Full House Resorts Inc. Q1 2023 Earnings Call

[music].

Full House Resorts, Inc, first quarter earnings call.

Time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Minder. This conference is being recorded it is now my pleasure to introduce your host Lewis Fanger CFO of full house resorts.

Sir you may begin.

Thank you and good afternoon, everyone welcome to our first quarter earnings call as always before we begin we remind you that todays conference call may contain forward looking statements that we're making under the safe Harbor provision of federal security laws I would also like to remind you that the company's actual results.

Could differ materially from the anticipated results in these forward looking statements. Please see today's press release under the caption forward looking statements for the discussion of risks.

And that may affect our results also we may make reference to non-GAAP measures such as adjusted EBITDA for a reconciliation of those measures. Please see our website as well as the various press releases that we issue and lastly, we're broadcasting this conference call that full house resorts Dot Com, where you can find today's earnings release as well as all of our.

SEC filings.

And so with all that said I'll I'll kick it off here and then turn it over to Dan for some cleanup but.

The big change in the quarter you probably saw was we did change the segment I think you guys are used to it by now it's pretty consistent with what you said a lot of other gaming companies.

We essentially have group regrouped our segments by geography, really a function of our growing scale and expansion and our and we think that's the appropriate way for you to look at it because that's the way we look at it behind the scenes.

The temporary opened quite strong we had $3.6 million of EBITDA in the quarter, 34% margin. That's in that first one and a half months of opening so not a full quarter of results there.

<unk>, we think will continue to improve as we continue to expand the amenities and offerings up a property on April 3rd we were permitted to start to open tables at 10, a M. Instead of two P. M. Previously on that day. We are also permitted to increase the Max table, that's from $1000 per hand to 2000.

On April 4th or I'm, Sorry April 5th we opened Asia as Tech our second restaurant for dinner service quite good food by the way I've been there many times and I encourage you to do the same over the next time you guys are up in the area.

And then and then we manage to cross a few records here in April obviously, the property continues to ramp up but in April as an example, we had our best gaming days. So far it was the first time, we crossed half a million dollars in daily gaming revenue, we had our best weekly table games revenue in the month of April we had our second best weekly table.

Games revenue in the month of April about one and a half weeks ago. We had one of our best slot volume days since opening weekend. He was the first time, we had a single hour when we crossed the $400000 in coin in and all of that is is as that property continues to ramp up behind the scenes and so here up this upcoming weekend.

I'm starting on May 12th what we're expecting is to go 24 hours.

On weekends and then the removal all table limits are so you can bet, our whenever we stopped but that's at a maximum bet that so somewhat more change to come here in the near term. Our current team count is sitting at over 500 people when the database in real time is over 25000 people and closing in on 30000 people. So.

Going quite well a circa sports the sports book itself a circuit. It got approved by the Gaming Commission, they're still waiting on their software to be approved and and they actually can't start operating until we receive our permanent operating license, which we hope to receive Oh here and at the upcoming meeting in June .

But once that's all done then sports can begin and we're expecting that to start perhaps in August of this year.

Looking at the other properties silver slipper I just wanted to flag that last quarter. We noted some over marketing by a competitor as we exited the first quarter that over marketing went away and our market share return to normal levels. We also were affected by some adverse hold both on a table games in house on the slot side.

Current year period, a rising star had a $2 $1 billion of free play sale, we do that every year.

It has fluctuated between quarters for what it's worth so this year, we did it in the first quarter last year, we did it in the second quarter and so just make sure for modeling purposes that you are adjusting your second quarters for that $2 1 million. That's already in the results now outside of that rising star had a pretty decent quarter.

Realizing that there's still absorbing the impact of that new Churchill downs facility nearby the.

The other property is not a whole lot to tell you I'm sure you saw the stories about record snowfall up in northern California and by Lake Tahoe.

And then in Colorado as well.

That all said they only want to do some clean up or talk about Germany.

Thanks.

First off I pointed out that we comfortably exceeded the expectations in the quarter.

The $10 1 million of adjusted EBITDA idea I think the consensus was seven and a half and I think the highest single estimate out there was about eight even if we take up the sale of free play we met the highest estimate that's out there.

And of course, the star of the show was the temporary in Illinois.

Which is open almost exactly yes, the quarter like Louis said that E. B D O T. A $3 6 million. If you just take that and multiply it times to that seven point to multiply that times four it's $29 six which is about what our whole company earned last year. So.

Pretty significant to us and it's still only partially open.

You know it had about 25 table games opened in the first quarter like today is about 28 and Maxwell the license permits 50, we have a request are waiting approval to expand the 38 games, we have the dealers to do so so we're waiting for the gaming Commission on that.

We opened originally with limited hours of operation are set by the Gaming Commission.

We were only opened from eight in the morning until four in the morning. So we're close to four hours a day and then we shrink that to two hours a day now as of May 12, it'll be at our discretion and we're gonna be 24 hours a day on weekends. Initially and then Oh, probably go to 24 hours a day.

Every day shortly thereafter.

Betting limits started out at $1000 a wager in the first quarter. It is currently 2000 as of May 12 puts unlimited it's at our discretion.

