Good afternoon and welcome to Full House Resorts First Quarter Earnings Conference Call. All participants will be in listen-only mode. I would now like to turn the conference over to Lewis Fanger, CFO of Full House Resorts. Please go ahead..

Thank you. And good afternoon, everyone. Welcome to our first quarter 2022 earnings call.

As always, before we begin, we remind you that today's conference call may contain forward-looking statements that we are making under the Safe Harbor provision of federal securities laws, I would also like to remind you that the company's actual results could differ materially from the anticipated results in these forward-looking statements.

Please see today's press release under the caption, Forward Looking Statements for the discussion of risks that may affect our results. Also, we may make reference to non-GAAP measures such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as the various press releases that we issue.

And lastly, we're broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release, as well as all of our SEC filings. And with that said, I'm going to talk about our newest news really quick with Circa Sports, and then let Dan go into Operations and our gross projects.

But we did just announce today our newest agreement with Circa Sports to develop and manage the on-site sports book at The Temporary as well as an American Place. If you've been at the Circa Resort here in Las Vegas, you'll know exactly why we're working with them. They have an amazing sportsbook here in town, for the largest in the world.

It's three stories tall with a podcast studio. Really fun and great sportsbook. They really embrace sports. If you haven't seen person, you need to. But they also have a mobile app in several states. As a part of our agreement, they'll use our expected sports skin in Illinois to launch their Circa Sports mobile sports app throughout the state.

And then usually we don't go into some of the details of these agreements but -- because of confidential -- confidentiality clauses. But this is a larger one and so disclosure wise, we think it's wise to give out some of the details. This agreement had a $5 million market access fee that was paid last week upon the contract signing.

As typical with those market access fees, we'll amortize it over the eight-year life of this contract once operations go live. Also similar to our other skin agreements, we do share in the revenue subject to an annual minimum. That minimum is $5 million per year, which of course also doesn't start until operations begin.

Beyond the eight-year initial term there are two potentials for year renewal periods, both at Circa Sports option. And so for those of you keeping track, we do have seven total skins. This one and that we expect in Illinois, three in Colorado, and three in Indiana. We're getting back one skin in Colorado and one skin in Indiana.

We get both of those back in the middle of May as we previously reported. And so when you total all the annual minimums from -- from our various contracts, we are sitting at $9 million per year, not including anything incremental from the two skins that cease in mid-May.

We certainly hope and believe that we'll find a replacement Operator in each of Indiana and Colorado. And so we do think that the $9 million figures should go higher. With that said, you want to --.

Yes, just to point out that the market access fee that we've charged on each of these agreements is not refundable. So we don't take it in income GAAP has this amortized that over the life of the contract, but it's not refundable. And so there is a similar market access fee. So I think it was a total of $3 million on the Churchill deals.

Churchill opted to exit the business. Slope, it's surprising because they're really the first people in it, but they're exiting the business. They don't get that back, so we will take an income..

In their case is $1.6 million that was still un -amortized as of December 31st, yeah..

And we take that in --.

Between -- in the first quarter, and the time that --.

-- between -- they told us they were out in May 15th, when they discontinued operations. And so there's that -- and we are talking with other companies to replace them. So ultimately, there should be a little bigger business net. But we're excited to work with Circa.

If you haven't been downtown to see their place, just to put in perspective and you may recall, we live in Las Vegas, been her long time, but they are the most successful new casino to have open in Las Vegas since Wynn open in 2004. There's been a number of failures.

but they focused on sports betting more than anyone else and so it's all over the place. It's up by their pool, it's in their casino, and it works, and they're a private company. And they probably do it really better than anyone else and so we're pretty happy to be partnering with them. Let me go back go back to the quarter.

It was a pretty decent quarter except that we're up against a really strong quarter last year. We were down, and the biggest piece of that was The Silver Slipper. And if you look at the overall EBDIT, we were at 10.4 versus 12.6 or 12.7. Most of that was at The Silver Slipper, which was down 1.6 in EBDIT.

