Q3 2024 Full House Resorts Inc Earnings Call

[inaudible]

Speaker Change: Good afternoon and welcome to the full house resort third quarter earnings call. At this time all participants are in less than only mode.

A question and answer session will follow the formal presentation. If anyone should require operator assistance during conference, please press star then zero on your telephone keypad.

As a reminder, this conference is being recorded.

Speaker Change: I would now like to tell the conference over to your host, Lewis Fanger, Chief Financial Officer, Afton House Resort. Please go ahead, sir.

Lewis Fanger: Thank you, good afternoon everyone. Welcome to our third quarter earnings call.

Lewis Fanger: As always before we begin, we remind you that today's conference call may contain forward-looking statements that were making under the safe harbor provision of federal security laws. It 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 with the discussion of risks that may affect our results.

Lewis Fanger: Also we may make reference to non-get measures such as the Justice Bbidda for a reconciliation of those measures. Please see our website as well as the various press releases that we issue. And we also have a presentation today on the website if you go to investors.fullhousewaizords.com. Click on the lower banner, click company info and then presentations and I'll take it to that presentation. And maybe the most fun piece that is on page 4, there are two video links for an ad that we're about to start running this week for Shamania as well as a drone fly through the property.

Lewis Fanger: And then lastly, we're also broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release, as well as all of our SEC filings. And with that said, you ready to go, Dan? Yeah, I'm ready. OK.

Dan: All right, everybody, look at, there's kind of no way around it. It was not a good quarter and I'm not happy about it. Colorado in particularly was disappointing.

Lewis Fanger: Just reminding everybody, it was partly open in the first quarter. It opened just before New Year's and was only part of the hotel.

Lewis Fanger: and then it was more open in the second quarter.

Lewis Fanger: Now the expenses are up, not surprisingly.

Lewis Fanger: You know, back in 2023, for example, the total expenses in the four quarters were 4.3, 4.2, 4.8, and 5.0.

Lewis Fanger: That was really just Bronco Billies with a little bit of Chamonix right at the end.

Lewis Fanger: And then as we opened the new property, it jumped in the first quarter to 9.1, and then 10.3 in Q2, and then 13.7 in Q3.

Lewis Fanger: The bad news is that while revenues have been growing they've been growing only as fast as the expenses so the revenues back 2023 Q1 was 3.7, 4.1, 4.7, 4.5

Lewis Fanger: And we weren't making a lot of money in 2023 because we had a lot of construction disruptions, so it was understandable.

Lewis Fanger: And then in 2024, the revenue has been $8.7, $10.8, and $13.0, which is good growth, but only as fast as the expenses have grown. And this results in little income and, in fact, a small loss in the quarter.

Lewis Fanger: The good news is that when you look at the magnitude of the market, and particularly the results of comparable casinos in Blackhawk,

Lewis Fanger: Well, the growth for daily operating expenses is largely behind us. I mean, there's some things like

Lewis Fanger: Gaming taxes that go with revenues, but but things like payroll should not grow going forward

Lewis Fanger: And our revenue should be able to grow. And that should bode well for profits in 2025. And we also made some marketing expenses that didn't help the corner. When we opened, we had an active kind of traditional advertising program.

Lewis Fanger: around that opening. There was kind of a cute ad that was filmed in the midst of construction. And then we essentially went dark in the spring and summer, as we were focused on getting the rest of the building open and building occupancy.

Lewis Fanger: And occupancy has built significantly, and in the third quarter it reached over 80% in September when it was back at 50% in the spring. And when it was at 50%, we were like, okay, let's get the occupancy up and let's be targeted about it.

Lewis Fanger: And part of what we did is we started offering a program where we...

Lewis Fanger: purchased mailing lists and provided free rooms on midweek days.

Lewis Fanger: and rooms that would otherwise be sitting empty, and that did help build the occupancy. Well, it turns out that all mailing lists are not created equal. So there's one mailing list that we bought that was reasonably successful. It was a well-defined list.

Lewis Fanger: 15,000 people on it and recognize the way this happens you pay somebody to mail the people on their list They don't give you the names generally

Lewis Fanger: Well, somebody had a well-defined list, 15,000 people with a propensity to visit Colorado casinos. It cost us about a dollar per person to mail it to them.

Lewis Fanger: And we offered a free night, midweek stay, which is when we would otherwise have generally had empty rooms.

Lewis Fanger: That particular mailing list, about 3% took us up on the offer, so 462 people out of 15,000.

Lewis Fanger: And that's not unusual. 3% took us up on the offer. So since you're mailing out 30 offers at $1 each to get one person, you have like $30 customer acquisition cost.

Lewis Fanger: And of those 462 people...

Lewis Fanger: 380 actually played. So you have an even higher customer acquisition cost if you get down to people who are actually playing. Now there may be some people, you know, we make them have a card to get the free room, maybe some people played without having their card, so maybe the actual play was a little better than that, but in general I think...

Lewis Fanger: People do use their cards. And then on that particular mailing list, the average win per person was $180.

Lewis Fanger: Now, that more than covers the customer acquisition costs and the gaming taxes and the cost to clean a room that would otherwise sit empty. So it's not hugely profitable, and after all, it's only 300 or 400 names, but it added 380 people to our mailing list who we didn't otherwise know.

Lewis Fanger: And now we don't have the customer acquisition cost to go back to it. And that's frankly how one builds a business. Now we had another larger mailing list that we bought that was less successful. It had 176,000 people on it.

Lewis Fanger: And it was kind of a black box. Somebody said, you know, these are people who have a proclivity to gamble.

Lewis Fanger: experience this where you maybe you subscribe to a newspaper or something and then it's got a little questionnaire what what things interest you and people click you know casinos and therefore somebody comes to us and says hey here's a list of people who who are interested in casinos we don't know exactly what it is they didn't charge as much for the mailing list

Lewis Fanger: And they wouldn't tell us the criteria. Now, honestly, we should have tested it with a small subgroup, but we didn't. We were eager to try to get the hotel filled.

