ASCA A SPAC I Acquisition Corporation

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 2013

TO THE STOCKHOLDERS OF AMERISTAR CASINOS, INC.:

        NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the "Special Meeting") of Ameristar Casinos, Inc. (the "Company," "Ameristar," "we," "us" or "our") will be held at 8:00 a.m., local time, on April 25, 2013, at the Vivaldi Room at the Encore Hotel and Casino, 3131 Las Vegas Boulevard South, Las Vegas, Nevada 89109, for the following purposes:

1.

Approval of the Merger Agreement. To consider and approve the Agreement and Plan of Merger among the Company, Pinnacle Entertainment, Inc., a Delaware corporation ("Parent"), PNK Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Parent ("HoldCo"), and PNK Development 32, Inc., a Nevada corporation and a wholly-owned subsidiary of HoldCo ("Merger Sub"), as amended pursuant to a First Amendment to Agreement and Plan of Merger dated as of February 1, 2013 and a Second Amendment to Agreement and Plan of Merger dated as of March 14, 2013 (as so amended, the "Merger Agreement"), pursuant to which either (i) Merger Sub will be merged with and into the Company (the "Planned Merger") with the Company surviving as a wholly-owned, indirect subsidiary of Parent or (ii) at the election of Parent under certain circumstances, HoldCo will be merged with and into the Company (the "Alternative Merger," and both the Planned Merger and Alternative Merger are hereinafter referred to as the "Merger"), and in which, immediately thereafter, the Company will be merged with and into Parent.



2.

Advisory Vote Regarding Merger-Related Compensation. To consider and vote on a non-binding, advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger; and



3.

Adjournment or Postponement of the Special Meeting. To approve the adjournment or postponement of the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement.

        After careful consideration, our board of directors unanimously determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to and in the best interests of the Company and its stockholders and recommended that our stockholders approve the Merger Agreement at the Special Meeting. Our board of directors unanimously recommends that you vote "FOR" the proposal to approve the Merger Agreement, "FOR" the proposal to approve, by a non-binding, advisory vote, the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger and "FOR" the proposal to adjourn or postpone the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies if there are not sufficient votes to adopt the Merger Agreement.

        Only holders of record of our common stock at the close of business on March 22, 2013, the record date for the Special Meeting, may vote at the Special Meeting.

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        The approval of the Merger Agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Company common stock. The approvals of the non-binding, advisory compensation proposal and the proposal to adjourn the Special Meeting require the affirmative vote of the holders of a majority of the outstanding shares of Company common stock present and entitled to vote at the Special Meeting as of the record date.

        If the Company has less than 2,000 stockholders (including record and beneficial stockholders) as of the record date, then stockholders who do not vote in favor of the approval of the Merger Agreement will have the right to dissent from the consummation of the Merger and obtain payment of the fair value of their shares if the Merger is completed if they meet certain conditions and comply with certain procedures under the Nevada Revised Statutes. However, as of March 22, 2013, the record date for the Special Meeting, the Company had more than 2,000 stockholders, and therefore, dissenters' rights will not be applicable to the Merger.

        Your vote is very important. Even if you do not expect to attend the meeting in person, it is important that your shares be represented. Please use the enclosed proxy card to vote on the matters to be considered at the Special Meeting by signing and dating the proxy card and mailing it promptly in the enclosed envelope, which requires no postage if mailed in the United States. Returning a signed proxy card will not prevent you from attending the meeting and voting in person if you wish to do so.

        You may vote by completing and mailing the enclosed proxy card, or by telephone or the Internet, or in person by ballot at the Special Meeting, in each case by following the directions contained in the accompanying proxy statement. If your shares are held in "street name," which means shares held of record by a broker, bank or other nominee, you should check the voting form used by that firm to determine whether you will be able to submit your proxy by telephone or over the Internet, or in person at the Special Meeting, provided you have obtained a proxy issued in your name from such record holder. Whether or not you expect to attend the Special Meeting, submitting a proxy by mailing the enclosed proxy card as promptly as possible will ensure that your shares are represented at the Special Meeting. Even if you have voted by proxy, you may still vote in person if you attend the Special Meeting by following the directions contained in the accompanying proxy statement. Please review the instructions in this proxy statement and the enclosed proxy card or the information forwarded by your bank, broker or other holder of record regarding each of these options. If you do not vote in person, submit the proxy or instruct your broker on how to vote at the Special Meeting, the effect will be the same as a vote against the proposal to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger.

        For more information about the Merger and the other transactions contemplated by the Merger Agreement, please review the accompanying proxy statement and the Merger Agreement attached to it as Annex A .

		By Order of the Board of Directors
Luther P. Cochrane		Gordon R. Kanofsky
Chairman of the Board		Chief Executive Officer
Las Vegas, Nevada March 25, 2013

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

         The following questions and answers are intended to address commonly asked questions regarding the Merger, the Merger Agreement, and the Special Meeting. These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the section titled "Summary" beginning on page 1 and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement, and the documents referred to and incorporated by reference in this proxy statement, all of which you should read carefully and in their entirety. You may obtain the documents incorporated by reference in this proxy statement without charge by following the instructions in the section titled "Where You Can Find More Information" beginning on page 84.

Q.    What will happen in the Merger?

A.    If the Merger is carried out under the Planned Merger structure, Merger Sub will be merged with and into the Company, and the separate corporate existence of Merger Sub will cease. The Company will continue as the surviving corporation under the Planned Merger structure as a wholly-owned subsidiary of HoldCo, which in turn is a wholly-owned subsidiary of Parent. Under certain circumstances, Parent may, at its option, elect to carry out the Merger under the Alternative Merger structure, pursuant to which HoldCo would be merged with and into the Company, and the separate corporate existence of HoldCo will cease. Immediately following completion of the Alternative Merger, a subsequent merger would be carried out, pursuant to which the Company would be merged with and into Parent and the Company would cease to exist as a separate entity. Regardless of whether the Merger is carried out under the Planned Merger structure or the Alternative Merger Structure, under no circumstances will the Merger Consideration change. For more information, please see the sections titled " Special Factors " and " The Merger Agreement " beginning on pages 20 and 60, respectively.

Q.    As a stockholder, what will I receive in the Merger?

A.    If the Merger is completed, you will be entitled to receive the Merger Consideration of $26.50 in cash (without interest and subject to deduction for any required withholding tax) for each share of Company common stock that you own immediately prior to the effective time of the Merger as described in the Merger Agreement.

Q.    When and where will the Special Meeting be held?

A.    The special meeting is scheduled to be held on April 25 at 8:00 a.m. (local time) at the Vivaldi Room at the Encore Hotel and Casino, 3131 Las Vegas Boulevard South, Las Vegas, Nevada 89109.

Q.    What matters will be voted on at the Special Meeting?

A.    At the Special Meeting, you will be asked to consider and vote on the following proposals:

•

approval of the Merger Agreement;



•

a non-binding, advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger; and



•

a proposal to adjourn or postpone the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement.

Q.    Why am I receiving this proxy statement?

A.    On December 20, 2012, the Company entered into the Merger Agreement with Parent, HoldCo and Merger Sub, providing for the Planned Merger of Merger Sub with and into the Company, with the

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Company surviving as an indirect wholly-owned subsidiary of Parent, or in the case of the Alternative Merger, with HoldCo being merged with and into the Company, and immediately thereafter, the Company being merged with and into Parent. You are receiving this proxy statement in connection with the solicitation of proxies by the Board in favor of the approval of the Merger Agreement.

Q.    How does the Board recommend that I vote regarding the Merger Agreement?

A.    The Board, after careful consideration, unanimously recommends that our stockholders vote:

•

" FOR " the proposal to approve the Merger Agreement;



•

" FOR " the non-binding, advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger; and



•

" FOR " the proposal to approve the adjournment or postponement of the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement.

You should read " Special Factors—Recommendation of the Board of Directors and Reasons for Recommending the Approval of the Merger Agreement " beginning on page 30 for a discussion of the factors that the Board considered in deciding to recommend the approval of the Merger Agreement.

Q.    What vote is required to approve the Merger Agreement?

A.    The approval of the Merger Agreement requires the affirmative vote of at least a majority of the outstanding shares of Company common stock on the record date.

Q.    How will I receive the Merger Consideration to which I am entitled?

A.    Following the Merger, and after the paying agent receives the proper documentation from you, the paying agent will issue and deliver to you a check or wire transfer for the amount of cash you are entitled to receive. Please see the section titled " The Merger Agreement—Exchange and Payment Procedures " beginning on page 62.

Q.    Am I entitled to dissenters' rights in connection with the Merger?

A.    No. Under Nevada law, if the Company has less than 2,000 record and beneficial stockholders as of the record date, then stockholders who do not wish to accept the consideration payable for their shares of common stock pursuant to the Merger may dissent from the Merger and obtain fair value for their shares under Section 92A.300 - 92A.500 of the NRS. As of March 22, 2013, the record date for the Special Meeting, the Company had more than 2,000 stockholders and, therefore, dissenters' rights will not be applicable to the Merger.

Q.    Are there any other risks to me from the Merger which I should consider?

A.    Yes. There are risks associated with all business combinations, including the Merger. Please see the section titled " Cautionary Statement Concerning Forward-Looking Information " on page 14.

Q.    Do any of the Company's directors or officers have interests in the Merger that may differ from or be in addition to my interests as a stockholder?

A.    In considering the recommendation of the Board with respect to the Merger Agreement, you should be aware that some of the Company's directors and executive officers have interests that are different from, or in addition to, the interests of our stockholders generally. See " Special Factors—Interests of the Company's Directors and Executive Officers in the Merger ," beginning on page 51.

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Q.    How do the directors and executive officers of the Company intend to vote at the Special Meeting?

A.    Our current directors and executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of their shares of Company common stock in favor of approval of the Merger Agreement. As of March 22, 2013, the record date for the Special Meeting, our current directors and executive officers owned, in the aggregate, 555,300 outstanding shares of Company common stock, or collectively approximately 1.7% of the outstanding shares of Company common stock.

Q.    Where can I find more information about the parties to the Merger?

A.    You can find more information about the parties from the various sources described in the sections titled " Special Factors—The Parties to the Merger " beginning on page 20 and " Where You Can Find More Information " beginning on page 84.

Q.    What vote is required to approve the non-binding, advisory proposal on executive compensation and the proposal to adjourn the Special Meeting, if necessary or appropriate?

A.    The approval of the non-binding, advisory compensation proposal and the proposal to adjourn the Special Meeting requires the affirmative vote of the holders of a majority of the votes cast on the matter at the Special Meeting.

