Name:	Carlos A. Ruisanchez
Title:	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.