And in.

In the food and beverage area in the first quarter, we only had one restaurant open and even then only for dinner.

In early April we opened our second restaurant.

Initially for dinner five nights a week, we are gradually expanding the operating hours of the two restaurants.

As the customer demand build sandoz, we hire more people.

The third restaurant, we expect to open this summer.

It's a it's a it's a diner facility that's a late getting to us, but that's actually okay. Because were still building the business with the other two.

And our mailing list started with near zero people on it.

Today, it's over 25000 people property of this size I would expect it to be 40 to 50000 of kind of extra people on the mailing list. Eventually so we're about halfway there that's important in making your.

You can market much more efficiency efficiently. Once you know who's Campbell, who gambles, you don't have to mass market as much.

Yeah.

And then just employees, we opened with about 400, we're now over 500.

It will be 700, plus when fully operational.

So we're making good progress there.

And.

Then so going forward, it's going to be a full quarter full operations.

Full hours of operation marketing efficiencies.

So we think it will build from where it is but it's already a pretty good number.

And a very big way this quarter was a turning point for the company.

You know, we borrowed quite a bit of money yeah, a couple of years ago to go build all this stuff.

And the interest expense on all of our debt adds up to about $9 5 million a quarter.

Adjusted EBIT was $10 million, so we actually covered our interest expense.

Of all $450 million of bonds and $27 million on the credit facility and that's despite only having the temporary for half the quarter and getting less than zero from Colorado.

And the cash we're sitting on is enough to finish Colorado and have it contribute to it as well and so you know when you look at it we're already producing.

A modest amounts of free cash flow and that's just going to get significantly bigger as the quarters go ahead.

And so you know if if you look at it and say well as we have full operation of the temporary and as we get Chamonix open we're going to shift very quickly from being one of the most levered casino companies to likely becoming one of the least levered casino companies over the period of about three quarters.

Now in Germany.

We had indicated before that we thought the earliest parts would be completed in Q3 and and that we may open in stages and be all opened by year end we've.

We've now made the decision to open the entire property all at once and do it on December 26, the day after Christmas a few say it's contributed to this one is.

It makes for better opening if everything is there you get one shot at a first impression and and and we'll be able to do that here.

Second.

There was a there is a narrow historical building 25 foot wide.

That as we get into construction, we found that the roof of it had some structural issues 25 feet. Why do you think you'd have to in excess of beams, but that's when they built them 18 nineties.

215 foot beams that when they altogether basically and so we had to bring.

Bring in structural engineers and figure out how to support it and so now the critical path runs through that building and and.

And that's important because if we tried to open.

Earlier.

We'd be opening with Germany separated from Bronco Billy's because this is a building you have to go through to get from one to the other and and we think it's better to open in its entirety and then frankly October November early December is a very seasonally slow period anyway.

On new year's Eve on the other hand is not one of the biggest days of the year and so where we've decided to focus on getting everything open all at once on the day after Christmas.

Importantly, there is no regulatory issue here like we had in our Illinois.

We are already licensed in Colorado, and we're operating at Bronco Billy's, we have a core base of employees, which we didn't have in Illinois.

So we don't think there'll be any regulatory issue, but that's opening on December 26.

Importantly.

We also entered into a partnership with Barry and you seen of various prime which is the restaurant are very successful restaurant that's in circa in downtown Las Vegas.

Bear in your scene, where for many years the management team at the nine Steakhouses pass, which is one of the most successful parts of the pump before.

Before that Barry came from Oriel.

And he actually started with Charlie Palmer in Manhattan.

At our at our Els and then was brought out to Las Vegas, One area also opened at our family but.

<unk> was very successful 25 years it just recently closed.

But these guys are kind of James Beard, Michelin star restaurants types.

Various prime was just ranked one of the top 100 restaurants in the country by Tripadvisor and that's.

It's a fairly new restaurants, I've got there pretty quickly.

Are we all had one James Beard Award.

Words twice and Michelin Star.

Several times.

So our goal is to have the best restaurant in the state of Colorado, and and partnership with them. We think we think we will get there and so that that's a very important.

Courtney to the place.

And as part of our secret you know the primary market for US is always going to be Colorado Springs, which is a million people are close to us, Colorado Springs, Pueblo and Canyon city add up to be about a million people.

Denver is an important secondary market, it's about two hours away.

It's closer to Blackhawk, then to Cripple Creek, although the southern parts of Denver.

Especially considering Denver, Traffics and southern parts of the Denver Metropolitan area, probably about equal distance and if we can have a better services and a more interesting casino than the ones in Black Hawk, We think we can get a significant secondary market dropping.

Denver is not unlike you know.

People, who live in San Francisco were actually closer to Reno, Las Vegas, but certainly many people from northern California and up in Las Vegas. So so that's what's going on there going ahead, the silver slipper did not have its best quarter.

But we've altered some of the marketing and I think it's going to do better going forward it but it wasn't a disaster, but it was a little soft.

In Colorado, we're not making anything actually lost a little bit of money last year.

And that's just because it's got no parking is kind of hotels have places under renovation.