Lewis Fanger: So we sent out a hundred and seventy six thousand offers at about a dollar mailing so a hundred and seventy six thousand dollars Again offering a free midweek stay

Lewis Fanger: We only got 0.8% took us up on the offer. So it cost us over $100 to get a person to come to our casino, customer acquisition cost. Then, frankly, of those, only half gambled.

Lewis Fanger: And so the customer acquisition cost was like $200, and those that gambled, they only lost $48, which barely pays for cleaning the room. So that particular mailing list was a bust, and you know, it counted for

Lewis Fanger: a few hundred thousand dollars. It was 1,382 room nights, which is...

Lewis Fanger: over several weeks, it wasn't all one month.

Lewis Fanger: which is somewhere five or ten points of our occupancy. Most of those rooms would have otherwise been empty because it was midweek.

Lewis Fanger: But in some cases, they may have displaced more profitable customers. So that particular promotion was a bust. Now, going forward, we will continue to do some mailing lists, but we're going to be a lot more careful about...

Lewis Fanger: How we do it. And we're also resuming an advertising program and Louis mentioned there's an ad starts up today. We didn't want to compete with the high ad rates of the political season. So we started with it today.

Lewis Fanger: We also had a very successful grand opening weekend this past weekend for our VIP players with Jay Leno and all sorts of things going on and it went very well.

Lewis Fanger: It's not all that expensive to make.

Lewis Fanger: And we also just hired a new VP of advertising for the entire company.

Lewis Fanger: Somebody who's got over 20 years of experience in the industry and she starts next week and she will help us Make sure we're targeting the advertising correctly and and not wasting dollars We're also seeking to hire more casino hosts

Lewis Fanger: and then sales and marketing people reach out to book meetings and conventions, which is very important to filling midweek periods profitably.

Lewis Fanger: We have had some conventions, like we had the Veterans of Foreign Wars from Colorado, we had a Funeral Home Directors Convention.

Lewis Fanger: which, believe it or not, when they're not conducting funerals, they like to gamble. And we've had a couple of dark championships, which have done okay. We will have much more over time. We have great meeting room space. But honestly, it's hard to get people to book.

Lewis Fanger: meetings and conventions before you're open because nobody's quite sure if you're really going to be as nice as you say you will be.

Lewis Fanger: and over time we will book those and that's part of also building the business. And then you'll notice on the stuff that Lewis Post, we're adding about 5,000 people a month to our mailing list and that's important over the long term.

Lewis Fanger: Like most casino companies, we tend to group our casinos into regions.

Lewis Fanger: I guess it's just become the norm. It makes it a little more complicated for our competition to figure out what we're doing.

Lewis Fanger: But this quarter, however, for transparency, I want to provide some additional numbers so that you guys all understand.

Lewis Fanger: And we don't tend to do this every quarter, but I'll do it this quarter. In Colorado, for example, our EBITDA, or EBDIT, depending on where you went to business school, is how you say it, in the quarter was a loss of $0.7 million versus a profit of $0.1 million last year, which reflects everything I just explained.

Lewis Fanger: Ellison's indicated he intends to refurbish the hotel, apparently extensively, and the first phase is to demolish most of the property's banquet and meeting room space, which is in a separate building from where we are, down along the beach.

Lewis Fanger: And so, as a result, the hotel...

Lewis Fanger: cancelled and put off a lot of its meeting and group business this summer and did a lot less of that business than I normally did.

Lewis Fanger: Ironically, the owners pushed off their construction plans. I don't know whether they redesigned them or didn't get the permits.

Lewis Fanger: But it was too late to recoup that segment of the business. And so the hotel itself had weaker occupancy than normal over the summer. And some of those groups are people who tend to gamble. And so principally due to that, our EBITDA was $1.8 million versus $2.2 in the third quarter at that property.

Lewis Fanger: It's now having a very nice October, but that's what went on there, and I think it's a temporary thing that both the Hyatt and our casino there have been very consistent over the years, absent a snowstorm here or there in the winter.

Lewis Fanger: and uh...

Lewis Fanger: I think they will eventually refurbish the hotel and make it even nicer than it is today. And hopefully we're still running the casino, do well, but that was what went on in the quarter.

Lewis Fanger: The other major segment we have is the Silver Slipper, Rising Star, and American Place.

Lewis Fanger: Now, the Silver Slipper did not have a great quarter.

Lewis Fanger: Largely due to an active hurricane season. I mean this time of year I feel like...

Lewis Fanger: You watch those storms come across the Gulf of Mexico and they always seem to curve.

Lewis Fanger: It feels like God's bowling and I'm the ten-pen every time.

Lewis Fanger: We weren't actually hit by a hurricane, fortunately, but several storms went to each side of us.

Lewis Fanger: And when it does, it affects our customers' ability and willingness to come to us.

Lewis Fanger: So we were off a million dollars there.

Lewis Fanger: Now this property has been capably run for many years, since it opened, by John Ferrucci, who's an industry veteran. He's retiring, and just this week we relocated Angie Truber.

Lewis Fanger: Trübner-Webner, if I say it right. Trübner-Webb, Dan. Trübner-Webb. She's from East Germany, originally, but we transferred her from Rising Star to the Silver Slipper. She started her career with us at the Silver Slipper in the finance area. We promoted her several years ago when we realized how smart she was to be the finance director of Rising Star.

Lewis Fanger: And then she became the GM at Rising Star, and frankly she did a very good job at that geographically difficult property. And so she brings a fresh set of eyes to the Silver Slipper, and we do a lot of things right there, both on revenues and expenses.