Q.    What is "golden parachute compensation"?

A.    "Golden parachute compensation" is certain compensation that is tied to or based on the consummation of the Merger and payable to the Company's named executive officers under existing Company plans or agreements. See " Advisory Vote Regarding Merger-Related Compensation (Say-on-Golden Parachute Compensation) " beginning on page 77.

Q.    Why am I being asked to cast a non-binding, advisory vote to approve "golden parachute compensation" payable to the Company's named executive officers under Company plans or agreements?

A.    In accordance with the rules promulgated under Section 14A of the Exchange Act, the Company is providing its stockholders with the opportunity to cast a non-binding, advisory vote on the compensation that may be payable to the Company's named executive officers in connection with the Merger.

Q.    What will happen if the stockholders do not approve the "golden parachute compensation" at the Special Meeting?

A:    Approval of the "golden parachute compensation" is not a condition to the completion of the Merger. The vote with respect to the "golden parachute compensation" is an advisory vote and will not be binding on the Company or Parent. Further, the underlying compensation plans and agreements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the non-binding advisory vote, if the Merger Agreement is approved by the stockholders and the Merger is completed, our named executive officers will receive the "golden parachute compensation."

Q.    When is the Merger expected to be completed?

A.    The parties to the Merger Agreement are working to complete the Merger as quickly as possible. In order to complete the Merger, the Company must obtain the stockholder approval described in this proxy statement and the other closing conditions under the Merger Agreement must be satisfied or waived, including the receipt of all requisite gaming and antitrust approvals. The parties to the Merger Agreement expect to complete the Merger in the second or third quarter of 2013, although the Company cannot assure completion by any particular date, if at all. Because the Merger is subject to a number of conditions, the exact timing of the Merger cannot be determined at this time.

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Q.    What happens if the Merger is not completed?

A.    If the Merger Agreement is not approved by the Company's stockholders, or if the Merger is not completed for any other reason, the Company stockholders will not receive any payment for their shares. Instead, we will remain as a public company and our common stock will continue to be registered under the Exchange Act and listed and traded on Nasdaq. Under circumstances specified in the Merger Agreement, we may be required to pay Parent a termination fee of $38,000,000 or up to $12,500,000 of its transaction expenses, or Parent may be required to pay us a reverse termination fee of $85,000,000. See " The Merger Agreement—Termination Fees and Reimbursement of Expenses ," beginning on page 74.

Q.    Who can vote at the Special Meeting?

A.    All of our holders of Company common stock of record as of the close of business on March 22, 2013, the record date for the Special Meeting, are entitled to receive notice of, and to vote at, the Special Meeting. Each holder of Company common stock is entitled to cast one vote on each matter properly brought before the Special Meeting for each share of Company common stock that such stockholder owned as of the record date.

Q.    What is the procedure for voting my shares at the Special Meeting?

A.    If you are the stockholder of record, you may vote your shares of Company common stock at the Special Meeting in any of the following ways:

•

in person—you may attend the Special Meeting and cast your vote there;



•

by proxy—stockholders of record may vote by proxy by filling out, signing and returning the enclosed proxy card in the postage-paid envelope provided.

Q.    What do I need to do now?

A.    We urge you to read this proxy statement carefully, including its annexes and the other documents referred to in or incorporated by reference into this proxy statement and to consider how the Merger affects you as a stockholder. After you have done so, please vote as soon as possible.

Q:    How do I cast my vote in person if I am a holder of record?

A:    If you are a holder of record on March 22, 2013, you may vote in person at the Special Meeting or by submitting a proxy for the Special Meeting. Whether or not you plan to attend the Special Meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope. If you attend the Special Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. Admission to the Special Meeting will be on a first-come, first-served basis.

Q.    How do I cast my vote if my shares of Company common stock are held in "street name" by my broker, dealer, commercial bank, trust company or other nominee?

A.    If you hold shares in "street name" through a broker, dealer, commercial bank, trust company or other nominee, then you received this proxy statement from the nominee, along with the nominee's voting instructions. You should instruct your broker, bank or other nominee on how to vote your shares of common stock using the voting instructions. Please refer to the voting instruction card used by your broker, dealer, commercial bank, trust company or other nominee to see if you may submit voting instructions using the Internet or telephone.

        If you hold shares in "street name" through a broker, dealer, commercial bank, trust company or other nominee and wish to attend the Special Meeting, you may vote those shares in person at the meeting only if you obtain and bring with you a signed proxy from the necessary nominee giving you the right to vote the shares. To obtain a signed proxy prior to the Special Meeting, you should contact your broker,

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dealer, commercial bank, trust company or other nominee. Admission to the Special Meeting will be on a first-come, first-served basis.

Q:    If my shares have been loaned out as of the record date by my bank, broker, or other nominee, am I still able to vote my shares?

A:    No. The right to vote shares of our stock belongs to whoever has the shares as of the record date. If your shares have been loaned out by your bank, broker, or other nominee as of the record date, then the person to whom your shares were loaned has the right to vote your shares, not you. You can find out if your shares have been loaned out by calling and asking your bank, broker, or other nominee.

Q:    What action do I need to take to be able to vote my shares if they have been loaned out by my bank, broker, or other nominee?

A:    You must contact your bank, broker, or other nominee prior to the record date and request that your shares be returned from loan, and not loaned out again.

Q.    What happens if I do not vote, do not submit a proxy, and do not instruct my bank, broker, or other nominee to vote or abstain from voting?

A.    If you fail to vote, either in person or by proxy, or fail to instruct your bank, broker, or other nominee how to vote, or abstain from voting, it will have the same effect as a vote cast "AGAINST" the proposal to approve the Merger Agreement.

Q.    What should I do if I want to change my vote?

A.    You have the right to revoke your proxy at any time before it is voted at the Special Meeting by filing with the Secretary of the Company either a written notice of revocation or another signed proxy bearing a later date. You may also revoke your proxy by attending the Special Meeting and voting in person.

Q.    What happens if I transfer my shares after the record date for the Special Meeting?

A.    The record date for the Special Meeting is earlier than the expected date of completion of the Merger. Therefore, if you transfer your shares of Company common stock after the record date, but prior to completion of the Merger, you will retain your right to vote at the Special Meeting, but the person who owns the shares of Company common stock at the time the Merger occurs will have the right to be paid the Merger Consideration in respect of those shares following completion of the Merger.

Q.    Will any proxy solicitors be used in connection with the Special Meeting?

A.    Yes. To assist in the solicitation of proxies, the Company has engaged MacKenzie Partners, Inc.

Q.    If I have stock certificates, should I send my stock certificates with my proxy card?

A.    NO. PLEASE DO NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD. Promptly after the completion of the Merger, the paying agent will mail to you a letter of transmittal with instructions for exchanging your Company stock certificates for the Merger Consideration. If you do not have stock certificates—that is, if you hold your shares of Company common stock in "street name,"—then your bank, broker, or other nominee will contact you regarding payment of the Merger Consideration.

Q.    Who can help answer my questions?

A.    If you have more questions about the Merger or the Special Meeting, or desire additional copies of this proxy statement or additional proxy cards, please contact MacKenzie Partners, Inc., our proxy solicitor, by calling +1 (212) 929-5500 or +1 (800) 322-2885 (toll-free), or emailing proxy@mackenziepartners.com.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

        This proxy statement may include predictions, estimates and other information that may be considered forward-looking statements, including, without limitation, statements relating to the completion of the Merger. These forward-looking statements may be identified by the use of words such as "expect," "anticipate," "believe," "estimate," "potential," "should," "could," "would," "will" or similar words intended to identify information that is not historical in nature. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved.

        These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including: (1) the Company may be unable to obtain stockholder approval as required for the Merger; (2) conditions to the closing of the Merger may not be satisfied or waived; (3) the Merger may involve unexpected costs, liabilities or delays; (4) the Company's business may suffer as a result of uncertainty surrounding the Merger; (5) the outcome of any legal proceedings related to the Merger; (6) the Company may be adversely affected by other economic, business, and/or competitive factors; (7) the ability and timing to obtain required regulatory approvals (including receipt by Parent of necessary approvals from gaming and antitrust regulators); (8) Parent's ability to obtain financing; (9) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (10) risks that the Merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the Merger; and (11) other risks to consummation of the Merger, including the risk that the Merger will not be consummated within the expected time period or at all. If the Merger is consummated, the Company's stockholders will cease to have any equity interest in the Company and will have no right to participate in its future earnings and growth. Additional factors that may affect the future results of the Company are set forth in its filings with the SEC, which are available on the SEC's website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.

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THE SPECIAL MEETING

General Information

        Our Board is using this proxy statement to solicit proxies to be voted at the Special Meeting of the Company's stockholders described below. Your vote is very important. For this reason, our Board is requesting that you allow your shares to be represented at the Special Meeting by the proxies named on the enclosed proxy card. The Company began mailing this proxy statement and the form of proxy on or about March 27, 2013.

Date, Time, and Place

        We will hold the Special Meeting at 8:00 a.m., local time, on April 25, 2013, at the Vivaldi Room at the Encore Hotel and Casino, 3131 Las Vegas Boulevard South, Las Vegas, Nevada 89109. Seating will be limited to stockholders. Admission to the Special Meeting will be on a first-come, first-served basis. If you plan to attend the Special Meeting, please note that you may be asked to present valid photo identification, such as a driver's license or passport. Stockholders owning stock in brokerage accounts also must bring a copy of a brokerage statement reflecting stock ownership as of the record date. Cameras, recording devices and other electronic devices will not be permitted at the meeting.

Purpose of the Special Meeting

        The Special Meeting is being held for the following purposes:

•

To approve the Merger Agreement;



•

To consider and vote on a non-binding, advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger; and



•

To approve the adjournment or postponement of the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement.

        A copy of the Merger Agreement is attached as Annex A to this proxy statement.

Record Date; Stockholders Entitled to Vote; Quorum

        Only holders of record of Company common stock at the close of business on March 22, 2013, the record date, are entitled to notice of and to vote at the Special Meeting. On the record date, 33,040,149 shares of Company common stock were issued and outstanding and held by 161 holders of record. Holders of record of shares of Company common stock on the record date are entitled to one vote per share of Company common stock at the Special Meeting on each proposal. For 10 days prior to the meeting, a complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose relating to the meeting, during ordinary business hours at our offices located at 3773 Howard Hughes Parkway, Suite 490S, Las Vegas, Nevada 89169.

