May 30--Pinnacle Entertainment's $2.8 billion bid to buy Ameristar Casinos appears to be in jeopardy after the Federal Trade Commission announced that it would seek to block the deal.

In a 17-page administrative complaint, the FTC on Wednesday said a merger of the Las Vegas-based rivals would reduce competition and hurt consumers in both the St. Louis area -- Missouri's biggest gaming market -- and Lake Charles, La.

Pinnacle, the owner of River City in south St. Louis County and the Lumiere Place casino on the St. Louis riverfront, announced in December that it would buy Ameristar, which owns a casino in St. Charles.

The deal would double Pinnacle's size as well as make it the dominant operator in St. Louis and Missouri.

In St. Louis, the deal would give Pinnacle control of three of the area's six casinos and nearly 60 percent of the area's $1 billion gambling market. Including the Ameristar casino in Kansas City, the deal also would make Pinnacle the biggest player in Missouri gaming, with four of the six largest casinos.

Pinnacle's chief executive, Anthony Sanfilppo, said in a statement that the company was disappointed by the FTC's decision.

"We continue to believe that the merger of these two gaming-entertainment property portfolios would not have any adverse effect on competition," he said. "We are committed to completing the transaction as expeditiously as possible and in the time frame agreed upon with Ameristar."

In December, the companies had said they expected the deal to close by the second half of 2013. An Ameristar spokeswoman declined to comment on the FTC's complaint.

The FTC said the commissioners voted 4-0 to seek a temporary restraining order and, if necessary, a preliminary injunction to prevent the deal from closing, pending an administrative hearing. The hearing is scheduled for Oct. 28 in Washington.

The agency said the Pinnacle-Ameristar combination would increase prices and lower quality for customers in the St. Louis area, where the two companies now compete, and in Lake St. Charles, where they would have begun competing in 2014.

In the St. Louis area, the merger would reduce the number of casino operators from four to three: Pinnacle; Penn National, owner of the Hollywood in Maryland Heights and Argosy Alton; and the Casino Queen in East St. Louis.

"The parties' combined market share and the post-merger market concentration levels in St. Louis make the transaction presumptively unlawful in that market," the FTC said in a news release.

Since entering the St. Louis market in 2007 and expanding in 2010, Pinnacle has managed to "steal share" from Ameristar, according to the FTC complaint. Ameristar responded with increased promotions and better service, the complaint added.

"For customers of Pinnacle and Ameristar casinos, this competition translated into better odds ... free or lower-cost amenities, and a better gambling experience," the complaint said.

Industry analysts have speculated Pinnacle might sell one of its St. Louis casinos to win FTC approval to acquire Ameristar.

Kathleen Renck, a gaming analyst at FBN Securities in New York, said the FTC complaint indicated that Pinnacle had not made "any offer to divest anything."

The Missouri Gaming Commission continues to examine the proposed deal, said Ed Grewach, the commission's general counsel.

"We're in the process of doing our own, independent investigation," he said. "We don't have any particular timetable."

Pinnacle owns seven U.S. casinos and a racetrack. It has a gaming operation under development in Cincinnati and holds a minority stake in a casino underway in Vietnam. Las Vegas-based Ameristar has eight casinos in the U.S.

Pinnacle stock dropped 8 percent, to $18.92 a share, on the news.

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