Lewis Fanger: But I'm also pretty confident that a fresh set of eyes will find ways to do some things better.

Lewis Fanger: and now replacing her...

Lewis Fanger: At Rising Star, we hired Jeff Mitchie.

Lewis Fanger: from a major tribal casino in Arizona. Jeff had worked with Louis and I many years ago when he was the assistant general manager at Belterra, which is 10 miles away from Rising Star. In fact, before he worked at Belterra, he worked at Rising Star.

Lewis Fanger: For several years, he was the finance director and senior operations person at the large Hard Rock Casino in downtown Cincinnati.

Lewis Fanger: So he knows the area very well. He's actually been commuting for a few years from Cincinnati, where his family stayed, to Tucson.

Lewis Fanger: and so we were we were happy to

Lewis Fanger: And he's operated casinos much bigger than the Rising Star. And he knows how to open a new casino, which could be important if we get the approval to move Rising Sun to Fort Wayne.

Lewis Fanger: So, let me digress for that for a moment.

Lewis Fanger: But over the interim 30 years, newer casinos have opened in every direction from it, often closer to where the customers live. So today is the oldest and most geographically challenged casino in Indiana.

Lewis Fanger: It makes money, but not a whole lot, like $4 or $5 million a year. In the recent past, the Indiana legislature has allowed two other first-generation casinos to relocate from where they originally had riverboats to better locations.

Lewis Fanger: One became the Hard Rock Casino on Interstate 84 in Gary, and it's now the number one casino in the state. It went from being one of the lowest revenue ones to the largest. The other is the Church of Downs Casino that opened a few months ago in Terre Haute, and it's also been very successful.

Lewis Fanger: So the state has benefited significantly in terms of tax revenues and employment from the relocation of those casinos

Lewis Fanger: So, we have recently proposed, and it's been in the press, to relocate our casino in Rising Sun to a suburb of Fort Wayne, Indiana, and the name of that suburb is New Haven. Now, Fort Wayne...

Lewis Fanger: It has about 650,000 people, it's the second largest city in the state, and currently has no nearby casino.

Lewis Fanger: And we intend to do this in a way that is generous to Rising Sun and the employees in Rising Sun.

Lewis Fanger: For example, we will make Rising Sun more than hold on the taxes we pay to them.

Lewis Fanger: We're the largest taxpayer in the community. And frankly, a casino in Fort Wayne would do enough better that we can continue to pay tax revenues to Rising Sun and be a big source of tax revenues in New Haven.

Lewis Fanger: Now, we recently opened a website on the proposal, which is allinonnewhaven.com. Now, recognize that this takes legislative approval, and state legislatures can be notoriously unpredictable.

Lewis Fanger: There's absolutely no certainty we can get this. It may take more than one legislative session to get it. Sometimes it takes two or three. If it ever does get approved.

Lewis Fanger: but if you don't try you don't get.

Lewis Fanger: It's taken us a similar period of time with American Place. These things take a long time to get approved, get designed, get everything in place, and get them built.

Lewis Fanger: So it's important to be realistic about it.

Lewis Fanger: And so it's a long ways down the road. And from a bondholder perspective...

Lewis Fanger: This strategy probably results in a series of refinances. So, for example, the existing bonds mature in 2028. So we would be looking at figuring out how to refinance those.

Lewis Fanger: in the not-too-distant future anyway.

Lewis Fanger: Well, to finance the permanent American place, we hope to call and replace that bond issue, perhaps in mid-2025, when we hope to have demonstrated the success of Chamonix.

Lewis Fanger: and we realize we have to prove that success before we can really go to the bond market in a good way.

Lewis Fanger: So, if we get permission to relocate Rising Star, it probably results in calling that subsequent bond issue, maybe in 2028 or 2029, to arrange financing for a new casino in Fort Wayne, because...

Lewis Fanger: Bound holders are pretty smart, they usually have covenants in it that force you to pay them a call premium every few years and that's just part of their business and that's fine.

Lewis Fanger: So on that let me segue to American Place, which is the bright spot in the quarter

Lewis Fanger: And if you're going to have one place up and the rest of them...

Lewis Fanger: not so strong, it's good to have it be the most important casino we have.

Lewis Fanger: And so despite being in a temporary structure, it made 7.7 million of EBDIT, which is a 13.3% increase over the third quarter of last year. It had a 17.6% increase in revenues. It's done that pretty steadily all year.

Lewis Fanger: There was another very positive development regarding American Place that has nothing to do with this actually.

Lewis Fanger: We get asked all the time.

Lewis Fanger: How can we be confident that the permanent American place will do much better than the temporary one? Aren't we investing in the ballpark of $300 million to address the same people?

Lewis Fanger: And we answered, look, the permanent will be significantly nicer, have better curb appeal, and those same people will gamble more, or more people will come.

Lewis Fanger: Well, there's a very analogous situation in Rockford, Illinois, where the Seminole Indian tribe about three years ago opened a temporary casino.

Lewis Fanger: and they just opened their permanent casino at the end of August.

Lewis Fanger: and in the month of September their revenues more than doubled and I understand they've continued to be strong in October and most of that seems to be growth in that market. They did penalize Grand Victoria a little bit. I think they were up seven million and Grand Victoria was down like two. Grand Victoria would be the closest casino to Rockford.

Lewis Fanger: It had no impact on us. We're a couple hours away. It had no impact that we could tell on rivers. Grand Vic is a very older riverboat, and there are some people who live in between Elgin, Illinois and Rockford. So those people came out of their driveway, and some of them turned right instead of left.

Lewis Fanger: But for the most part, the permanent casino significantly grew.

Lewis Fanger: the revenues for the Hard Rock. And Rockford, by comparison, is a metropolitan area with about 450,000 people.