It's amazing what that lives or more months to be honest and that will turn around when we get so many open which is now on the horizon.

And then the circa sports book deal in Illinois, which is $5 million a year to us.

You know, which which it alone covers a good chunk of interest expense.

And circa.

There's a whole bunch of regulatory stuff that has to happen, but we think they'll be up and operating by August .

Yeah.

We did get the entitlements.

To the corps of engineer to add a tower at the silver slipper, but we're a little busy these days so it's certainly not imminent.

And we're actively.

Actively doing the designs for the permanent American place.

We expect to open about three years and it sits at right.

Yes.

I think we got everything down.

Yeah.

Okay.

That said, let's go to Q&A, Let me let me just from what we did change the segment report that that start to yeah, yeah, Okay, and and so it just as we've gotten to be a bigger company that didn't seem to make sense to spend a lot of time talking about fallon separately or.

Separately, so it's not possible to invest in only one of our casino if you're investing in the company. So it's it's more appropriate to kind of show you. What the company is doing and we break it out by geographic segment says most casino companies do so.

Yep.

Got it.

Any questions.

Thank you.

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Our first question comes from David Fein with B Riley. Please go ahead.

Great. Thank you and congratulations on the Waukegan margin ramp that certainly faster than we anticipated I think on the last call. There was actually mentioned that walkie game could hit 40% margins over the course of time and just looking at what you accomplished in the first 40 days or so there.

Is that ramped to 40% you know one could that be conservative that 40 firsthand even as amenities come on that May you know stabilize that ramp for a little bit but after fine tuning I mean, and you know it's in terms of sort of overall timing to get there has that changed internal.

In your view.

I think what you're referring to is as I was referring to 40% of gaming.

It could be 40% of gaming revenue, okay. So we're pretty happy about the 35% sorry.

The more restaurants and get.

More food and beverage revenue you don't make much margin on the food and beverage right and but on the other hand in the casino.

Predominantly slot machines, so far as it is at all of our properties.

And then the tax rate in Illinois on table games is significantly less than it is on slot machines. So we will have pretty good margins.

And tables and everybody has good margins on slots and then Theres No hotel here, there's no golf, we're saying.

Some of our other properties have these other things that are low margin businesses. This one does so it should be a high margin business yeah, yeah, because if you think about it Dave.

You know that that food and beverage really is breakeven right. So it ends up bringing down your overall margin. If you look at a consolidated basis. The only thing I should tack on there is is as we ramp up these other amenities that are.

And in the mix.

Whether it's the additional restaurants or the additional table games hours that theres, probably a little bit of margin degradation, there too and.

In part from just having more.

Lower margin stuff like more food and beverage.

And in the revenue line with with not as much on the EBITDA line.

That'll that'll be great margins, a little bit and then and just just the normal ramp up will degrade a little bit too, but I think in the longer run.

The property that should have margins in the in the 30% ish and I think even our GM. There would tell you as he has told me many times and as all property. He pulled 40% margins and he would love to get 40% margins and we would love that as well so but it's more of a stretch goal than it is the easy go well there. The other thing I'd point out is in the expense.

In the quarter, we had a lot of mass advertising, we were running TV ads, we were running.

A lot of Billboards.

And as you build the mailing list you can focus more specifically on people, who are known to gamble and so your advertising expenditures and marketing costs get much much more directed and much more efficient so.

You know that will happen over time, we even we even had the trains that we wrapped.

On the commuter line with the stuff for the property, which is once you. Once you have a mailing lists you don't have to do stuff like that it's it's kind of like I was explaining to advertising agency, it's like going fishing in a lick you've never been to before and you have to go through your line out all sorts of different places and you start to learn where the Fisher.

And then just go back to those places and in this quarter, we were throwing a lying all over the place trying to find out where the people are gambling, who they are and as we zero in on that will become more efficient.

Okay, Great one last.

Oh go ahead, one last thing and I'll hop you D V D a.

For April so put it all in perspective, our our margin.

We haven't closed the books yet there for April , but it's probably going to be in the high 20, percents not not not not have a three on it but that's in part because we ramped up that new Asian restaurant, so well.

A little more color there for you to help you out yeah. No. That's very helpful. Thank you and then have you observed anything from running the temporary you know at least to date that could be incorporated in the permanent build as either an amenity or maybe something you you want to eliminate to further maximize sort of the.

The long term potential in Waukegan or is the road map pretty sat there.

Oh, no we're learning stuff every day.

And I could write a book about this stuff we've learned in three months.

Is it Oh, you know dramatically changing.

Some stuff and so you do learn stuff and frankly, just thinking about it as you're as you work on it.

And frankly, our Uh huh.

Hired as the architects the same firm who did.

The Venetian and Palazzo and an end.

So yeah, Hello, Yamazaki I wasn't sure how to perhaps with Yamal that casino and a bunch of other stuff very experienced architects by the name of W. E T G.

<unk> in hospitality.

And frankly, they've come back with some.

Significant improvements in our design so so.