Colorado, which is very truing up with the construction, I mentioned a minute, I was down a couple of million and Nevada which suffered from a wind percentage, share swing, was down about 400,000. Indiana was flat. So let me address Mississippi. There were five things that I think are worth noting.

Last year, the government stimulus checks came out in the middle of March. And we definitely saw a lift in our business at that time. We saw a lift right away, and then it continued strong through April and then kind of petered out gradually over the year.

Hard to know how much of our $30 million of -- we did $30 million of EBDIT at The Silver Slipper, just under $50 million company-wide. Some piece of that was related to stimulus checks. Maybe a couple of million, three million, something like that. But that's a guess. We don't really know.

But in the first quarter, our spot win at The Silver Slipper was flat, our table game win at The Silver Slipper was flat. So despite the fact that there were stimulus checks issued in the middle of March last year, property had flat revenue and in terms of slots and tables, which questions the bread and butter.

And so that was actually not a factor in the quarter. Even though everybody was, "Well, last year we had stimulus checks. " But when you really get into the numbers, we did okay this year without the stimulus checks.

Almost all of the swing in revenues was our on-site sportsbook, where we have the closest online on-site sportsbook to New Orleans and Baton Rouge. And it opened about five-years ago. It's grown to be a nice segment of the business there. And they legalized online sports betting in Louisiana.

There was a bill to do the same thing in Mississippi and it didn't pass in Mississippi because the industry couldn't get their act together. But in Louisiana it passed and it opened at the beginning of the first quarter, and that pretty much hurt our business quite a bit.

And so we were down like 65% in terms of the tickets written at our on-site sportsbook. We share that with William Hill, who actually runs it, so we get a piece of the income and they get a piece of the income.

Now, given that it's down, and I think it's probably perpetually down because until Mississippi allows online, and even when they do allow online, population of Louisiana is bigger than Mississippi. Mississippi is about three million people, when Louisiana is about 4.5. Of course, a lot of that population of Louisiana lives a long way from us.

March report. But the fact that Louisiana approved it and Mississippi didn't, hurt us. If Mississippi had approved it, we probably still would have been hurt, but not by as much. And so to put it in perspective though, of the $30 million of EBDIT at The Silver Slipper last year, $1.4 was from the sportsbook.

And so if that drops by 65% than would be a million out of the therapy. And that might be a reasonable guess them in the swing in the quarter was 400,000. Now part of that income from the sportsbook but the wind percentage was a little lower than normal. And the first-quarter has things like the Super Bowl in it so it's seasonally, a little stronger.

So I don't think you'll see that biggest swing every -- every quarter. I -- I think it'd be more reasonable to expect that we're going to make something like a half million at the sportsbook there instead of a million for and that's just is what it is perpetual.

Another thing I'll mention that is an ongoing issue and that was our insurance costs are property insurance is up significantly. And in the quarter at The Silver Slipper alone, it was $280,000. The increase was $280 thousand.

And we're not alone on this, I think a lot of companies who are dealing with this, but there has been a number of hurricanes and flooding incidents and insurance companies are upside down and then on the flip side when interest rates are low, that is a negative for the insurance companies.

So they have been ramping up their cost of insurance pretty steeply, the last couple years really. And it's affecting us across-the-board. Now, I know having been dealing with this for a long time, especially on the to speak of coast. There's kind of a long sine-wave on this.

In other words, if you a couple of years where there isn't a storm, and at this point they're charging us twice as much for insurance as they were a couple of years ago. And if you go for a period of time without a storm, then competition starts to set in and you'll get better insurance rates.

And I think in our unique case, as we get open in Illinois and as we build up the Chamonix in Colorado, we get better, more diverse, less reliant on the hurricane area of Mississippi. So I think we can do better going forward.

