Sex-for-play charges rock Pinnacle Ent. boat

Apr 23, 2002 7:30 AM

Allegations of sex-for-play by two former employees have rocked Pinnacle Entertainment’s Belterra riverboat casino in Indiana.

In the wake of the charges, now under investigation by the Indiana Gaming Commission, Pinnacle’s CEO and chairman resigned. Former Mirage exec Dan Lee was quickly hired to assume both roles.

The Glendale, Calif.-based Pinnacle would not say if the hasty departures of CEO Paul Alanis and Chairman R.D. Hubbard were connected to a pending sexual harassment lawsuit at Belterra. But the timing of the shuffle ”” and a subsequent shakeup in the riverboat’s security operations ”” seems more than coincidental.

Two player development managers, Gwen Perry and Logananne Sabline, allege that they were ordered to "attend to the wants and needs of wealthy gamblers,’’ according to their lawsuit.

The women claim that security chief Jack Strohm told them "he wanted them in the casino kissing men and the like." Strohm reportedly instructed Perry to "go to popular bars to pick up Arab men to bring to the casino" while she was in Lexington for the Keeneland horse sale.

Earlier, the complaint states, Belterra hosted a golf outing where female escorts groped and fondled a group of four dozen high-rollers. The filing in U.S. District Court in New Albany, Ind., said Sabline and Perry were directed to use sex to "entice" high-end players. The women, both from Madison, Ind., are seeking $600,000 each in damages.

The suit goes on to say that Strohm fired Sabline and demoted Perry after they complained to the casino’s personnel director. Perry subsequently quit.

GamingToday has learned that Strohm has since been replaced as security chief and no longer works at the property. Sources also report that federal authorities may be looking into the women’s charges, perhaps as part of a civil rights probe.

One of Lee’s first orders of business was to fly to the Switzerland County resort and to visit with gaming commission officials in Indianapolis. Company officials had no comment on those meetings.

Indiana regulators would not discuss their investigation. "Under our statute, we would have everything from doing nothing, to a fine, to a suspension or a revocation of their license,’’ commission executive director Jack Thar told the Louisville Courier-Journal.

The case is being monitored closely in Nevada as Pinnacle maneuvers to bid on the bankrupt Aladdin hotel-casino. Inside sources tell GamingToday that unresolved problems in Indiana ”” or even just attendant bad publicity ”” could hamper or scuttle regulatory approval here.

Lee, in the meantime, is reportedly negotiating with Colony Capital Chairman and CEO Tom Barrack to acquire the $1.05 billion Aladdin, which analysts say might be obtained for as little as $350 million.

Belterra is one of seven casinos owned by Pinnacle, which has properties in Nevada, Mississippi, Louisiana and Argentina. The riverboat has a 38,000-square-foot casino and a 15-story hotel tower on the northern shore of the Ohio River.

Amidst the corporate changes, Pinnacle (NYSE: PNK) pushed its annual stockholder meeting back from May 21 to June 18. First quarter results will be reported on April 30.

Pinnacle (formerly Hollywood Park) said last week it expects to post a quarterly net loss of $2.5 million to $3.7 million (a loss of 10-15 cents per diluted share). That compares with analysts’ estimates of a net loss of 22-25 cents. The company anticipates cash flow of $18.5 million to $20 million, significantly ahead of most estimates.