        Shares of Company common stock represented by proxies reflecting abstentions and "broker non-votes," discussed below, will be counted in determining the presence of a quorum. A broker non-vote occurs when a broker, dealer, commercial bank, trust company or other nominee does not vote on a particular matter because such broker, dealer, commercial bank, trust company or other nominee does not have the discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner. Brokers, dealers, commercial banks, trust companies and other nominees will not have discretionary voting power with respect to any of the proposals to be considered at the Special Meeting. A quorum will be present at the Special Meeting if the holders of a majority of the shares of Company common stock outstanding and entitled to vote on the record date are present, in person or by

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proxy (or are represented by broker non-votes, even though such broker non-votes cannot be voted by such nominee at the Special Meeting). In the event that a quorum is not present, or if there are insufficient votes to approve the Merger Agreement at the time of the Special Meeting, it is expected that the meeting will be adjourned or postponed to solicit additional proxies.

Recommendation of the Board of Directors

        The Board, after careful consideration, unanimously determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to and in the best interests of the Company and its stockholders and recommended that the Company's stockholders approve the Merger Agreement at the Special Meeting. The Board unanimously recommends that our stockholders vote:

•

" FOR " the approval of the Merger Agreement;



•

" FOR " the non-binding, advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger; and



•

" FOR " the adjournment or postponement of the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement.

Vote Required

Approval of the Merger Agreement

        The approval of the Merger Agreement by our stockholders requires the affirmative vote of the holders of a majority of the outstanding shares of Company common stock entitled to vote at the Special Meeting as of the record date.

        Failure to vote your shares of Company common stock (whether in person or by proxy and whether you are a stockholder of record or hold your shares in "street name" (in which case, such failure to vote will be deemed a broker non-vote)) will have the same effect as a vote "AGAINST" the proposal to approve the Merger Agreement.

Approval of the Compensation Proposal

        The approval of the non-binding, advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger requires the affirmative vote of the holders of a majority of the shares of Company common stock voted on the matter at the Special Meeting.

        Abstentions and broker non-votes are not counted as votes cast, and as such, all abstentions, broker non-votes and shares not in attendance at the Special Meeting have no effect on the non-binding, advisory vote to approve the "golden parachute compensation."

Approval of the Adjournment or Postponement of the Special Meeting

        The approval of the proposal to adjourn or postpone the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement requires the affirmative vote of the holders of a majority of the shares of Company common stock voted on the matter at the Special Meeting.

        Abstentions and broker non-votes are not counted as votes cast, and as such, all abstentions, broker non-votes and shares not in attendance at the Special Meeting have no effect on the outcome of the adjournment or postponement proposal.

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Stock Ownership and Interests of Certain Persons

        As of March 22, 2013, the record date for the Special Meeting, our current directors and executive officers owned, in the aggregate, 555,300 outstanding shares of Company common stock, or collectively approximately 1.7% of the outstanding shares of Company common stock.

        Certain members of our management and the Board have interests that are different from, or in addition to, those of our stockholders generally. For more information, please read " Special Factors—Interests of the Company's Directors and Executive Officers in the Merger " beginning on page 51.

Voting Procedures

        Ensure that your shares of Company common stock can be voted at the Special Meeting in person, or by proxy, by submitting your proxy or attending the Special Meeting if you are a stockholder of record, or contacting your broker, dealer, commercial bank, trust company or other nominee for a form of proxy and instructions for attending the Special Meeting.

         If your shares of Company common stock are registered in the name of a broker, dealer, commercial bank, trust company or other nominee: check the voting instruction card forwarded by your broker, dealer, commercial bank, trust company or other nominee to see which voting options are available or contact your broker, dealer, commercial bank, trust company or other nominee in order to obtain directions as to how to ensure that your shares of Company common stock are voted at the Special Meeting.

        If your shares of Company common stock are registered in your name:     submit your proxy as soon as possible by signing, dating and returning the enclosed proxy card in the enclosed postage-paid envelope, so that your shares of Company common stock can be voted at the Special Meeting.

        The failure to vote will have the same effect as a vote "AGAINST" the proposal to approve the Merger Agreement. If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be voted in favor of the proposal to approve the Merger Agreement, the non-binding advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger, and the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies.

        For additional questions about the Merger, assistance in submitting proxies or voting shares of Company common stock, or to request additional copies of the proxy statement or the enclosed proxy card, please call MacKenzie Partners, Inc., our proxy solicitor, toll-free at (800) 322-2885.

Voting by Proxy or in Person at the Special Meeting

        Stockholders of record can ensure that their shares of Company common stock are voted at the Special Meeting by completing, signing, dating and delivering the enclosed proxy card in the enclosed postage-paid envelope. Submitting by this method will not affect your right to attend the Special Meeting and to vote in person. If you plan to attend the Special Meeting and wish to vote in person, you will be given a ballot at the Special Meeting. Please note, however, that if your shares of Company common stock are held in "street name" by a broker, dealer, commercial bank, trust company or other nominee and you wish to vote in person at the Special Meeting, you must bring to the Special Meeting a proxy from the record holder of those shares of Company common stock authorizing you to vote at the Special Meeting.

        You should return a proxy by mail (or, in the case of shares of Company common stock held in "street name," by any method provided for by the record holder of your shares), even if you plan to attend the Special Meeting in person. If you vote your shares of Company common stock by submitting a proxy, your shares will be voted at the Special Meeting as you indicated on your proxy card. If no instructions are indicated on your signed proxy card, all of your shares of Company common stock will be voted:

•

" FOR " the approval of the Merger Agreement;

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•

" FOR " the non-binding, advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger; and



•

" FOR " approval to adjourn or postpone the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies in the event there are not sufficient votes at the time of the Special Meeting to approve the proposal to approve the Merger Agreement.

Electronic Voting

        Many stockholders who hold their shares of Company common stock through a broker, dealer, commercial bank, trust company or other nominee will have the option to submit their proxy cards or voting instruction cards by telephone or the Internet. If you hold your shares of Company common stock through a broker, bank or other nominee, you should check your voting instruction card forwarded by your broker, dealer, commercial bank, trust company or other nominee to see which options are available.

        Please read and follow the instructions on your proxy card or voting instruction card carefully.

Other Business

        We do not expect that any matter other than the proposals to (i) approve the Merger Agreement, (ii) approve the non-binding, advisory proposal to approve the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger and (iii) approve the adjournment or postponement of the Special Meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement, will be brought before the Special Meeting. If, however, other matters are properly presented at the Special Meeting, the persons named as proxies will vote in accordance with their best judgment with respect to those matters.

Revocation of Proxies

        Submitting a proxy on the enclosed form does not preclude a stockholder from voting in person at the Special Meeting. A stockholder of record may revoke a proxy at any time before it is voted by filing with our corporate secretary a duly executed revocation of proxy, by properly submitting a proxy by mail with a later date or by appearing at the Special Meeting and voting in person. Attendance at the Special Meeting without voting will not itself revoke a proxy. If your shares of Company common stock are held in street name, you must contact your broker, dealer, commercial bank, trust company or other nominee to revoke your proxy and for a form of proxy to vote in person at the Special Meeting.

Adjournments and Postponements

Adjournment or Postponement of the Special Meeting

        The Company may move to adjourn or postpone the Special Meeting if deemed necessary or appropriate, including in order to enable the Board to solicit additional proxies in favor of the approval of the Merger proposal if the number of shares of Company common stock present in person and represented by proxy at the Special Meeting and voting "FOR" the Merger is insufficient to approve the Merger proposal. In that event, the Company will ask its stockholders to vote only upon the adjournment or postponement proposal and not on the other proposals discussed in this proxy statement.

Vote Required and Board of Directors Recommendation

        The approval of the proposal to adjourn or postpone the Special Meeting requires the affirmative vote of the holders of a majority of the shares voted on the matter at the Special Meeting.

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        The Board has unanimously approved and authorized the Merger, and unanimously recommends that you vote "FOR" the approval of the Merger Agreement, "FOR" the proposal to approve, by a non-binding, advisory vote, the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger and "FOR" the proposal to adjourn or postpone the Special Meeting.

Rights of Dissenting Stockholders

        Under Nevada law, if the Company has less than 2,000 record and beneficial stockholders as of the record date, stockholders who do not wish to accept the Merger Consideration payable for their shares of common stock pursuant to the Merger may dissent from the merger and obtain fair value for their shares under Section 92A.300 - 92A.500 of the NRS by giving notice of intent to dissent prior to the stockholders' vote. However, as of March 22, 2013, the record date for the Special Meeting, the Company had more than 2,000 stockholders and, therefore, dissenters' rights will not be applicable to the Merger. See " Dissenters' Rights " beginning on page 81.

Solicitation of Proxies

        This proxy solicitation is being made by the Company on behalf of the Board and will be paid for by the Company. The Company's directors, officers and employees may also solicit proxies by personal interview, mail, e-mail, telephone, facsimile or other means of communication. These persons will not be paid additional remuneration for their efforts. The Company has also retained MacKenzie Partners, Inc. ("MacKenzie") to assist in the solicitation of proxies for a fee estimated not to exceed $30,000, plus the reimbursement of out-of-pocket expenses incurred on behalf of the Company.

Questions and Additional Information

        If you need assistance in completing your proxy card or have questions regarding the Merger or Special Meeting, or to request additional copies of the proxy statement or the proxy card, please contact MacKenzie at +1 (212) 929-5500 or toll-free at +1 (800) 322-2885, by email at proxy@mackenziepartners.com, or at 105 Madison Avenue, New York, New York 10016.

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SPECIAL FACTORS

         The following is a description of certain material aspects of the Merger. You are encouraged to read carefully the full text of the Merger Agreement attached to this proxy statement as Annex A because it is the legal document that governs the Merger. The following description is subject to, and is qualified in its entirety by reference to, the Merger Agreement.

The Parties to the Merger

Ameristar Casinos, Inc.

        Ameristar Casinos, Inc. is an innovative casino gaming company with eight casino hotel properties that primarily serve guests from Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska and Nevada. The Company has been a public company since 1993, and its stock is traded on the Nasdaq Global Select Market. The Company generates more than $1.1 billion in net revenues annually.

Pinnacle Entertainment, Inc.

        Pinnacle Entertainment, Inc. is an owner, operator and developer of casinos and related hospitality and entertainment facilities. Pinnacle owns and operates seven casinos, located in Louisiana, Missouri, and Indiana, and a racetrack in Ohio. In addition, Pinnacle is developing a new gaming entertainment facility at River Downs Racetrack in Cincinnati, Ohio and holds a minority equity interest in Asian Coast Development (Canada) Ltd., an international development and real estate company currently developing Vietnam's first integrated resort near Ho Chi Minh City. In January of this year, Pinnacle acquired 75.5% of the equity of the owner of the racing license for Retama Park Racetrack near San Antonio, Texas, and entered into a management contract to manage the day-to-day operations of Retama Park Racetrack.

