Chamonix, Full House Resorts’s flagship property in Colorado, has seen its upper management let go, the company disclosed during its fourth-quarter earnings call.
In addition to a new general manager, the casino resort will see a new marketing boss, hotel director, IT director, human resources director, and table games director, among others. “I don’t make management changes lightly,” said CEO Dan Lee, admitting he acted “pretty aggressively” in overhauling the Chamonix team.
The Cripple Creek casino, which saw its grand opening as a finished property in November after phased partial openings over the prior year, was said to be completed save for one parking lot. “The revenues are not yet where we expect them to be,” said Lee, “so income has been scant. I’m still very convinced it’ll make $50 million a year at some point.”
Likening Chamonix’s growing pains to the early months of Beau Rivage in Mississippi and Louisiana’s L’Auberge du Lac (both of which he opened), Lee maintained, “We’re head and shoulders nicer and larger than the competition in Cripple Creek. Even Bellagio didn’t get to $500 million in the first year.
“Some of the management team were in a little bit over their heads,” hence the new hires, Lee continued.
CFO Lewis Fanger sounded a hopeful note, saying he’d been examining “heat maps” of Denver “and let me tell you, Denver has lit up pretty nicely” and was no longer an ancillary market for Chamonix. He also noted that fourth-quarter revenue had increased 161 percent for Chamonix without marketing, as the quarter was dominated by election advertising and Christmas.
Lee continued that Chamonix had been exceeding state levels of gaming growth by 100 percent but was not where it ought to be, particularly in its table game play. He said table games represented 10 percent of Chamonix revenue and needed to be double that.
To that end, Chamonix was hiring more dealers and running its own dealer school. Additionally, two baccarat games were being added and the tables “are on the loading dock as we speak,” said Lee.
The CEO expressed particular dissatisfaction with a temporary Chamonix restaurant that the former management team had converted to a buffet. It had been serving crab meat at the cost of $11 a customer and prime rib at $10 a head. As a consequence, it was spending $100 for a $45 check. “We don’t do stupid things like that anymore.”
He was also unhappy with staffing levels for amenities such as the massage-treatment rooms, of which Chamonix has nine—but only two masseuses although “it’s a nice profit center.” He said the same largely held true for the beauty parlor, even though many, mostly female, customers like to cash out slot points in the form of salon services.
Fanger stressed the brighter side, saying that Chamonix had grown the Cripple Creek market as much as 27 percent without hurting the competition. He said the casino was getting wealthier players, with some gambling as much as $500,000 in a weekend.
Full House’s casino in Waukegan, Illinois, The Temporary at American Place, tended to be a happier topic. Lee said that it had been green-lit to seek $325 million in financing for construction of its permanent iteration. Lee added that he was happy with The Temporary’s performance despite the fact that it was in a sprung structure that looks like a municipal warehouse.
“We’re dealing with our bankers,” Lee said of financing. “There will be no equity involved. That would be giving it away.” Later he laughingly reiterated, “I hate the word ‘equity.’ It’s a bad word around here!”
Lee added that no REITs would be involved either: “At the end of the day, it’s pretty expensive capital that you can’t unwind—and some of our competition is finding that out.”
Construction of the permanent American Place is to start later this year with an eye to completing it by August 2027. Lee added that he could “probably” get a legislative extension of The Temporary’s time-limited license, if needed.
He also noted that the American Place temporary facility does more business than the nearby similar precursor to Hard Rock Rockford did, so he is optimistic for the permanent casino’s prospects. “I will have a different theme than showing Lady Gaga’s underwear under plexiglass,” he joked.
If American Place only does the average slot machine business of an Illinois casino (excluding Rivers Casino Des Plaines) that alone would be $200 million per year, Lee projected. Plus, he observed, Waukegan has drive-by business. “In Cripple Creek, nobody drives by.”
Referring to his in-town Chicago competitor Bally’s, Lee said, “I like the guys at Bally’s, including Soo Kim. He’s brilliant. But I like our position better,” including Full House’s shorter runway to profitability. “I wish them well but I wish us better.”
As has often been the case, Lee was asked about potential acquisitions, prompting a lengthy digression. “I had your job at one time and you’re always judged by one quarter, one year.” Lee said he even gets grief from his own mother about small stock-price fluctuations of which he is unaware.
He said he has modeled Full House as trending towards a nine-times-cash-flow valuation at $45 per share. Relocation of the Indiana casino, Rising Sun, could be worth $6 or $7 per share alone.
Full House had selected a site near Fort Wayne for the relocated Rising Sun casino (currently underperforming on the banks of the Ohio River), but local opposition killed that proposal in the Indiana legislature. State authorities are currently studying where else Rising Sun’s gaming license might be relocated.
“I do not want to mess up what we have,” the CEO explained. “There are so many bad deals out there and they are so easy to do.” He said he wants to stay the course he was charting and “We’ll have one of the best-performing casino stocks in the next five years.”
Contemporary politics intruded at one point when Lee was asked about the effects of tariffs on the construction cost of American Place. “There are ways to hedge that but we haven’t done it,” he replied. “It’s pretty unknown.”
Lee continued that Full House usually used Chinese steel and glass, which were already under pre-Trump administration tariffs. “We got through it. It wasn’t fun but we got through it.”