Lewis Fanger: It's kind of its own Midwestern place that is two-thirds the size of Fort Wayne, just to put it in perspective, and they're doing

Lewis Fanger: $10 or $11 million a month in revenues at this point. In a facility that's pretty comparable to what we intend to build as our permanent, both in terms of cost and quality, they did a good job, we'll have

Lewis Fanger: You know their their theme is to hang

Lewis Fanger: We'll have a little more interesting thing than that, but they do a good job. They're probably the best run travel gaming operations in the country, and we're rooting for them because we think they're a good template for us.

Lewis Fanger: Now, uh...

Lewis Fanger: I will also note that

Lewis Fanger: We actually are doing pretty well in October and November with some swings and win percentage and there's some seasonality.

Lewis Fanger: But I'm hoping to have a fourth quarter that at least looks better than the third quarter. And then I think we're set up to have a pretty good 2025.

Lewis Fanger: I'd also note there's some other noise in the corner.

Lewis Fanger: and when they get licensed we'll sell them the operating company for two.

Lewis Fanger: Fallon is very small, it didn't fit in the portfolio, we hardly ever got there.

Lewis Fanger: We got a good price for it.

Lewis Fanger: and there was a couple million dollar gain in the quarter.

Lewis Fanger: The prior year's results, and that's, you know, of course, a non-cash, well, it is cash, it's a gain, and the prior year's results included.

Lewis Fanger: The accelerated recognition

Lewis Fanger: of Deferred Revenue from Market Access Fees. Now, back when sports gaming was new, and a lot of people were trying to get into it, and before...

Lewis Fanger: It concentrated down to a few major players.

Lewis Fanger: Everybody was trying to get in.

Lewis Fanger: We didn't go and try to develop it ourselves, which would have been very expensive and difficult. So we licensed other people to operate under our licenses, but they had to pay a market access fee up front. So WIND, for example, paid us a market access fee so they could operate online sports betting in...

Lewis Fanger: in Indiana and Colorado.

Lewis Fanger: Lewis, did I miss anything? I went through a lot of stuff. You did, Dan. Let me give you a quick peek into October for what it's worth.

Lewis: It's a month when you see these monthly revenue numbers that come out in a week or so. Just know that that number, while higher than the prior year, should have been up even more. Rising Star revenues and EBITDA are both up pretty meaningfully versus last year. And as Dan mentioned, we have a new general manager that will start there. I forgot to mention that we have a new general manager. There's another thing that happened in September I forgot to mention.

Lewis: when the news came out that we were going to try to move to Fort Wayne.

Lewis: It unnerved both our employees and our customers. And we had to go to our employees and say, Hey, calm down. This is not at all certain. And even if it happens, it's five years away.

Lewis: so don't quit on us here and and by the way if we do get to move

Lewis: of those day bonuses, a lot of those employees are going to be rooting for us to move.

Lewis: But on the customer side, people, we actually got phone calls from people saying, Hey, I have a reservation this weekend. Should I be worried? Are you closing? And we're like, No, we're not closing. And, and, well, if I gamble there, what am I going to do with my points? And, and so we've had to go back and calm people down. But September took an immediate hit when that hit the newspaper. And it's kind of come back. So I'm sorry, I want to know. No, that's perfect. And so nice, nice rebound there in October, versus prior year, and certainly versus the September that just ended. And the new GM that'll start there in a week. So we're slipper admissions are up about two or 3% spend for guesses down a little bit. Although, as Dan mentioned, we also have a brand new GM, Angie, that's moving down there from rising star. And then over at grant.

Lewis: and Dan Lodge. Thank you.

Lewis: Both slots and tables are up pretty meaningfully over the prior year period. So up about 10% on the slot side and 20% on tables. October is actually shaking out to be pretty decent. The only other thing I had there, Dan, was that Stockman's sale. If you assume EBITDA figure there of about $800,000, that's an 11.5 times EBITDA multiple. It's a very strong multiple. And so we were quite pleased with that sale.

Lewis: And the guys buying it are smart guys, good guys. They're smart guys who operate small casinos like that. So it's in their wheelhouse, and it's not in our wheelhouse. So it's a pretty logical transaction. So does anyone want to do questions, Dan? Sure. So let's open up for Q&A.

Speaker Change: Thank you for watching!

Speaker Change: Thank you, Sobh.

Speaker Change: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star and then 1 now. A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you would like to remove your question from the queue.

Speaker Change: Again, if you would like to ask a question, please press star and then 1 now. The first question we have comes from David Bain of B-Rally Securities. Please go ahead.

David Bain: Thank you. Thanks, Dan and Liz, for all the info. It seems like we're at trough margins for Chamonix, and revenue grows basically on a relatively fixed cost base from here through the initiatives you spoke to.

Speaker Change: You seem to infer, I think Dan, in the beginning that 2025 is really when we see more of a meaningful margin ramp.

Lewis: Okay, well, um...

Lewis: then places like the state of Washington where the casinos are also some distance away on Indian reservations up in the mountains or even California where it's tribal gaming. And so I think there's a lot more growth in the market. I often cite Monarch as our competition, which it really is at the high end.

Lewis: But I think we will both do well going forward. If you look at their numbers, they have 500 rooms.

Lewis: And they didn't get there overnight, it took them a while.

Lewis: But, and they don't break out Reno.

Lewis: But guys like you back into it and give me an estimate, and I can get it. I used to be an analyst myself, so I can get a pretty good estimate. They seem to be earning upwards of at least $100 million, maybe $100 million of EBDIT, $120 million of EBDIT on about $300 million.

Lewis: And they're about a 30% market share in Blackhawk. And I believe Ameristar is pretty close to those numbers. They're probably number two now, but they're not far behind that. And they also have about 500 gas gems. We only have 300 gas gems. So we don't expect to get to those numbers.

Lewis: But, you know, can we get to half those numbers? We should be able to, over time.