PNK Holdings, Inc.

        PNK Holdings, Inc. was formed for the sole purpose of entering into the Merger Agreement and consummating the transactions contemplated by the Merger Agreement. HoldCo is wholly-owned by Parent.

PNK Development 32, Inc.

        PNK Development 32, Inc. was formed for the sole purpose of entering into the Merger Agreement and consummating the transactions contemplated by the Merger Agreement. Merger Sub is wholly-owned by HoldCo, and is an indirect wholly-owned subsidiary of Parent.

Overview of the Transaction

        The Company, Parent, HoldCo and Merger Sub entered into the Merger Agreement, providing for the merger of Merger Sub with and into the Company or, at the election of Parent under certain circumstances, the merger of HoldCo with and into the Company, with the Company as the surviving corporation of the Merger. If Parent elects to pursue the Alternative Merger, immediately following the completion of the Alternative Merger, the Company will be merged with and into Parent. The following will occur in connection with the Merger:

•

each outstanding share of Ameristar's common stock will be converted into the right to receive $26.50 in cash without interest (and subject to deduction of any required withholding taxes), other than (i) treasury shares; and (ii) shares held by Parent, HoldCo, Merger Sub or any other wholly-owned subsidiary of the Company.



•

each option to acquire shares, whether vested or unvested, that is outstanding at the effective time of the Merger will be cancelled in exchange for an amount in cash (without interest, and subject to deduction of any required withholding taxes) equal to the product of (i) the excess, if any, of the

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Merger Consideration over the per share exercise price of such option and (ii) the number of shares subject to such option; provided, however, that, with one exception that is scheduled in the Merger Agreement, in the case of options granted after the date of the Merger Agreement, only that portion of those options that would have vested on or before the first anniversary of the applicable grant date will be cashed out, and the remaining portion of those options will be cancelled without consideration at the effective time of the Merger; and

•

each restricted stock unit, whether vested or unvested, that is outstanding at the effective time of the Merger will be cancelled in exchange for an amount in cash (without interest, and subject to deduction of any required withholding taxes) equal to the product of (i) the Merger Consideration and (ii) the number of shares subject to such restricted stock unit; provided, however, that, with one exception that is scheduled in the Merger Agreement, in the case of restricted stock units granted after the date of the Merger Agreement, only that portion of those restricted stock units that would have vested on or before the first anniversary of the applicable grant date will be cashed out, and the remaining portion of those restricted stock units will be cancelled without consideration at the effective time of the Merger.

        Following and as a result of the Merger:

•

Company stockholders will no longer have any interest in, and will no longer be stockholders of, the Company;



•

shares of Company common stock will no longer be listed on Nasdaq, and price quotations with respect to shares of Company common stock in the public market will no longer be available; and



•

the registration of shares of Company common stock under the Exchange Act will be terminated.

Background of the Merger

        The Board and management of the Company continually review the Company's long-term strategic plan with the goal of maximizing stockholder value. As part of this process, the Board and management of the Company have periodically evaluated potential strategic alternatives relating to the Company's business and engaged in discussions with third parties.

        In November 2006, following the death of the Company's founder, Craig Neilsen, his estate (the "Estate") became the holder of approximately 54% of the Company's common stock. The co-executors of the Estate are the Company's Chief Executive Officer, Gordon Kanofsky, and Ray Neilsen, Mr. Neilsen's son, who was also then a director of the Company (the "Executors"). At the time of Mr. Neilsen's death, Mr. Kanofsky and Mr. Ray Neilsen held the positions of Executive Vice President and Senior Vice President, respectively, and, immediately following Mr. Neilsen's death both were elected by the Board as directors and named Co-Chairmen of the Board. Following Mr. Neilsen's death, the Executors advised the Board (a) the Estate would face a need for liquidity to pay estate taxes and (b) the Estate and its beneficiaries entitled to receive portions of the Estate's shares in the Company would face a need for significantly greater asset diversification. In late 2007, the Executors received inquiries from a number of third parties with respect to a potential purchase of some or all of the Company's common stock then owned by the Estate. In November 2007, the Executors advised the Board of such inquiries and the Estate's belief that an entire Company sale process might stimulate a competitive bidding process that would maximize stockholder value for all Company stockholders (including the Estate). In response, the Board established a transaction committee, comprised of the Board's independent directors (the "Transaction Committee"), to consider and manage (if appropriate) a potential sale process that involved either the shares owned by the Estate or the entire Company. At that time, the Transaction Committee hired Lazard and Bank of America Merrill Lynch to serve as its financial advisors and also relied upon Gibson, Dunn & Crutcher LLP ("Gibson Dunn") as its legal advisor.

        In December 2007, the Company undertook a number of steps in order to prepare for a potential sale process, including the execution of a non-disclosure agreement with the Estate that prohibited the Estate

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from using any confidential Company information in connection with a sale of the Estate's shares, but in early 2008, following the deterioration of the general debt and equity markets, which included a substantial decline in the Company's share price, the Transaction Committee decided to abandon the entire Company sale process. At that time, the Executors informed the Transaction Committee that the Executors intended to remain open to discussions with third parties concerning a potential sale process, subject to compliance with their confidentiality obligations to the Company. The Executors committed to inform the Transaction Committee if any such discussions produced any preliminary proposals the Executors believed should be further considered by them or the Transaction Committee or both. Such discussions with third parties continued from time to time thereafter.

        On May 31, 2008, Mr. Ray Neilsen was named Chairman of the Board (and resigned as Senior Vice President) and Mr. Kanofsky was named the Company's Chief Executive Officer and Vice Chairman of the Board.

        In the spring of 2010, as the economic and financial market conditions began to stabilize, the Executors received formal and informal inquiries from third parties regarding a potential sale of the Estate's shares and/or acquisition of all shares of the Company. Following receipt of such inquiries, the Executors advised the Transaction Committee and asked that it begin again to evaluate a potential sale of the Company. On July 30, 2010, the Transaction Committee, in consultation with its advisors, as well as the Executors and their advisors, decided to launch a formal sale process, which was to commence the week following the 2010 Labor Day weekend.

        On August 11, 2010, in response to market rumors published in various newspapers, the Company issued a press release stating that it was exploring strategic alternatives to enhance stockholder value.

        From August 31, 2010 to December 14, 2010, the Transaction Committee's financial advisors conducted a robust auction process. During the process, 38 potential buyers (24 financial and 14 strategic) were contacted, and 12 potential buyers (11 financial and one strategic) executed confidentiality agreements with the Company. As the next step, six potential buyers (five financial and one strategic) submitted preliminary indications of interest. Thereafter, two potential buyers, both private equity firms, submitted final round bids. Both bids were more than $1.50 below the $17.89 closing price of the Company's stock on the date the bids were received and both were considered unacceptable by the Transaction Committee.

        On December 14, 2010, the Company issued a press release stating that the Transaction Committee was no longer considering a sale of the Company as a means of enhancing stockholder value.

        In January 2011, the Executors and the Transaction Committee began discussing the possibility of a leveraged share repurchase transaction in which the Company would purchase all or substantially all of the Company's shares owned by the Estate. The Transaction Committee and its financial and legal advisors evaluated such a transaction and concluded that such a transaction, if executed at an appropriate price, would remove the downward pressure on the Company's stock price created by the Estate's known need to diversify and need for liquidity and would allow the Company to pursue more aggressive growth initiatives. On February 27, 2011, Ameristar and the Executors agreed to a transaction in which the Company would purchase 26,150,000 Company shares from the Estate at $17.50 per share, which was approximately a 5% premium to the then-prevailing market price. The repurchase of the Estate's shares closed in April 2011, at which time the Company entered into a new senior secured credit agreement and issued new senior notes, which together provided the requisite funds for the Company to purchase the Estate's shares and repay and/or redeem its then-current debt obligations. This refinancing had the added benefit of extending all of the maturities of the Company's outstanding indebtedness. Thereafter, the Executors sold the Estate's remaining shares in the public market. In connection with the repurchase transaction, Messrs. Neilsen and Kanofsky resigned from their posts as Chairman and Vice Chairman, respectively, of the Board.

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        As noted above, from time to time, the management of the Company and the Board review the Company's strategic plans and, in connection therewith, frequently consult with financial advisors. In furtherance of discussions in late July 2012 between Mr. Kanofsky and the Company's Chairman of the Board, Luther P. Cochrane, in early August 2012, Mr. Kanofsky asked Centerview and Lazard to prepare written presentations relating to possible strategic alternatives and growth opportunities and shareholder activism that the Board might utilize in connection with a Board discussion to take place sometime in September 2012. Centerview and Lazard, both highly regarded financial advisors, were selected because of their expertise with respect to the gaming industry generally and their familiarity with the Company and its operations. Lazard previously advised the Company on a number of matters beginning in 2003, including the 2010 sale process and the 2011 repurchase of shares from the Estate, and Centerview had previously advised the representatives of the Estate beginning in 2007 through both the 2010 sale process and the 2011 repurchase of shares from the Estate. On September 14, 2012, Mr. Kanofsky sent to the Board the presentations prepared by Centerview and Lazard, which the Board reviewed and discussed telephonically on September 27, 2012.

        Meanwhile in early September 2012, the Chairman and CEO of a publicly traded gaming company ("Bidder 1") requested to meet in person with the Company's Chairman, Mr. Cochrane. Such meeting occurred on September 19, 2012, at which time Bidder 1's CEO indicated an interest in acquiring the Company at a 15-30% premium to the then-current market price in a transaction that would include a significant portion of the consideration in the form of Bidder 1's common stock. Bidder 1's CEO indicated that such a transaction had not been discussed with Bidder 1's board of directors or management team. In response, Mr. Cochrane advised Bidder 1's CEO that he did not believe the premium offered would be sufficient for the Board to seriously consider such proposal.

        On October 4, Bidder 1 submitted an unsolicited written preliminary indication of interest to acquire the Company for $23.00 per share with $16.10 to be paid in the form of Bidder 1's common stock and $6.90 to be paid in cash, representing a 70%/30% stock and cash mix. At the same time, Bidder 1 requested access to certain non-public financial information regarding the Company. Following the receipt of Bidder 1's indication of interest, the Company engaged Lazard and Centerview to serve as its financial advisors in connection with a possible sale transaction with Bidder 1 only and engaged Gibson Dunn to serve as its legal advisor. The Board determined that, unlike the 2010 sales process and the 2011 repurchase of shares from the Estate, there were no directors with conflicting interests in a transaction with Bidder 1 and, therefore, there was no need to either re-engage the Transaction Committee or otherwise form a special committee.

        On October 8, after consultation with Gibson Dunn, the Company advised Bidder 1 that such a proposal was insufficient both as to amount and form of consideration to induce the Board to authorize the sharing of non-public information with Bidder 1.

