Top executives of Full House Resorts reiterated that their Nov. 7 earnings call was the last that would be held before the oft-postponed opening of the temporary American Place casino in Waukegan, Illinois. Observing that proximate Rivers Des Plaines does $600 million a year in revenue, Full House CEO Dan Lee said, “The temporary [American Place] might be bigger than our whole company.
“The existing casinos in our area drive $1.2 billion,” Lee elaborated, adding that he might get a small piece of that, claw away business from slot routes, and grow the market. “The decor’s going up this week,” he said, and the 1,000 slots will be in by month’s end.
“Probably the biggest challenge is that 50 table games require a lot of employees,” so American Place will probably open with less than its full table-game arsenal. “Miles and miles of low-voltage cabling” remain to be installed and approved. “If everything goes perfectly, we’ll open in late December,” the CEO explained, but “more likely it will be in mid-January.
“Our interests and (those of the) Gaming Control Board are perfectly aligned,” Lee continued, drawing a comparison between the hoped-for orderly opening in Waukegan and the “complete fiasco” that he witnessed at Trump Taj Mahal when it debuted. “I don’t think they ever really recovered.”
He emphasized that licensing, staff training, and play nights still lay ahead. “There are times when you go through the play nights and the cage doesn’t balance. Everybody wants to have a date certain, but’s it’s not every helpful. Frankly, if the [computer] servers don’t work, it could be early February.”
“Usually, when you open a normal casino,” interjected CFO Lewis Fanger, “you take two or three years. We’ve condensed that” into six months. “But we feel very good about where that process is,” he continued, saying the temporary’s interior looks “spectacular.” Asked about macroeconomic factors, Fanger replied, “I kind of feel better than ever,” pointing to the consistent performance of Rivers, just below $50 million in gross gaming revenue per month. “We don’t need $50 million a month to make our math work. We need 10, 15 million.”
“Technically, we’re not in a recession,” Lee insisted. “GNP grew last quarter.”
The temporary American Place will be allowed to run for two years, with a third-year option, which Lee thinks will need to be granted. “We promise a hell of a nice casino,” he related, saying that he intends to build one despite “pretty crappy” bond and equity markets. REITs, he said, are “calling all the time” wanting to buy American Place or other Full House properties. “Currently, we’re in great shape. We don’t need money.”
As for potential tribal and Hard Rock International competition from nearby Kenosha, Fanger said, “We’ll have speed on our side, we’ll have proximity, and we’ll have quality.”
“The two tribes have a lot to fight over,” chuckled Lee, alluding to the Hard Rock-backed Menominee and the established Potawatomi casino in Milwaukee.
Asked if Tuesday’s election result in Wisconsin would affect the Kenosha proposal, Lee speculated that the two gubernatorial candidates were being “somewhat vague” in order to draw campaign dollars from both tribes. “I hate to be a cynic, but that’s how it often works.”
Full House recorded a pre-tax loss of $3.6 million, as quarterly revenue slid to $29.7 million from $32.5 million the previous year, and executives had no shortage of explanations. Lee blamed the difficult comparison on 2021 stimulus checks, which buoyed prior-year play. Also, the sale of $2.1 million in Indiana free play had been advanced to the second quarter of 2022. “We’ve been swimming a little bit upstream,” Lee said.
Those adverse currents included insurance that was up because of Silver Slipper’s hurricane vulnerability on the Mississippi Gulf Coast. Also, Silver Slipper’s sportsbook revenue was cannibalized by online sports betting in nearby Louisiana. It was 50 percent lower, significant to Lee (who supports online wagering in Mississippi), even though it was only five percent of overall Silver Slipper revenue.
Also, alluding to the in-progress Chamonix in Colorado, as well as American Place, Lee said, “In the quarter, there were a lot of pre-opening costs. It obviously is a drain on our net income.”
In Indiana, Rising Star was pressured by Turfway Park’s addition of historical horse racing machines, “which are really slots,” in nearby Boone County, Kentucky. Continued Lee, “When they realize that the new place is a dark airplane hangar that sells hot dogs off a cart, they’ll come back.”
Alluding to the price of crab, which is half of Silver Slipper’s food budget, Lee said, “The cost of food is up and that’s affected us some too. On the positive side, we didn’t have a wildfire at Lake Tahoe over Labor Day weekend,” a reference to the Caldor fire that wiped out much of Tahoe gaming revenues in the autumn of 2021.
Fanger pointed out that, if one goes back to 2019, property margins are 12 percent better, despite all the headwinds Lee had mentioned.
The two also speculated on entering the online-sports-betting business themselves rather than contracting their books out to third-party operators, “and really do it for our own customers,” Lee explained, with on-property incentives attached, rather than duking it out with FanDuel and DraftKings for market share. “We think we could do it and probably make a little money,” the CEO continued, adding that it would enable Full House to develop the know-how for igaming, which is being considered in both the Indiana and Illinois legislatures.
Unlike other casino CEOs who have teased fourth-quarter earnings data, all Lee would initially say about October was, “So far, it’s been pretty good.” He added that foot traffic was down at Silver Slipper and customer spending was flat, warning that the fourth quarter generally would be “seasonally slower.”
Pressed on the opening of in-progress Chamonix in Cripple Creek, Lee likened it to the phased debut of L’Auberge du Lac in Louisiana, when he was CEO of Pinnacle Entertainment. “If we ended up opening [Chamonix] with 200 rooms instead of 300 rooms, the guest experience would not be different. From the outside, it’ll look finished. There might be guys inside installing carpet.”
Prodded further on his Colorado events calendar, Lee replied, “What we’re building is really big for Cripple Creek. It’s really big for Full House Resorts. It’s 300 rooms. That’s one-tenth the size of Treasure Island. We’re not hosting Comdex.” However, Chamonix will be welcoming a Colorado convention of morticians who, Lee noted, tend to be good gamblers when they get to let their hair down.
