In contrast to their last earnings call, Full House Resorts executives were markedly upbeat about the performance of The Temporary at American Place, which propelled Full House to $10.1 million of first-quarter cash flow.
“In a very big way, this quarter was a turning point in this company,” said CEO Dan Lee. At the end of the earnings call, he explained, “We’re pretty cash-flow positive going forward. … We are going quickly from being one of the most leveraged companies to one of the least leveraged.”
“The Temporary opened quite strong,” said CFO Lewis Fanger, “results we think will continue to improve.”
Maximum table bets at the Waukegan, Illinois, casino are now $2,000 a hand. Tables open at 10 a.m. instead of the former 2 p.m. and 28 tables are in play at peak hours. “In April, we had our best gaming day so far,” volunteered Fanger, one in which $500,000 was wagered.
“Starting on May 12, we’re expecting to go 24 hours on weekends,” without table-bet limits. Fanger described table game demand as “pretty robust,” saying players were queuing up at 1:45 p.m. for a 2 p.m. resumption of play.
One boost for business, Lee said, were the video displays that play on the tented roof of The Temporary at night. “If you drove by during the day, it looks like a public-works project. In effect, we’ve built the industry’s biggest speakeasy.”
But he admitted, “Marketing The Temporary is a bit of an impediment.” The name, which Lee himself chose, dampens sales and hiring with its connotation of impermanency. Still, “People overwhelmingly walk in the door and their jaws drop,” Fanger added.
The Temporary is awaiting regulatory approval to go to 38 table games, then a self-imposed maximum of 50. The Asia Azteca restaurant is now open for dinner five nights a week, with a third restaurant to follow this summer. “Its diner facility is a bit late getting to us,” Lee explained. The upside is that a relative dearth of amenities is improving the margins at The Temporary, especially compared to amenity-heavy Full House casinos in Indiana and Mississippi.
If there’s a hiccup, it’s that Circa Sports’s software has yet to be approved by Illinois regulators. Full House hopes to launch sports betting in August.
On the positive side, having started with no mailing list, Full House now has 25,000 Chicagoland names and hopes to double that.
Mass advertising for The Temporary was predicted to go away quickly in favor of direct marketing. “It’s like fishing in a lake you’ve never been to before,” Lee said. “In this quarter, we were throwing our line all over. You could write a book about the stuff we’ve learned in three months.”
As for Full House’s other major capex investment, Chamonix in Colorado, Lee and Fanger announced a dramatic change, scrapping a phased opening in favor of an all-at-once December 26 debut. “You get one shot at a first impression,” Lee said, blaming part of the revision on a rickety, adjacent, historical building that had to be shored up. Full House is already licensed in Colorado, so Lee anticipates no regulatory issues.
Chamonix’s dining inventory will be augmented by Barry’s Prime, a restaurant from the creators of N9NE, formerly at Palms Casino Resort, and Aureole, late of Mandalay Bay.
“That’s very important to the place and it’s part of our secret,” Lee confided, referring to drawing customers from Chamonix’s secondary market, Denver. Revenue from existing Bronco Billy’s was negligible last quarter, due to construction disruption and a lack of parking. “It’s amazing that we’re losing more money at Bronco Billy’s, given everything,” Lee said with a laugh.
In other markets, Fanger said Silver Slipper in Biloxi was “affected by some over-marketing by a competitor,” which Lee later identified as Penn Entertainment. Rising Star in Indiana was described as still impacted by new historical horse racing machines at Churchill Downs in Kentucky.
Fanger and Lee cautioned Wall Street analysts not to overdramatize the Silver Slipper’s declivity, with Lee citing Boyd Gaming’s recent weakness in Mississippi and Louisiana, adding, “We’re not down that much. We’re a little soft. We’re holding our own. We used to have the Silver Slipper super over-insured, because the whole company was relying on it,” a burden that can now be shifted to Waukegan and eventually Cripple Creek as well.
Current events and a certain Indiana/Kentucky competitor impinged on the call at a late juncture, when an analyst apologized for asking one question too many about Waukegan.
“As far as beating dead horses,” Lee replied, “they’re all over at Churchill Downs. We don’t have any here.”