        On October 18, Bidder 1's CEO called Mr. Cochrane and indicated that Bidder 1 would provide a revised indication of interest on October 22. Mr. Cochrane responded by email advising Bidder 1 that the Company would prefer a written indication of interest if one was to be made.

        On October 22, Bidder 1 submitted a revised unsolicited written preliminary indication of interest to acquire the Company for $24.50 per share with 50% to be paid in cash and 50% to be paid in Bidder 1's common stock and again requested access to certain non-public financial information regarding the Company. Bidder 1's October 22 letter also indicated a belief that certain of the Company's stockholders may prefer a transaction that allowed them to receive Bidder 1's common stock in a tax free manner.

        On October 24, the Board met in-person with Centerview, Lazard and Gibson Dunn, as well as management of the Company, to discuss Bidder 1's latest indication of interest. At such time, the Board determined, subject to the execution of a suitable confidentiality agreement, to allow Bidder 1 to attend a management presentation by the Company's management team and engage in high-level due diligence. Management of the Company, Centerview, Lazard and Gibson Dunn also discussed potential structures to

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allow for more consideration to be paid in the form of cash while preserving the tax-free treatment of any Bidder 1 common stock that would be included in a potential transaction.

        Following the October 24 meeting, the Company, with the assistance of Centerview and Lazard, populated a virtual dataroom with certain high-level financial and operational information (the "Dataroom") and scheduled a management presentation for Bidder 1 to be held on November 7.

        From October 24 to November 5, Bidder 1's legal advisors and Gibson Dunn, as well as management of Bidder 1 and the Company, engaged in negotiations with respect to the confidentiality agreement between the Company and Bidder 1, which was signed on November 5.

        On November 1, 2012, Parent's CEO, Anthony Sanfilippo, on an unsolicited basis, contacted Mr. Kanofsky by telephone to indicate a desire to present an acquisition proposal to the Board. In the evening of November 1, the Board, together with Centerview, Lazard and Gibson Dunn, held a special telephonic meeting at which time Mr. Kanofsky updated the Board with respect to the oral indication of interest from Parent as well as the status of the negotiations over the confidentiality agreement with Bidder 1. During the telephonic meeting, the Board authorized management to negotiate amendments to the engagement agreements with Centerview and Lazard to extend such agreements to cover a possible sale transaction regardless of the identity of the buyer, which management promptly completed. Such amendments were signed on November 2, 2012. It was also determined that there was no need to either re-engage the Transaction Committee or otherwise form a special committee in connection with a transaction with Parent, as none of the directors had conflicting interests in such a transaction.

        Also on November 5, 2012, Mr. Kanofsky and Centerview, Lazard and Gibson Dunn held a telephone call with Parent and its financial and legal advisors to discuss Parent's interest and potential purchase price. At such meeting, Mr. Sanfilippo advised that Parent would be prepared to offer between $22.00 and $25.00 per share in cash. Mr. Sanfilippo also described in general terms the proposed financing that Parent would utilize to fund the potential transaction and Parent's willingness to accept certain risks with respect to regulatory approvals. Near the conclusion of that call, Mr. Kanofsky advised Mr. Sanfilippo that it was likely that the low end of Parent's proposed range would need to be increased in order to induce the Board to consider providing any confidential information to Parent and that Parent would need to make a formal proposal in writing before the Board would consider it.

        Later on November 5, the Board met telephonically with Company management, Centerview, Lazard and Gibson Dunn. Mr. Kanofsky updated the Board with respect to the call earlier in the day with Parent, including Parent's proposed range of valuation, Mr. Kanofsky's response thereto and the fact that Parent planned to send a written proposal on November 6. The Board then discussed Parent's gaming licensing status and history of prior acquisitions and the advisability (including both the advantages and risks) of possibly reaching out to other potential acquirers.

        On November 6, Parent delivered a written non-binding indication of interest stating that it would be interested in acquiring the Company in an all-cash transaction at a price between $23.00 and $25.00 per share.

        Later on November 6, the Board held a telephonic special meeting, at which Centerview, Lazard and Gibson Dunn participated, to discuss Parent's proposal and potential next steps. Upon the advice of the Company's management, Centerview, Lazard and Gibson Dunn, the Board determined that the Company's management should, subject to the execution of a suitable confidentiality agreement, provide a management presentation to Parent and allow Parent access to some of the information in the Dataroom with the view that such steps would encourage Parent to increase its offer price.

        On November 7, the Company's executive management team held an in-person meeting with Bidder 1's executive management team, as well as with both parties' financial advisors. Following the meeting, Bidder 1 was provided access to the Dataroom.

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        From November 7 to November 15, Parent's legal counsel, Morrison & Foerster LLP ("Morrison & Foerster"), and Gibson Dunn, as well as management of Parent and the Company engaged in negotiations with respect to a confidentiality agreement between the Company and Parent, which was signed on November 15.

        On November 12, Mr. Cochrane and Mr. Kanofsky met in-person with Bidder 1's CEO, as well as its President and Chief Operating Officer, to discuss generally Bidder 1's most recent proposal, certain due diligence information pertaining to the Company and certain public information concerning Bidder 1. At such time, the parties did not engage in any negotiations with respect to Bidder 1's proposal nor did Bidder 1 alter its proposal either in terms of price or mix of consideration.

        On November 15, Penn National Gaming, Inc. ("Penn"), another publicly traded gaming company, announced its intention to restructure itself, in part, as a publicly traded REIT. Following Penn's announcement, the market price of Penn's common stock increased significantly and other regional gaming operators' stock prices, including the Company's, also increased, although not as dramatically.

        On November 16, the Company's executive management team held an in-person meeting with Parent's executive management team, as well as with both parties' financial advisors.

        On November 21, management of the Company, Centerview, Lazard and Gibson Dunn held a telephonic meeting at which time Centerview and Lazard described Penn's proposed REIT structure and the possible utilization of a similar structure by the Company. Centerview and Lazard indicated that the general increases in the stock prices of regional gaming operators following the Penn announcement likely reflected the market's view that such companies could potentially employ a similar strategy and benefit from the higher current trading multiples of REITs relative to regional gaming operators, thereby unlocking value for shareholders. However, Centerview and Lazard advised that the Company would likely have significant difficulties employing such a structure because of, among other things, the Company's current debt level, limited number of properties, and lack of diversification relative to other REITs and Penn's proposed REIT. With respect to the Company's debt level, Centerview and Lazard noted the magnitude of debt reduction that would be required by the Company to meaningfully address that impediment to structuring a REIT would require either: (i) the issuance of a substantial amount of additional equity, which would likely have significant execution risk and involve a substantial dilution of existing stockholders that may reduce or offset any potential value enhancement flowing from the REIT structure; or (ii) utilizing a significant portion of the Company's free cash flow over a several year period to make prepayments of its debt, which would limit the Company's financial flexibility to pursue other opportunities to grow the Company and increase stockholder value. In addition, management of the Company, Centerview, Lazard and Gibson Dunn discussed the uncertainty regarding the ability of a gaming company to effectively convert to a REIT due to the interplay of the rules governing REITs and gaming regulatory requirements and that a REIT structure could create additional complexities for the operation of the Company's properties and further capital investment in them.

        On November 25, Mr. Sanfilippo and Mr. Kanofsky had a telephone call in which Mr. Sanfilippo indicated that Parent would be willing to offer a share price of $24.50 in cash conditioned upon the Company granting Parent 45 days of exclusivity to complete negotiations on a purchase agreement and to complete confirmatory due diligence. Mr. Sanfilippo further advised Mr. Kanofsky that Parent was in discussions to obtain preliminary commitments from JPMCB and Goldman Finance to provide the necessary debt financing and that such commitments would be in place for a period of nine months following execution of a definitive purchase agreement.

        After consultation with the Company's executive management, on November 26, Lazard and Centerview contacted Bidder 1's financial advisors and advised them that (i) the Company had been approached by another potential buyer; (ii) Bidder 1's proposed price was not superior in terms of price or the form of consideration; and (iii) Bidder 1 needed to submit a revised proposal quickly, and, in any

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event, by the end of the day on November 27, in order to stay involved in the Company's strategic review process.

        On November 27, Bidder 1 submitted a non-binding written indication of interest reconfirming its prior proposal for an acquisition at $24.50 per share with 50% to be paid in cash and 50% to be paid in Bidder 1's common stock. Bidder 1 also requested a three-week exclusivity period in order to finalize a purchase agreement with the Company.

        On November 29, the Board met telephonically with Centerview, Lazard and Gibson Dunn to discuss the indications of interest from Bidder 1 and Parent. Gibson Dunn reviewed with the Board its legal duties, which had previously been reviewed in detail with the Board at its meeting on October 24 and each subsequent meeting. At this meeting, Centerview and Lazard presented an analysis of Penn's proposed REIT structure and the potential utilization of such a structure by the Company. Centerview, Lazard and the Board also discussed that the Company would likely have significant difficulties employing such a structure because of, among other things, the Company's current debt level, limited number of properties, and lack of diversification relative to other REITs and Penn's proposed REIT. With respect to the Company's debt level, Centerview and Lazard noted the magnitude of debt reduction that would be required by the Company to meaningfully address that impediment to structuring a REIT would require either: (i) the issuance of a substantial amount of additional equity, which would likely have significant execution risk and involve a substantial dilution of existing stockholders that may reduce or offset any potential value enhancement flowing from the REIT structure; or (ii) utilizing a significant portion of the Company's free cash flow over a several year period to make prepayments of its debt, which would limit the Company's financial flexibility to pursue other opportunities to grow the Company and increase stockholder value. Management of the Company, Centerview, Lazard, Gibson Dunn and the Board also discussed the uncertainty regarding the ability of a gaming company to effectively convert to a REIT due to the interplay of the rules governing REIT's and gaming regulatory requirements and that a REIT structure could create additional complexities for the operation of the Company's properties and further capital investment in them.

        At this meeting, the Board also asked Centerview, Lazard and Gibson Dunn, as it had done previously, whether they recommended that the Company actively solicit acquisition proposals from other potential purchasers. Centerview and Lazard reiterated their view that the solicitation of other parties would not likely increase the competition in the bidding process and any related delays could jeopardize the process the Company was currently pursuing with Bidder 1 and Parent, due to the following factors: (i) the process the Company ran in late 2010 and the limited interest at that time from strategic buyers; (ii) the likelihood that private equity purchasers, due to the lack of synergies and their potential rate of return requirements, would not make proposals competitive with the valuation proposals currently offered by Parent and Bidder 1; (iii) their view that other possible strategic buyers, beyond Parent and Bidder 1, each have circumstances that suggest they are unlikely to pursue an acquisition of the Company; and (iv) the provisions of the proposed form of merger agreement prepared by Gibson Dunn would not preclude other potential buyers (strategic or financial) from making a proposal following the execution of a definitive agreement with either Bidder 1 or Parent. In addition, the Board considered the possibility that the solicitation of additional potential bidders would increase the likelihood of potential leaks regarding the Company's potential sale and the consequences that might have on the Company and its business, including disruption of the Company's relationships with its customers, suppliers and employees. The Board ultimately concluded that it should allow both potential buyers to conduct further due diligence and request that both parties submit final bids by the end of business on December 7.