Yeah, and some of them are improvements in quality and some of them are improvements in efficiency. So it's it's a it's a process, but yeah. We are learning a lot. Obviously, so you know the table games demand has actually been pretty robust. It's you know when when we were opening at two P. M.

It was kind of nice to walk the floor at $1 45 in Seattle lineup of people waiting for those tables to open and so then when he went to 10 a M openings you you're kind of starting to go into that saying that all over again.

That's been a nice pleasant surprise to see especially given that the gaming tax rate there is fixed at a flat 15% on the.

Slot side, we're certainly learning our marketing day by day and that's why in April you saw us.

Some new records were where we're tailoring the marketing don't tell what the locals are responding to but the other thing that I forget sometimes so you probably forget about it too is is that that slot customer is one that is used to getting their free play in the mail every week and they get a.

They're they're they're used to their usual things and when you don't have a database it's hard to offer that right. It's not surprising and so from from February to March to April to May as you continue to build that database you continue to build your slot player too.

In the month of May just have to start this month, we had our first kiosk games, where you swipe your card and do you get your bonus points or whatever it is and and so you know this is may is probably going to be the first full month, where you've got your full breadth of normal slot marketing amenities, there and live.

And so as soon as that as that database continues to expand I think youre going to see just continued change in that property too.

Okay. There's two things there's two things we've learned.

But one of which we couldn't do anything about the other one maybe we could have and that was one.

But we did go through the trouble to have these projectors project interesting visuals on the 10th at night otherwise it would have just been a deep hole and that cost us.

Close to $1 million all in but when you drive by at night. It really catches your eye is pretty spectacular during the day it looks like a department of public works parking garage here I mean, it's it's very unimpressive during the day and there's not much we could do about that.

A temporary buildings and so.

The permanent we'll catch right, but if you drove by this during the day.

Yeah, we were trying to figure out how to market to say you got to come inside because when you step inside its far nicer than it looks like it will be from the outside.

And so that's been one of our interesting challenges that there wasn't much we could do about it we did I'm glad we went through the troubled shine lights on at night, because that helps a lot.

The other thing was the choice of name, which was may choose in the name of the temporary and I wanted to choose that name because I didn't want people to think that this was American place because American place would be much nicer.

But marketing the temporary is actually kind of an impediment because people are like well why don't want to go to this place it's only temporary.

It's not that nice is just temporary and there's even been a little bit of a hurdle with employers like belabor permanent job now what do I want to go to work at a place called the temper and so it's kind of like with the employers who say listen we're hiring for American place you just it's a permanent job that's just a temporary structure.

So the use of the temporary name, what's a little tongue in cheek in it and it was to not confuse people on American place being bigger and better.

But in the meantime, it's been a little bit of a challenge yeah. I mean, the pleasant thing as people walk in the door and overwhelmingly people walking in their jaws drop and and Theyre just amazed by the place it's very very different on the inside versus what you would expect when you see it on the outside and look I hear everything that Dan said, but at the.

The end of the day, a brand new property anywhere is going to have its own marketing challenges as your brand the property. So.

This was a very very good start to it we're extremely pleased with Q1 and nothing has changed our ability or our thinking as to what this property can do in the long term. It's itself. It's they're in full in effect, we built the industry's biggest speakeasy.

If you go down well hidden secret Cosmopolitan as all these speakeasy and you go to the back of their food court, pushing emergency exit door and Lo and Behold, There's a bar back there that's always jammed called Ghost Donkey right and it's like somehow they have to get that word out and our casino is kind of the same thing you're driving by what looks to be a place for the department of public works is storing so.

For the winter and until you walk in the door you don't realize how special it is yeah.

Okay, sorry for tracking error.

Thank you alright, guys. Thank you. Thanks.

Thanks, Dave.

Our next question comes from Edward NGO, which raw and Kim. Please go ahead.

Hi, Thanks for taking my question two quick ones for me. The first one is on the temporary any update on what the GTR was in the month of April and then it or at least Directionally versus March and then for.

For the opening date of Chamonix.

Set in stone is that that December 26, and I guess at the same time, what point this year or we can start to see less disruption that the profitability part property as well thanks.

Oh I don't have it in front of me, but it's going to be a little low sevens. If I recall correctly. It's a April is always a strange month for a lot of markets. Because you get April you get Easter in there. We had we had some snow days there on the weekend and then you had a yeah. What I'm told is a big deal Orthodox ortho.

Easter as well so it's.

It's.

If I were in your shoes I would look at the opening of additional tables is the next big move for gaming revenues there more than anything else in the near term and the changes on May 12, and the changes I made 12, absolutely yep are pretty important and frankly I don't understand the Orthodox Easter argument.

The property told this Orthodox Easter got hurt them and I'm like really how many Orthodox Christians do we have gambling at our casino, but anyway. So the regular eastern definitely slow.

And.

But properties doing couple of million a week pretty consistently.

And then the.

Bronco Billy's the Xiaomi Bronco Billy's.

Because the.

Theres hotel rooms above the parking garage parking garage was actually completed.