Lewis: and recognize the people who live on the south side of Denver like Castle Rock and even

Lewis: Centennial and Parker. They're about equal distance from us to Blackhawk. In fact about 20% of our new signups are from the Denver area and then Colorado Springs is closer to us.

Lewis: And so you can kind of play with the graph. But I think, you know, granted there's some seasonality that you have to deal with, but absent seasonality, we should be able to show steady revenue growth for the next two or three years that exceeds our expense growth.

Lewis: resulting in higher margins so that at maturity maybe we're making 50 million a year on 150 million of revenue at you know in other words being half of what a monarch is.

Lewis: And by the way, to be clear, I think this is enough of an underserved market.

Lewis: Casino customers are in Denver, because a lot of them go to Las Vegas, for example. If they're in the 5th or 6th inning, we're in the 1st inning.

Lewis: You know, while traditionally winter is seasonally slower for that market

Lewis: historically there haven't been any rooms in that town either and if you look at what happened in Blackhawk with room product, a lot of that seasonality starts to go away. We have, you know, half of the room product now in town and so I think that'll actually help us out with some of...

Lewis: offset a lot of the seasonality that you usually see.

Lewis: That, I think, will be going on there over this coming winter. There's this thing that they do called Ice Castles that brings thousands and thousands of people on their own to town every year. It was, did it for the first time last winter as we were getting ready to open, and so we'll be back for its second year this year. We've got some marketing plans behind the scenes for some events that we're gonna try to drive as well. Ice Fest is by far one of the biggest weeks in that market every year where they bring tens of thousands of people as well. And so there are a lot of other natural marketing events in the city beyond what we're doing that'll help bring people over to see us for the first time. So it's, I think there are a lot of reasons to still be quite excited.

Lewis: So it's you know it's it's a I think there are a lot of reasons to still be quite excited.

Lewis: But you know that that ramp is Dan kind of alluded to in his comments, it's always difficult to get its E. It's quite easy to figure out what the long term run rate is it's always a little difficult to figure out that ramp to it yeah and I went into a lot of detail on those direct mail programs because they wanted you to kind of appreciate the sort of trial and error that.

Lewis: But that ramp, as Dan kind of alluded to in his comments, it's always difficult to get it. It's quite easy to figure out what the long-term run rate is. It's always a little more difficult to figure out that ramp to it. Yeah, and I went into a lot of detail on those direct mail programs because I wanted you to kind of appreciate.

Lewis: And any new properties I mean, theres things, we tried at American placement at first open than it was like Oh that didn't work don't try that again and then you gradually figure out what does work and you go back like the one mailing list that did work will probably go back and mail those people again.

Lewis: <unk>.

Lewis:

Lewis: And, you know, and now we know if we're going to buy.

Lewis: And now we know if we're going to buy a large mailing list and it's not clear.

Lewis: a, you know, a large mailing list.

Lewis: and it's not clear.

Lewis: You know somebody says well these have a propensity to gamble and theyre not willing to tell us what it is well, let's try it out with a thousand people not 175000 people and find out if it works and Uh huh.

Lewis: And so you get smarter that and even with the advertising, part of the reason we're hiring this, this new VP of advertising.

Lewis: You get smarter, there and even with the advertising part of the reason we're hiring.

Lewis: This new VP of advertising is it's important to you know, it's a pretty complex algorithm like do you want to be on stream.

Lewis: is, it's important to, you know, it's a pretty complex algorithm, like, do you want to be on streaming television, do you want to be on Facebook, do you want to be on network television in Colorado Springs, in Denver, you know, we're in Pueblo, what program, what time of day, and so on.

Lewis: Streaming TV do you Wanna be on Facebook do you want to be on network television in Colorado Springs in Denver, where in Pueblo, What program, what time of day, and so on and and and and this is something that she has been doing for 20 years and she's very good at it and we're happy to have her in and she'll bring a lot of benefit to us.

Lewis: And this is something that she's been doing for 20 years, and she's very good at it, and we're happy to have her. And she'll bring a lot of benefit to us in Colorado, but she'll also help us in all the other markets.

Lewis: In Colorado, but she will also help us in all the other markets.

Lewis: Ciao

Lewis: Right.

Lewis: Right.

Speaker Change: No that's helpful.

Lewis: Now that's helpful and I mean back on the marketing thing then if we could just follow up on that it seems like

Speaker Change: I mean back on the marketing thing then if we could just follow up on that it seems like you know it's about showing folks there. Many of these because it seemed like in Colorado Springs through press in another.

Lewis: You know, it's about showing folks the amenities because I assume like in Colorado Springs through press and other outlets, they must know the properties.

Lewis: Oh, let's say they must know the properties there, but it may be helpful to give a sense of repeat business from new carded players and maybe you know if there's been any change in frequency from legacy card at once.

Lewis: There, but it may be helpful to give a sense of repeat business from new carded players And maybe you know if there's been any change in frequency from legacy carded ones if if you have that offhand

Lewis: If you have that offhand.

Speaker Change: Well it all depends on how you have already been big picture.

Speaker Change: Yes, if you if you look at that big list of that.

Lewis: The.

Lewis: Slides that Louis posted that shows what a 140000 people in the mailing list, but that's a mailing list that has been accumulated since bronco Billy's open in some of those people are dead and so we cut it down to.

Lewis: People, we've seen in the last 36 months people, we've seen in the last year and how often are we seeing them now now that we have a hotel of course, we're seeing people more they tend to stay overnight they tend to gamble more.

Lewis: But to get to where we need to be we need to find more new people and get the new people to come and so even the Grand opening weekend was part of that I mean to some extent we held a party for really good players from Bronco Billy's, but a lot of the people were new who didn't know us before and we want them to go home and tell their neighbors.

Lewis: Usually a gambler haynesville gamblers and go back and say Hey, we went up there they had a surprise entertainer and guess what it was Jay Leno and who is terrific and.

