Full House posts modest profit as revenues soar

November 8, 2023 8:56 PM
Photo: Full House Resorts (courtesy)/Rendering of American Place Resort and Casino in Waukegan, IL.
  • David McKee, CDC Gaming Reports
November 8, 2023 8:56 PM
  • David McKee, CDC Gaming Reports

Time was of the essence in a truncated 45-minute investor call by Full House Resorts Wednesday. Executives had to squeeze in quarterly earnings before the MGM Resorts International earnings call began.

Third-quarter revenues shot up 73 percent to $71.5 million, driven largely by The Temporary at American Place, in Waukegan, Illinois. Cash flow was $20.6 million and Full House posted $4.5 million in profit. “Our liquidity remains in a good spot,” said CFO Lewis Fanger, citing $84 million cash on hand.

With a nod to the impending MGM call, CEO Dan Lee said, “It was a pretty good quarter. I’d be happy to talk about it for two hours.”

The CFO cited “pretty meaningful sequential improvement” in Waukegan and said he expects The Temporary to have its high-end steakhouse in operation by year’s end. The steakhouse, Lee added, will be important for New Year’s Eve table-game players and high rollers. Full House is also rolling out a new Chicagoland-targeted ad campaign that “emphasizes the excitement inside the tent.”

Looking ahead to fourth-quarter earnings, Lee said The Temporary slowed in October, a traditionally sluggish month. It grossed $7.3 million, behind Rivers Des Plaines and Bally’s Casino in Chicago. “The property continues to mature and is doing quite well.”

Of The Temporary’s new Circa-operated sportsbook, Lee said, “It’s not a big positive, but it does bring people into the property. That’s true in Las Vegas as well — the sportsbooks have always been a modest amenity. The steakhouse will probably have a bigger impact.”

Full House continues to wait on a Potawatomi tribe lawsuit in Illinois before proceeding with the $325 million permanent American Place. Lee expects a one-year to 18-month hiatus. “The courts are pretty backed up these days.” When the permanent casino is finished, “We’ll be one of the least-levered companies in gaming.”

The bulk of the call, which included a show-and-tell portion, emphasized the splendor of Chamonix in Cripple Creek, Colorado. Fanger cited a philosophy of “find an under-penetrated market without any differentiated product, which we think we’ve found in Cripple Creek.” Added Lee, “And we’ll grow the market. Denver is also an underserved market.”

Lee predicted a December 26 soft opening. “Frankly, we’re scrambling. We won’t have everything open.” The casino, parking lots, and all 300 guest rooms will be ready, but the spa, most restaurants, and a speakeasy bar will not. Of the latter, Lee observed, “It’s a speakeasy, so no one will notice.” The grand opening will be held next spring.

He continued that Full House was having to pay higher wages to attract workers to Cripple Creek. “If you’re a tipped employee, you’re obviously going to get a lot more with us,” Lee said, adding that he was outsourcing the housekeeping (as at the company’s Hyatt Tahoe) to trim operating expenses, thereby taking care of one-third of hotel staff.

Lee added that it was harder to hire in Illinois, because “every employee down to dishwasher” has to be vetted by the Illinois Gaming Board. He said prospective workers would rather apply at Amazon’s warehouses to avoid filling out 30 to 40 pages of IGB paperwork.

The CEO admitted to being “a little chagrined” at a recent PR Newswire release touting the inception of hotel bookings at Chamonix. The first rooms should be reserved for casino players, he said. “Three hundred guest rooms on any given night is around 500 people in the property and we’ve only got 800 slot machines.” He said he would prefer if the opening were “not slammed,” because staffers are new and still learning.

Lee cited the example of the L’Auberge du Lac, which opened done when he was CEO of Pinnacle Entertainment. The Lake Charles, Louisiana, casino was so popular from the start that state police were threatening to cut off access, because traffic was backed up onto the nearby interstate highway.

Of Cripple Creek, Lee said, “It’s a little historic town with itty-bitty casinos” and Full House is reinventing that image. He likened it to his time with Steve Wynn, when The Mirage changed popular perceptions of Las Vegas as a city of cheap hotel rooms and inexpensive food.

“When you walk into the property for the first time, your jaw will drop,” interjected Fanger. Lee called it “Wynn quality,” having been designed by Four Seasons veterans.

Full House expects to achieve $50 million a year in return on investment from Chamonix. “But don’t expect us to do $6 million in January,” Lee jested. “Monarch is doing north of $100 million” in Black Hawk. “They’re pretty good too. If we could do fifty, I’d be pretty happy.”

Fanger said there was “no comparison” between Chamonix and the other Cripple Creek casinos, which include Full House’s Bronco Billy’s. “The next best property,” Lee said, “has the Caesars name on it, but it was built by Isle of Capri, which we used to refer to as Pile of Debris.”

Inflationary pressure, Lee said, “has largely gone away. We get asked all the time if there are signs of a recession,” he resumed, showing some asperity. Sometimes, he said, the company has a bad week at the Silver Slipper in Mississippi and he thinks, we might be. But then the same casino has a good week.

Possibly due to time constraints, outlying Full House casinos weren’t discussed. Lee did allow that the Silver Slipper had an easement to build a hotel tower and that might be a use for some of the company’s spare cash. “I don’t see any other markets to go into,” he concluded. “The markets we’re in are pretty good.”