        Later on November 29, Lazard and Centerview contacted Bidder 1's financial advisor and Parent's financial advisor, Goldman, Sachs & Co. ("Goldman Sachs"), to inform them of the Board's decision and the bid procedures, which required them to submit, by no later than the close of business on December 7, a final offer price, a mark-up of a proposed merger agreement provided to them by Gibson Dunn, any further due diligence requirements, notice of any internal or external approvals that would be required in

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order to consummate a transaction, and any financing commitments necessary to consummate the transaction. During these calls, Centerview and Lazard told both Bidder 1's financial advisor and Goldman Sachs that their respective clients had not distinguished themselves with their prior bids, which were not deemed by the Board to be sufficiently compelling to consider selling the Company. Along those lines, Centerview and Lazard reiterated to the financial advisors of Bidder 1 and Parent that the Board had not decided to pursue a sale of the Company and was still evaluating strategic alternatives, including remaining independent. Centerview and Lazard also instructed Bidder 1's financial advisor to request Bidder 1 to allow the Company to conduct due diligence on Bidder 1 in order to evaluate the value of any Bidder 1 common stock that might be received in a transaction with Bidder 1.

        Also on November 29, Gibson Dunn sent Bidder 1's legal advisors a proposed form of confidentiality agreement that would govern the use of any confidential information provided by Bidder 1 to the Company in connection with the Company's evaluation of the value of Bidder 1's common stock.

        On November 30, Bidder 1's CEO called Mr. Cochrane and advised him that Bidder 1 was not interested in participating in the process outlined by Centerview and Lazard and that, despite this reluctance, Bidder 1 might be willing to consider a transaction, potentially at $26.00 per share, assuming 30-50% of such consideration was paid in Bidder 1's common stock. Bidder 1's CEO also indicated that it would only be willing to bid above its prior proposal if the Board indicated a price it would be willing to accept and the Company agreed to negotiate exclusively with Bidder 1.

        Also on November 30, the Company announced it was terminating efforts to pursue a casino license for western Massachusetts. This decision was made by the Company's management following lengthy analysis and consultation with the Board, and was not impacted by the Company's ongoing discussions with Bidder 1 and Parent or the possibility of a sale transaction. The Company's management concluded that there was not a sufficient likelihood that the basis upon which the Company could be awarded the license to develop and operate a casino in Springfield, Massachusetts was favorable enough to warrant its further pursuit. The local selection process, various project requirements and associated costs led to management's decision to reserve the Company's resources for more attractive growth and diversification opportunities.

        On December 2, Mr. Cochrane called Bidder 1's CEO, in an effort to encourage Bidder 1 to participate in the Company's process, and told him that Bidder 1 would be well advised to abide by the bid procedures that the Company had provided and reiterated that the Board had not yet reached a conclusion to sell the Company, but that it had committed itself to a process aimed at obtaining the best offer and that Bidder 1 should make every effort to participate in that process if it were serious about acquiring the Company. In addition, Mr. Cochrane advised that it would be critical for Bidder 1 to allow the Company to conduct due diligence on Bidder 1 in order to evaluate the value of any stock consideration that Bidder 1 proposed to use in a transaction with the Company.

        Also on December 2, Mr. Sanfilippo called Mr. Kanofsky to discuss certain aspects of the Company's proposed form of merger agreement. Thereafter, Mr. Sanfilippo and Mr. Kanofsky exchanged emails regarding the intent or reading of certain provisions of the proposed merger agreement.

        On December 3, Parent was provided with access to certain documents included in the Dataroom. Thereafter, through December 20, the Company responded to subsequent diligence inquiries from Parent and posted additional information to the Dataroom accessible to Parent.

        On December 5, the CEO of Bidder 1 called Mr. Cochrane and reiterated that Bidder 1 would not participate in a competitive bidding process, but that Bidder 1 was nevertheless still interested in potentially acquiring the Company. Bidder 1's CEO also advised Mr. Cochrane that Bidder 1 would not consider a transaction with the Company that involved the Company's stockholders receiving less than 40% of the consideration in the form of Bidder 1's common stock. Mr. Cochrane again advised that if Bidder 1 were interested in acquiring the Company it should adhere to the process Centerview and Lazard communicated on November 29.

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        On December 6, Centerview and Lazard called Bidder 1's financial advisor at which time Bidder 1's financial advisor confirmed Bidder 1's interest in the Company but its unwillingness to participate in a competitive process.

        During the morning of December 7, Mr. Sanfilippo called Mr. Kanofsky and advised that Parent would be submitting its bid later that day. Mr. Sanfilippo asked Mr. Kanofsky if there were any last-minute instructions that Mr. Kanofsky might want to pass on to him. Mr. Kanofsky informed Mr. Sanfilippo, as he had done on prior occasions, that Parent not only needed to offer the highest purchase price, but that such purchase price also needed to represent a premium compelling enough for the Board to agree to sell the Company. Mr. Kanofsky did not indicate what such a purchase price would have to be for the Board to reach such a conclusion.

        Later on December 7, Parent submitted a written offer to purchase all of the Company's common stock for $26.00 per share in cash. Parent's submission included, as requested, a revised draft of the proposed form of merger agreement reflecting Parent's comments, draft debt financing commitments from JPMCB and Goldman Finance and a list of the confirmatory due diligence items it wished to receive. In addition, Parent submitted a draft exclusivity agreement that requested the Company to agree to negotiate exclusively with Parent for a period of 45 days.

        On December 8, the Board met telephonically with Centerview, Lazard and Gibson Dunn to review Parent's proposal. In advance of the meeting, Centerview and Lazard provided the Board with financial analyses with respect to the proposal and Gibson Dunn provided the Board with lists of material issues with respect to Parent's revisions to the proposed form of merger agreement and Parent's debt financing commitment letter. Parent's mark-up of the merger agreement raised several issues, including (i) removal of the Company's ability to seek damages in the event that Parent failed to obtain gaming or antitrust approvals, unless Parent had materially and intentionally breached its obligations under the merger agreement; (ii) the replacement of the Company's ability to seek damages if Parent's financing became unavailable with a $50 million liquidated damages remedy; (iii) a termination fee of $50 million that would be payable by the Company under certain circumstances, including to accept a superior proposal; and (iv) the elimination of Parent's obligation to divest assets or properties to the extent necessary to obtain antitrust or gaming regulatory approvals. The Board also received a presentation from Centerview and Lazard evaluating the proposed purchase price and Gibson Dunn again reviewed with the Board its legal duties.

        Because Bidder 1 had orally indicated that it might be willing to pay as much as $26.00 per share with 40% to be paid in the form of Bidder 1's common stock, the Board previously requested that Centerview and Lazard advise the Board as to what, if any, premium or discount the Board should attribute to any Bidder 1 common stock that would be used as consideration in any transaction with Bidder 1 so that the Board could evaluate the value of any offer from Bidder 1 relative to the cash purchase price proposed by Parent. At the meeting, Centerview and Lazard advised the Board that accepting stock in a transaction with Bidder 1 involved uncertainty that would not be present in an all-cash transaction, noting that (a) Bidder 1 had refused to provide the Company with any non-public information to allow the Company and its advisors to conduct more thorough financial and operational due diligence, which would allow them to better assess the value of Bidder 1's stock, (b) an acquisition of the Company would be transformational for Bidder 1, (c) in a transaction where 40% of the consideration was to be paid in Bidder 1 stock, the Company's stockholders, collectively, would own a significant portion of Bidder 1's outstanding shares following a transaction and, to the extent that a large number of the Company's stockholders preferred to sell Bidder 1 stock shortly after a transaction, they could have difficulty selling large amounts of Bidder 1 stock efficiently, and (d) Bidder 1's common stock had been trading very close to all-time highs. A countervailing point considered by the Board was that the Company's stockholders, in a properly structured transaction, would be able to defer any tax consequences with respect to any consideration received in the form of Bidder 1 common stock. However, Centerview and Lazard indicated that they

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believed a large percentage of the Company's stockholders would be indifferent to the tax treatment of the transaction.

        The Board discussed the proposal from Parent with its financial and legal advisors and also whether the Company should again try to persuade Bidder 1 to submit a proposal. The Board considered the fact that Bidder 1 had not provided the Company and its advisors an opportunity to conduct due diligence on Bidder 1 and was requiring exclusivity in order to make another proposal, and the Board considered Bidder 1 unlikely to offer a purchase price that, when viewed in light of the stock component Bidder 1 demanded, would exceed Parent's current proposal. The Board also evaluated the possibility that Parent might alter its proposal if the Board delayed negotiations with Parent in order to wait for Bidder 1 to make a new proposal. The Board further considered that Bidder 1 held gaming licenses in fewer of the Company's jurisdictions than did Parent, and that the closing of a sale to Bidder 1 could be expected to take up to several months longer than the closing of a sale to Parent. After consultation with Centerview, Lazard and Gibson Dunn, the Board concluded that the Company should proceed with negotiations with Parent if Parent agreed to make certain modifications to its proposal, namely (i) an increase in the purchase price to $26.50; (ii) a significant reduction in the termination fee payable by the Company under certain circumstances; (iii) a shorter exclusivity period; (iv) a reasonable requirement to divest assets or properties to the extent necessary to obtain antitrust and/or gaming regulatory approvals; and (v) a significant increase in the termination fee payable by Parent under certain circumstances, including Parent's inability to obtain financing or regulatory approvals. The Board authorized Mr. Kanofsky to call Mr. Sanfilippo to negotiate these points.

        Later on December 8, Mr. Kanofsky called Mr. Sanfilippo and discussed the points enumerated above. Over the course of several subsequent calls between them that day, Mr. Kanofsky and Mr. Sanfilippo agreed to the following: (i) a purchase price of $26.50 per share in cash; (ii) a Company termination fee of $38 million payable in certain circumstances; (iii) an exclusivity period that ended on December 31, 2012 with a good faith effort to execute a definitive merger agreement by December 20; (iv) Parent would be required to divest up to two casino properties if necessary in order to obtain antitrust and/or gaming regulatory approvals, but no more than one property in any one state; and (v) a Parent termination fee of $85 million payable in certain circumstances. Later that night, Mr. Kanofsky informed the Board of the results of his negotiations with Mr. Sanfilippo.