And I also think we're kind of at a peak in the long term sine-wave of what the insurance companies can charge, given what they're charging today. I think it's probably a pretty profitable business. And people will come into the business. Whereas in the last couple of years, people we're exiting the business.

So -- but that is -- I don't think a perpetual thing. But I think the rate at which insurance costs improve will be years, not quarters. So for at least the next few quarters we're going to struggle with cost of insurance. The other one is rather unique, and that's the price of crab.

I remember our food cost was up $800,000 at The Silver Slipper in the quarter. All of that was crab. Actually, crab accounted for about a 110% of the increase in the food costs. We used to buy crab $8 a pound, now we are buying it at $17 a pound, and it's a very popular part of our buffet. Our buffet is very popular.

For the 12 months ended March 31, the recent 12 months ended, we spent $4.6 million on crab. We went back and looked at the 12 months ended March 31st, 2021, we spent $2.4 million on crab. So the amount of crab we bought was up $2.4 million and that was a significant cause that caused over half the swing in income at The Silver Slipper.

So what's going on with -- first of, what could we do about it? Well, we could try offering other things, but people like crabs. There are local crabs, but they are tiny little crabs. And we've -- we've made a name for ourselves by offering the snow crabs and Dungeness crabs, which have much bigger claws.

But if you look at the crab industry then when people Die-Cut supply chains, this is a supply chain issue for us because in 2020 there wasn't any fishing you couldn't go out on a boat with a bunch for the people and collect crabs.

And that was kind of okay initially because there were no restaurants open either and people tend to eat crab more in restaurants than they do at home. And so -- And there were frozen inventories. Most crab comes from frozen inventory anyway, certainly all the crab we serve is frozen.

We don't -- we don't make crawly little things all the way from boots and sound into Mississippi. We buy tractor trailers full a frozen crab. And so the crab we're serving today, we probably bought four or five months ago. It's been a warehouse in Mississippi. It came out of -- it was a crawly thing, one or two years ago.

So this is very different than buying crabs and Pikes marketplace in Seattle. And so when you first had the absence of fishing, we also had an absence of restaurants and to the extent crab was still big sold, that depleted the frozen inventories.

But what happened in 2021, the restaurants all opened, everybody wanted crab again, you didn't have any frozen inventories and the crab season is now not in the summer. And so the price of crab doubled, went from $8 bucks a share to $17 a share. And so I was looking around something.

There's a restaurant chain with crab in their name, was like, really doesn't know what to do. And we've just got to bit the bullet. Now we did do some stop. We stopped offering two-for-one buffets midweek. Now we've stopped having crab on the buffet midweek. But 65 percent of our buffet is comped for casino customers.

And so what we charged to go to the buffet is irrelevant for two thirds of the people using the buffet. And so to some extent we're just -- we'll just muscle through it. There is -- I found another little factor, there is some Snow Crab that comes to this country from Russia, but as near as I can tell, it's not significant enough to move the market.

It was a comment I heard and when I went looking at it, I don't think that's been a factor, or will be a factor. And in fact, it's the opposite now, because people are out fishing now. And guess what? There's a lot of crab, and they're a little bigger crab because of the pandemic, nobody was fishing for them.

And so I think we're going to have a pretty good crab season this year, and eventually the inventories get frozen, inventories get rebuilt. But you're trying to fill the inventories while you also fill the supply chain. So if you go out to a restaurant and order crab, it's pretty expensive these days in most restaurants.

Much higher than that used to be. But people are still ordering crab. And so they're trying to fill the current demand and rebuild the inventories, and it will take a little while. But eventually, I suspect it gets back to where crab was $8 a pound. Maybe it goes to $9 a pound because oil is more expensive, and the crab boats use gasoline.

But there's no other reason long-term why the price of crab should be twice what it is. And it's funny because I went looking to see if inflation was a factor. No, our payroll costs are up less than 3%. The cost of all of our other stuff is not changed much, it really came back to crabs, and I think that's a short-term thing.

