Hubbard Resigns in Pinnacle Purge

After an executive shakeup at Pinnacle Entertainment Inc., formed three years ago in the aftermath of the sale of Hollywood Park to Churchill Downs, the Glendale-based gaming company may face sanctions Monday at a meeting of the Indiana Gaming Commission.

R.D. Hubbard, a prominent owner and breeder of thoroughbreds who led a proxy fight that resulted in the ouster of Marje Everett as chairman of Hollywood Park in 1991, has resigned as chairman of Pinnacle and begun a divestiture of his stock. Since mid-April, he has sold at least $6.9 million of stock. He had been the biggest personal shareholder in Hollywood Park before it was sold to Churchill Downs in 1999 and was also the largest Pinnacle investor.

Some of Hubbard’s fellow board members at Pinnacle were upset after the Indiana Gaming Commission announced in May that the company’s license at the Belterra Casino and Resort on the Ohio River was in jeopardy. Eight or more women, referred to by the commission as prostitutes, allegedly were brought to Belterra last year to entertain 48 high rollers who had been invited to a golf tournament. Some Pinnacle board members didn’t learn of the controversy until well after the Indiana investigation had begun.

Paul Alanis, the chief executive officer of Pinnacle, has resigned. Also dropping off the board is Robert Manfuso, a Maryland horse breeder and former minority owner of the Pimlico and Laurel Park racetracks there.

Reached Friday at Saratoga, Manfuso said his resignation was not related to Pinnacle’s problems in Indiana.

“I’m a racing guy, and was on the board of the old Hollywood Park company for that reason,” Manfuso said. “When Hollywood Park Inc. became Pinnacle, I didn’t really fit with the casino and gaming mix. But from what I understand about what happened in Indiana, I think the gaming commission there is overreacting to this thing.”

Besides leaving the company, Hubbard has agreed to either sell his Pinnacle stock or put his interests in a trust, as well as cease to do business with the company. Hubbard reportedly will pay a $750,000 fine, and Pinnacle also could be hit with a substantial fine, which has been estimated at $2 million. Jack Thar, executive director of the Indiana Gaming Commission, said that a hefty fine for Pinnacle has been discussed by the commission’s seven members.

“The settlement proposed [by Pinnacle in May] has not been accepted,” Thar said. “There’s been no final action. Whether this comes up Monday remains to be seen. The purpose of the meeting is to discuss other things, unrelated to Belterra, and the Belterra situation might not come up at this time.”

Three telephone messages left with Hubbard’s attorney, Theodore Nicholas, were not answered.

One golfer who attended the tournament last summer at Belterra said that he was aware the women were there.

“I think they were brought in from Las Vegas,” said the golfer, who asked that his name not be used. “There was nothing out of line as far as the tournament was concerned. But what happened [at a party] after the tournament, I can’t vouch for.”

Pinnacle owns seven casino resorts in Indiana, Nevada, Louisiana, Mississippi and Argentina. It also operates card clubs at Hollywood Park, in Inglewood and in Compton. When Churchill Downs Inc. bought the Hollywood Park racetrack, it agreed to lease the card club to Pinnacle for 10 years at $3 million annually. The Hollywood card club is wired for Las Vegas-style slot machines, which are not legal except in Indian casinos.

Alanis’ annual salary was $600,000 and Hubbard was paid $500,000 a year. Daniel Lee, Pinnacle’s new chairman and chief executive, is a former chief financial officer who was associated with Steve Wynn’s casino properties in Las Vegas.

Pinnacle, which was trading at about $5 a share in February, reached a 52-week high of $12.68 on May 3. The stock closed at $7.50 Friday.

Hubbard, who owns Ruidoso Downs, a quarter horse track in New Mexico, is one of three applicants who want to build a racetrack and casino in Hobbs, N.M., near the Texas border. Slot machines there bring in an estimated $54 million a year. The license is expected to be issued at a meeting of the New Mexico Racing Commission on Aug. 27.

“[Hubbard’s troubles] in Indiana are an issue we’re aware of,” said Julian Luna, executive director of the commission. “I don’t know if it will be a factor in New Mexico.”

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Beat Hollow, ranked by the Daily Racing Form as the best turf male in the country, will carry high weight of 122 pounds Sunday in the $400,000 Eddie Read Handicap at Del Mar. Beat Hollow will be ridden by Alex Solis. Also running, at 118 pounds, is Redattore, winner of the stake last year. Rounding out the six-horse field are Deploy Venture, Sarafan, Night Patrol and Casey Griffin.... Trainer Bill Mott saddled the winner of Saratoga’s Bernard Baruch Handicap for the fourth straight year when Del Mar Show won the $200,000 stake Friday. Jerry Bailey has ridden all four Mott winners, including Yagli in 1999 and Hap the last two years.