        On December 11, Parent submitted a revised written proposal reflecting the terms Mr. Kanofsky and Mr. Sanfilippo discussed on December 8 and the Company and Parent entered into an exclusivity agreement providing Parent with the exclusive right to negotiate with the Company through December 31, 2012.

        From December 11 until the execution of the Merger Agreement on December 20, the Company, Parent and their respective legal advisors exchanged drafts of the Merger Agreement and held extensive negotiations. In addition, over this period the Company continued to provide due diligence materials to Parent.

        On December 14, the Company, Gibson Dunn, Parent and Morrison & Foerster conducted in-person negotiations in Los Angeles at which time the material open issues were discussed and largely resolved.

        On December 17, the Board met with Centerview, Lazard, Gibson Dunn and Company management to review and discuss the process and the negotiations of the Merger Agreement with Parent. Gibson Dunn again reviewed with the Board its legal duties and reviewed the revised terms of the Merger Agreement negotiated to date. Company management indicated that good progress was being made on the Merger Agreement and that Parent had agreed to pay a termination fee of $85 million, not only in circumstances where it could not obtain financing, but also if the transaction was not consummated because Parent was unable to obtain the necessary gaming regulatory approvals. Centerview and Lazard also confirmed that neither Bidder 1 nor its financial advisor had contacted them since December 6.

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        On December 20, the Board met again to review and discuss the process and the status of negotiations with Parent. At the outset, Gibson Dunn once again reviewed with the Board its legal duties, in particular the responsibilities of the Board members should they decide to authorize a sale transaction. At the request of the Board, Lazard delivered its oral opinion (which was subsequently confirmed in writing as of December 20, 2012) to the effect that, as of that date and based on and subject to the various considerations to be described in its written opinion, the Merger Consideration to be paid to holders of Company common stock (other than (i) holders who are entitled to and perfect dissenters' rights of their shares of Company common stock or (ii) Parent, HoldCo, Merger Sub or any other wholly-owned subsidiary of Parent (such holders, collectively, the "Excluded Holders")) in the transaction was fair, from a financial point of view, to such holders of Company common stock (other than the Excluded Holders). The full text of Lazard's written opinion dated December 20, 2012, which sets forth, among other things, the procedures followed, assumptions made, matters considered and limitations and qualifications on the review undertaken by Lazard in connection with its opinion, is attached to this Proxy Statement as Annex B . At the same meeting, Centerview delivered its oral opinion (which was subsequently confirmed in writing as of December 20, 2012) to the effect that, as of that date and based on and subject to the various considerations to be described in its written opinion, the Merger Consideration to be paid to the holders of shares of Company common stock (other than (i) shares of common stock owned directly or indirectly by Parent, HoldCo or Merger Sub or any wholly-owned subsidiary of the Company or (ii) shares of common stock held by holders who are entitled to and properly demand dissenters' rights for such shares (together, "Excluded Shares")) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. The full text of Centerview's written opinion dated December 20, 2012, which sets forth, among other things, the procedures followed, assumptions made, matters considered and limitations and qualifications on the review undertaken by Centerview in connection with its opinion, is attached to this Proxy Statement as Annex C . Gibson Dunn reviewed the terms of the Merger Agreement and noted that all issues had been satisfactorily resolved. Following further discussion, the Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable and in the best interests of and were fair to the Company and its stockholders, and (ii) approved and authorized the Merger Agreement and the transactions contemplated thereby, including the Merger. The Board unanimously recommended that the Company's stockholders approve the Merger Agreement.

        In the evening of December 20, the Company, Parent, HoldCo and Merger Sub executed the Merger Agreement.

        Prior to the opening of the U.S. financial markets on December 21, the Company and Parent publicly announced via joint press release the execution of the Merger Agreement.

Recommendation of the Board of Directors and Reasons for Recommending the Approval of the Merger Agreement

        The Board has unanimously

•

deemed it advisable and in the best interests of the Company and its stockholders that the Company enter into the Merger Agreement, and that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable and fair to and in the best interests of the Company and its stockholders; and



•

directed that the approval of the Merger Agreement be submitted to a vote at a meeting of the stockholders of the Company and recommended to the stockholders of the Company that they vote for the approval of the Merger Agreement, for the proposal to approve, by a non-binding, advisory vote, the compensation that may become payable to the Company's named executive officers in connection with the completion of the Merger, and for the proposal to adjourn or postpone the

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Special Meeting, and all other actions or matters necessary or appropriate to give effect to the foregoing pursuant to the NRS.

Reasons for Recommending the Approval of the Merger Agreement

        In reaching these determinations, the Board considered a number of factors, including the following material factors:

•

Merger Consideration.   The Board concluded that the Merger Consideration of $26.50 per share represented an attractive valuation for the Company and an opportunity for the Company's stockholders to receive a significant premium over the market price of the Company's common stock. The Board reviewed the historical market prices, volatility and trading information with respect to the Company's common stock, including:



•

the fact that the Merger Consideration represents premiums of approximately 45% and 43% over the average closing prices of the Company common stock for the 90 and 60 days, respectively, ended December 20, 2012, the day the Board approved the Merger Agreement;



•

the unlikelihood of a strategic alternative at a higher value than the cash price to be paid by Parent or another potential buyer, in light of the fact that the Company actively negotiated increases in the initial and subsequent offers made by the potential buyers, including Parent;



•

the relationship of the Merger Consideration to the discounted equity value of the Company operating as an independent entity, based on Company management's projections as detailed in " Opinion of Lazard Frères & Co. LLC " and " Opinion of Centerview Partners LLC " below; and



•

the multiple of the Company's aggregate value in the proposed Merger to its last four quarters' Adjusted EBITDA implied by the Merger Consideration compared to multiples implied in comparable merger and acquisition transactions as detailed in " Opinion of Lazard Frères & Co. LLC " and " Opinion of Centerview Partners LLC " below.



•

Review of Prospects of Remaining Independent.   The Board considered the Company's future prospects if it remained independent, focusing primarily on:



•

management's views on the Company's prospects over the next five years, the gaming industry generally, and the Company's long-term financial projections, as well as the Board's knowledge and understanding of the business, operations, management, financial condition, earnings and prospects of the Company, including the prospects of the Company as an independent entity;



•

the potential impact on us of consolidation in the gaming industry generally and the expectation of increased competition in certain gaming markets in the future from gaming companies with greater resources;



•

the stagnant or low growth rates of consumer spending on gaming at a time when more states have begun to license gaming, which has led to significant cannibalization of the Company's existing markets, and the likely continued erosion of consumer demand in connection with the probable legalization of online gaming and the uncertainty concerning legislative and competitive outcomes that may make it difficult for the Company to compete in the online gaming space;



•

the risks associated with legislative changes that could, among other things, permit gaming in neighboring states or permit expansion within the Company's current markets, which would increase competition for the Company's properties;



•

the risks associated with other legislative changes, including the imposition of smoking bans or limits on hours of operation or other gaming restrictions in jurisdictions where we currently operate and the negative impact such changes would have on our operating results;

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•

the belief that the Company's growth prospects were dependent upon the development or acquisition of new properties, the costs of, and the risks associated with and potential returns on investments in development projects and the perceived lack of attractive acquisition candidates on favorable terms in the foreseeable future; and



•

the views of management, Centerview and Lazard on undertaking a REIT conversion similar to the conversion proposed by Penn, namely, (i) any benefits related to a potential REIT conversion would likely not be achievable until the Company had significantly reduced its debt level, and (ii) the Company might face a range of potential difficulties in employing such a structure, including the uncertainty surrounding such a structure in the gaming regulatory environment and the potential operating complexities arising from having to operate separate REIT and operating company entities.



•

Financial Analyses and Opinions of the Company's Financial Advisors.   The Board received opinions from Lazard and Centerview, delivered to the Board on December 20, 2012, subsequently confirmed in writing. Each financial advisor independently analyzed the transaction. Because the firms applied independent judgments, the quantitative outputs of the analyses necessarily differ. Nevertheless, both firms reached the same conclusion, namely, that, as of December 20, 2012, and based upon and subject to the various assumptions, procedures, factors, qualifications and limitations set forth in the particular written opinion, the Merger Consideration to be paid to holders of Company common stock pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.



•

Form of Merger Consideration.   The Board considered that the form of consideration to be paid to holders of Company common stock is cash, which will provide certainty of value and immediate liquidity to the holders of such Company common stock.



•

Terms of the Merger Agreement, Lack of Financing Condition and Ability to Accept a Superior Proposal.   The Board considered the terms of the Merger Agreement, including the respective representations, warranties, covenants, conditions and termination rights of the parties and the termination fees payable by the Company and Parent, respectively. In particular:



•

The Board considered that Parent is required by the Merger Agreement to use its reasonable best efforts to obtain all regulatory approvals, including, if requested, an obligation to divest up to two of its or the Company's properties in order to obtain antitrust or gaming approvals and the fact that Parent would be obligated under certain circumstances to pay to the Company a termination fee of $85,000,000 if Parent does not obtain all gaming regulatory approvals;



•

The Board considered the obligation of Parent to obtain the requisite financing to consummate the Merger, the lack of a financing condition, the strength of the financing commitment Parent received from JPMCB and Goldman Finance and/or their affiliates and the $85,000,000 termination fee Parent would be obligated under certain circumstances to pay to the Company if Parent does not obtain the necessary financing; and



•

The Board considered the procedural safeguards that the Board believes were and are present to ensure the fairness of the Merger. The Board noted that the termination fee payable by the Company if it were to accept a superior proposal and the fact that Parent would have the right to match any such superior proposal for four business days could have the effect of discouraging competing third party proposals, but that such provisions are customary for transactions of this size and type. The Board considered that the $38,000,000 termination fee, representing approximately 3.96% of the equity value and approximately 1.37% of the enterprise value of the proposed transaction was reasonable, particularly in light of the Company's historical solicitation of offers to acquire the Company and the recent process conducted with Parent and Bidder 1. The Board also noted that the Merger Agreement allows

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the Company and the Board to respond to unsolicited competing proposals that the Board determines are or might lead to a superior proposal and to terminate the Merger Agreement if such a superior proposal is made. In addition, none of the parties that had previously expressed interest in the Company was contractually restricted from making a competing proposal as the standstill provisions of the confidentiality agreements with potential buyers from the 2010 sale process expired in late 2011 and the execution of the Merger Agreement would release Bidder 1 from its standstill provision. In particular, the Board concluded that third parties would not be discouraged by the $38,000,000 termination fee because it represents approximately 1.37% of the enterprise value of the Company based on the Merger Consideration.