In effect, we had the price of crab escalated in September. I think we have one more quarter to deal with the price of crab year-over-year and then we should be on a better situation in the second half of this year.

So the biggest factor at The Silver Slipper, and really company-wide in the quarter was ironically the price of crab, and I think it's short-term. And then Wynn percentage affected The Silver Slipper a little.

But it's rare we talk about what percentage because usually with portfolio theory, once you get through having four or five properties that evens out, and then if you start adding together different quarters over the course of a year, and company-wide, we see very few swings in one percentage.

This was a quarter, though we are company-wide, it was about $2 million. But if you look at the revenue line on the net, the segment, but on the total income statements, casino revenue was down about $3 million two of that was company-wide would percentage and the rest was the Sportsbook in Mississippi.

When we get -- so that explains The Silver Slipper. I mean, it was really crab and Sportsbook and then property insurance. Those three things account for a 100% of the swing in EBDIT. The biggest factor is short lived, that's the price of crab and the other two are a little more long term. In Indiana, we had very good result with flat.

I think it's good because remember we had stimulus checks last year this time, and we also have an increase in insurance costs there and the and yet despite that, we did fine percentage number as well..

Yeah. Well, and the big swing, Dan would've been on a table -- table games side. It was 17 percentage point, sorry, 16 percentage point difference in hold share versus last year. When you look at both slot and table, that was roughly $850,000 of lost revenue when comparing this year to last year..

property offset that and they ended up the quarter with flat income. So that's why I view flat as being actually pretty good..

Yeah..

Because they offset some -- headwinds and came in just fine. Colorado is quite torn up with construction at this point. We have no on-site parking. We're running valet parking. We have a parking lot three blocks away, that we have a shuttle bus to. The market as a whole is doing very well since April of last year when they get rid of the betting limits.

And so we're down despite the market being up and that's a direct reflection of how torn up the property is. We've actually torn down a good chunk, fairly 25% of the Bronco Billy's building was torn down because it will become part of Chamonix. And then this is a seasonally slow quarter there and so that feeling reasonably we had a loss.

We won't have a loss on that over the year. But I also wouldn't expect much income for the year. I think we'll have something, but it's irrelevant. We're building a $250 million place. Do we really care whether we make money this year? Obviously, we care and we're doing the best we can. The construction people, of course, would prefer to just close it.

That would make their life easier. But we have 200 employees. They have been loyal employees to us, so we want them to be part of Chamonix. And our customers, we have very loyal customers, who we want them to be part of Chamonix. And so we are expecting and willing to have this construction disruption this year.

And Chamonix should open about a year from now. And we will have a much brighter future at that point. In Nevada, the Grand Lodge, at the high top actually had a pretty good winter, is okay. Ski season or certainly better than the year before when the pandemic inhibited capacity to ski areas.

But it had a pretty big wind percentage swing their cost it like $600,000 in revenue, and that accounts for pretty much all the swing in income. And so Northern Nevada was okay except for wind percentage, it really wasn't anything else going on there. In the contracted sports wagering we talked about off two different things coming and going.

Last year we didn't have all the six skins up and running. This year we did going into the quarter at all six skins and then two of the skin. So they were going to discontinue their business, and then we signed the deal with Circa so that that's all the different thing that's going on there. And corporate was about flat.

Really the more important things in the company is that we have these two major things that we're building. We got -- they took us longer to get started in Waukegan than I would've hoped. But I understand it this a big project for the city of Waukegan and Lake County. And when we went in and said, okay, we wanted to get going really quickly.

they hired outside parties, outside lawyers, outside consultants, as they should. And those people all said, "Well, we want to review the whole plans, we're going to see the whole -- how you're laying out the parking lots and so on before we let you start construction on the foundation.

" So the irony is the sprung structure is completed and ready to be delivered. We don't have a foundation to build it on yet. We got the building permit on Friday. The tent of the fence and erosion protection stuff is going up today, which allows us to be putting in the foundations this week.

