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US – Full House enjoys ‘phenomenal third quarter’ following reopenings

By - 6 November 2020

Full House Resorts, operator of casinos such as Silver Slipper in Mississippi, Rising Star in Indiana, and Billy Broncos in Colorado enjoyed a ‘phenomenal third quarter’ with the promise of expansion in Colorado following the approval new laws.

Its revenues in the third quarter of 2020 came in at $42m, versus $44.3min the prior-year period, reflecting operating limitations during the COVID-19 pandemic. Net income for the third quarter of 2020 rose to $7.7m with EBITDA up115.6 per cent to $12.5m. This strong growth primarily reflects new marketing programs and staffing improvements at the company’s properties. Results for the third quarter also include $0.7m of revenue related to a full quarter of operations for two of the company’s six permitted sports wagering websites.

“We had a phenomenal third quarter,” said Daniel R. Lee, President and Chief Executive Officer of Full House Resorts. “As we noted last quarter, we chose to reopen our properties conservatively in terms of amenities and hours of operation, given the uncertainty of the customer response to reopening in the midst of a pandemic.
“We are pleased that customers have generally responded positively, recognising that it is possible to operate a casino with appropriate social distancing and health safety measures,” he added. “We think our positive results also reflect that people generally drive rather than fly to our casinos and that we do not rely on potentially pandemic-unfriendly amenities such as shows, nightclubs or convention facilities.

“Finally, we installed new slot management systems at two of our more important properties in late 2019. We used the pandemic-closure period to familiarize ourselves with those systems, analyse our customer data from late 2019 and early 2020, and reinvent our key marketing strategies, including our loyalty programs. All of these factors helped our operating income more than triple, and our Adjusted EBITDA more than double, over the prior-year quarter. We think that much of this improvement is sustainable.”

At Silver Slipper Casino and Hotel in Mississippi, revenues grew 10.5 per cent in the third quarter of 2020 to $20m. Rising Star Casino Resort in Indiana, saw revenues decline for the third quarter of 2020 to $9.6m from $11.7m.

At Bronco Billy’s Casino and Hotel in Colorado, revenues declined for the third quarter of 2020 to $7.6m from $8.1m. The Northern Nevada segment consists of the Grand Lodge and Stockman’s casinos and is historically the smallest of the company’s segments. Northern Nevada’s total revenues were $4.1m and $6.3m for the third quarters of 2020 and 2019, respectively.

Mr. Lee explained: “All of our properties still have operating restrictions in order to maintain social distancing, including the number of slot machines that we are permitted to operate, the number of people that we can accommodate at each table game, and restrictions on the types of food service we can offer, as well as the seating capacity of our bars and restaurants. In Colorado, we are still unable to offer any table games. Even with these restrictions, several of our properties, including our Colorado property, had their best months in history during the quarter.”

Continued Mr. Lee, “We also had our first full quarter of operations for one of our three permitted ‘skins’ in Colorado and our third full quarter of operations for one of our three permitted ‘skins’ in Indiana. These two sports wagering websites represent a minimum of $2.5m per year of annual contractual revenue. Our six agreements are with three different companies, each permitted to operate under our licenses in Indiana and Colorado for a minimum 10-year period. One of those companies is now operating in Indiana, while a different company is operating in Colorado. We expect each to start operations in the other state shortly. The third company recently commenced its first mobile gaming operations in another state and intends to expand into Indiana and Colorado within the next few months. When all six ‘skins’ are in operation, the company should receive a contractual minimum of $7m per year of sports gaming revenues. Since the company incurs very little expense related to these operations, almost all of such revenues should translate into income.

“On Tuesday, Colorado voters approved several changes to the state’s gaming laws. In particular, the state law now allows local communities, namely Cripple Creek, Black Hawk and Central City, to set betting maximums and approve new table games, such as baccarat. Those changes will ultimately benefit the entire state, but most significantly, the local communities. This change will allow the state’s casinos, including Bronco Billy’s, to attract a wealthier clientele and to offer a broader gaming experience. We continue to evaluate a potential major expansion of Bronco Billy’s, which was put on hold when we were required to close due to COVID-19.”
The company continues to be one of three bidders for the opportunity to build a new casino in Waukegan, Illinois, midway between Chicago and Milwaukee. Last week, the Illinois Gaming Board indicated that it expects to choose its preferred developer in 2021, in the spring or summer.

Me. Lee explained: “We believe our American Place proposal is the most creative and dynamic of the proposals and should generate the greatest amount of investment, tax revenues and jobs for Waukegan and its surrounding communities. To augment our application, we recently executed a commitment letter to fund American Place, including both a temporary casino and the permanent facility. The commitment letter is with a multi-billion-dollar investment management firm that has experience with casino construction projects. Under the commitment letter and if chosen by the Illinois Gaming Board, Full House would invest $25m in the project as equity, will own no less than 60 per cent of the project, and will receive management fees for operating the casino and related amenities,” Mr. Lee concluded.

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