Lewis: He was expensive.

Lewis: But the comedians are a lot cheaper than the big band, but he's one of the best comedians and and he is sort of name that people will talk about and we have a venue where we can sit six 600 people for a show like that an escalator away from the casino monarch doesn't and <unk>.

Lewis: Sure.

Lewis: They have a ballroom, but I don't think they could do it as well as we do and and so it's a little bit of a competitive edge and so we purposely did that.

Lewis: But nobody in Cripple Creek could do anything close to that and.

Lewis: So we were able to entertain a 600 people this weekend with entertainment with great meals, we had horse drawn carriages around around the Cripple Creek, we had tours of the district Museum tours, the Bordello Museum.

Lewis: You could go visit a goat firm in milk, a goat guess what that was so popular we had to get an extra bus sport.

Lewis: We had sound bowls, and the Spa and all this stuff and people ask me well how did it go and I said well.

Lewis: There were a lot of things that could go wrong operationally and none of them did we pulled that off.

Lewis: We actually had.

Lewis: If not the strongest weekend it was very close it's probably the strongest weekend since the new year's Eve when we opened and we may have tapped that I haven't gone back and looked.

Lewis: When you consider the cluster Jay Leno and the cost of all that other stuff that we make money probably not you don't usually in a grand opening weekend, but you'd do it to get everyone's attention and get there and then you get them to come back next weekend. The weekend. After when you don't have to pay for Jay Leno and.

Lewis: And so on and the you know if you have to look at the early reviews versus what you would see today at the massive improvement now.

Lewis: The appreciation I think for the product that we built is absolutely there the repeat visitation is absolutely there.

Lewis: If you look at the customers coming in the door today versus a year ago.

Lewis: All the right things are happening behind the scenes, so I like theirs.

Lewis: When we sit around the room and think about.

Lewis: Where that property can be in year two year three year four.

Lewis: Nothing's changed.

Lewis: The excitement that we have for that building is as strong as it ever was in large part because of the way customers have reacted to the other and has changed the population of Denver, and Colorado Springs, keep growing thats very true and by the way. The other thing I should point out this wasn't.

Lewis: When you think Grand opening this wasn't.

Lewis: Like you might have with the big casino in Las Vegas, with fireworks and all of this we didnt publicize. This it was only for 300 invited guests and their spouses or not a very big place, we only have 300 hotel rooms and.

Lewis: So it was really just for the top echelon players and that's intentional you could not buy a ticket to see Jay Leno and so if you're a customer of say the golden Nugget, you'll like.

Lewis: If we sold tickets Golden Nugget, we'd go buy tickets and give it to their customers when they're doing that you.

Lewis: You want to come see Jay Leno, you're going to be our customer.

Lewis: And we will continue to do stuff like that.

Lewis: No I mean, clearly your confidence in Germany remains unchanged and I just wanted to lastly, congratulate you on the sales stock lands at the valuation seems great for shareholders and good for the buyer as well. Thank you.

Lewis: Yeah.

Lewis: On the <unk>, yeah, yeah, yeah.

Speaker Change: I was just congratulating on a good transaction Oh, okay, well I mean, my son, just so you know I had a bunch of options I got when I took the job just under 1 million options and they were going to expire in November 28 and <unk>.

Lewis: And therefore, I had to exercise them and that incurs a whole big tax bill and the exercise prices. If that's what you're talking about he said stockman does time Augusta Oh, sorry go ahead.

Lewis: Understood.

Speaker Change: I'll, let somebody else.

Lewis: Mike Go ahead, Ted is to hold the shares.

Mike: I had a <unk> five program, it's sold some shares too.

Mike: Pay my taxes, and the remaining shares I intend to hold so it's like I didn't I.

Mike: I didn't actually take any money out of the company I just paid my taxes, but it ends up being for the filing that shows me as having sell chairs.

Speaker Change: But we do thank you on the ASO backwards, yes, absolutely yeah.

Lewis: Right.

Lewis: Isolation on your stock I thought.

Lewis: Okay.

Lewis: I'm sorry.

Lewis: That's okay.

Lewis: Details of that are in our 10-Q, so I E.

Lewis: We're trying to make sure people understand I have not lost confidence in the company I just had to pay a big tax bill.

Lewis: So.

Lewis: No.

Lewis: Perfect. Thanks, guys. Thank.

Lewis: Thank you thanks, Dave.

Speaker Change: The next question we have comes from Jordan Bender of citizens JMP. Please go ahead.

Jordan Bender: Good afternoon, everyone. Just one for me when we think about the legacy portfolio. So I guess outside of Illinois, Colorado.

Lewis: Without getting into guidance can you just maybe give us a sense or the general outlook of what growth looks like next year and then how should we think about your expense growth to 2025 as well. Thank you.

Speaker Change: Okay, well the silver slipper in my opinion should be earning in the high teens, if not 20.

Lewis: It's not there now it's somewhere 13 14 million a year maybe 15.

Lewis: And I'm, hoping that Angie will get us back there she's very good at coming up with marketing programs and controlling costs and she did that and I think when I think she doubled the results in rising Sun. After she became G M.

Lewis: So I have high hopes on that I'm sure she's listening and probably swallowing hard.

Lewis: But that's where I think it should be if you looked at normal margins and a regional casino.

Lewis: That's what it should be doing.

Lewis: And.

Lewis: We did have some storms this year and and so on but I also think a fresh set of eyes is going to help us and then.

Lewis: Tahoe, we've always made about three to four $3 million to $4 million a year like one year, we've got a little above four now if ellison.

Lewis: And it's always been kind of a short term lease that gets renewed.

Lewis: Just we did it as a 10 year lease that they can cancel on short notice. So it's still a short term lease if you will.

Lewis: But it's been we've been running it now for at least 10 years and you know the.

