Pinnacle Entertainment Files Lawsuit Related to Casino Magic Biloxi Against Three Insurance Companies

3 August 2006

Pinnacle Entertainment, Inc. (NYSE: PNK) announced that, on August 1, 2006, it filed suit in the United States District Court for the District of Nevada against three of its excess insurance carriers. The suit relates to the loss incurred by Pinnacle as a result of Hurricane Katrina at its Casino Magic property in Biloxi, Mississippi. Collectively, the three insurers provide $300 million of coverage, in excess of $100 million of coverage provided to Pinnacle by other insurers. In total, Pinnacle's policies applicable to the Hurricane Katrina loss provide an aggregate of up to $400 million of coverage for loss caused by a weather catastrophe occurrence (as defined by the policies) and up to $100 million of inclusive coverage for loss caused by a flood occurrence. The three insurers are Allianz Global Risks US Insurance Company, Arch Specialty Insurance Company and RSUI Indemnity Company.

The suit alleges, among other things, that the defendants have improperly asserted that Pinnacle's losses were due to a flood occurrence as opposed to a weather catastrophe occurrence; that, after the close of the proposed sale of certain Casino Magic Biloxi assets to Harrah's Entertainment, Inc., Pinnacle is not covered for any continued business interruption loss at Casino Magic Biloxi incurred after that sale; and that Pinnacle is not entitled to designate its St. Louis County project as a replacement for Casino Magic Biloxi.

The suit seeks damages equal to the outstanding amount of Pinnacle's claim (totaling $346.5 million, less $100 million previously paid or anticipated to be paid in the near future). It also seeks declarations that Pinnacle's St. Louis County project constitutes a permissible replacement property under the applicable policies and that Pinnacle is entitled to receive the full amount of its Casino Magic Biloxi business interruption loss arising out of Hurricane Katrina, even though it is in the process of selling the Casino Magic Biloxi site and certain related assets to Harrah's. Finally, the suit also seeks unspecified punitive damages for the improper actions of the defendants in connection with Pinnacle's claim.

As previously reported, on April 11, 2006, Pinnacle filed an insurance claim with its insurers totaling $346.5 million for losses sustained at Casino Magic Biloxi due to Hurricane Katrina.

About Pinnacle Entertainment

Pinnacle Entertainment owns and operates casinos in Nevada, Louisiana, Indiana, Argentina and the Bahamas, owns a hotel in Missouri, and owns a casino site and has significant insurance claims related to a hurricane-damaged casino and hotel complex previously operated in Biloxi, Mississippi. Pinnacle also has two casino development projects under construction in the St. Louis, Missouri area, which are dependent upon final approval by the Missouri Gaming Commission.

All statements included in this press release, other than historical information or statements of historical fact, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including statements regarding the Company's current lawsuit with certain of its insurers related to Casino Magic Biloxi, insurance proceeds available to the Company, construction projects, new development opportunities, and pending acquisitions and divestitures, are based on management's current expectations and are subject to risks, uncertainties and changes in circumstances that could significantly affect future results. Accordingly, Pinnacle Entertainment cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. Such factors include, but are not limited to: (a) the results of the damage from Hurricanes Katrina and Rita, and insurance proceeds available to the Company, including the impact to communities surrounding the Company's affected properties and issues that could arise with respect to our insurance policies that could reduce or significantly delay the receipt of insurance proceeds; (b) the outcome of the Company's lawsuit with certain of its insurers related to damage incurred at Casino Magic Biloxi; (c) the risk that Pinnacle's proposed transactions with Harrah's are not consummated; (d) many construction-related factors could prevent the Company from completing its construction and development projects within budget and on time; (e) because the Company has considerable leverage, future cash flows may not be sufficient to meet its financial obligations and the Company might have difficulty obtaining additional financing; (f) the risk that the proposed St. Louis and Sugarcane Bay projects, proposed expansions to the existing facilities, proposed acquisitions, and other capital intensive projects could strain the Company's financial resources and the risk that such projects and new developments might not provide for a sufficient return, if any; and (g) other risks, including those as may be detailed from time to time in Pinnacle Entertainment's filings with the Securities and Exchange Commission ("SEC"). For more information on the potential factors that could affect the Company's financial results and business, review the Company's filings with the SEC, including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K.

For further information

At Pinnacle Entertainment - (702) 784-7777:

Dan Lee, Chairman & CEO

Wade Hundley, President

Steve Capp, CFO

Chris Plant or Lewis Fanger, Investor Relations

Source: prnewswire

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