“Not a great quarter. We’re working hard.”
That’s how Full House Resorts CEO Dan Lee wound up the company’s second-quarter earnings call, revealing revenue pancaked and losses grew.
“Rest assured, we had a very solid month of growth in July,” President Lewis Fanger assured investors at the start of the call, held from Full House’s Temporary at American Place casino in Waukegan, Illinois.
Fanger was addressing business in Waukegan, where the temporary casino had grown its database to 107,000 names and the pace of signups hadn’t slackened. Fanger said the casino had downsized one restaurant, added a comedy club, and transformed “an underperforming corner of the casino” into a poker room.
Wall Street analysts were told that Chamonix, Full House’s resort in Cripple Creek, Colorado, was growing gambling revenue without cannibalizing the market. “Our gaming continues to be under-saturated,” Fanger said. “This is a market that has been starving for high-quality gaming product.”
Fanger predicted that Chamonix would have been cash flow-positive in July, even though the impact of a new marketing team wouldn’t be felt until the third quarter. Revenue, he said, was flat sequentially, but costs were down significantly.
Taking up the thread, Lee said Chamonix had a different challenge from American Place, because the former has a 300-room hotel to fill. (American Place’s hotel will come when the permanent casino opens in 2027.) He called midweek occupancy “anemic.
“Quite honestly, we’ve just hired that sales force” to recruit group-and-convention business for Chamonix, Lee confessed. In defense of the previous sales team, Fanger said, “It’s not easy to sell rooms and space before you have anything you can see.” Lee applauded Black Hawk Monarch’s meeting business and $100 million in annual revenue, achieved even though “they’re in a very constricted space.”
Other drags on the balance sheet were the absence of Stockman’s Casino, in Nevada, sold by Full House, and underperformance at Silver Slipper, in Biloxi. A $1.6 million revenue dip at Silver Slipper was attributed to a cutback on “over-comped” players. The Mississippi casino also had to close its parking garage during a critical weekend after a ramp collapsed.
Full House is still trying to relocate its Indiana license, Lee said, and the state’s Casino Control Commission was actively studying the issue. “We’re quite confident that there will be some significant benefits” from moving out of Rising Star.
Analysts mostly wanted to discuss Chamonix, however. Lee said he had been “putting constraints on overtime” there. He also restructured pay periods to end on Thursdays rather than Sundays, which reduced weekend-incurred overtime. Some ad work had been brought in-house, also saving money. Network-TV buys were cut back in favor of more Internet-banner ads.
“We’re doing better with our laundry contractor,” Lee said, as well as with the outside housekeeping staffers. At the end of the first quarter, Lee dismissed the original Chamonix management team, incurring severance payments that are “dragging us a little.
“It’s slow progress, but it’s steady progress,” Lee said in defense of Chamonix. He allowed that he should have staffed up the marketing department three years ago and is deploying artificial intelligence to clean house. “A lot of people in that [marketing] database are dead!”
Still, Lee maintained, “We’re 100 percent of the growth in Cripple Creek. We thought we would grow the market and we are.”
Being in the middle of Colorado, Chamonix was insulated from events in neighboring states, the CEO contended. Also, “There is nothing new being built in Colorado” in terms of gambling venues.
“Out of the box, it’s disappointing to me that we’re not doing more revenue than we have been,” Lee admitted. He likened the situation to the first two years of Beau Rivage, in Biloxi, which initially underperformed. “But eventually, if you build a quality product, it catches on.”
Part of the problem, Fanger opined, was the perception of Cripple Creek itself, “a market that had really bad products.” Full House, he continued, needed to reinvent Cripple Creek’s image upward and top-tier players were already gravitating to Chamonix. “We need to do a little more fishing in the world,” he offered.
Lee didn’t seem to think the permanent American Place would have to be postponed “if we can get a shovel in the ground by year’s end.” Even if Full House hasn’t issued the requisite construction bonds, he continued, it might start work anyway.
The CEO even floated the idea of keeping the American Place workforce on the payroll in the event that Illinois forces a shutdown of the temporary casino before the permanent one is ready, “if you had a very modest gap. I’m not actually worried about it.”
Asked about the impact of the federal budget just passed by Congress, Fanger responded, “To the extent that any of our customers have more money in their pockets, it’s a good thing.” He added that the company would be able to work through its non-operating losses faster, thanks to the new legislation.
Lee added that the no-tax-on-tips provision would raise take-home pay and lower the pressure for salary increases. “Hardly a day goes by that I don’t have somebody asking for a raise and now I have something to push back on,” he said.
Wrapping up the call, Lee joked, “Nobody asked whether we’d rather buy Maverick or Century,” two casino companies in flux. “The answer is that we’re pretty busy,” he laughed.