But the elevators lead down into the Chamonix casino, which is not hooked up to Bronco Billy's. So we don't have a way to get parking for Bronco Billy's until we opened Chamonix and that's the major thing for it now when Germany opens we not only have the garage, but we now have large surface lots behind Germany.

And we will go from having the lease parking in town to having the most parking in town.

But it all happens when chamonix opens because the cause of which connected so.

The summer is seasonally more important than the winter. So so we hope to make some money at Bronco Billy's This summer.

But I think the big turn will won't happen until we really get Chamonix open and that's a pretty certain date I mean, theres no regulatory issue with.

Thought long and hard about it we've got all the construction people to sign off on it there actually turning parts of the building over to us as much as two months before that.

Now then we have to put the furniture and and all that which takes well.

We've gotten the approval of the fire authorities to be able to do that before we have a regular occupancy certificates, we have to run a fire watching all this stuff.

And and we will use chamonix like the completed facilities in Germany to train people.

And and so.

No that's it.

Certain date at this point.

Like if you wanted to reserve a guestroom.

For that last week of December we would take the reservation at this point.

Helpful. Thank you.

Yeah.

Having said that I got to make sure they've opened up the website, but yes.

Yeah, I don't think we have quite a bit yeah.

I'm sure Baxter's listing on the Gulf really scrambling to do that.

Yes.

Any other questions.

Our next questions come from Chad Beynon with Macquarie. Please go ahead.

Good afternoon, Dan and Lewis, Thanks for the color and nice quarter.

In terms of the silver slipper, there's a property that generated exceptional results back in in 'twenty, One and now we've had a couple of quarters of of just really tough comps in the the performance has come down a little bit Dan you talked about potentially doing some things you know when.

When when the focus is is removed from from some of the other projects right now, but can you shine a little bit of a light in terms of just generally what's going on in the current macro environment, if trends have kind of leveled off there. Obviously, we all know that the southern region generally and in gaming probably outperformed I think that was fairly.

But just trying to get a sense of where this settles out in the current macro environment. Thanks.

Well I think Boyd.

Boyd mentioned they saw weakness in.

Mississippi and Louisiana in their quarter.

I've actually been I'm wondering if you can pull the results by property from Louisiana, and both boomtown on the West Bank of New Orleans and treasure chest.

Which is not far from there were both down strongly and we're not sure why in there because they were down like 20% each were not down that much where it's a little soft and we've.

We've had better quarters, but.

But I think we are.

The main thing we've been playing against us that Penguin and put some money into the Hollywood, which is down the street from us. So they opened a refurbished spa.

Baccarat room in a noodle bar.

And they've got more aggressive with their marketing and so we've responded now with some.

New marketing programs.

And we seem to be holding our own into April .

So I think it's.

And actually as the company shifts I mean.

You know if the suit.

<unk>.

Part of the benefit of growing the company and we used to count an awful lot of the silver slipper now silver slipper can have a soft quarter in and it can easily be made up for by the temporary and when Chamonix opens the silver slipper is going to be our probably our number three property not number one.

And we're actually looking now like insurance rates continue to go up.

Transcript is taking such a hit on different hurricanes and so on.

And we used to have like.

The silver slipper Super over insured because the whole company was relying on and we may cut back on that now will still have an adequately insured, but if it got hurt by a hurricane the company would be fine and so.

We may be able to do that going forward to reduce the growth that would otherwise continue in our insurance expenses.

No.

But anyway.

It wasn't a horrendous quarter at the silver slipper. It was it was.

So let.

Let me help you out a little bit there too Chad.

Pretty when it did $30 million of EBITDA two years ago, we were out there telling people, it's not a $30 million of your asset for what it's worth but it's doing between 15 and 20.

Disappointed at 15, I'm looking at Dan to make sure he agrees with that and.

But if you're doing it in the ballpark of 20, that's probably the right spot to be and and is it a little more on the disappointing side. The answer is yes, we do.

Did have some slot and table hold issues that I briefly mentioned at the top of the call but to put it into numbers.

Table games hold was was two nine percentage points below last year's first quarter that that equates to $230000 of of lost revenue. If you would've kept the same flat whole percentage and then on the on the slot side. We're about 37 bps lower which is about 800000 bucks. So those are insignificant numbers either for it.

What it's worth.

Great. Thanks.

Yeah.

That's.

It's interesting that people talk about the region being weak and and.

We've been okay, we're a little weak and okay, but I I I do kind of wonder.

Whether inflation has a bigger impact there than in other parts of the country because.

It's a the per capita income is lower in Mississippi, and Louisiana than other parts of the country.

So if you add.

Some of the cost of necessities, who might have a bigger impact on household income.

But that's that's just a guess.

I don't really know why that region would be weaker than any other region and we are from what I've been able to see from.

Boyd and pen with the exception of Planet Hollywood.

I think we're doing better than most in the region.

Good color. Thank you.

I wanted to touch on table games opportunity at the at the temporary.

So you know you talked about.

The the bed Max limits, the number of tables, the hours, where where where do you expect the tables versus slots to be and then the second part of that is when circa opens in August .

Should we expect for some nice demand.