And when you take that timeline out, we had hoped to be open in the summer, it's going to be the fall. If I were to guess at a month, that's probably October. It might be late in October, but it's somewhere around in there. But the good news is we're now underway, finally. And there I think the supply chain issues, we've been ahead of the curve.

As I mentioned, we have the tent, which will enclose an area of the size of 1.5 football fields. We will have 1,000 slot machines, 50 table games, three restaurants, 20 acres of parking, it's a big deal. And we will get open as quickly as we can. And having gotten the permit at this point, I think that was the biggest hurdle.

It was not only the city, but also the Gaming Commission, which we got their approval. And so we're off and running now. I think we're ahead of the supply chain issues.

We got the tent, we have a floor that goes in, it’s kind of a raised floor, if you've been at G2E at the Las Vegas Convention Center when you go in and look at the slot machine manufacturers ' stuff, that's all on a raised floor. In other words, the Convention Center here has a big concrete floor.

They bring in this kind of -- it's a plastic sort of thing, that raises you up like four inches and that allows you to run all the cabling in it to get to all the slot machines. And that's what we're doing because it's the most efficient way to do it.

And we were able to find whenever this is, three acres of raised floor that we own now and we've been dealing with the slot manufacturers to make sure we can get the slot machines. One of the bill validating companies is having supply chain issues out of Japan. Fortunately, that's not the one we're using. So we think we're in good shape there.

And so we've started to hire people. We've hired a number of department heads now, and that will continue through opening. So that's -- you could talk recession or inflation or any of that stuff far more important for us and for our stock is getting Waukegan open because it's a closest casino to 1.2 million people and it will do well.

And so we look forward to that. And then the construction is still ongoing at a pace, and quite well in Cripple Creek. It's on track to open in the second quarter of next year. We're also just starting to renovate Bronco Billy's itself.

So we're going to have additional disruption within Bronco Billy's, but it's going to be significantly better when it's all done. And you could see those on the website, a couple of different websites we have. But the one that I used to go to is just ChamonixCO.com. Think of Chamonix Colorado dot com.

And there's links to the webcam, so we can see the construction in progress. The elevator towers, which are the tallest things on the project, are done. That guestrooms are getting filled in.

You can't see it from the webcam, but behind the main building is the meeting rooms space and it's getting filled in and closed and so it's coming along pretty fast now. And there -- we were a little concerned whether we could find the manpower, we've actually found the manpower just fine.

And we've had some issues with getting the light gauge steel on time, but it really came from the architecture, didn't finish the drawings on time. But we've overcome those and we're doing better. And so we're on track to open in the second quarter of next year.

And were -- we've had a couple a little bumps on price, but we're pretty close to that $250 million number. We're well within the contingency, so I think we're in good shape there. Anything else to say about Chamonix? It's pretty exciting because we're now starting to buy some stuff.

In fact, I'll find a way to put a picture up of -- we have a piece of art that was like $300,000 that's part of the budget that hangs at a prominent spot in the place that's made of solid gold because it's gold mining town, we're near a big gold mine, and we want something stands out.

So we're getting into the exciting stuff and this isn't the state when we did a Bellagio. It's much less expensive. But it's going to be a pretty showy thing and its fun. So that's coming along. Rough day to report earnings. Rough day in the market.

And so I know everybody just wants to go have a scotch, grab something, but I will tell you, business-wise we're just fine. I feel like the Canadian lighthouse when they -- there was a big ship that was coming towards them and they announced on the frequency. The ship that's ahead of us. So in so many miles we suggest you veer off course.

And the other person said back, "We suggest you veer off course. And then Enterprise said, "This is the USS Enterprise, we are an American aircraft carrier and we have a whole fleet of ships that's escorting us. Again, we request that you re-change course. " And a Canadian came back and said, "Yes, we're a fucking lighthouse. Do what you want.

