CEO Dan Lee’s five-year plan for Full House Resorts dominated the company’s fourth-quarter earnings call.
Full House reported a 13% increase in revenue from 2020 and a profit of $5 million or 14 cents per share. Gains included the complete write-off of loans obtained under the CARES Act. Also, the company had a full set of “live” sports-betting skins. Those in Indiana and Colorado will be up for rebid, as lessee Churchill Downs is retiring from online sports betting, but Lee expects to find ready takers and even more value for an impending skin in Illinois. The company also has $340 million in cash on hand, most of it earmarked for construction projects.
“We had issues like a lot of business with of lot of employees getting omicron,” Lee said. “But we’ve stayed pretty steady. It’s pretty weird to be sitting here talking about slot machines when there’s a war going on in Europe,” he mused.
Still, in a time of fuel-price inflation, it’s usually a plus for regional gaming, he added, as opposed to getting on a plane to Las Vegas. Regarding lingering health concerns, he compared non-vaccinated Americans to chain smokers: “They’re taking a heavy health risk.”
While the COVID pandemic “saw a definite falloff” in Full House’s older-customer demographics, younger players filled in and “we’re back to a normal age spread,” doing more business with less marketing spend, not to mention having dumped $5 blackjack and two-for-one midweek buffets.
Lee and CFO Lewis Fanger lingered only slightly on the 2021 performance of Full House assets, noting that Silver Slipper in Biloxi, Mississippi, had its best year ever, generating revenue of $91 million. As for a casino push in nearby Slidell, Louisiana, “overwhelmingly strong” voter turnout led to an decisive defeat for rival Peninsula Pacific, and “because of that, we don’t have to worry about [competition] for a long time.
“Chamonix should be a home run,” Fanger continued, pivoting to Full House’s ongoing flagship project in Cripple Creek, Colorado. It’s presently going vertical, which has cost adjacent Bronco Billy’s its hotel rooms and parking, as well as some casino floor space, meaning that Full House has not benefited from the recent 40% rise in Cripple Creek gaming revenues.
Lee sketched a five-year future in which Full House would pay no federal income tax and open two signature properties, Chamonix and American Place in Waukegan, Illinois.
“More has been committed [to Chamonix] than one would expect for a $250 million project,” with $215 million of it still to be funded. But it is coming into a greater-Denver market that is significantly underserved by casinos, Lee said, mainly because of the state’s betting limits, which were only recently removed and inhibited casino investment.
Not only will Chamonix be the only four-star property in Cripple Creek, it will have 300 hotel rooms – Monarch, in competing Black Hawk, has 500 – but “we have far more convention and meeting space than they have. Our most important market will always be Colorado Springs,” Lee continued, but he’s counting on curiosity-driven business out of Denver and projected $150 million in full-year revenue when Chamonix opens in the second quarter of 2023.
As for Waukegan, Full House is investing $100 million in a temporary casino, at the other end of the eventual American Place parking lot, upon which will be erected an aluminum-and-kevlar sprung structure, shipped in on 28 trucks and the size of 1-1/2 football fields. The temporary casino will offer 1,000 slots, 50 table games, two restaurants, and an external diner. A third of the $100 million goes toward the Illinois gaming tax, while some of the other costs (game inventory, personnel) will amortize part of the $400 million budget of the permanent casino when it opens in 2025. Although Full House plans to operate the temporary casino for three years, Lee acknowledged that i has permission for only two and will need a special extension from the state for year three.
While Lee and Fanger don’t expect American Place to equal the $500 million a year in revenue engendered by Rivers Casino Des Plaines, Lee noted that Waukegan is the seat of Lake County, the 27th most prosperous such area in the U.S. and that American Place will be the only casino in the county. The temporary facility will open around Labor Day and a job fair to staff it is being held next week. Lee summarized the pace of construction by saying, “When somebody asked me what color I wanted the slot chairs, I said, ‘Whatever’s in stock.'”
Lee was dismissive of the effect of a Windy City casino on Waukegan.
“We always assumed there would be a casino in downtown Chicago,” he said, as well as slots at Arlington Park, which instead will be the new home of the Chicago Bears. “So sometimes there’s a pleasant surprise.” He observed that all the casinos in Illinois except Rivers (which is much closer to Chicago) are unpleasant aging riverboats that are off the beaten track and distant from freeways. “We’ll be the closest casino to 1.2 million people.”
Asked if he would divest any of Full House’s assets, Lee demurred. “We don’t have a need for the money. To sell a property in order to get cash … you’d have to get a pretty good multiple,” adding that he likes the company’s geographic diversity. Still, “If somebody offers $100 million for Rising Sun, I will beat them to the bank.”
Concluded Lee, “We have a very good future ahead, so we go to work thinking, ‘Don’t screw this up.'”