Lewis: <unk> and Larry Ellison don't want to go get a gaming license and so we have good relationships with them, we pay them pretty significant rent and so it's a way for them to have a casino in their place and benefit from the economics of it and be competitive with other hotels at Lake Tahoe without.

Lewis: Without having to get a casino license. So hopefully we're there for a long time and if that and if Larry Ellison really does fix the place up its already very nice hotel, but he has a history of really improving the hotels. He buys by a lot and if he does that it could be a source of growth, but because it's a short term.

Lewis: I'm, Lisa it's hard to put much value on that.

Lewis: Hopefully with there for a long time, but there's no certainty it will be.

Lewis: At rising.

Lewis: Rising star frankly, we struggle all the time to keep it profitable I think we can keep doing that and Jeff is also very good manager in and we can at least tread water.

Lewis: It's hard to get upside when you have better casinos every direction you you have to do corky things like like we started the every year we ever we put up all these Christmas decorations that give the keys to Santa Claus and we call. It the Christmas Casino for two months, so we actually make money in the fourth quarter. When historically, we used to lose money.

Lewis: And.

Lewis: But the big upside there is fort Wayne I mean in and if we can move into Fort Wayne you can have a casino that makes you know 30 or 40 million a year or even better.

Lewis: Instead of five.

Lewis: But that's a long day, so I look at that as like well why don't yourself well this could be the next big growth opportunity for the company.

Lewis: Down the road and if you got into a situation, where you did get the permit to go but but you couldn't arrange the financing you can always sell the subsidiary and still generate shareholder value. So, but I think the timing would be such that we.

Lewis: We probably would be able to finance it pretty easily after American place opens because you know once you like even today, we've done all the construction.

Lewis: Theres only.

Lewis: $7 million in the restricted cash account for Chamonix, and we expect five of that to finish all the construction spending and then we're done.

Lewis: And so now it's time to harvest some cash flow and we're going to build up cash flow in the next few quarters and then we'll go into the financing for the permanent America place and.

Lewis: But the permanent American place has been on hold waiting for the there was a lawsuit from the Potawatomi tribe against the Gaming Commission.

Lewis: And because of that lawsuit we were able to get an extension of the period of time, we can operate the temporary if that lawsuit drags out we could probably get another extension.

Lewis: And so you kind of yeah, we watch our liquidity pretty carefully. This is the tight spread we've just finished all the construction, but our liquidity is good.

Lewis: Sitting okay, we've got an interest payment in February.

Lewis: Pretty much have the money today for it we're going to generate cash flow between now and February and then the next interest payment in August should be easy.

Lewis: As chairman he comes online and so.

Lewis: I don't know how did I go down this route.

Lewis: Other property I don't know American place.

Lewis: Yeah.

Speaker Change: EBITDA and will continue to gain in 2025, so net of stretch would be to have EBITDA to start with a four.

Speaker Change: I think if we're in somewhere in the mid to upper Thirty's will be pretty pleased.

Lewis: I'm trying to think of what when we didn't have in there.

Lewis: Alright.

Lewis: Legacy properties, I mean, basically auto basically where a three legged stool, we got a silver slipper, Colorado and American place in rising Sun as a growth opportunity.

Lewis: Outside of that.

Lewis: And Tahoe.

Lewis: Our return on our investment there is very good and we will continue to run it as long as they allow us to run it as best we can.

Lewis: But essentially it's a three legged stool with a couple of little extras, yeah in Colorado, I mean, if we're doing something between one and $2 million a month in the earlier part of the year I think we'd be pretty pretty happy Yeah. I mean, you know I I pay a lot of attention to monarch, because they are a successful company and a competitor versus they own.

Lewis: We have two places and they focus on the two places that do a really good job at the two and if we can do a really good job at our three I'd be very happy we don't have to diversify on your behalf you can diversify on your own and and and so our focus is on doing a really good job on the the three stores, we have in that and.

Lewis: And go from there.

Speaker Change: I appreciate it thank you very much.

Speaker Change: Thank you. Thank you.

Speaker Change: The next question we have comes from Brian singer of Craig Hallum Capital Group. Please go ahead.

Brian Singer: Hey, good afternoon, Dan Lewis.

Brian Singer: Not to nitpick too much 'cause American place is performing really strongly here, but margins appear to be down year over year revenue grow faster than EBITDA, you guys anything to call out there and then how should we think about the cost structure within that.

Brian Singer: Property, specifically going forward.

Brian Singer:

Lewis: I hadn't actually focused on the emergence, but my my guess is it would be because we opened the steakhouse.

Brian Singer: Which is actually a big revenue driver, but of course has employees in food and beverage revenue, which is less profitable.

Speaker Change: Our cable business has been growing pretty robust yeah, Oh, yeah table you.

Speaker Change: You know it's I.

Speaker Change: I mean, we do pay attention to Americans and to some extent, but if you run the company based on margins.

Speaker Change: I can improve the margins at rising Sun, if I'd just close the hotel and close the golf course, and close the ferry boat and we'd have higher margins less income and so you try to maximize income.

Brian Singer: But the main thing that's changed at.

Brian Singer: American place over the past year as our opening the high end restaurant, which we did back in.

Brian Singer: February February.

Brian Singer: And the minute we opened at our casino revenue got a lot better.

Brian Singer: But operating restaurant like that is a low margin business. So it that.

Brian Singer: That may have affected the margins.

Speaker Change: Yeah, we actually had if youre looking at if you're comparing it to the third quarter of last year or two we had a $600000 true up that benefited us in last year's third quarter. So.

Brian Singer: Year over year that.

Lewis: We did not have that in this year's third quarter. So trip was Oh. It was there was a reversal of.

Lewis: We won't go into it but yeah. It was.

Lewis: The reversal of expenses you took earlier when I should've been capitalist.