To comment on the weekends during NFL season September October et cetera through the fourth quarter from people, who are maybe going in to watch the games at this what appears to be one of the bigger sports books in the in the County, and then maybe go over to the table games, given that's kind of the third customer demographic just trying to trying to fill.

We're out what the opportunity could be there on table games later on in the year.

Well on your first question, we opened with twenty-five table games were 20 or 20.

'twenty 'twenty Jaeger, who will eventually we're allowed to have 50.

But when you go from 28 20 to 50, you don't double the revenues because you don't need 50 games on the Tuesday morning.

But you may use all 50 games on a Saturday night and so.

As you double the number of table games, maybe the table game revenue goes up 50% I'm just picking a number of my head.

When all is said and done I still expect slot machines to be probably at least two thirds of the revenue of the property.

But the table games will.

We will be more whereas in our other properties slot machines or 80% to 90% of the revenues at the property.

And then because it's a lower tax rate I think we can make better margins on table games in Illinois than we can in the other markets.

The spa.

The sports book, it's still kind of a new area of the fact that there are that.

But you can make a bet on a game on your on your iPhone.

From anywhere in the state reduces the need to come to our property to make a bet.

Now Nevertheless, the sports book, especially the way circuit does it creates an ambiance that people like him in there, there's probably no better place to be during March madness, and sitting at Circus Sports book and eventually American place, we will have a sports book looks very similar and so it becomes an amenity that people want to go to almost like.

Nightclub or something and and so that's important.

And of course, we participate in the online.

Bedding, so we will benefit from that and there's a minimum of $5 million a year I'd be surprised if our half of the onsite.

Sports book is $5 million a year I think the online is probably bigger.

But is it a nice amenity to have an accidental yes were anxious to have an open and I think it will drive some people, but it's still kind of a.

Unknown thing like a <unk>, but in general where states have online bedding.

And people don't like and when.

When Louisiana load online sports betting.

It did hurt our.

In House Sports book quite a bit at the silver slipper, because people were driving to the silver slipper to place a bet because we were the closest.

Casino to Louisiana, we were the closest sportswear to Louisiana now the sports book was never more than something like 5% of our revenues there, but it went from 5% to one.

When you when suddenly people could make our beds online.

Yes, another way to think about the tables chat if it helps you as if you look at reverse rivers in the month of March as an example did roughly 40% of their roughly.

Roughly 40% of their total gaming revenue came from the table side.

At our other nearest competitor Grand Vic.

The percentage was closer to 21% and I think we did something like 14% of our total revenues came from the tables themselves and so the question is are we going to be closer to 20% like most other casinos in the state or are we going to be close to reverse at 40%.

I don't know the answer but my gut says you're probably somewhere between the two but.

But but we'll certainly have a lot more I think we are between the two the the the Asian communities in.

Chicago land or there's a number of significant Asian communities that are pretty close to rivers.

And while there is in Asia, there are Asians living in Lake County.

It's not as significant so I don't think we'll be at 40%, but I think it will be higher than 20.

And actually nobody has asked the question I guess, we should have mentioned it from what we can tell so far.

Although we're already one of the higher grossing casinos in the state of Illinois, I don't think we've had much if any effect on rivers or any of the other local casinos I think we've grown the market and we know that the people who have signed up but our players club are predominantly from Lake County, we've met.

We've had actually very few people sign up who are from downtown Chicago and that's what we expected, but it also says that when our bellies eventually opens downtown Chicago, We don't think it'll have much impact on us River sits squarely between us in downtown Chicago, So if somebody from downtown Chicago is driving there.

Place they're driving.

40 minutes past rivers to get to us.

No.

Okay.

You both appreciate it nice quarter.

Thanks, Jeff.

Our next question comes from Ryan <unk> with Craig Hallum Capital Group. Please go ahead.

Good afternoon, Dan Lewis.

Not to beat a dead horse here on the temporary but one there and then I do have one follow up elsewhere, but.

I get it margins will dip kind of as we as it ramps up but I guess as you add the lower margin amenities should we assume EBITDA dollars will grow from here kind of run rate what you've done in the first 45 days.

Yeah, I think you got it by the way as far as beating dead horses Theyre all over at Churchill Downs. So we don't have any dead horses around here.

[laughter] yet no.

The 40% number is 40% of gaming revenue and I think that's totally doable.

It's just you got to be careful what you're dealing with because a lot of people normally in this business you look at total revenue and what are the margins going to total revenue and an end.

Things like restaurants will bring that down.

And so.

We'll probably end up with margins somewhere around 30% plus or minus on total revenues and close to 40% on gaming revenues. So if that helps you and yes.

This will build from here I mean, we said before that we thought even the temporary could earn $50 million of <unk> well, we're already a third and we're not even fully up and so I think we can get their announcement it doesn't happen overnight, but I think.

You know that that might be a reasonable expectation for calendar 'twenty 'twenty four for example.

No.

Yes.

You, obviously don't yet you obviously don't add these amenities if he thinks they're going to be detrimental to the dollar we focus a lot less on the margin a lot more on the dollar amount. So so you're not wrong. We are we want to see the total dollar number continuing to go up you know if you want you know if we wanted to get the margins are significantly higher at rising Sun we can.

Close the golf course, and close the hotel and we had a much higher margins, we'd have less income less income aircraft people out there right now.

Yes, yes makes sense.

Then.

Down in Mississippi. So it seems like there is a new one every year, but south beach casino trying to build a casino development rate a mile away from silver slipper, I guess any thoughts there.

We have a right of first refusal on that piece of land.

And it's secure land and I'm pretty sure I think it is.

I think he's just trying to keep the entitlements on us land.

It's a it's a pretty mature market.

From the numbers repeatedly and I don't think the numbers work to build the new place.

Yeah on the Diamond head is still around there.

Still a public company, it's been talking about building new place for 20 odd years.

The last totally new players to get built was the Scarlet Pearl and its returns been pretty anemic.

No you can make the math work on an expansion.

And you did a few years ago as we contemplate at the silver slipper.

To build something from scratch I think it's very hard to make the numbers work. The gaming per capita by PS.

In South East, Louisiana, and southern Mississippi, So that's everything from Biloxi to Baton Rouge, and New Orleans. The gaming per capita in that region is second only to Las Vegas as far as as far as I know gaming per capita in Las Vegas, because people retire here, who like to gamble. So it gets.

Distorted, but otherwise this this region is the most saturated.

Gaming region in the country and that's despite having relatively modest.

Household income and so I think when somebody goes to build the new place becomes a market share gain more than our market growth game and that makes it very hard.

To make the numbers work, whereas like in Colorado.

Colorado is still one of the least penetrated gaming markets I mean, the gaming per capita in Denver, and Colorado Springs is about half the U S average.

And yes, you have to drive an hour to get to those casinos, but that's true in the state of Washington, and that's true in the state of California, I mean, they're 60 travel casinos in California, but theyre not in Beverly Hills, they're like an hour drive from where the people live and yet the gaming per capita in the state of Washington, and the state of California.

As in the ballpark of $400 per capita and then Denver, it's still under 200, and that's why our monarch out a great return on their investment we think we're going to get a great return on our investment and the same thing is true in Lake County, So when we're looking at where do you go we look for markets, where the gaming per capita is low.

So where the existing suppliers, perhaps not very good and and those are opportunities for us. If you look to go into the.

Southern Mississippi and it draws people because there's not a limit on the number the number of licenses are kept but a few and you could be anywhere along this long coast.

But when you really start crunching the math, it's like well, it's a mature market, it's going to cost to just as much to build there is a cost to build someplace, that's not a mature market.

No in the current lending environment I don't know how a one off project gets funding and what is essentially a mature market as as us and Boyd and others talk about.

The market that's.

A little bit on the softer side to be quite Frank so.

You know it it is one thing too.

Have a side that could potentially have a casino and gaming approval for that site, but that's another entirely to actually then take that and turn it into a physical casino, that's up and running yet actually.

Lewis and I have been around this for a long time and it was a <unk>.

15 years ago, when we were at Pinnacle that the casino magic in Biloxi was destroyed by Hurricane Katrina.

And it was making about $15 million a year and at the end of the day, we got north of $200 million of insurance proceeds.

And we could have rebuilt.

Instead, we use the money to build the stuff in St. Louis.

The higher return that we didn't have to rebuild the velocity and we sold that site to harriss.

And then after they sharpen their pencil they never built on it either so I think it's a mature market very hard to justify building a new place we have eight minutes and for people in the queue I don't think that I get to all of them down, but let's try and I'll try to be efficient okay.

What's next.

Our next question comes from Jordan Bender with JMP Securities. Please go ahead.

Great. Thanks for taking my question, Dan you kind of just touched on it kind of reach in your database.

Will there be kind of an initiative to reach towards rivers or part of wanting me more in the near term or are you guys going to kind of wait to take maybe try and take share from those once.

The final structure it built a couple of years.

The permanent place, which will have hotel rooms in Pi and amenities and so on might take a little more market share, but frankly this is such an underserved market.

I think there's enough for everybody but.

Certainly like right now if you lived in downtown Chicago and drove out to what Keegan, which take you close to an hour.

You'd be like Okay. That's nice.

But when you drive out to American place you can say Holy <expletive>. This is really nice and so.

The permanent one.

It will be more of a competitor more market share, whereas the temporary as pretty much Lake County.

Yeah, but you know by the way, they're not going to be static either I mean part of what it means to make a lot of money in Milwaukee I'm sure. There are scratching their heads thinking how do they improve their place wherever it certainly makes a lot of money that just didn't expense.

To figure it out or improve their place and that's that's how enterprise works.

We certainly think the marketing radius is going to grow from here Jordan It's a.

It's extremely local at this point and if you live in well, Matt our Avon's dinner, one of those towns, where you're essentially halfway but drive time wise between us and rivers.

It's going to be much easier to get that person to make the drive towards us once the permanent opens.

The nearer term.

Rationale would be why would you want to drive towards downtown Chicago and so.

We think we have a quality facility on the inside quite frankly, I think our temporaries nicer than a lot of the permanent facilities that are in the area, but it certainly not nicer than river surface has a very nice facility and so does the potawatomi.

But we kind of are hearing the same thing from people that are on the Wisconsin, Illinois border I don't want to drive towards downtown Milwaukee, and so I think Dan's right I think even I think in the longer term. This is a big market that everyone will be able to play in but but you know.

We're hyper localized right now and that will certainly expand out even in the near term.

It's 80 miles from rivers Potawatomi.

So there is an 80 mile gas with no casinos.

Until until the temporary open.

The temporary is near the midpoint of those 80 miles and it's surrounded by the 700000 people who live in Lake County, that's our core market and Louis mentioned Grand Vic, which as the Crow flies. It's about the same distance from us as rivers, but you can't drive.

The way the Crow flies and if you Google It if you'd leave Grand Vic headed for US you have to drive past reverse so grand Vic is actually far.

Far more distant competitor than rivers or Potawatomi.

Uh huh.

So.

Great.

And then for the follow up can you just kind of area can you remind us of the resolution happened with the gaming tax payment.

The state of Illinois, if you had to pay that and for that was a partial payment.

Okay.

We paid we paid the 50 unhelpful, but I mean at the end of the day.

We thought the law wasn't particularly clear and weird interpreted it one way and the gaming Commission interpret it in another way we asked our lawyers to look into it they talked to the gaming commissions lawyers and in the end.

It kind of wasn't worth fighting over to be honest it wasn't the amount of money. It was the timing of it and.

Yes, there are regulators and you don't want to pick a fight with the regulators.

The politicians left the love Big.

Everyone's doing their best to come up with an interpretation.

Yeah, we did pay the 50 in full and we did it when our lawyers came back and said you can file a lawsuit but by the time the lawsuit gets heard somewhere.

Youre going to what anyway. So what's the use and then you run the risk of piss off your regulators, where would you want to do that so.

Alrighty, Thanks, nice quarter, but it.

To be honest the bulk of this wasn't the regulators. It was the politicians and some of you may know that my ex-wife as one and they left a law that was like.

Crazy Big.

Uh huh.

Thanks Jordan.

Dan we're probably only have time for one of them Oh, sorry, there yeah, probably the last question here go for it.

Our next question comes from John Decree, we've see B R. E. Please go ahead.

Hey, guys. Thanks for taking my question I'll make it an easy one.

Round things out.

Follow on from from a license payment could you Lewis give us.

Little bit of help I haven't seen the 10-Q out on what we spent in capex in the quarter and then with some additional amenities and end tables.

Expected in May at Waukegan can you kind of give us your expectation for any kind of closeout costs on the temporary in terms of capex.

Yeah. We are we spent roughly $58 million on the temporary in the first quarter that includes at $50 million of license payment that I mentioned, and then $8 million of just excuse me largely wrap up Capex and then over at the at Chamonix, We've spent about 33.

<unk> million box are roughly in that ballpark on a.

True true construction capex.

So that's all on one K, you'll you'll get that Q I think lately tomorrow night for what it's worth.

And you know from here.

Here.

Well in real time, I've got $93 million sitting in the Chamonix account.

We'll spend every bit of that.

In 2023, there may be some trailing stuff in 2024 four.

Kind of retain edge and whatnot, but but.

By and large it's going to be spent in 2023 and over at the temporary it's really stuff for the permanent for what it's worth.

And we will spend you know.

<unk> digit millions between here and year end on things like architects and some basic site work and whatnot.

It's not like we're converting the steakhouse at Bronco Billy's into an Italian restaurant.

$1 million, that's not part of the restricted payments.

And frankly, the silver slipper once a new slot machines that will probably buy for them.

To help them be competitive in the market, but so the other capex is relatively modest stuff yeah. The tables that are that are not on the floor yet at the temporary for what it's worth those had been bought they've been bought for a while they've just been sitting in a warehouse it didn't make sense for us to put them on the floor without dealers because we thought that would just make I guess angry that you didn't have a.

Dealers Adam on a busy Friday night, so so we left them in the warehouse.

Asian restaurant was already complete at opening day. It was really relying on the employees to go and stop it and then we've got that Steakhouse, that's kind of off site still being built and Adam I know I think it's a I know there's a check for a $7 million. That's what I'm about to say I think there's a check that's getting ready to go out the door for $5 84.

And then we've got the balance so it's in the ballpark of a million Bucks.

Got it and that was great.

Was the turning point I mentioned, because you know we've been cash flow negative for a while now is we built all this stuff and this was kind of the turning point, where pretty solidly cash flow positive going forward.

Thanks, everybody I appreciate it.

That's probably at the end time wise yeah. Okay.

Okay. Thank you very much everybody.

That concludes our Q&A session I would like to turn the floor back over to Luis changer CFO of full house resorts for closing comments.

Well I'll speak for Dan We think you guys as always go out and see the temporary I know a lot of you havent yet it's.

Pretty impressive to see in person and.

And we'll chat with you again next quarter. So you can look at the web Cam of Germany, It's pretty impressive too yeah itself. There. Thank you guys will see you next quarter.

Yeah.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Okay.

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