•

Likelihood of Closing.   The Board considered the closing conditions in the Merger Agreement and the likelihood that Parent would be able to obtain the necessary financing and gaming approvals in order to consummate the transaction. The Board further considered, among other things:



•

the absence of a financing condition and the financing commitments obtained by Parent;



•

the likelihood that Parent, as an existing gaming operator that is already licensed in several states where the Company operates, would be able to obtain the necessary gaming approvals on a timely basis; and



•

the Company's right, in certain circumstances, to specifically enforce Parent's obligations.

        In the course of its deliberations, the Board also considered a variety of uncertainties, risks and other countervailing factors concerning the Merger Agreement and the Merger, including:

•

the Company may be unable to obtain stockholder approval as required for the transactions contemplated by the Merger Agreement;



•

conditions to the closing and the transactions contemplated by the Merger Agreement may not be satisfied;



•

the transactions contemplated by the Merger Agreement may involve unexpected costs, liabilities or delays;



•

the business of the Company may suffer as a result of uncertainty surrounding the Merger and the transactions contemplated by the Merger Agreement;



•

the Company may be adversely affected by other economic, business, and/or competitive factors;



•

the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;



•

the risk that the Merger and the transactions contemplated by the Merger Agreement disrupt the Company's current plans and operations;



•

the risk that the Merger and the transactions contemplated by the Merger Agreement create potential difficulties in employee retention;



•

other risks to consummation of the Merger and the transactions contemplated by the Merger Agreement, including the risk that the Merger and the transactions contemplated by the Merger Agreement will not be consummated within the expected time period;



•

the Company may be required, if the Merger is not completed, to pay its own expenses associated with the Merger Agreement, the Merger and the other transactions contemplated thereby;



•

that an all-cash transaction will be taxable to the Company's stockholders that are U.S. holders for U.S. federal income tax purposes; and



•

that restrictions in the Merger Agreement on the conduct of the Company's business prior to the consummation of the Merger may delay or prevent the Company from undertaking business opportunities that could arise prior to the consummation of the Merger.

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        In addition, the Board was aware that certain of our directors and executive officers have interests with respect to the Merger that differ from, or are in addition to, their interests as stockholders of the Company. The Board, however, observed that the majority of the value of such different or additional interests relates to change in control benefits that arise from equity-based compensation, which the Board felt to a significant extent aligned the interests of the directors and executive officers with those of the stockholders in seeking to maximize the per-share Merger Consideration. See "— Interests of the Company's Directors and Executive Officers in the Merger " and " Advisory Vote Regarding Merger-Related Compensation (Say-on-Golden Parachute Compensation) " beginning on pages 51 and 77, respectively.

        The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive, but the Board believes it addresses the material factors considered by the Board in its consideration of the Merger, including factors that may support the Merger as well as factors that may weigh against it. In view of the variety of factors and the amount of information considered, the Board did not find it practicable to, and did not make specific assessments of, quantify or otherwise assign relative weights to, the specific factors considered in reaching its determination. In addition, the Board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, and individual members of the Board may have given different weights to the above factors.

Opinion of Lazard Frères & Co. LLC

        On December 20, 2012, at a meeting of the Board to evaluate the Merger Agreement, Lazard rendered its oral opinion, subsequently confirmed in writing, that based upon and subject to the assumptions, procedures, factors, limitations and qualifications set forth in such opinion, the Merger Consideration to be paid to holders of Company common stock (other than shares owned by the "Excluded Holders") in the Merger was fair, from a financial point of view, to the holders of Company common stock.

         The full text of the Lazard opinion is attached as Annex B to this proxy statement and is incorporated into this proxy statement by reference. The description of the Lazard opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the Lazard opinion set forth as Annex B . Stockholders are urged to read the Lazard opinion in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Lazard in connection with the opinion. The Lazard opinion is for the benefit of the Board, and only addresses the fairness, from a financial point of view, of the consideration to be paid to holders of the Company's common stock (other than the Excluded Holders) in the Merger as of the date of the opinion. The Lazard opinion does not address the relative merits of the Merger as compared to other transactions or business strategies that might be available to the Company or the underlying decision by the Company to engage in the Merger, and is not intended to and does not constitute a recommendation to any holder of Company common stock as to how such holder should vote with respect to the Merger or any matter relating thereto. The Lazard opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Lazard as of, the date of the Lazard opinion. Lazard assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date of the opinion. The following is only a summary of the Lazard opinion. You are urged to read the entire opinion.

        In connection with its opinion, Lazard:

•

reviewed the financial terms and conditions of a draft of the Merger Agreement dated December 20, 2012;



•

reviewed certain publicly available historical business and financial information relating to the Company;

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•

reviewed various financial forecasts and other data provided to Lazard by the management of the Company relating to the business of the Company, including the Company's base case forecast (the "Base Case Projections") and the Company's alternate case forecast (the "Alternate Case Projections");



•

held discussions with members of the senior management of the Company with respect to the business and prospects of the Company;



•

reviewed public information with respect to certain other companies in lines of business Lazard believed to be generally relevant in evaluating the business of the Company;



•

reviewed the financial terms of certain business combinations involving companies in lines of business Lazard believed to be generally relevant in evaluating the business of the Company;



•

reviewed historical stock prices and trading volumes of Company common stock; and



•

conducted such other financial studies, analyses and investigations as Lazard deemed appropriate.

        Lazard assumed and relied upon the accuracy and completeness of the foregoing information, without independent verification of such information. Lazard did not conduct any independent valuation or appraisal of any of the assets or liabilities (contingent or otherwise) of the Company, or concerning the solvency or fair value of the Company, and Lazard was not furnished with any such valuation or appraisal. At the direction of the Board, Lazard utilized both the Base Case Projections and the Alternate Case Projections for purposes of its analysis. Lazard assumed, with the consent of the Board, that the Base Case Projections and the Alternate Case Projections had been reasonably prepared on bases reflecting the best currently available estimates and judgments as to the future financial performance of the Company. Lazard assumed no responsibility for and expressed no view as to the Base Case Projections or the Alternate Case Projections or the assumptions on which they were based.

        The Lazard opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Lazard as of, the date of the Lazard opinion. Lazard assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date thereof. Lazard did not, and does not, express any opinion as to the price at which shares of Company common stock may trade at any time subsequent to the announcement of the Merger. Although Lazard did participate in discussions with one potential alternative buyer during its current engagement and did solicit indications of interest from third parties in late 2010 regarding a potential transaction with the Company, Lazard was not authorized to, and it did not, otherwise solicit indications of interest from third parties regarding a potential transaction with the Company, nor was it requested to consider, and its opinion did not address, the relative merits of the Merger as compared to any other transaction or business strategy in which the Company might engage or the merits of the underlying decision by the Company to engage in the Merger.

        In rendering its opinion, Lazard assumed, with the consent of the Board, that the Merger would be consummated on the terms described in the draft Merger Agreement, without any waiver or modification of any material terms or conditions. Representatives of the Company advised Lazard, and Lazard assumed, that the Merger Agreement, when executed, would conform to the draft reviewed by Lazard in all material respects. Lazard also assumed, with the consent of the Board, that obtaining the necessary governmental, regulatory or third party approvals and consents for the Merger will not have an adverse effect on the Company or the Merger in any respect that is material to Lazard's analysis. Lazard did not express any opinion as to any tax or other consequences that might result from the Merger, nor does the Lazard opinion address any legal, tax, regulatory or accounting matters, as to which Lazard understood that the Board obtained such advice as it deemed necessary from qualified professionals. Lazard expressed no view or opinion as to any terms or other aspects (other than the Merger Consideration to the extent expressly specified in the Lazard opinion) of the Merger, including, without limitation, the form or structure of the Merger or any agreements or arrangements entered into in connection with, or contemplated by, the

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Merger. In addition, Lazard expressed no view or opinion as to the fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties to the Merger, or class of such persons, relative to the Merger Consideration or otherwise.

        The following is a brief summary of the material financial and comparative analyses that Lazard deemed appropriate for this type of transaction and that were performed by Lazard in connection with rendering its opinion as well as analyses that were presented to the Board for informational purposes only but were not material to the rendering of Lazard's opinion. The summary of Lazard's analysis described below is not a complete description of the analysis underlying Lazard's opinion. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analyses and the application of those methods to the particular circumstances, and, therefore, is not readily susceptible to summary description. In arriving at its opinion, Lazard considered the results of all of the analyses and did not attribute any particular weight to any factor or analysis considered by it; rather, Lazard made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

        In its analysis, Lazard considered industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of the Company. No company or business used in Lazard's analysis as a comparison is identical to the Company, and an evaluation of the results of that analysis is not entirely mathematical. Rather, the analysis involves complex considerations and judgments concerning financial, operating and geographical characteristics and other factors that could affect the public trading or other values of the companies analyzed. The estimates contained in Lazard's analysis and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analysis. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, the estimates used in, and the results derived from, Lazard's analysis are inherently subject to substantial uncertainty.

        The financial analysis summarized below includes information presented in tabular format. In order to fully understand Lazard's financial analysis, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analysis. Considering the data in the tables below without considering the full narrative description of the financial analysis, including the methodologies and assumptions underlying the analysis, could create a misleading or incomplete view of Lazard's financial analysis.

Summary of Lazard Valuation of the Company

        Comparable Companies Analysis

        Lazard reviewed and analyzed selected public companies that it viewed as generally relevant in evaluating the Company. In performing this analysis, Lazard reviewed and analyzed publicly available financial information relating to the selected public companies, and compared such information to the corresponding information for the Company. Specifically, Lazard compared the Company to the following public companies (the "Selected Companies"):

        Although none of the Selected Companies is directly comparable to the Company, the companies have operations and/or other criteria, such as lines of business, markets, business risks, growth prospects,

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maturity of business and size and scale of business that, for purposes of this analysis, Lazard considered generally relevant in evaluating the Company.

        Based on equity analysts' estimates and other public information, Lazard reviewed, among other things, the enterprise value of each of the Selected Companies as a multiple of such company's earnings before interest, taxes, depreciation and amortization, or EBITDA, for the most recently reported last twelve months ("LTM") and its estimated EBITDA for the calendar years ending December 31, 2012 and December 31, 2013 (referred to below as "CY 2012E" and "CY 2013E"). A company's enterprise value is equal to its short-and long term-debt plus the market value of its common equity and the value of any minority interest and preferred stock (at liquidation value), minus its cash and cash equivalents. Where applicable, EBITDA and enterprise values were also adjusted for a company's attributable portion of a joint venture.

        The results of the analysis were as follows: