Q4 2024 Full House Resorts Inc Earnings Call

Speaker Change: [music].

Operator: Greetings, and welcome to the Full House Reports fourth quarter and full year 2024 earnings call. At this time, all participants are in a listen-only mode.

And welcome to the full house reports fourth quarter and full year 'twenty 'twenty four earnings call. At this 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.

Operator: A brief question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Pat.

Speaker Change: As a reminder, this conference is being recorded it is now my pleasure to introduce your host Lewis Fanger Chief Financial Officer. Thank you Sir you may begin.

Lewis Fanger: It is now my pleasure to introduce your host, Lewis Fanger, Chief Financial Officer. Thank you, sir. You may begin. Thank you, and good afternoon, everyone. Welcome to our fourth quarter earnings call.

Speaker Change: Thank you and good afternoon, everyone welcome to our fourth 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. This whole security laws I'd also like to remind you that the company's actual results could differ.

Lewis Fanger: As always, before we begin, we remind you that today's conference call may contain forward-looking statements that we're making under the Safe Harbor Division of Federal Security Laws. I'd 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 that May Affect Our Results. Also, we may make reference to non-GAAP measures such as adjusted EBITDA for reconciliation of those measures. Please see our website, as well as the various press releases.

Speaker Change: For 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 that may affect our results also we may make reference to non-GAAP measures such as adjusted EBITDA.

Speaker Change: <unk> of those measures please see our website as well.

Speaker Change: Please go ahead Sir.

Lewis Fanger: And 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, are you ready to go, Dan? Okay, Louis tells me to be briefer than usual, because people want more time for questions. So we've got a lot of things going on.

Speaker Change: And lastly, we're also broadcasting this conference call. It full house resorts Dot Com, where you can find today's earnings release as well as all of our SEC filings.

Speaker Change: And with that said you're ready to go Dan Hey, Louis tells me to be briefer than usual because people want more time for questions. So.

Speaker Change: So we had a lot of things going on so American place. So start with that you know it had another strong quarter. The revenues were up strongly every quarter of the year, our fourth quarter revenues were up 27%.

Lewis Fanger: So American Place, I'll start with that. You know, it had another strong quarter. The revenues were up strongly every quarter of the year. Fourth quarter, revenues were up 27%. Overall, it was up 42% for the year. EBDIT was up 60%. You know, so it just continues to mature as it has since shortly after it opened. It also, more important than the numbers sometimes, the Chicago Tribune does a survey of the best employers in the Chicago area. And I'm proud to say that we were on the list and we were the only casino on the list in Chicagoland.

Speaker Change: Overall, it was up 42% for the year I E.

Speaker Change: E T I T was up 60%.

Speaker Change: So it just continues to mature as it has since shortly after it opened.

Speaker Change:

Speaker Change: He'd also I'm more important on the numbers sometimes.

Speaker Change: The Chicago Tribune does a survey of the best employers in the Chicago area.

Speaker Change: I'm proud to say that we were on the list and we were the only casino on the list and Chicago land and that's important.

Lewis Fanger: And that's important. We have for a casino relatively low turnover. We have great employees, we're providing great service, and that's the key to a great business.

Speaker Change: We have for our casino relatively low turnover.

Speaker Change: We have great employees, we're providing great service and that's the key to a great business.

Speaker Change: These.

Lewis Fanger: Equally important, the Illinois Supreme Court ruled in favor of the Gaming Commission endorsing their selection of us for the Waukegan license, basically, so that puts it behind us. They had earlier lost in federal court as well. And so that opens the door to going and getting the financing to build the permanent, you know, right now. We're doing very, very well. We're one of the better performing casinos in the state despite the fact that we're essentially in a tent. It's like a sprung structure. It's the sort of structure that your municipality uses to store salt for the winter.

Speaker Change: Equally important the Illinois Supreme Court ruled in favor of the gaming Commission endorsing their selection of us for the Waukegan license basically.

Speaker Change: So that puts it behind us.

Speaker Change: They had earlier lost in federal court as well.

Speaker Change: And so that opens the door to going and getting financing to build the permanent you know right now.

Speaker Change: And we're doing very very well, we're one of the better performing casinos in the state. Despite the fact that we're essentially you're not an attempt it's like a spring structure. It's it's like.

Speaker Change: What sort of structure that you're a municipality users to store salt for the winter. So it's it's not really a full on casino, although we dressed it up pretty well to make it look as good as we could and but our commitment to the state is to build the permanent one.

Lewis Fanger: So it's not really a full-on casino, although we've dressed it up pretty well to make it look as good as we could. But our commitment to the state is to build a permanent one, which will cost about $325 million going forward in the next phase. You know, it was difficult to do that when there was a lawsuit out there questioning whether we have the license that's been resolved. And so we're dealing with our bankers now on the best way to finance this. The one thing we're quite sure of is there will be no equity involved at these prices that would be giving it away.

Speaker Change: Which will cost about $325 million going forward.

Speaker Change: And in the in the next phase and the.

Speaker Change: You know it's difficult to do that when there was a lawsuit out there are questioning whether we had the license that's been resolved and so we're dealing with their bankers now on the best way to.

Speaker Change: To finance. This is the one thing we're quite sure of is there will be no equity involved.

Speaker Change: At these prices that would be giving it away and so we were very intent on doing this without any issuance of equity whatsoever.

Lewis Fanger: And so we are very intent on doing this without any issuance of equity whatsoever. We also don't believe that we need to do a REIT or sell any assets. We think we can do this all in the debt markets on very favorable terms. If you look at other deals done recently in the debt markets, they're being done at very favorable rates. Other casino deals, and there have been some pretty big ones. The REITs are always an opportunity for us, but at the end of the day, it's pretty expensive capital that you can't unwind anywhere down the road, and I think some of our competition is finding that out.

Speaker Change: We also don't believe that we need to do a REIT or sell any assets. We think we can do this all in the debt markets I'm very favorable terms. If you look at other deals done recently in the debt markets are there, they're being done at very favorable rates.

Speaker Change: Other casino deals and they've done some pretty big ones.

Speaker Change: The rates are always an opportunity for us, but at the end of the day, it's pretty expensive capital that you can't unwind anywhere down the road and I think some of our competition is finding that out. So we have we have not done any of the.

Lewis Fanger: So we have not done any of the. We haven't reached OPCO-PROPCO deals yet, and we don't think we have to. And so we hope to get the financing together in the next several months.

Speaker Change: Right Opco propco deals yet and we don't think we have to and so what we hope to get the financing together in the next several months.

Lewis Fanger: We intend to break ground later this year. We actually could start construction without the financing, at least initially, because in the first few months of construction, there's not a lot of money being spent. It's just bulldozers moving things around. But we want to get started later this year. We're allowed to operate the temporary until August of 2027. There isn't a date by which we have to open the permanent, but as a practical matter, we have, you know, 500 employees and we have a state municipality who are relying on our tax revenues, and we want to transition smoothly from the temporary into the permanent.

Speaker Change: We intend to break ground later this year.

Speaker Change: We actually could start construction without the financing at least initially because in the first few months of construction, there's not a lot of money being spent.

Speaker Change: It's just bulldozers moving things around.

Speaker Change: And but we wanted to get started later this year, we're allowed to operate the temporary until August of 'twenty 'twenty seven.

Speaker Change: That's.

Speaker Change: There isn't a date by which we have to open to permanent but as a practical matter. We have you know 500 employees and we as a state and municipality, who are relying on our tax revenues and we want to transition smoothly from the temporary into department and so where we're targeting to be ready in August of 2027.

Lewis Fanger: And so we're targeting to be ready in August of 2027. If we did need an extension, we'd probably get it. We did once before. It requires going through legislature. But I don't think we're going to need an extension. I think we can make that deadline.

Speaker Change: If we did need an extension, we'd probably get it we did once before it requires clients who legislature, but I don't think we're going to need an extension I think we can make that that deadline.

Lewis Fanger: The outlook for the permanent is actually very good. There's a very good comparable. The Hard Rock folks operate a casino in Rockford, Illinois, which is owned by an investor group. They operated in a temporary for a couple of years, and they moved into a permanent facility a little bit down the road from the temporary, and they did that at the beginning of September. And their revenues since then have been double what they were before. And Rockford is a city of about 450,000 people. We're the only casino in Lake County, which is about a million people.

Speaker Change: The outlook for the permanent is actually very good there's a very good comparable the hard.

Speaker Change: The hard rock folks operate a casino in Rockford, Illinois, which is owned by an Investor group.

They operated in a temporary for a couple of years and they moved into a permanent facility.

Speaker Change: Down a little bit down the road from the temporary and they did that at the beginning of September.

Speaker Change: And their revenue sense than had been double what they were before and Rockford is a city of about 450000 people.

Speaker Change: We're the only casino in Lake County, which is about a million people.

Lewis Fanger: And so our revenues are bigger than theirs, and our temporary does more revenues than their temporary did, and I think our permanent will do more revenues than their permanent is doing. But they saw a doubling of their revenues when they went from the temporary into the And frankly, if your revenues double, your income probably triples. And there's two similar places in Virginia where temporary casinos have been recently replaced with permanent, and both of those are also doing very well. And so there's quite a few comparables out there that bode well for us. There's another way of looking at it that we've done.

Speaker Change: And so our revenues are bigger than theirs are.

Speaker Change: Our temporary does more revenues in their temporary did and I think our permanent we'll do more revenues and their permanent is doing.

Speaker Change: But they saw a doubling of their revenues when they went from the temporary and permanent and frankly, if your revenues double your income probably triples and theirs.

Speaker Change: Theres two similar places in Virginia, where temporary casinos have been recently replaced with permanent and both of those are also doing very well.

Speaker Change: And so theres, a quite a few comparables out there that bode well for us.

There's another way of looking at it that we've done if you take the average win per slot in average win per table in the state and exclude rivers, which isn't a very demographically rich area. If you just take the average of all the other casinos and apply it to the number of slots or tables that will have on our permanent if we only do the average.

Lewis Fanger: If you take the average win per slot and average win per table in the state and exclude rivers, which is in a very demographically rich area, if you just take the average of all the other casinos and apply it to the number of slots and tables that we'll have in our permanent, if we only do the average, and there's lots of arguments why we might do more than average, because we have pretty good demographics around us as well. But if we only do the average, it would be about $200 million in revenue. And if you had normal margins on that, it'd be close to $100 million in EBDIT.

Speaker Change: There's lots of arguments why we might do more than average because we have pretty good demographics around us as well, but if we only do the average it would be about 200 million of revenue and if you had normal margins on that would be close to 100 million in E. P. T I T.

Lewis Fanger: And that's just casino revenue. So I'm saying EBDIT into casino revenue would be a pretty high margin. If you include food and beverage revenue. The revenues would be higher, but there's not much margin in food and beverage and sometimes it lost. So that's why you see... Overall margins on a casino in the region are usually more like 30%, not 50%. But if you just do it on casino revenues, it's close to 50%.

Speaker Change: And that's just casino revenue, so I'm, saying E. B D. I T into a casino revenue would be a pretty high margin.

Speaker Change: If you include like food and beverage revenue.

Speaker Change: The revenues be higher, but there's not much margin in food and beverage that sometimes it lasts so that's why you see.

Speaker Change: Our overall margins on a on a casino in the region is arguably more like 30% not 50%, but if you just do it at casino revenues is close to 50%.

Lewis Fanger: So that's American Place. It's doing well, and we're getting ready for the next phase there.

Speaker Change: So that's American place, it's doing well and we're getting ready for the next phase there are in Colorado, We completed Chamonix finally, and in October actually not quite completed there's one parking lot that we need the ground of thought before we can finish it.

Lewis Fanger: In Colorado, we completed Chamonix finally in October, actually not quite completed. There's one parking lot that we need the ground to thaw before we can finish it. It's kind of an important parking lot, but otherwise the place is done. We had a grand opening in early November, which is coming right into the slowest time of the year. And you know, despite all of that, revenues were up strongly in the year. Revenues were up very strongly in the fourth quarter as well, more than double. But of course, the facility is much more spectacular than what we had before.

Speaker Change: It's kind of an important parking lot, but but otherwise the places is done we had a grand opening in early November which is coming right into the slowest time of the year and you know despite all of that revenues were up strongly in the year. Our revenues were up very strongly in the.

Speaker Change: Fourth quarter as well more than double.

Speaker Change: But of course the facilities much more spectacular than what we had before.

Lewis Fanger: Now, expenses are also up quite a bit, and that's not surprising, because now we're operating a full-on resort casino, and the revenues are not yet where we expect them to be. And so income has been scant. In fact, it lost a little bit of money in the fourth quarter. Now going forward, I expect the revenues to continue to climb, both because it's maturing, just like American Place did. The expenses should not climb, and income should be pretty good starting this year and grow from there. Now, I'm still very convinced it'll make $50 million a year at some point.

Speaker Change: Now expenses are also up quite a bit and that's not surprising because now we're operating a full laden resort casino and the revenues are not yet where we expect them to be and so our income has been scant fact, it lost a little bit of money in the fourth quarter.

Now going forward expect the revenues to continue to climb them.

Speaker Change: Both because it's maturing are just like American plaisted, the expenses should not climb.

Speaker Change: And and income should be pretty good are starting this year and grow from there now I am still very convinced it'll make $50 million a year at some point if you look at what other casinos in Black Hawk makes it that's actually very reasonable yeah monarch is making up north of $100 million.

Lewis Fanger: If you look at what the casinos in Blackhawk make, that's actually very reasonable. You know, Monarch is making north of $100 million a year. Ameristar is somewhere in that ballpark. The Jacobs Casino does very well. I think he's only got about 50 rooms, and he makes something like $50 million a year. Islet Capri makes something like $50 million a year. And so they're appealing to Denver, which is 4 million people. We're equal distance to the south side of Denver as Blackhawk is, and that's probably a million people, but we are much closer to the million people who live in Colorado Springs and Pueblo.

Speaker Change: A year of marriage started somewhere in that ballpark that Jacobs casino does very well I think he has only got about 50 rooms, and he makes something like $50 million of ear Isle of Capri makes up something like $50 million a year.

Speaker Change: And so there appealing to Denver, which is 4 million people, where equal distance to the south side of Denver as Black Hawk is and that's probably a million people, but we are much closer to the 1 billion people, who live in Colorado Springs in Pueblo. So again, it's a demographically rich area we're heading.

Lewis Fanger: So again, it's a demographically rich area. We're head and shoulders nicer than the competition and larger than the competition in Cripple Creek. So I expect we doubled our market share this year, and I think we will grow the market and eventually evolve into having a strong market share of a growing market.

Speaker Change: Soldiers nicer than the competition and and larger than the competition in Cripple Creek. So I expect a we doubled their market share this year and I think Oh, we will grow the market and and and eventually evolve into having a strong market share of a growing market.

Lewis Fanger: This is not dissimilar to other places we've opened. I remember Beau Rivage in Mississippi, when we opened, it was a little bit of a slow opening, and then eventually caught on, and it's dominated the Mississippi Gulf Coast now for 20-odd years, more than 20 years. La Verge in Lake Charles, same thing. You know, first several months, we had some bugs to get out of it, and then it kicked in, and 20 years later, it's making $100 million a year. Even Bellagio didn't get the $500 million a year of income in the first year. It took a few years.

Speaker Change: This is not dissimilar to other places we've opened I remember Bo revised in Mississippi. When we opened it was a little bit of a slow opening and then eventually caught on and it's dominated the Mississippi Gulf Coast now for 20 odd years more than 20 years live airs in Lake Charles same thing.

Speaker Change: You know first several months, we had some bugs to get out of it and then it kicked in and 20 years later, it's making $100 million a year, even Palazzo didn't didn't get to $500 million here of income in the first year. It took a few years and so what are the same here now we have also made some.

Lewis Fanger: And so the same here.

Speaker Change: Management changes.

Lewis Fanger: I came to realize that some of our management team was perhaps a little over their heads.

Speaker Change: I came to realize that some of our management team was enough, perhaps a little over their heads and so we hired Brandon leasing from as our new G. M. He starts on Monday, He started out at the Rama Casino in Toronto. He he's originally from Canada now is.

Lewis Fanger: And so we hired Brandon Leeson as our new GM. He starts on Monday. He started out at the Rama Casino in Toronto. He's originally from Canada, although he now has a dual passport. And he worked at the Rama Casino, worked his way up, and then he went and worked for the in Ontario. So he knows slot machines very well. And then quite a few years ago, came to Blackhawk, ran the aisle in Blackhawk, and then ran Bally's in Blackhawk, the three casinos there that Bally's has. And he's had a couple of stints, including recently, where he worked for companies offering database management of marketing lists.

Speaker Change: Dual passport.

Speaker Change: And he worked with the Roma Casino worked its way up and then he went and worked for the Ontario Lottery.

Speaker Change: Regulating slot machines in Ontario says you know slot machines, very well and then quite a few years ago came to black Hawk I ran the aisle and Black Hawk, and then ran bally's and Black Hawk. The three casinos. There that bally's has and has had a couple of stats, including recently, where he worked for.

Speaker Change: Companies offering database management of marketing less so he kind of knows the marketing side and the data side in the casino.

Lewis Fanger: So he kind of knows the marketing side and the data side and the casino machine sides and so on. And, you know, for example, when he was at Bally's, he worked on the Bally's has three licenses in Blackhawk, the same way we have three licenses in Cripple Creek. Historically, the Gaming Commission said you can do that and it reduces your gaming taxes because it's progressive tax rate. But the Tito tickets from one aren't good in another. And that creates confusion for customers when they go in from Chamonix and to Bronco Billy, their Tito ticket doesn't work.

Speaker Change: Ashish sites and so on and you know for example, when he was at Bally's. He worked on the Bell.

Speaker Change: Bellies has three licenses of Black Hawk the same way, we have three licenses in Cripple Creek.

Speaker Change: Historically, the gaming Commission said you can you can do that and it reduces your gaming taxes, because it's progressive tax rate, but the Tito tickets from one aren't good and another and that may create confusion for customers. When they go in from Chamonix into Bronco, Billy there Tito take it doesn't work.

When when all of the you know you are now.

Lewis Fanger: when all the, you know, you're now on a different color carpet, basically. And, well, at Bally's, he worked with the slot system company, and now that slot system was, I think, IGT, if I recall, and modified it in a way that satisfied the regulators. So today, Bally's doesn't have that issue. They can, a Tito ticket from one Bally's casino can be used at a different one, even though some of, one of their casinos actually cross the street from their other two. And he did this two years ago. And so, we were like, this should make an important improvement, and it's not, you know, it's an important improvement.

Speaker Change: Now on a different color carpet basically and Oh, well at palace he worked with the.

Speaker Change: The slot system company and now that slot system was a I think a G T. If I recall and modify it in a way that satisfies deregulators. So today bally's doesn't have that issue. They can tito ticket from one bally's casino. It can be used in a different one even though some of them one of their casinos actually across the street from their other two.

Speaker Change: And he did this two years ago and so.

Speaker Change: We were like this this shouldn't Baker important improvement asset you know it's a it's an important improvement is it a huge no it's not huge but it's an important improvement in I just hold it out there as an example of the sort of creative stuff. He's done in the past that we're looking forward to having him work with us and are analyzing.

Lewis Fanger: Is it a huge? No, it's not huge, but it's an important improvement, and I just hold it out there as an example of the sort of creative stuff he's done in the past that we're looking forward to having him work with us in analyzing this and running this better.

Speaker Change: Miss from renting this better we also have a new HR director, we have a new hotel director, we have new I T. Director, we have a new corporate V. P of advertising, who is deeply involved with the chamonix. So we're throwing a lot of new talent at the property and I'm confident that that's going to make a big difference and you know.

Lewis Fanger: We also have a new HR director. We have a new hotel director. We have a new IT director. We have a new corporate VP of advertising who's deeply involved with Chamonix. So we're throwing a lot of new talent at the property, and I'm confident that that's going to make a big difference. And, you know, 10, 20, and 30 years from now, this property's going to be a solid business.

10, 20, and 30 years from now this property is going to be a solid business.

Lewis Fanger: in Indiana, you know, we're in Rising Sun, Indiana. When that casino first opened, it made $50 million a year. It was the only casino in the entire region. And then over the last 30 years, other casinos have opened that are newer and closer to where people live, whether it's in Shelbyville, cutting off people from Indianapolis or downtown Cincinnati, in Ohio and Miami Valley in Ohio, and now the Churchill stuff in Kentucky. So everywhere you look, we have competition. And so that property's income has trended down to where it's just $4 or $5 million a year.

Speaker Change: In.

Speaker Change: Indiana, you know where were in.

Speaker Change: Rising Sun, Indiana, when that casino first open it made $50 million year. It was the only casino in the entire region and then over the last 30 years. Other casinos have opened that are newer and closer to where people live.

Speaker Change: Whether it's sitting shelbyville cutting off people from our Indianapolis or or downtown Cincinnati.

Speaker Change: I O and in Miami Valley in Ohio, and now the Churchill stuff and Kentucky. So everywhere you look we have competition.

Speaker Change: So that property income has trended down to where its just for a $5 million a year.

Lewis Fanger: We went to the legislature seeking to move it. The bill did not get out of the Senate, but the Senate did pass a study bill that calls for the Gaming Commission to have an independent study on what the benefits for the state might be of allowing underperforming licenses to relocate and where they might relocate. We were proposing New Haven and still are, which is a suburb of Fort Wayne, and we would build a pretty significant place there. But if you look at a map, the other obvious place is the city of Indianapolis, which is 2 million people and has no casino.

Speaker Change: We went to the legislature seeking to move it the bill did not get out of the Senate, but the Senate did pass a study bill that calls for the gaming Commission to have an independent study on what the benefits for the state might be of allowing underperforming licenses to be.

Speaker Change: Locate and where they might be located.

Speaker Change: The we were proposing new Haven, and still are which is a suburb of Fort Wayne.

Speaker Change: And we would build pretty significant place there.

Speaker Change: But if you look at the map the other obvious places the city of Indianapolis, which is 2 million people and has no casino.

Lewis Fanger: And so I suspect that that study will focus on those and maybe elsewhere in the state. And what is clear is, and that study commission needs House approval, and we think it'll probably get that in the next two weeks. Like, why would you not study the issue? It doesn't mean it's going to happen, but at least you have a study, so you're operating with some background. And there are some precedents. You know, we are the lowest performing license in the state at this point by a pretty wide mark. I think the next lower casino does twice what we do, and that's the one in French Lick, and they get all sorts of historic tax credits because they're in a historic hotel.

Speaker Change: And so I suspect that that study will focus on those and maybe elsewhere in the state.

Speaker Change: And what what is clear is in that study Committee Commission needs a house approval.

Speaker Change: And we think it'll probably get that in the next two weeks like why why would you not study the issue doesn't mean, it's going to happen, but at least you have studied so you're you're operating with some.

Speaker Change: Some background.

Speaker Change: And there are some precedents.

Speaker Change: You know we are the lowest performing license in the state at this point.

Speaker Change: By a pretty wide Mark I.

Speaker Change: I think the next lower casino does twice, what we do and that's the one in French Lake and they get all sorts of historic tax credits because they are in a historic hotel difficult for them to move them.

Lewis Fanger: Difficult for them to move. There used to be two other casinos that were similar to us in annual revenues, and that was the former Trump Casino and the Barton Casino on the water in Gary. And they had gone bankrupt at one point, and they were barely in business. And the legislature approved relocating those, and one of them moved to Interstate 80, still in Gary, but it's the Hard Rock in Gary, and it's now the number one producing casino in the state. So the revenues and the jobs went way up when they relocated it. And the other one ended up in Terre Haute, which is the Churchill property, and it's doing very well as well, both in revenues and jobs and investment.

Speaker Change: There used to be two other casinos that were similar to us in annual revenues and that was the former Trump casino and the Barton casino.

Speaker Change: On the water and Gary.

Speaker Change: And they had gone bankrupt at one point in and they were barely a business and the legislature approved relocating those and one of them moved to.

Speaker Change: Interstate 80 still it Gary but its the hard rock and Gary and that's now the number one producing casino in the state so the revenues and the and the jobs went way up.

Speaker Change: They relocated it and the other one ended up in Terre Haute.

Speaker Change: Which is the Churchill property, and that's doing very well as well both in revenues and jobs and investment and and so there are precedents.

Lewis Fanger: And so there are precedents. You know, in Indiana, people are hesitant to have an expansion of gaming, they don't want additional licenses, if you will. But there are a history of relocating licenses, which is better for the state. Now the state originally put the licenses at the borders to try to draw business from Illinois and Ohio and Kentucky. But now those states all have their own casinos. So the best locations have changed. And so, you know, I've said several times this might take two or three legislative sessions before it happens. I do think it has a reasonable chance of happening, although when you're dealing with state legislatures, I think it was Mark Twain said nobody is safe on the legislatures in session, so it's hard to predict.

Speaker Change: And and then.

Speaker Change: You know in Indiana. The people are hesitant to have an expansion of gaming. They don't want additional licenses. If you will but there are a history of relocating licenses.

Speaker Change: Which is better for the state and the state originally put the licenses at the borders to try to call a trough business from Illinois, and Ohio, and Kentucky, but now those states all have their own casinos. So the best locations have changed.

Speaker Change: And so.

Speaker Change: I've said several times this might take two or three legislative sessions before it happens I do think it has a reasonable chance of happening, although when youre dealing with state legislatures are I think it was Mark Twain said nobody is safe when the legislature in session. So it's hard to predict.

Lewis Fanger: But we know it's a good thing for the state, and we hope that rationality prevails, and that would be a good investment opportunity for us. Meanwhile, we continue to make good money in Rising Sun, not a lot of money, but some.

Speaker Change: But we know it's a good thing for the state and and we hope that the rationality prevails and that would be a good investment opportunity for us.

Speaker Change: Meanwhile, we continue to make good money in rising sun that a lot of money, but some.

Lewis Fanger: We have a new general manager there, Jeff Mitchie, who Lewis and I worked with years ago at Pinnacle, and Jeff had been involved with a much bigger tribal casino down in Arizona, but his wife and his new grandchildren live quite close to us in Rising Sun, and he wanted to come back to the region, and so we have a guy who is very, very qualified, now in charge of Rising Star, and frankly, he'd be very qualified to help move the license if we are allowed to do so at some point. Now, he replaced Angie, who had run it for a few years, and John Ferrucci had been running Rising Silver Slippers since it opened 20 years ago, and he retired, and so she moved down there.

Speaker Change: We have a new general manager there, Jeff Michie, who who are loosen I worked with years ago at a pinnacle.

Speaker Change: And Jeff had been involved with the much bigger a tribal casino down in Arizona.

Speaker Change: But his wife and his new grandchildren.

Speaker Change: Live quite close to us in rising Sun and he wanted to come back to the region and so we have a guy who's very very qualified Oh no.

Now in charge of rising star and frankly he'd be very qualified to help most of the license.

Speaker Change: If we are allowed to do so at some point.

Speaker Change: Now he replaced a N G. You would run it for a few years and Uh Huh, John Ferrucci had been running rising star rising I'm, sorry, silver slipper since it opened 20 years ago, and and he retired and and so she moved down there. She had worked there originally.

Lewis Fanger: She had worked there originally, and we had promoted her to finance director at Rising Star, and then the general manager at Rising Star, and she did very well in a challenging market, and she's been back down at the Silver Slipper now for several weeks, and has lots of new ideas, and I'm confident that the Silver Slipper is going to see improved results in the months ahead.

Speaker Change: And we had promoted her to finance director at Rising Star and then the general manager at rising Star, which did very well in a challenging market and she's been back down at the silver slipper now for several weeks and.

Speaker Change: Has lots of new ideas and and I'm confident that the.

Speaker Change: The silver Slipper is gonna see improved results in the in the months ahead.

Speaker Change: And.

Lewis Fanger: Meanwhile, at Lake Tahoe, where we are on a short term lease to run the casino at the Hyatt Tahoe, but it's been extended many, many times. And I hope that will continue to be the case. The property is is owned by Larry Ellison, and he's moving ahead with refurbishing it. And the first phase of that is the stuff along the beachfront. And frankly, that stuff was built 50 years ago. and didn't really make use. The special real estate that it is, it's a lot of beachfront on Lake Tahoe, which is very, very valuable. And what exists there today is a big restaurant and some meeting rooms and banquet rooms and some villa suites that have gotten pretty dated and a surface parking lot.

Speaker Change: Meanwhile, at Lake Tahoe, where we are on a.

Speaker Change: Short term lease to run the casino at the Hyatt Tahoe, but its been extended many many times and I hope that will continue to be the case.

Speaker Change: The property is owned by Larry Ellison, and he's moving ahead with <unk>.

Speaker Change: Refurbishing it and the first phase of that because the stuff along the beach front.

Speaker Change: And.

Speaker Change: And frankly that stuff was built 50 years ago.

Speaker Change: It didn't really make use of the.

Speaker Change: Special real estate that it is there's a lot of beachfront on Lake Tahoe, which is.

Speaker Change: Very very valuable and what exists there today is a big restaurants, some meeting rooms, and banquet rooms and <unk>.

Speaker Change: Some are below suites, they've gotten pretty dated and surface parking lot. So he has plans to to fix up that part or replace that part of the property our casinos in the main building, which is across the street.

Lewis Fanger: So he has plans to fix up that part or replace that part of the property. Our casino is in the main building, which is across the street, and that's not being affected by the refurbishment currently. I think he has plans later to come back and refurbish that. And we may be impacted some by the refurbishment because some of our customers like to stay in those villas. But long term, this already special property will probably be much more special under him and we hope to continue to be part of it.

Speaker Change: And that's not being affected by.

Speaker Change: By the refurbishment correctly I think he has plans later to come back to refurbish that.

And Oh, we may be impacted some by the refurbishment because all of our customers like to stay on those fellas.

Speaker Change: But long term this already special property will probably be much more special under him and we hope to continue to be part of it and and so that's that's like Tau in Fallon as I think you know we sold it it's a two part.

Lewis Fanger: And so that's Lake Tahoe.

Lewis Fanger: In Fallon, as I think you know, we sold it. It's a two-part deal. The real estate of it closed several months ago. We're waiting for the buyers to get their license. They've been licensed before in Nevada. They're pretty prominent people. And we expect them to be licensed in the next few weeks, at which point we close the rest of the deal and they take over the management of it. So that's Fallon. And did I miss anything? I got nothing left, Dan.

Speaker Change: Part deal the real estate of it closed several months ago.

Speaker Change: We're waiting for the buyers to get their license they've been licensed before in Nevada pretty prominent people and we expect them to be licensed in the next few weeks at which point, we closed the rest of the deal and and they take over the management of it. So that's fallon and did I Miss anything.

Speaker Change: Nothing locked down let's do some Q&A I got it all okay, we're happy to take questions.

Lewis Fanger: Let's do some Q&A. Boy, I got it all. Okay.

Operator: We're happy to take questions. Thank you.

Okay.

Speaker Change: Thank you we will now be conducting a question and answer session.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Speaker Change: I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for.

Speaker Change: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Operator: One moment, please, while we poll for questions.

Speaker Change: One moment, please while we poll for questions.

Ryan Sigdahl: Our first question comes from Ryan Sigdahl with Craig Hallam Capital Group. Please proceed with your question. Hey, good afternoon, guys.

Our first question comes from Ryan Macdonald with Craig Hallum Capital Group. Please proceed with your question.

Ryan Macdonald: Hey, good afternoon guys.

Ryan Sigdahl: I want to start with kind of a higher level question.

Ryan Macdonald: I want to start with kind of a higher level question I mean, given the challenges you've had at Chamonix. Thus far I guess does that change your plans for American place, whether it be the design the gaming floor the size amenities, where even the overall minimum guaranteed spend that you guys have committed to there.

Lewis Fanger: I mean, given the challenges you've had at Chamonix thus far, I guess, does that change your plans for American Place, whether it be the design, the gaming floor, the size, amenities, or even the overall minimum guaranteed spend that you guys have committed to there? No, not at all. The guaranteed minimum spend, if I recall correctly, and Alex is on the line and correct me, I think it's 500 million of which we've already spent 175. And some of that is the temporary but big parts of it, like the $50 million license fee, the storm sewers and parking lots and so on that are being used for the temporary are also part of the permanent and $20 million of slot machines.

Speaker Change: No not at all I mean, the the guaranteed minimum spend if I recall correctly, Alex its unrelenting correct me I think it's 500 million of which we've already spent 175.

Speaker Change: And some of that is the temporary but a big parts of it like the $50 million license fee.

Speaker Change: Uh huh.

Storm sewers and parking lots and so on that are being used for the temporary are also part of the permanent and $20 million a slot machine. So are we.

Lewis Fanger: So we're already kind of into it.

Speaker Change: We're already.

Speaker Change: Kind of into it.

Speaker Change:

Lewis Fanger: Actually, it's the opposite. When you go to the Hart, the property that Hard Rock built in Rockford, they did a good job, they really did a good job. And they have the same sort of license, we have the same number of gaming positions and so on. And, and they spent in the ballpark of 300 million, which is what our going forward spend is in the in the next phase. And, and so I've kind of gone to town looking at that. Now, you know, I will have a different theme than showing, you know, Lady Gaga's underwear behind plexiglass.

Speaker Change: Actually it's the opposite when you go to the heart of the property that hard rock built in Rockford.

Speaker Change: They did good job they really do a good job and they have the same sort of license. We had the same number of gaming positions and so on.

Speaker Change: And and they spend in the ballpark of $300 million, which is what our going forward spend is in that in the next phase and that and so I've kind of gone to town looking at that now.

Speaker Change: No.

Speaker Change: I will have a different theme then showing you know Lady Gaga underwear behind plexiglas.

Lewis Fanger: But that's, that's the Hard Rock theme and it works for them. We've also spent some time over Durango station where I think stations did a really good job. And, and it's very successful.

Speaker Change: But that's that's the hard rock theme and it works for them.

Speaker Change: We've also spent some time.

Speaker Change: Over a Durango station, where I think stations did a really good job and and it's very successful now that was $700 million, we don't have that sort of budget, but.

Lewis Fanger: Now that was 700 million, we don't have that sort of budget. But it was funny, we were over there yesterday and Lewis was freaking out because I brought with me a laser pointer that that pointing it all over the place to measure different parts of their casino for our design. And, and, and if anybody noticed it, it looked like there was a sniper in the room. And Lewis was afraid we were going to get kicked out. But there's there's stuff they did there very well, that that we hope to borrow, recognizing that we have a smaller budget and a smaller place than Durango.

Speaker Change: It was funny, we were over there yesterday and Lewis was freaking out because I brought with me a laser pointers that are pointing at all over the place to measure different parts of their casino for our design and that in and if anybody noticed that it looked like there was a sniper in the room and this was afraid we were going to get kicked out.

Speaker Change: But there's there's stuff they did there a very well that that we hope to borrow recognizing that that we have a smaller budget and in a smaller place in Durango.

Lewis Fanger: So it's a little more of a, let's say the theme of Durango and the size of the Hard Rock.

Speaker Change: So it's a little more but let's say the theme of Durango and the size of the hard rock.

Lewis Fanger: And it and then it's, and recognize this is it's a very different place than Chamonix. Chamonix is an hour from most of our customers up in the mountains at 10,000 feet on the backside of Pikes Peak. So you need a hotel, people need to stay overnight. Not everybody, but a lot of people. And, and then you need other amenities to get them up there. So a big spa and, and, and, and different restaurants and parking garage and all that. And in Waukegan, we're in the middle of a million people. I mean, literally in the middle of a million people.

Speaker Change: And it's and then it's and recognize this is it's a very different place than Germany, Germany is an hour from most of our customers up in the mountains at 10000 feet on the backside of pegs peak, So you need a hotel people need to stay overnight.

Speaker Change: Not everybody, but a lot of people and and then you need other amenities to get them up there so a big spa and.

Speaker Change: And different restaurants, and parking rationale that and.

And Waukegan, we're in the middle of a million people I mean literally in the middle of a million people Lake County is one of the Lee County is most of that is 750000, if I remember correctly one of the wealthiest counties in the country with like Lake Bluff Lake Forest, and Liberty Bill and so on and.

Lewis Fanger: Lake County is one of the Lake County is most of that it's 750,000 if I remember correctly, one of the wealthier counties in the country with like, Lake Bluff and Lake Forest and Libertyville and so on. And, and so In Waukegan, it's much more like Durango Station, which is the locals casino. I mean, they have a little hotel there, but it's really a locals casino. And, and that's what we're doing there.

Speaker Change: And so.

Speaker Change: In Waukegan, it's much more like Durango station, which is the local casino I mean, they are a little hotel there, but it's really a local's casino and and that's what we're doing there whereas in and.

Lewis Fanger: Whereas in, in, in, in Cripple Creek, it's kind of like a half sized version of La Verge. And when we built La Verge in Lake Charles, the customers are coming from Houston, that's two hours away. So we had to have stuff to get people there. And so we built the hotel that initially had 700 people. rooms later got expanded to 1000 rooms, and a golf course and all that stuff. So it was more of a smallish destination resort, a small version of what Las Vegas is really. And, and that's what Chaminade is. So it's a, it's a different market and requires a different place.

Speaker Change: And in Cripple Creek, it's kind of like a half size version of La bearish. When we built the bearish on Lake Charles the customers are coming from Houston, That's two hours away. So we had to have stuff to get people. There are and so we built the hotel, but initially at 700 grams later got expanded to a thousand rounds and golf.

Speaker Change: Of course, and all that stuff. So it was more of a a smallish destination resort yeah, a small version of what Las Vegas, It's really and and that's what chamonix. It. So it's a different market and requires a different place and so when you look at what you build in Waukegan.

Lewis Fanger: And so when you look at what you build in Waukegan, you know, there's one other one I'd mentioned the on the south side of Chicago, which is a much more satisfying saturated market than the north side of Chicago. And, and the Wind Creek Casino opened, and they have a hotel, if you back out their hotel, they also spent about $300 million. And so we think that's kind of the sweet spot. And again, the same number of gaming positions as we have, they've grown the market pretty nicely. Now, because it's more saturated, they have had some impact on the casinos in, in northern Indiana, and, and also a little bit of an impact on Juliet and maybe a little bit on Bally's downtown.

Speaker Change: There's one other one I mentioned the.

Speaker Change: On the south side of Chicago, which is a much more saturated markets than the north side.

Chicago.

Speaker Change: And in the Wind Creek Casino opened and they have a hotel if you back out their hotel. They also spent about $300 million and so we think that's kind of the sweet spot and again the same number of gaming positions because we have they've grown the market pretty nicely now because it's more saturated they have had some impact.

Speaker Change: Packed on the casinos and northern Indiana, and also a little bit of an impact on Joliet, and maybe a little bit on valleys downtown.

Lewis Fanger: Because, because the south side gaming per capita is quite a bit higher than on the north side. So we're a less saturated market, I don't think we have much impact, and we haven't had much impact on Rivers or Pottawatomie, who are our competitors on the north side. And, but you know, it's a, it's a good example, if you build a good product in a market, You'll grow the market. And frankly, in a place like Waukegan, you build a place and people drive by and say, well, look at that.

Because it because the south side gaming per capita is quite a bit higher than that in the north side. So we're less saturated markets I don't think we have much impact and we haven't had much impact on rivers or Potawatomi, who are our competitors on the north side.

Speaker Change: And but you know it's a it's a good example.

Speaker Change: Example, if you build a good product in the market.

Speaker Change: Yo Yo look growth market.

Speaker Change: And frankly in a place like Waukegan, you you build a place and people drive by and say well look at that in a place like Cripple Creek nobody drives by and says Hey look at that you you have to tell people that you are there and that takes a marketing campaign and you know we had some you know coming up to the Grand opening.

Lewis Fanger: In a place like Cripple Creek, nobody drives by and says, Hey, look at that. You have to tell people that you're there. And that takes a marketing campaign.

Lewis Fanger: And you know, we had some, you know, coming up to the grand opening, which was on November 3 or 4. You know, ad rates were very expensive because of the national political campaign. So we actually were not on the air in the month of October. And then we're on the air for a little while, and then you run into Christmas, and it's like, Not really a good use of money to be advertising during the Christmas season, and so we kind of backed off again, and now we're up again. So our task is to tell people we exist, they're not going to see it from driving by.

Speaker Change: <unk>, which was on November 3rd or fourth.

Speaker Change: You know AD rates were very expensive because of the national political campaign. So we actually were not out in the air in the month of October.

Speaker Change: And then we're on the air for a little while and then you run into Christmas and it's like.

Speaker Change: That's not really a good use of money to be advertising during the Christmas season, and so we kind of backed off again and now we're up against so so our task is to tell people. We exist. They are not going to see it from driving by and so it's a little slower ramp up than you would get in the market like waukegan, but it'll get there in the system.

Lewis Fanger: And so it's a little slower ramp up than you would get in a market like Waukegan, but it'll get there.

Lewis Fanger: I mean, it's the same sort of thing when the Mirage opened in Las Vegas, they had to tell everybody in LA there was a new hotel in Las Vegas, and it wasn't like the other ones. And that's our task. It's actually been pretty encouraging as well, because when we look at maps of where customers are coming from, you know, we've been doing heat maps of Denver, and I will tell you Denver is lit up pretty nicely. You know, we always talk about the roughly a million people that are in the feeder market between Colorado Springs and some of those surrounding cities.

Same sort of thing when the Mirage opened in Las Vegas, They had to tell everybody in L. A there was a new hotel in Las Vegas, and it wasn't like the other ones and and that's our task, it's actually been pretty encouraging as well because when we look at maps of where customers are coming from.

Speaker Change: We've been doing heat maps of Denver, and I will tell you Denver has let up pretty nicely.

Speaker Change: I always talk about the roughly a million people that are in the feeder market between Colorado Springs, and some of those surrounding cities. The southern suburbs of Denver, We're always meant to be gravy for us into help no further supplement the plan, but what is looking pretty bright for us as that market is quite excited to go and visit the property.

Lewis Fanger: The southern suburbs of Denver were always meant to be gravy for us and to help, you know, further supplement the plan. But what is looking pretty bright for us is that market is quite excited to go and visit the property.

Lewis Fanger: You know, Colorado Springs still has, to Dan's point, you know, we didn't have a big awareness campaign throughout almost all of 2024 for us. And so, you know, we managed to get, you know, 160% increase in revenues year over year, despite the fact that we weren't running ads. And so when you think about what does the next year bring, it's going to bring a lot of good. I mean, Dan and I were talking yesterday at Durango, but we're talking about Chamonix and how we feel better than ever for this property and its chances for success.

Speaker Change: Colorado Springs still has.

Speaker Change: To Dan's point, we you know we didn't have a a big awareness campaign.

Speaker Change: Throughout almost all of 'twenty 'twenty four for it for us and so you know we managed to get a 160% increase in revenues year over year. Despite the fact that we werent running ads and so when you think about what is the next year bring it's going to bring a lot of good where we are I mean, what Dan and I were talking yesterday after angle, but.

Speaker Change: We're talking about how many and how we feel better than ever for this property and that's transferred chances for success. So it'll be fine. The only other point I wanted to make on Waukegan is you know Rockford as well as its doing just don't forget that within a 30 minute drive we've got some 900000 people and our 30 minute drive ring they've got about 400.

Lewis Fanger: So it'll be fine.

Lewis Fanger: The only other point I wanted to make on Waukegan is, you know, Rockford, as well as it's doing, just don't forget that within a 30-minute drive, we've got some 900,000 people in our 30-minute drive ring. They've got about 400,000 people. So we have more than twice the population. But then when you look at median household income, we're like 52% higher than their median household income in that same drive ring. And so, you know, they are doing quite, quite well. We know we will do quite well, too.

Speaker Change: <unk> thousand people. So we have more than twice the population, but then when you look at median household incomes or like 52% higher than their median household income in that same drive rang and so you know they are doing quite quite well, we know we will do quite well too.

Speaker Change: A very good and when you look at that heat map. It goes all the way out to Minneapolis a couple.

Lewis Fanger: Very good and when you look at that heat map it goes all the way out to Minneapolis.

Lewis Fanger: I will ask you a very short second question and then turn it over to the others. Your skins for your online sports betting license looks like you're down to one now just circa is that correct five million the right run rate as we look to the next several years? Yeah, there's a little bit of volatility in 2Q and 3Q because the existing skins that we had there that's going to be discontinued, they're still around one until June and the other until, is it September? December. So there's a little volatility. But I would tell you as a kind of on a normal ongoing basis, if you include the amortization of the upfront market access fee for Illinois, just Illinois is $5.6 million.

Speaker Change: Yeah.

Speaker Change: Oh, absolutely Minneapolis, [laughter] I will ask you a very short a second question and then turn it over to the others. Your skins for your online sports betting license it looks like Youre down to one now just circa is that correct $5 million run rate as we look to the next several years.

Speaker Change: Yeah, Theres, a little bit of volatility into Q3 Q because.

Speaker Change: The existing <unk>.

Speaker Change: Skins that were that we had there that we got the that that that's gonna be discontinued.

Speaker Change: They're still around one until June and the other in cells that September December December December. So so there's a little volatility, but I would tell you.

Speaker Change: On a normal ongoing basis, yes. If you include the amortization of the upfront market access fee for Illinois, just Illinois is $5 6 million and so if you if you're looking at 2026 and beyond $5 6 million is the right number to use and serco seems pretty determined to hang in there.

Lewis Fanger: And so if you're looking at 2026 and beyond, $5.6 million is the right number to use. And SERCA seems pretty determined to hang in there. I mean, in other markets, DraftKings and FanDuel just so dominate. and Bed MGM, I guess, third. And so they've kind of squeezed other people out, even including Wynn, who was our partner at one time, and Churchill Downs. But Circa's always operated a little differently, and their sports book here in Las Vegas does very well in downtown Las Vegas, and of course, Illinois is a pretty big market, so it's not a small market for them, it's a big market.

Speaker Change: In other markets draft Kings and Pandora, just so dominate.

Speaker Change: And bet MGM I guess third.

Speaker Change: And so they've kind of squeezed other people out even including when he was a partner at one time and Churchill Downs.

But certainly as always operate a little differently in their sports book here in Las Vegas does very well and in downtown Las Vegas, and and of course, the Illinois, a pretty big market. So it's not a small market for them. It's a it's a big market and.

Ryan Sigdahl: But I think our likelihood of finding other people to ride on our license is not high at this point, because draft kings and fan deals so dominate the market, it's hard for anyone else to break in. Thanks guys, and I agree with the Vegas, Circa is the best sports book there, so hopefully they can replicate that in Illinois going forward.

Speaker Change: But I think.

Speaker Change: Our likelihood of finding other people to ride on our license is not high at this point because draft clean some tangible so dominate the market it's hard for anyone else to break in.

Speaker Change: Yeah, Thanks, guys and I agree with the Vegas Circus, the best Sports book, there. So hopefully they can replicate that and Illinois going forward.

Ryan Sigdahl: Thanks, good luck guys. Thanks, Ryan.

Speaker Change: Thanks, Good luck guys.

Speaker Change: Yeah. Thanks.

Thanks, Brian.

Jordan Bender: Our next question comes from Jordan Bender with Citizens. Please proceed with your question.

Speaker Change: Our next question comes from Jordan Bender with citizens. Please proceed with your question.

Jordan Bender: Afternoon everyone.

Lewis Fanger: Yeah, this situation seems to be a moving target on an hourly basis here, but on the idea of tariffs, if you start to look at construction for the permanent in Illinois, are you starting to see any changes in prices for material and is there any way to kind of hedge yourself given that you're going to be starting construction here in the next couple months? Well, there are ways to hedge, but we haven't done it. I mean, you can go buy steel futures and stuff, but I don't, I think it's pretty unknown what tariffs are going to be out there.

Jordan Bender: Afternoon, everyone. Yeah, the situation seems to be a moving target on an hourly basis here, but on the idea of tariffs you know as you start to look at construction for the permanent in Illinois are you starting to see any changes in prices for material and is there any way to kind of hedge yourself.

Jordan Bender: Youre going to be starting construction here in the next couple of months.

Jordan Bender: Well there are ways to hedge, but we haven't done it I mean, you can go buy steel futures and stuff but.

Jordan Bender: I don't I think it's pretty unknown, what tariffs are going to be out there and I think we've somewhat dealt with that in chamonix.

Lewis Fanger: And I think we've somewhat dealt with that in Chamonix. You know, the Chamonix was my 12th or 13th casino, and I will tell you, the other ones, most of them, Either the steel came from China or the glass came from China, or the possibility of buying the steel or the glass from China held down prices from domestic manufacturers. And people forget there were already pretty significant tariffs, plus the pandemic supply change issues as we were starting construction in Chamonix. And we got through it. I mean, it wasn't fun, but we got through it. So we're actually kind of assuming the worst as we design this place to build it for $325 million.

Jordan Bender: The Xiaomi was by 12% 13th Casino and I and I will tell you the other ones most of them.

Jordan Bender: Either the steel came from China, or the glass came from China or the possibility of buying the steel or the glass from China held down prices from domestic manufacturers.

Jordan Bender: People forget that we're already pretty significant tariffs plus the pandemic.

Jordan Bender: Our supply chain issues as we were starting construction in Germany, and we got through it I mean, it wasn't it wasn't it wasn't fun, but we got through it.

Jordan Bender: So we're actually kind of assuming the worst as we design this place to build it for 325 million in other words, we're assuming that that stuff will be expensive.

Lewis Fanger: In other words, we're assuming that that stuff will be expensive, and you just build it into it. But you have to kind of go ahead and, you know. Take a guess, otherwise you would just freeze and not do anything.

Jordan Bender: And and.

Jordan Bender: And you just built it into it.

Jordan Bender: But.

Jordan Bender: But you have to kind of go ahead and are you now.

Jordan Bender: Take a guess otherwise you would just freeze and not do anything.

Jordan Bender: And.

Lewis Fanger: Well, and we're trying to be smart as well in the design. So, you know, we're going out of our way to make sure that we don't put air conditioning, air conditioner, or handling units where where you might expand the casino later on as an example. So we, you know, we're trying to be thoughtful, I think we're going to have different ways to help mitigate that issue should it pop up. But, but to Dan's point, we're also putting in some pretty extensive cost assumptions in this model as well.

Jordan Bender: And we're trying to be smart as well on the design. So you know we're going out of our way to make sure that.

Jordan Bender: We don't put air condition Air Conditioner are handling units where were you might expand the casino later on as an example, so we you know we're trying to be thoughtful I think we're gonna have different ways to help mitigate that issue should a pop up but.

But to Dan's point, we're also putting in some pretty extensive cost.

Jordan Bender: Our assumptions in this model as well.

Lewis Fanger: Thanks, Lewis.

Louis: Thanks Louis.

Jordan Bender: And then just on the second one here, there's some reports out there suggesting that you were looking to buy an asset, you know, outside of your mentioned there, are you actively looking for other M&A opportunities?

Louis: And then just for my second one here, there's some reports out there, suggesting that you were looking to buy an asset you outside of your mentioned there are you actively looking for other M&A opportunities and what are the guardrails that we should be thinking about if you do go down that path.

Lewis Fanger: And what are the guardrails we should be thinking about if you do go down that path? You know, I know it's hard.

Louis: You know.

Louis: I know it's hard.

Lewis Fanger: As most most of you know, I had your job at one time. And and you're always judged and focused by you know, one quarter one year and looking. And when you're in my position, I tend to look further out. And and you know, I'll get calls from my mom who's 95 years old, and it seems like all her mahjong playing partners own our stock, and she'll call me and say, you know, your stock was down 10 cents today, why was that? And I'm like, well, mom, I didn't even know that. And I'm focused on where the stock will be in 2030.

As most most of you know I had your job at one time and and you're always judged in focus by one.

Louis: One quarter one year in looking.

Louis: And when you're in my position I tend to look further out.

Louis: And you know I'll get calls from my Mom was 95 years old and it seems like all her mahjong playing partners own our stock and she'll call me and say you know your stock was down 10 cents today why was that and then like my mom.

Louis: I didn't even know that and I'm focused on where the stock could be in 2030 and over the holidays I sat in and just played with a rough model myself, which I like to do sometimes now.

Lewis Fanger: And over the holidays, I sat and just played with a rough model myself, which I like to do sometimes now. You know, and, and so I just played with the model and said, Okay, I'm pretty sure we're going to get 50 million a year in Chaminade by 2030. That can be 2025. But give us until 2030. I think we can get there. And then I said, and by then, we will have operated the permanent American place for two and a half years, and it could be 100 million. And I plugged that in, and I said, well, let's suppose Angie gets the silver slipper from $13 million to like $20 million, which is what it did two years ago.

Louis: And.

Louis: So I just play with the model and said, Okay, I'm pretty sure we're going to get a $50 million a year in chamonix by 2030.

Louis: That can be 2025, but give us until 2030 I think we can get there and that's it and by then we will have operated the permanent American place for two and a half years and it could be $100 million.

Louis: Plug that in and I said, well, let's suppose Angie gets the silver slipper from $13 million to like $20 million, which.

Louis: What it did two years ago, and I and I think that's entirely possible.

Lewis Fanger: And I think that's entirely possible. And then I said, OK, and if we get to move to New Haven with Rising Sun, and we invest in the first phase, I think it's $350 million in the first phase. The whole investment's like $500 million eventually. But the later phases will be built out of cash flow. And let's say it gets a reasonable return on investment. And then I worked into, OK, we produce a lot of cash flow, and let's assume we borrow the rest. And I threw in, I think, a 9% interest rate to be kind of conservative.

Louis: And then I said, okay, and if we get to move to New Haven with rising Sun and we invest in the first phase I think it's $350 million in the first phase the whole investments like 500 might eventually but the later phases will be built out of cash flow and lets say its good catch a reasonable return on investment and then I worked in.

Louis: Two okay, we produce a lot of cash flow.

Louis: And let's assume we borrow the rest through and I think at 9% interest rate to be kind of conservative and then I said you know we get out there and.

Lewis Fanger: And then I said, you know, we get out there, and you've got to have an exit to a model like this, right? And the easiest thing is to assume you sell the company at year-end 2030. Now, that doesn't say we will. But at some point by then, maybe somebody else is running the company, and I'm retired or something. But when you model it, you have to kind of assume something like that. And I said, well, let's assume the company sold for like nine times cash flow. which would not be a high multiple. The casinos that have been sold recently have sold to our north of 10, especially when you consider that we still own our real estate.

Louis: And and you got to have an exit to a model like this right and the easiest thing is to assume you sell the company at year end 'twenty 30, Huh, that's doesn't say, we will but at some point by then maybe somebody else who's running the company and I'm.

Louis: Retired or something but yes, when you model. It you have to kind of assume.

Louis: Something like that and I said, well, let's assume the company sold for like nine times cash flow.

Louis: Which would not be a high multiple.

Louis: Casinos that have been sold recently sold toward north of 10, especially when you consider that we still own real estate.

Lewis Fanger: And when I put that whole model together and divided it by shares outstanding, I got $45 a share. And you guys run your own models. And this is but I thought there's got to be a mistake. And I sent it to Lewis, and he couldn't find a mistake. And then, and there isn't a mistake in it, right? It's just a highly levered company growing and executing. And so then, I said, Well, how much of this is Fort Wayne, and Fort Wayne was like, six or $7 a share of it. And so I backed out that let's suppose the legislature never allows that to happen.

Louis: And when I put that whole model together and divided by shares outstanding I got $45 a share.

Speaker Change: And you guys run your own models and this is but I I I thought there's gotta be a mistake and I Senate Lewis he couldn't find a mistake and there isn't a mistaken it right. It's just a highly levered company growing and executing and so then I said well how much of this is fort Wayne and Fort Wayne was like six years.

Speaker Change: $7 a share of it and so I backed out that let's suppose the legislature never allows that to happen and.

Lewis Fanger: And, and so we just continue with Rising Sun, which doesn't earn a whole lot. And now you say that's only six or $7 a share, that means Fort Wayne alone is more than what our stock is trading at. Right.

Speaker Change: And so we just continue with rising Sun.

Speaker Change: She doesn't have a whole lot and now would you say, that's only six or $7 a share that means fort Wayne alone is more than what our stock is trading at right and and so then I said, let's do something that's let's knock all those numbers down and be very very very conservative and I went to the bottom range of of what I would.

Lewis Fanger: And, and so then I said, Let's do something, let's let's knock all those numbers down and be very, very, very conservative. And I went to the bottom range of what I would be very disappointed on what each of us would do. And I still got $20 a share. And it's like, that's up fourfold from where our stock is. And it's like, so then, you know, bankers will call us up and say, Hey, we have a casino, we want you to look at in, you know, bumfuck, Arkansas. And I'm like, No, I do not want to mess up what we have.

Speaker Change: Be very disappointed on what each of these would do and I still got $20 a share and that's up four fold from where our stock is and it's like So then you know bankers would call us up and say Hey, we have a casino. We want you to look at and you know Bumfuck, Arkansas and I'm like no I do not want to mess up what we have.

Lewis Fanger: I mean, we will look and we listen, sometimes you learn something from it. But it would have to be a really good deal. Because You know, there are so many bad deals out there, and they're so easy to do, and we're going to have a great stock if we just execute on what we have. Now, we do have, you know, guys like Alex running around looking for other deals, and sometimes he shows up at one, right? I mean, he showed up at American Place. And so we may very well have other deals between now and 2030, but we're very cautious about it because we know if we just execute on what we have, we will have one of the best performing casino stocks in the next five years.

Speaker Change: I mean, we will look and we listen sometimes you learn something from it but it would have to be a really good deal because you know that there are so many bad deals out there and they're so easy to do and we're going to have a great stock. If we just execute on what we have now we do have.

Speaker Change: Guys like Alex running around looking for other deals and sometimes he shows up a blend right. I mean, he showed up with American place and so we may very well have other deals between now and 2030, but we're very cautious about it because we know if we just execute on what we have we will have one of the best performing casino stocks, but I guess the next five years.

Lewis Fanger: Just to be very clear, Jordan, we are not actively looking at any acquisition, just so you know. And I'll remind everybody what I said earlier in the call, there may be some forecast statements that we may not achieve or something, right? It was a safe harbor thing. Safe harbor, yeah. But that's, that's the math we look at. And that's what we're focused on.

Jordan Bender: Just to be very clear Jordan, we are not actively looking at.

Speaker Change: Any acquisition just so you know.

Speaker Change: And I'll remind everybody with as I said earlier in the call. There may be some forecast statements that we may not achieve or something right. It was a safe Harbor safe Harbor right.

That's the math, we look at and that's what we're focused on.

Lewis Fanger: Thank you. I'm hoping this all works out and you can be playing Mahjong by 2030.

Speaker Change: So thank you.

Speaker Change: I'm, hoping this all works out and you can be playing module that by 2030.

Speaker Change: [laughter] alright.

John Decree: Our next question comes from John DeCree with CBRE. Please proceed with your question. Hi, Dan. Hi, Lewis. Thanks for taking my questions. Um, maybe two on on Chavoney. The first, uh, curious if you could give us a little color on kind of what you're seeing on the casino floor. We look at the state reports, the same ones. Everyone else gets in and it looks like, you know, we could see the slot market growing nicely in Chaminee, but you know, less so on the table side. So curious what you're, what you're seeing and what your expectations are for table volumes, slot volumes for the upcoming spring season.

Speaker Change: Our next question comes from John Decree with CBRE. Please proceed with your question.

John Decree: Hi, Dan Hi, Louise Thanks for taking my questions.

John Decree: Maybe Q1 on Chamonix, the first Q.

John Decree: Morris if you could give us a little color on kind of what youre seeing on the casino floor, we look that the state reports the same ones.

John Decree: Everyone else catching on and it looks like we could see that.

John Decree: Spot market growing nicely in chamonix, but less so on the table side too curious, what you're what you're seeing and what your expectations are for cable volume swap volumes for the upcoming spring season.

Lewis Fanger: Well, we are we're actually 100% more than 100% sometimes of the growth in the entire state. But the growth should be more than it is. And tables has been one of our weak points. And so we have a new director of table games. We have a new director of casino operations, I forgot to mention, actually. We had a director of casino ops in Rising Sun, who did a great job. And earlier in his career, he had been in Colorado. So we relocated him, and he's been there two months. And there's stuff like, we have not offered Baccarat.

John Decree: Well, where we are and where we're actually 100% more than 900% sometimes at the growth in the entire state.

But the growth should be more than it is and tables has been one of our weak points.

John Decree: And so we have a new director of table games, we have a new director of casino operations I forgot to mention actually.

John Decree: We had a director of casino apps in rising Sun, who did a great job and earlier in his career he had been in Colorado. So we relocated him and he's been there two months.

John Decree: And there are stuff like Oh, we have not offered bakra effect nobody in Cripple Creek offers baccarat and as I speak we have two baccarat table sitting on our loading dock and dealers going through dealer school to learn how to deal with and <unk> has a pretty significant game and Blackhawk.

Lewis Fanger: In fact, nobody in Cripple Creek offers Baccarat. And as I speak, we have two Baccarat tables sitting on our voting dock, and dealers going through dealer school to learn how to deal it. And Baccarat's a pretty significant game in Blackhawk. We also, our table limits are lower than they are at our competition in Blackhawk. Well, I'm willing to let the table limits go up, but I want to make sure that we have experienced supervision and experienced dealers, and that we're doing so intelligently. And so we're trying to buttress that. We are trying to hire more dealers.

John Decree: We also are table limits are lower than they are at our competition in black Hawk, well I'm I'm willing to let the table limits go up but I want to make sure that we have experienced supervision and experienced dealers in that and that we're doing so intelligently and so we're trying to buttress that we are trying to hire more dealers.

Lewis Fanger: We don't have enough dealers. We're running our own dealer school at the moment. And so there's a lot of stuff focusing on tables. And part of the reason we made the management changes we made was to help focus more on tables, because our table game should be maybe 20% of our revenues, and it's less than 10%. And so that's a strong area of growth for us. We are about to put in new carpet and handicap ramps within Bronco Billies. Right now, it's pretty jarring when you go from Chamonix into Bronco Billies. And Bronco Billies has probably half our slot machines, maybe.

John Decree: Don't know enough dealers, we've running their own dealer school at the moment.

John Decree: And so there's a lot of stuff focusing on tables.

John Decree: And part of the reason we made the management changes we made was to help focus more on tables, because that that our table games should be maybe 20% of our revenues and it's less than 10 and.

And so that's a strong area of growth for us.

We are about to put in new carpet and handicap ramps within Bronco Billy's right now it's pretty jarring. When you go from Chamonix into Bronco, Billy's and Bronco, Billy says probably half our slot machines, maybe maybe at least half and so we're trying to improve that transition.

Lewis Fanger: at least half. And so we're trying to improve that transition. There are quite a few customers who actually prefer the brick walls and kind of Western theme of Bronco Billies, but of course the slot machines in Chamonix do much better. And so we're trying to pull that down. We're improving our food and beverage offerings, changing the menus, changing the marketing. We had a kind of a temporary restaurant that when we opened we didn't have the high-end restaurant done yet. So we turned the small meeting room space into what was supposed to be a temporary restaurant.

John Decree: There are quite a few customers, who actually prefer the brick walls and kind of the western theme of Bronco Billy's.

John Decree: But of course, the slot machines in Germany do much much better and so we're trying to.

John Decree: Pull that.

John Decree: Down.

John Decree: We're improving our food and beverage offerings.

John Decree: Changing the menus change in the marketing.

John Decree: We had a kind of a.

John Decree: A temporary restaurant.

John Decree: That.

John Decree: When we opened we didn't have the high end restaurant done yet so we.

John Decree: Turn the small meeting room space into what was supposed to be a temporary restaurant.

Lewis Fanger: And then we couldn't get enough waiters, so I said they could run it as a buffet. Well, they ran it as a buffet all year, and small volume buffets lose a lot of money. We lost a million and a half dollars on that buffet. And when I finally figured out how ridiculous it was, it was part of the reason for all these changes. And we were charging $45, and the cost of the crab alone was $11 a cover. Prime rib was $10 a cover. The pastries were $9 a cover. The linens were being leased from a wedding supply linen company.

John Decree: And we Couldnt get enough waiters so.

John Decree: They said they could run it as a buffet well they ran it as a buffet all year and small volume buffets lose a lot of money, we lost a million and half dollars something that buffet.

John Decree: And when I finally figured out how ridiculous. It was was part of reason for all these changes and we were charging $45 and the cost of the crab alone was $11 a cover prime rib was $10 cover the pastries were $9 of cover the linens where beer.

John Decree: Leased from a wedding supply linen company that was $10 of covered before.

Lewis Fanger: That was $10 a cover. Before you bought the salmon and the chicken and paid for the payroll, we were upside down. We were spending $100 a cover and charging $45 a cover. And that's just stupid, and we won't do stupid things like that anymore. And I'm sure Brandon, who was a very analytical young man, I think he's mid-40s, experienced man, and he'll make sure that we put a number on this. When you operate one too many restaurants, it affects every restaurant. And so on a Saturday, that would do 150 covers. little buffet. First off, it frees up our small meeting room space to help book meetings.

John Decree: Before you bought the salmon in the chicken and paid for the payroll we were upside down we were spending $100 of cover.

John Decree: And charging $45 a cover.

John Decree: And that's just stupid and we won't do stupid things like that anymore.

Speaker Change: And I'm sure Brandon It was very analytical, yes, young man and I think he's mid forties experienced man.

John Decree: He'll.

John Decree: He'll make sure that we put a number on this and you know when you operate one too many restaurants that affects every restaurant.

John Decree: So on a Saturday that would do 150 covers.

John Decree: By eliminating that little buffet first of it frees up our small meeting room space to help book meetings and second we may lose 20 or 30 covers to the casinos across the street, which are doing well.

Lewis Fanger: And second, we may lose 20 or 30 covers to the casinos across the street, which are doing well because of us, and that's fine. But the other 120 covers are split among our 980 Prime and our Home Café and our Mexican restaurant. And then there's an Italian restaurant that we hope to finish up this year in Bronco Billy's. And by moving those covers into the other restaurants, the other restaurants will have better profit numbers. So there's a lot of low-hanging fruit like that for Brandon and the rest of us to wake up to. We were so focused on getting open that there was some stuff like that that fell through the cracks.

John Decree: Because of us and that's fine, but the other hundred 20 covers a gift it split among our 980 prime and our homecare Fei and our Mexican restaurant and then there's an Italian restaurant that we hope to finish up this year in Bronco Billy's and by moving those covers into the other restaurants the other restaurants.

John Decree: We'll have better profit numbers so.

Speaker Change: There's a lot of low hanging fruit like that for for Brandon in the rest of us to wake up to where we were so focused on getting open that there was some stuff like that that fell through the cracks.

Lewis Fanger: There's one other point I want to make there, John, if you look at market share, our market share in the fourth quarter was 26.9 percent. So we more than doubled our gaming market share year over year. And maybe we don't stress this point enough, but usually what happens when you go and open a brand new big casino like this is everyone in the market is down 20, 30 percent as they absorb the capacity. And the reality is no one was hit. And we completely, you know, we went from, you know, effectively 13 percent market share to 27 percent market share without hitting anyone in the market.

John Decree: There's.

John: One other point I want to make there John.

John: You know when when if you look at market share our market share in the fourth quarter was 26, 9%, so we'd be more than doubled our gaming market share year over year.

John: And.

John: I don't maybe you don't stress is pointing up but usually what happens when you go and open a brand new big casino like this as everyone. In the market is down you know 20, 30% as they absorb the capacity and the reality is no. One was hit and we completely you know we went from you know effectively 13% market share to 27.

John: <unk> percent market share without hitting anyone in the market. It's.

Lewis Fanger: It's, you know, and a big part of that obviously was certainly on the slot side. We still have room to grow on the table game side. But we still more than tripled our gaming table or table games win per day for what it's worth. So, you know, kind of baby steps in year one. I think we're going to have bigger steps in year two as this marketing campaign goes out and takes full effect. And, you know, we are starting to get wealthier customers in the door. We have players in the door now that will gamble half a million bucks in a weekend.

And a big part of that obviously was certainly on the slot side, we still have room to grow on the on the table games side, but we still more than tripled our gaming cable our table games win per day for what it's worth so you.

John: No.

Kind of baby steps in year, one I think we're going to have a bigger steps and you were too is that does this marketing campaign goes out and takes full effect.

John: We are starting to get wealthier customers in the door. We are players in the door now that will gamble half a million bucks in a in a weekend. We never would have had any play like that and that whole market ever historically and so.

Lewis Fanger: We never would have had any play like that in that whole market ever historically. And so this market's on the move. It's taken a little bit longer than what I think Dan and I would have hoped, but it is absolutely going to do quite well. Great. Thanks, Lewis. Thanks, Dan. I think you answered my follow-up in there, so I'll pass it off to the next one. Thanks, gentlemen.

John: So those markets on the move it's a.

Speaker Change: Taken a little bit longer than what I think Dan and I would have hoped but it is absolutely going to do quite well.

Speaker Change: Great. Thanks, a lot. Thanks, Dan I think you've answered my follow up in there so I'll pass it off to an excellent. Thanks gentlemen.

Speaker Change: Thanks, Tom.

Chad Beynon: Our next question comes from Chad Beynon with Macquarie Asset Management. Please proceed with your question. Hi, Dana Lewis, thanks for taking my question. Wanted to ask about the American place margins. Good to see that the revenue is ramping and congrats on all the awards that you've received for service levels. It looks like, you know, revenues at this point are in line or maybe even ahead of expectations compared to, you know, what we thought the property would be, you know, well over $100 million. I believe you guys talked about potentially 30% margins kind of moving even higher.

Speaker Change: Our next question comes from Chad Beynon with Macquarie asset management. Please proceed with your question.

Chad Beynon: Hi, Dan and Lewis. Thanks for taking my question wanted to ask about the American place margins good to see that the revenues ramping and.

Chad Beynon: Congrats on all the awards that you've received for service levels. It.

Chad Beynon: It looks like revenues at this point are in line or maybe even ahead of expectations compared to what we thought the property would be well over 100 million.

Chad Beynon: I believe you guys talked about potentially 30% margins kind of moving even higher so it's not at that level at this point, but can you talk about maybe where the expenses are here and if the revenues increase from these levels and twenty-five if a lot of battle pushed down to the bottom line and meet some of the.

Lewis Fanger: So it's not at that level at this point, but can you talk about maybe where the expenses are here and if the revenues increase from these levels in 25, if a lot of that will push down to the bottom line and meet some of the margin targets? Thank you. Yeah, I think it will. I mean, if you're looking at the results for this past year compared to the prior year, it's a little distorted because we opened the high-end restaurant in February of last year and that was pretty important at driving the casino revenue higher. and helping the EBD hire, but most restaurants operate at much lower margins, so the revenue of that restaurant...

Chad Beynon: The margin targets. Thank you.

Speaker Change: Yeah, I think it will I mean, the if youre looking at the results for this past year compared to the prior year. So a little distorted because we opened the high end restaurant.

Chad Beynon: In February of last year.

Chad Beynon: And that was pretty important driving the casino revenue higher.

Chad Beynon:

Chad Beynon: And and helping the EBT.

Chad Beynon: <unk>.

Chad Beynon: But that but most restaurants operate at much lower margin. So the revenue of that restaurant.

Lewis Fanger: and its income actually hurt margins a little bit. but helped income. And now going forward. I think we'll be able to keep expenses under control and hopefully continue to grow revenues and so margins will show very gradual improvement. We're also getting smarter with our marketing. For example, we have not sent out any physical mail since May of last year and transitioned it all to email and you save a lot of money on postage and printing if you can get the emails of your customers and the percentage of Americans who have an email address is now about 95%.

Chad Beynon: And its income actually hurt margins a little bit.

Chad Beynon: But helped income and.

Chad Beynon: Now going forward.

Chad Beynon: I think we'll be able to keep expenses under control and hopefully continue to grow revenues.

Chad Beynon: And so margins will show a very gradual improvement.

Chad Beynon: Improvement where else are getting smarter with our marketing.

Chad Beynon: For example.

Chad Beynon: We have not send out any physical mail since may of last year.

Chad Beynon: And transitioned it all the email and it's and.

Chad Beynon: And you save a lot of money on postage and printing.

Chad Beynon: If you can get the emails of your customers and you know the percentage of Americans, who have email and email address is now about 95%.

Lewis Fanger: Very few people do not have an email address and we're finding that the response rate to email is actually a little bit better than the response rate to physical mail. And so American Place kind of made that transition, other casinos are doing it as well and so now we're back at all of our other casinos saying, okay, you've got to do special promotions to get people's email and we're going to get out of the physical mail business because It's expensive. I mean, if you if you send a flyer out with a And add in, you know, come up and stay for a night for on us and you send it out, you know, if it's a pretty basic.

Chad Beynon: Very few people do not have an email address and so.

Chad Beynon: And we're finding that the response rate to email us at <unk>.

Chad Beynon: A little bit better than the sponsoring two physical mail.

Chad Beynon: So American place kind of made that transition other casinos are doing it as well and so now we're back at all of our other casinos, saying, Okay. You got to do special promotions to get People's email and we're going to get out of the physical mail business because.

Chad Beynon: It's expensive.

Chad Beynon: If you send a flyer out where the.

Chad Beynon: And add it come up and stay for a night for.

Chad Beynon: And you send it out.

Chad Beynon: If it's a pretty basic flaw.

Lewis Fanger: Flyer. By the time you print it and mail it, it's $2 a person. And the sort of response rate you get is about 5%. And so you're spending $60 to get somebody to your doorstep before they put any money in a slot machine. And if you can do it through email, you're spending zero. And so it's that sort of, you know, nuts and bolts that you start looking for that eventually results in better margins, better income. Yeah, and keep in mind too, Chad, gaming revenues obviously aren't done growing. The January numbers are public. I know you saw those and we were up 34% year over year in the month of January.

Chad Beynon: Flier by the time, you printed mail it it's $2 person and the sort of response rate you get it's about 5% and so you're spending $60 to get somebody to your doorstep before they put any money in a slot machine and if you can do it through email your spending zero and so it's that sort of.

Chad Beynon: You know nuts, and bolts that that should start looking for it that eventually results in better margins better income.

Chad Beynon: Yeah, and keep in mind too Chad gaming revenues, obviously arent on growing the January numbers are public I know you saw those and we were up 34% year over year in the month of January not a surprise that you know that.

Lewis Fanger: Not a surprise that, you know, that that's not not a bad thing overall for margins. I think as we, you know, get that number higher, the push is to try and get that number in the mid 10s per month. A year ago, we were in the mid sevens in a typical month, right. So for us to be pretty reliably over 9 million these days is a nice move. And eventually we'll get that over 10 and a half. And as you do get it over 10 and a half, I think that's when you approach that 40 million plus of EBITDA, if that helps you.

Chad Beynon: That's not a bad thing overall for margins I think as we get that number higher the pushes to try and get that number in the mid cans per month, a year ago. We were in the mid sevens in a typical month right so for us to be.

Chad Beynon: Pretty reliably over 9 million. These days is a nice move and eventually we'll get that over time and to happen as you do get it over time and a half I think that's when you approach that $40 million plus of EBITDA if that helps you.

Lewis Fanger: You know, I I like the guys at Bally's, including Sue Kim, who's a pretty brilliant guy. But I like our position in Chicago better because our revenues are pretty much the same as theirs. We actually beat them a little bit in January. Generally they've been a little bit ahead of us at their temporary casino in downtown. But they have a higher tax rate. The downtown license had a significantly higher tax rate than the other licenses. And then their reinvestment obligation for their permanent is measured in billions, and ours is $300 million. And so... You know, I like our position better than theirs.

Chad Beynon: Yeah.

Chad Beynon: Uh huh.

Chad Beynon: I like the guys at bally's, including Soo Kim.

Chad Beynon: This is pretty brilliant guy.

Chad Beynon: But I like our position in Chicago better because.

Chad Beynon: Our revenues are pretty much the same as theirs, we actually beat them a little bit in January.

Chad Beynon: Generally they've been a little bit ahead of us at their temporary casino in downtown.

Chad Beynon: But they have a higher tax rate the downtown license had a significantly higher tax rate than the other licenses and then their reinvestment obligation for their permanent as measured in billions and ours is $300 million and so.

Chad Beynon: You know I I like our position better than their snow I wish them well.

Chad Beynon: Now, I wish them well, but I wish us better. Thank you. Okay.

Chad Beynon: But I wish us better.

Chad Beynon: Yeah.

Chad Beynon: Thank you, Okay, and then from a housekeeping standpoint.

Lewis Fanger: And then from a housekeeping standpoint, I don't know if this was called out on the press release, but Lewis, the lower corporate expense for the quarter, could you flush that out? And then how should that look for 2025? Should that revert to, you know, five or so million, five to six million a year? I think if you look at the annual run rate of corporate in 2025, 2024, it's like six, six million. There was some over accruals that got reversed in the fourth quarter. So that fourth quarter looked unusual. Perfect. Thank you both. Appreciate it.

I don't know if this was called out on the press release, but Lewis the the lower corporate expense for the quarter could you flush that out and then how should that look for 25 should that revert.

Chad Beynon: Five or so million $5 million to $6 million a year.

Chad Beynon: I think if you look at the annual run rate of corporate in 2025.

Chad Beynon: 2024, it was like six 6 million.

Chad Beynon: There was some over accruals that got reversed in the fourth quarter. So that fourth quarter looked are unusual.

Chad Beynon: Yes.

Speaker Change: Perfect. Thank you both I appreciate it.

Chad Beynon: [laughter] you hired as CFO.

Lewis Fanger: You're hired at CFO.

Lewis Fanger: Hey, Dan, we have time for maybe one or two questions, depending on how quickly you get through these. So let's take at least one more.

Speaker Change: Hey, Dan we have time for maybe one or two questions depending on how quickly you get through these so let's take at least one more.

Operator: Our next question comes from Ricardo Chinchilla with Deutsche Bank. Please proceed with your question. Hey, guys, thank you so much for taking my question. I was hoping we could dig a little bit more on, you know, the ramp up here at Chamonix. So, can you guys provide a little bit of color on January? I know that it's stopped because of the water and, you know, I know that you guys have been playing a little bit to modeling. So maybe you guys can help me out a little bit. I have you guys increasing your OPEX as likely on the fourth quarter based on my math.

Speaker Change: Our next question comes from Ricardo Chinchilla with Deutsche Bank. Please proceed with your question.

Ricardo Chinchilla: Hey, guys. Thank you so much for your thinking like question I was hoping we could dig in literally.

Ricardo Chinchilla: More on you know the ramp up of here at Chamonix. So can you guys provide a little bit of color on January I know that it stopped because of the water and you know I know that you guys have been playing a little bit to modeling. So maybe you guys can help me out a little bit I have you guys increasing your own packs.

Ricardo Chinchilla: It's likely on the fourth quarter based on my math.

Ricardo Chinchilla: Can you give us an idea of with your proposed savings and, you know, now that you guys have a new manager that's going to focus on cost savings. Like, what's the right OPEX per day that, you know, to run that property and, you know, perhaps a little bit more of gaming volume. Look, it's hard to look at it on a month-to-month basis, the effects and different things that are affecting, or even on a quarterly basis. If your target is 50 million in 2030, And now it's summer seasonal. So a lot of that will be the third quarter.

Ricardo Chinchilla: Can you give us like an idea of with your proposed savings and you know now do you guys have you know a new manager there is going to focus on cost savings like what's the right Opex per day that you need to run that property.

Ricardo Chinchilla: You know.

Ricardo Chinchilla: And perhaps a little bit more of a gaming volumes.

Ricardo Chinchilla: Well look it's hard to look at it on a month to month.

Ricardo Chinchilla: Fix and different things that are affecting or even on a quarterly basis, but.

Ricardo Chinchilla: But do you like if your target is $50 million in 2030, we ought to be able to get to 10 or $15 million of E V. D. I T Shea.

Ricardo Chinchilla: And now with summer seasonal so a lot of that'll be the third quarter.

Ricardo Chinchilla: And then from there. It goes 2030 40. The next few years and that's how you get to 50.

Lewis Fanger: And then, you know, from there it goes, you know, 20, 30, 40 the next few years. And that's how you get to 50. And, you know, it. That's as good a guess as anybody. Now, there's some areas where we probably have too many employees, and there's other areas where we have too few, like we don't have enough dealers, I already alluded to. We don't have enough masseuses. We have seven treatment rooms and two other rooms we can use, so really nine treatment rooms. We have two masseuses, and on weekends, they're totally filled. We could fill probably seven masseuses on weekends.

Ricardo Chinchilla: And.

Ricardo Chinchilla: Sure.

Ricardo Chinchilla: Yeah.

Ricardo Chinchilla: That's as good a guess as anybody know theirs.

You know there are some areas, where we probably have too many employees and there's other areas, where we have too few like we don't have enough deal or Saturday alluded to we don't have enough misuses Oh, we have.

Ricardo Chinchilla: Seven treatment rooms in two other rooms, we can use so really nine treatment rooms with tumor systems and on weekends, they're totally felt we could we could feel probably seven misuses on weekends, it's a popular thing.

Lewis Fanger: It's a popular thing, and we charge $130 or $150 for a treatment, and the massage therapist gets $20 or $30, and so it's a nice profit center. We need more masseuses. We're trying to find them. We have a salon where people can get manicures, pedicures, and get their hair cut or colored and so on. It's a beautiful salon, and we have one or two salon therapists.

Ricardo Chinchilla: And you know, we charge of 130 or $150 for treatment in the massage therapist gets 20 or 30 Bucks and so it's a nice profit center, we need more of a systems.

Ricardo Chinchilla: We're trying to find them.

Ricardo Chinchilla: We have a salon, where people can get manicures pedicures and get their haircut are colored in so it's beautiful salon and we have one or two salon therapists.

Lewis Fanger: We probably need a dozen, and we are trying to find them, and that also is a profit center, but it's also a marketing tool because if a woman can use her slot points to get her hair cut, and she likes her hair cut, she's going to come back every month to get her hair cut using her slot points, so that's the marketing tool, and so there are a lot of tasks for Brandon and the rest of us to refine this place, and it pains me to go back there and see our salon ready for action, and we don't have employees in it yet.

Ricardo Chinchilla: We probably need a dozen and we are trying to find them and that that also is a profit center, but it's also a marketing tool because if if.

Ricardo Chinchilla: If a woman can use her slot points Takeda haircut and she likes to haircut she's going to come back every month to get a haircut using her slot points. So that's the marketing tool and so there are there are a lot of tasks.

Ricardo Chinchilla: For brand and then the rest of us to to refine this place and it pains me to go back there and see our Salon ready for action and we don't have employees in it yet we can't fight, but we will find those employees, even if you know the.

Lewis Fanger: We will find those employees, even if people who cut hair, they work in kind of a different sort of commission basis. I'm willing to give them much better commissions than they get in Woodland Park or Colorado Springs, and we need to do that. And I'm even willing to guarantee them pay because if we guarantee that they're going to have, you know, six women getting their hair cut a day to pick a number, well, then we turn around to the marketing people and say, okay, we just bought six hair cuts today, so go find some of your best customers and offer them a hair cut, and that's how you jump start that business, and so the management team we're putting together is going to be doing a lot of stuff like that.

Ricardo Chinchilla: People, who cut here, if they work and kind of differ.

Ricardo Chinchilla: A different sort of commission basis, I'm willing to give them much better commissions than they get in woodland Park, or Colorado Springs, and we need to do that I'm, even willing to guarantee them pay.

Ricardo Chinchilla: Because if we guarantee that theyre going to have.

Ricardo Chinchilla: Six women getting their hair cut a day to pick a number well then we turned around and the marketing people say, okay. We just bought six haircuts today. So go find some of your best customers and offer them a haircut and that's how you jumpstart that business and so.

Ricardo Chinchilla: And so the management team, we're putting together is going to be doing a lot of stuff like that.

Lewis Fanger: And, you know, when you say, what will the earnings be in the first quarter, we're not going to make much in the first quarter. But the faster we can make some of the changes I'm detailing, the faster we can get to that. And I'm pretty sure we can get to 10 to $15 million this year. Yeah, I'm trying to think of what to add to Dan's, you know, the look, we lost a little bit of money in 4Q there, we're likely going to lose a little bit money here in 1Q, I'll tell you, February is better than January.

Ricardo Chinchilla: And when you say what would the earnings being the first quarter, where they can make much in the first quarter.

Ricardo Chinchilla: But the faster we can make some other changes M detailing the faster we can get to that and I'm pretty sure we can get to $10 million to $15 million. This year.

Speaker Change: Yeah, I I I'm trying to think of what to add to Dan.

Ricardo Chinchilla: The.

Look we lost a little bit of money in <unk>, there were likely going to lose a little money here in <unk> I'll tell you February was better than January.

Lewis Fanger: And, you know, the big changes that we made that we were making behind the scenes, including bringing in a bunch of people from other properties to help shore things up and with some of the analytics on the cost side, that really happened in full force now. So, you know, it takes a little bit of time to digest crunch numbers and digest things. But, you know, in terms of when do you start seeing the benefits of those actions, I would not assume it happens right away in 1Q. But, you know, on the flip side, we're going to be going into spring and summer here relatively quickly.

Ricardo Chinchilla: And.

Ricardo Chinchilla: The big changes that we made that we were making behind the scene it seems including bringing in a bunch of people from other properties to help.

Ricardo Chinchilla: Sure things up and with some of the analytics on the cost side that that really happened in full force now so it takes a little bit of time to digest crunch numbers and digest things, but in terms of when do you start seeing the benefits of those actions I would not assume it happens right away on <unk>, but on the flip side, we're going to be.

Ricardo Chinchilla: Going into spring and summer here relatively quickly and to Dan's point.

Lewis Fanger: And to Dan's point, you know, we, it is a, tends to be a spring and especially summer seasonal market and we will make, I think, pretty decent money in those months. Yeah, and I don't mind telling you, those of you who have known me for a long time, I don't make management changes like this lightly, and we've pretty aggressively changed the management of this property in the last several weeks, and I think that reflects the fact that as we got into it, after everything was open, and it's like, why are we not doing better? And you found stupid things, like the buffet I cited, and it's like, stop doing stupid things, and so now I've hired and brought in a bunch of smart people, and hopefully we'll start doing smart things.

Speaker Change: We it is a tends to be a spring and especially summer seasonal market and we will make I think pretty decent money in those months, Yeah, I don't mind, telling you those of you who have known him for a long time.

Speaker Change: I don't make management changes like this lately.

Speaker Change: And and.

Speaker Change: Pretty aggressively changed the management of this property in the last several weeks and I think that reflects the fact that as a as we got into it after everything was open.

Speaker Change: Like why are we not doing better and you found stupid things like the buffet I cited.

Speaker Change: It's like stop doing stupid things and so now I've hired and brought in a bunch of smart people and hopefully we will start doing smart things.

Lewis Fanger: The sooner we do smart things, the sooner you guys will be happy.

Speaker Change: The sooner, we do smart things, if I may I'll be happy.

Speaker Change: Yeah.

Speaker Change: So.

Lewis Fanger: If I may follow up with one really quick one, can you remind us your CapEx plans for the year? Well, other than American Place, it's like seven, five of which is maintenance. And then I mentioned the Italian restaurant might be two. And American Place is not a big number because we'll just be starting. So of the, do you remember what it is in the second half of the year? It's going to be dependent on the financing, obviously, but it's It's not a big number. I'm hesitant to give one. It's not a big number. Well, the architectural fees are probably going to be 10, and that's largely this year.

Speaker Change: If I may follow up with one really quick one can you.

Speaker Change: Do you mind, just your Capex plans for the year.

Speaker Change: Well other than American place, it's like seven five of which is maintenance and then I mentioned, the Italian restaurant it might be too.

Speaker Change: And American place is not a big number because it would just be starting so of the two.

Speaker Change: You remember what it is in the second half of the year.

Speaker Change: It's going to be dependent on the financing obviously, but it's.

Speaker Change: It's not a big number I had a big they're hesitant to go well there.

Speaker Change: The architectural fees are probably going to be 10, and that's largely this year and a couple of guys driving built bulldozers round. So maybe maybe 'twenty in the second half of this year and American place, but most of that $3 25 will end up being in.

Lewis Fanger: And a couple of guys driving bulldozers around. So maybe 20 in the second half of this year in American Place. But most of that 325 will end up being in the second half of 2026 and the first half of 2027. And then some spills over even after you open, because construction bills are paid in arrears. Yeah, that's right. Appreciate it. Thank you so much. Best of luck, guys. Well, thank you, Luis.

Speaker Change: In the second half of 2026 in the first half of 2027, and then some spills over even after you open because construction bills are paid in arrears, yeah, that's right.

Speaker Change: Appreciate it. Thank you so much because of luck guys.

Lewis Fanger: Hey, Dan, we're gonna take one last question, and then we're gonna, let's be quick, and we'll round it out. Okay.

Speaker Change: He didn't want to take one last question and then we're gonna, let's be quick and well rounded out okay.

Andrew Walker: Okay, our last question comes from Andrew Walker with Rangeley Capital. Please proceed with your question. Hey guys, thanks for the question. And just wanted to say how much I enjoyed and agreed with the conversation on the valuation and opportunity costs on acquisitions. Just real quick, I think you mentioned the February results for Colorado. What did the February results for American Place look like? We always hesitate to give them because the numbers that I always get behind the scenes differ from what actually gets reported. That's because we look at the numbers with free play and the states report it different ways.

Speaker Change: Okay. Our last question comes from Andrew Walker with <unk> Capital. Please proceed with your question.

Andrew Walker: Hey, guys. Thanks for the question and just wanted to say how much I enjoyed an agreed with the conversation on the valuation and opportunity cost on acquisitions.

Andrew Walker: Just real quick I think you mentioned that February results for Colorado, what did the statutory results for American place look like.

Speaker Change: [laughter] you will we always hesitate to give them because the numbers that I always get behind the scenes differ from what actually gets reported.

Speaker Change: That's because that we.

Speaker Change: Look at the numbers with free play in the.

Speaker Change: States reported in different ways, so theres always a little different from the state numbers, but listen it's been very consistently rising.

Lewis Fanger: So there's always a little difference in the state numbers. But listen, it's been very consistently rising. for since it opened. And now I don't think it's going to continue to be up 25-30% over the prior year. Going forward at some point, the growth will slow, but it's been pretty consistently up 20% over the prior year.

Speaker Change: Yeah.

Speaker Change: For since it opened yet.

Speaker Change: And no I don't think it's going to continue to be up.

Speaker Change: 25%, 30% over the prior year going forward at some point that growth will slow, but it's been pretty consistently up 20% over the prior year.

Lewis Fanger: Now the comparisons get more difficult in the middle of February because we opened the high-end restaurant middle of February last year. So without even looking at the month, looking out the year, I'd expect us to be running up 15-20%. And then gradually, maybe later this year, we're only up 10% in revenue. But then the bottom line would be up more than that, because if you're up 10% in revenue, you might be up 20%. And you know, you did have some, there are little pockets of weather depending on where you look, Andrew. So I'll tell you this, outside of the weather pockets, the customer is actually still pretty robust, if maybe that's the other angle of your question.

Speaker Change: The comparisons get more difficult in the middle of February because we opened the high end restaurants middle of February last year.

Speaker Change: So I without even looking at the months.

Speaker Change: Looking out the year I'd expect us to be running up 15%, 20%.

Speaker Change: And then gradually maybe later this year were only up 10% in revenue, but then the bottom line would be up more than that because if you're up 10% of revenue you might be up to 20% of income.

Speaker Change: Yeah, and you know you did have some.

Speaker Change: Pockets of weather, depending on where you look Andrew So I'll I'll tell you this way outside of the weather pockets the customer is actually still pretty robust.

Speaker Change: If maybe that's the other angle of your question, it does especially in Colorado and especially in Waukegan.

Lewis Fanger: It does, especially in Colorado and especially in Waukegan, you know, we're seeing a very good robust customer. But I would tell you, we would expect that as well, because those are two under penetrated markets. And so we expect them to be a little more robust anyway.

Speaker Change: We're seeing a very good robust customer, but I would tell you we would expect that as well because those are two underpenetrated markets and so.

Speaker Change: And so we.

Speaker Change: Expect them to be a little more robust anyway. There are two little things, we're doing that helped the numbers.

Lewis Fanger: There are two little things we're doing that help the numbers. Our larger restaurant was, or one of our large restaurants was somewhat underutilized. And we're now, we've set it up and are using it for entertainment events. So we bring in comedians and inexpensive entertainment to be in front of 300 people. And that's worked pretty well at driving business when we do it. And we'll probably do more of that. And we're also adding a small poker room. Now in poker, you get a rake, so it's not a lot of money. But it was a pretty slow corner of the casino, and so we said, well, let's put in a poker room.

Our larger restaurant or one of our large restaurants was somewhat underutilized and we're now we've set it up and are using it for entertainment events. So we bring in comedians and inexpensive entertainment.

Speaker Change: To be in front of 300 people and that's worked pretty well at driving business. When we do it and we will probably do more of that.

Speaker Change: We're also adding a small poker room.

On poker you got a race so it's it's not a lot of money.

Speaker Change: But it was a pretty slow corner of the casino and so we said well, let's put it in a poker room. So we have one or two.

Lewis Fanger: So we have one. Our competition has poker. Coming soon. Yeah. And so that'll be open in the next few months. Awesome.

Speaker Change: Competition has poker coming soon.

Speaker Change: And so that'll be opened in the next few months.

Speaker Change: Awesome and then just the bookings for Colorado over the next couple of months I don't think you've really talked about that and how are you.

Lewis Fanger: And then just the bookings for Colorado over the next couple months. I don't think you've really talked about them. How are kind of the hotel rooms looking so far? I honestly don't know it off the top of my head. But what I was going to say is it is a it is a short booking window. It's not like Vegas, you know, in Vegas, you get pretty advanced bookings. In our cases, we'll drop a mailer. Actually, the mail is going out now for the month of March, for example, but those mailers will have, you know, the room offers for the current month.

The hotel room booking so far.

Speaker Change: I I don't.

Speaker Change: I don't know it off the top of my head, but was going to say it is it is that it has a short booking window, it's not like Vegas in Vegas.

Yes.

Speaker Change: Pretty advanced bookings in our cases will drop a mailer actually I'm always going out now for the month of March for example, but those mailers will have the room offers for the current month and so are our lead time isn't months and months and months it tends to be days, a week and we do feel on weekends. So when you're looking at occupancy it's all about.

Lewis Fanger: And so our lead time isn't months and months and months, it tends to be days or weeks. I mean, we do fill on weekends.

Lewis Fanger: So when you're looking at occupancy, it's all about the And that's one of the other areas we need to hire more sales and marketing people to help use the meeting room space to fill mid-week, so we're working on that.

Speaker Change: And that's one of the other areas, we need to hire more sales and marketing people to help us the meeting room space to fill midweek, yeah. So working on that.

Andrew Walker: Okay, well, hey, most of my other questions have been answered. Again, I love how y'all talked about the opportunity cost and excited to get some new equity financing done. We're not doing equity. I think he said no equity. No equity. I wrote the word equity. That's a bad word around here. No equity. We agree, Andrew. We agree. Thank you, Andrew.

Speaker Change: Okay.

Speaker Change: Most of my other questions have been answered again I'd love to tell you all talked about the opportunity cost and excited to get some new equity financing done.

Speaker Change: We're not doing equity I think he said no.

Speaker Change: Okay.

Speaker Change: No equity.

Speaker Change: Yeah, I word equity.

Speaker Change: It around here.

Speaker Change: Oh absolutely.

Speaker Change: We agree we agree.

Speaker Change: Thanks, Andrew for markdown.

Speaker Change: Alright. Thank you Andrew Hey, did you want to just wrap it up real quick.

Lewis Fanger: Hey, Dan, you want to just wrap it up real quick? I think we've covered it. So thank everybody for your support. Hang in there with us. We're going to have a great five years here.

Speaker Change: I think we've covered it so thank everybody for your support.

Speaker Change: Hanging in there with US and this is this is we're going to have a great five years or so.

Speaker Change: Alright, Thank you guys.

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

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

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