" And it's like, okay, the market is all over the place. Well, you know what, we have our money, it's fixed rate, our business is doing fine, our business does fine during recessions, and we're building this stuff. There's a side , yeah, bring on a little recession, maybe we can build this stuff cheaper. And so I think we're just fine.

And the stock is volatile, but at the end of the day, we're building value for shareholders and the stock will reflect that..

The only other thing --.

Yes. Let me -- let me just tirade a little bit about crazy GAAP. Well, I will tell you. You will see the charges on debt restructuring, and to me, it's a little illogical but we issued another a $100 million of bonds that are the same CUSIP as the bonds we have outstanding now.

And as a result, some of the fees that are associated with the issuance of those bonds get expensed under GAAP, and that's why you see the charge. Had we issued them with a different CUSIP, they would've been capitalized, which makes no sense to me at all. But that is GAAP, so we've followed GAAP.

And the end result is the charge we take this quarter on that is basically offset by slightly lower interest expense over the life of the bonds, and so it's a big much to do about nothing. But that's what you see there. The only -- we couldn't -- and of course, the bond buyers want to be in the same CUSIP because it's more liquid..

Yes. The only other thing I was going to mention, Dan, it's from a liquidity point-of-view, we still have a lot of cash. And so here in real time, we're sitting on about $318 million of cash with $205 million of that reserve for the build out of Chobani. But on top of all that cash, we still have our $40 million undrawn revolver.

The only thing being utilized on that revolver is a $1 million standby letter of credit for the bill out of the temporary in Waukegan. So we've got quite a bit of additional liquidity there, but that's all I had. If you ready for questions..

Before bringing question. The only real supply chain issues we've been dealing with this crap..

Yeah..

We knew..

Dan, hoping we could leverage your experience with minor recessions. Major recessions, or macro events that impacted operations from Mirage, Pinnacle Full House, or three-year general industry observations over the years. For regional, the impact was relatively benign based on historical gaming revenue data. We're dealing with a fixed cost base.

And then every recession if -- newer recession tends to be a bit different. While real-time trends are not worries than we're getting questions about the back half macro. We would love to hear how you think about the world as it relates to the portfolio. You kind of did that already, but go ahead..

Yes, but we'll recognize when somebody goes to our casinos we're a cheap trip, we're an easy trip. You get in your car with two or three people and drive there. So it's not the cost of gas as it's -- you're not driving very far, so it's not a lot of gas, it's has been split between two or three people, it doesn't add a lot.

Whereas when the price of fuel goes up, the price of airfare goes up proportionally more and you're buying a ticket for each person. So it has a much bigger impact on Las Vegas.

And then of course, a big part of Las Vegas is a convention business, as in fact there, when you have a recession the companies tighten up on who can go to conventions and so on. So it has a much bigger impact on Las Vegas than it does on the regional casinos in general. And so we've become the stay-vacation-at-home or something.

So if you go back and look at the recession in '08 or '09, which was what the great recession -- biggest recession in our lives, regional casinos did just fine. And so I don't think -- I think we'll see not much impact going through it.

Now, availability of gas, and if you go way, way back in history when you -- if you were in LA and you can only buy gas on the even days of the week, and you've got to be my age to remember those days, right? Well, then you don't necessarily want to go across the Mojave Desert and find out if you can get gas to go home.

But nobody seems to be talking about the availability of gas. They're talking about -- and so I think -- and even there, it's interesting. I recently bought a new car and all the manufacturers are shifting to electric and my other car is an electric car. That is the way for the future.

And so somewhere five years from now, 10 years from now, you're going to have gas stations that are empty and you're going to be charging your car up and you'll have solar batteries on the top your house.

Well, for example, in the parking garage at Chamonix, we have a whole bank of places where you can charge your car because we think that in the not-too-distant future that's going to be important.