Brian Singer: So.

Speaker Change: Got it and then one quick follow up on Xiaomi, so varying degrees of success on the mailing of lifestyle marketing and strategy there but.

Brian Singer: Yes, why not lean more into the convention business and really trying to drive people in to see that the property through that.

Speaker Change: Well, you know frankly, where the.

Speaker Change: The convention business should be pretty important and we were we were a little slower than this then we should be normally you would hire a pretty big sales and marketing force before you even open we had one person.

Brian Singer: We've recently added two more we should have five men's abroad. More has 900 rooms. They have about 18 people in sales and marketing and the broad more probably I'm guessing the broad more this is the big five Star Hotel in Colorado Springs, It's I think it's the largest five star hotel outside of Las Vegas, and I think they run about 85% occupancy.

Brian Singer: And I'll bet about 75% of that occupancy is group meeting and convention business and so.

Brian Singer: You look at that and say, okay, well for us.

Brian Singer: We're just getting going we're just starting with <unk> by the way has been around 100 years. So they've had time to build that.

Brian Singer: At that book, and we're just starting and and.

Brian Singer: We're building up that sales force, we've added as I mentioned to other people in the last few months and frankly I'd like to hire two more.

Brian Singer: So.

Brian Singer: But it takes time right.

Brian Singer: That's the that's the bread and butter unless I mean, that's not the bread and butter at Las Vegas could fill every weekend with people driving over from Los Angeles, and then they fill the midweek with meetings and convention. So it's the same formula as the strip really.

Brian Singer: Okay.

Speaker Change: Thanks, Jeremy Thanks, Greg.

Speaker Change: Alright, Dan we have two questions in the queue was trying to get three things real quick okay.

Speaker Change: The next question we have comes from John Decree of C. B R. E. Please go ahead.

John Decree: Hey, guys.

John Decree: Most of my questions have been answered already but.

John Decree: Maybe one on Chamonix and Cripple Creek overall so.

Speaker Change: It appears you haven't had much impact.

Speaker Change: On the local market yet.

Brian Singer: Might have ramping revenues.

David Bain: Curious I know Dan your plan has always been to expand the market.

Brian Singer: With what you've built there but is there some low hanging fruit maybe in that market or.

Brian Singer: Alright competitors being incrementally more promotional maybe you know as you ramp up and so it's been a thought maybe you would have taken some customers some more customers from your competition in that market. So curious on your thoughts as to what's kind of happening in Cripple Creek Ranjit.

Brian Singer: Roger competitors.

Brian Singer: For the last few months, we are over a 100% of the growth in both Cripple Creek and the state. Although it's we look at our our revenues when we look at the growth in the market and the growth in the state.

Brian Singer: And.

Brian Singer: And so now.

Brian Singer: I think if you take our numbers out the casinos, excluding us in Cripple Creek.

Brian Singer: Group are down some not down dramatically, but don't stop.

Brian Singer: No. It's not it's not an analogous group like the century casino is right across the street from US and century on their earnings call said Theyre doing well in Cripple Creek well of course, they are our restaurants get jammed.

Brian Singer: Can accommodate everybody for lunch and they go across the street to century, because they have a decent restaurant for lunch.

Brian Singer: The double Eagle, who has two blocks away from us a.

Brian Singer: It's probably not getting that sort of spillover in and I am guessing they may be down in.

Brian Singer: Two partners, who owned it have both passed away so there operationally and a bit of flux.

Brian Singer: The Golden Nugget, which acquired the Wildwood.

Brian Singer: They brought in there, they're a well managed company they brought in Oh, good management, and and I think they're doing well and we kind of welcome that I think are and then triple Crown has always been well run and so you know I don't think I don't think we're eviscerating anybody I don't think we will eviscerate anybody, but we are more of them.

Brian Singer: 100% of the growth in the market.

Brian Singer: Yeah, and you know you always get a little bit of an impact in the short term, but I think a year two three years from now when everyone looks back I think everyone in the market will say Wow. This market grew pretty much entirely because of this new opening.

Brian Singer: We don't get all the details in Black Hawk, but I you know I would guess that monarch is doing very well has had some impact on them are star and perhaps the horseshoe, but not all that much I think that I think they are all doing well so and I think we will do the same.

Brian Singer: Overtime in Cripple Creek.

Brian Singer: Look I will tell you if the opposite happened if we opened up and he saw massive declines at our competitors that would have pointed to the fact that maybe this wasn't as under saturated or marketed as we would've expected the.

Brian Singer: The fact that we have grown this market so much without really any impact on the others.

Brian Singer: Just speaks to the deepness.

Brian Singer: They kind of underserved nature of both Colorado Springs, and Denver, especially those southern suburbs. Its actually our strategy. We want to go into underserved markets because you get a higher return on investment and underserved market than you do if you're just competing for market share and so Fort Wayne is the ultimate underserved market. It has no casino within an hour.

Brian Singer: We're in a half of it.

Brian Singer: But even in.

Brian Singer: Lake County in Waukegan.

Brian Singer: We've been able to generate the revenues we generate I think we're now one of the more higher revenue casinos in the state despite being in a in a tent and we've had almost no impact on rivers or as near as we could tell the Potawatomi tribe, who are would be our closest competitors or even the slot machines and pumps, we've got very little impact.

Brian Singer: We have grown the market because it's an underserved market and we do that as a strategy.

Brian Singer: And I got asked the other day about why don't we try to get something on the strip and I like.

Brian Singer: It's not an underserved market anymore, there's 63 Indian tribes in California with casinos and this is a pretty mature market and the returns on investment.

Brian Singer: Or sub par unless you do something like our stations did with Durango, which was.

Brian Singer: A neighborhood that was underserved and they went in with a very good product and they're doing very well, but just about everything else in Las Vegas has not gotten a great return and.