Full House aligns with Circa near Chicago, but could use more crab in Mississippi

May 10, 2022 11:26 PM
  • David McKee, CDC Gaming Reports
May 10, 2022 11:26 PM
  • David McKee, CDC Gaming Reports

Despite only breaking even in the first quarter of 2022, Full House Resorts executives were ebullient in their earnings call. CFO Lewis Fanger wasted no time in announcing a deal with Circa Sports to develop and run the sportsbooks at Full House’s Waukegan, Illinois, American Place, both the temporary and permanent casinos. “If you’ve ever been to the Circa Resort in Las Vegas,” Fanger said, “you’ll know exactly why we’re working with them,” citing the property’s three-story sports book and outdoor, poolside, video array.

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Circa will operate off of Full House’s Illinois sports-betting skin, with the $5 million access fee amortized over the eight-year life of the contract (Circa also has a pair of four-year renewal options). By contrast, Full House faces a $1.6 million exposure from ex-partner Churchill Downs’ abrupt withdrawal from the Indiana and Colorado markets. Circa can’t cover those bases, CEO Dan Lee added, because it has other commitments in each state. He said Full House is in talks with other sports-betting operators for those two states.

Lee’s ambition is “the best sportsbook in the Midwest. It’ll be fun working with Circa. They really get into the details. [Derek Stevens] lives and breathes this stuff.” Lee said that they’ve been hesitant to do it themselves,” but Circa gives them the confidence. As an example, Stevens “had it so people were sitting in heated water in 50-degree Vegas winter watching football.” Interjected Fanger, “We expect you’re going to walk into our American Place sports book and say, ‘Wow!’ That’s our goal.”

Sticking with sports betting, Lee observed that the Silver Slipper, on Mississippi’s Gulf Coast, had taken a hit from the advent of online sports betting in Louisiana, especially as it’s the closest casino, particularly to the Baton Rouge market. The Mississippi Legislature mulled OSB during the last session, “but the industry couldn’t get its act together” and the effort failed. Silver Slipper was also pressured by a “significant” increase in the cost of insurance-“They’ve been ramping up the cost of insurance pretty steeply for the last couple of years,” reported Lee-a situation that could be ameliorated as Full House widens its geographical diversity, lowering its financial and physical exposure to the storm-prone Gulf Coast.

But the real crisis at Silver Slipper is crab – or the lack of them.

“Our food cost was up $800,000 at the Silver Slipper,” said Lee. “All of that was crab,” which went from $8 a pound to $17. “We could try offering different things, but people like snow and Dungeness crab,” on which Silver Slipper has built its reputation. The typical crab being served today “was a crawly thing one to two years ago,” but has spent the last couple of years in a storage freezer. The pandemic and consequent curtailment of fishing has been a short-term curse (low supply), but promises to be a long-term blessing (bigger meatier crab harvested right now). Russian snow crab has been cut off, but that is not a significant factor, according to Lee.

Lee was generally sanguine about the economy, saying, “Bring on a recession. Maybe we can build this stuff a little cheaper. The only supply-chain issue we have is crab. Who knew? We’re a cheap trip, an easy trip. It’s not a lot of gas. If you go back to the Great Recession, regional casinos did just fine. Nobody seems to be talking about the availability of gas,” he added, harkening back to the Oil Embargo of 1973. Mask mandates are gone, Baby Boomers are back, and “we’ve kept some of the younger people.” Money from the infrastructure bill will eventually percolate into the economy “and into our slot machines. We’re perfectly situated today for what’s going on in the world.”

Noting that his regional casinos weren’t as exposed as the Las Vegas Strip, Lee added that Full House had been offered a number of Sin City properties, but isn’t particularly interested right now. “This is a tough market,” he said of his home city. Now, if someone offered us Bellagio for $50 million, we’d figure out how to do it,” he joked.

In Cripple Creek, Colorado, “the market on a whole is doing quite well,” though not Bronco Billy’s, which has been 25 percent demolished to make room for Chamonix and has no parking. “Do we really care if we make money this year?” Lee mused aloud. “The construction companies would like us to close it [entirely], because it would make their life easier.” Still, “The construction is ongoing and apace. The elevator towers are done. The guest rooms are getting filled in. We’ve found the manpower just fine” and Chamonix is on track for a spring 2023 opening.

Asked about Golden Nugget’s acquisition of the Wildwood Casino in Cripple Creek, Lee welcomed the competition.

“That was a pretty screwed-up property,” with Wildwood sitting atop an expensive, subterranean, five-story parking garage. “It went bust really fast,” eventually falling into the hands of a real estate investment trust. Perhaps the best move the latter made was to add a motel, according to Lee. “It’s a stick-built motel, but it doubled their income.” By contrast, Golden Nugget CEO Tilman Fertitta “is actually a pretty good casino operator. I worked with Steve Wynn, but the biggest ego I ever met is Tilman Fertitta.” However, Lee believes Fertitta will make Wildwood a destination property, even though it’s on the edge of town.

Due to a city review, the Waukegan temporary casino is starting construction later than planned and Full House is looking at opening sometime between October and as late as December. “Maybe I was a little optimistic,” Lee conceded. “This leads into the permanent [casino] and that’s a 30-year business. … Having gotten the permits, at this point we’re over our biggest hurdle. We’ve started to hire people and will continue through opening.”