And so I think there's -- if you build the hotel these days and you think of 30 years, you better be thinking about having enough power in that parking garage for people to be able to charge their cars. And so I think the availability of gas that seem to be an issue, price of gas is an issue, but it probably works to our favor.

Recession, I don't know. Every time they talk about all these people trying to get across the boarder, I'm like, no let them in because we need employees. But of course that's -- I don't mean to be political. Of course, we don't want to just to take the border down. But we've had -- unemployment is still 3.5%. We do find employees.

It's a little bit of a challenge, but then we try to make sure that we are good employer so we can keep the employees we have and so much. And so I'm -- I'm not worried about a recession, I'm not actually worried about interest rates. I mean, somewhere out there will have to refinance our existing debt.

But it's a couple of years away and we -- and we don't absolutely have to. We could find that ways to finance the permanent one and Waukegan, if we had to and lever existing bonds outstanding, but we've always been assuming that will be able to barrow cheaper at some future date when we're more diverse and so on.

And so we would just call the bonds we have, and I guess if interest rates went up a lot, it might not make sense to call the bonds we hit. If you keep a bunch of happen to figure out how to finance something and the other things.

So our balance sheet, I wish I could say it was -- must been Lewis brilliance because we are perfectly situated today for what's going on in the world. We have the money to build these things and our debt are all fixed rate and so it's just a matter of getting them built. So -.

At all at our opening in six months, Dan. Here is the second question that will open it up to normal Q&A.

Are there any changes that you would make now, either in design and development or operations to hedge for a softer consumer, or is it pure execution mode based on real-time trends?.

No, nothing really. I wish we could have figured out how to build Chamonix with less disruption to Bronco Billy's, but there really isn't a way. It is what it is. And The Silver Slipper is solid.

We have been slowly working and getting entitlements to expand The Silver Slipper someday, but we're so busy building the other two things that it's on the backburner for now.

And we do keep inching our way forward with different entitlements, but I think even if everything cleared up tomorrow, I don't think we'd start construction right away because we're busy trying to build what we have. And that's what I do. I think we're in pretty good shape.

Maybe some of that is brains and some of that is luck, but I can't figure what else I would do..

These are all assets go for the long term and that's what we're doing..

That's what we're doing. Once in a while, we're offered different properties in Las Vegas. We live here, so of course, we look at it. I have had operated casinos in Las Vegas before. But this is not an undeserved market anymore. When you think that California used to be half of Las Vegas visitors, today it's still 30% of Las Vegas visitors.

And they have 60 + tribal casinos in California that are newer and just as nice -- many of them are newer and just as nice as casinos in Las Vegas. This is a tough market. And so we've looked at a lot of stuff and not done it. And I think that positions us well at the moment. No, never say never.

If somebody offers to sell us Fellatio for $50 million, we try to figure out how to do it but that has not happened..

Let's go into a proper Q&A now..

We will now begin the question-and-answer session. . At this time, we will pause momentarily to assemble our roster. First question comes from Ryan Sigdahl with Craig-Hallum Capital Group. Please go ahead..

Good afternoon, guys. Lewis, you did such a nice job, I thought about just emailing my questions and letting you guys handle it. I'll press forward. I'm curious on -- so congrats on the circus sportsbook. I agree with you, I've been there, it is absolutely fantastic in the best sportsbook in Vegas, it draws people.

So curious if you're able to disclose scale in any plans you have on the one that will go in your casino.

If it's similar to that or anything to comment, there?.

Well, the one in The Temporary, we're trying to build it so quickly. So that'll be a pretty normal sportsbook. We bought two Airstream trailers that are like little food trucks that'll be located near it so that you can get a beer and a cappuccino pretty easily.

That's about as creative as we're getting in this tent because we're trying to build it so fast. Now in the permanent casino, we're actually -- I'm looking forward to working with Derek Stevens to try to figure out how to have the best sportsbook in the Midwest.

And our design is early enough there that we can do some things there to make it a really kick-ass sportsbook. And it's fun -- it will be fun working with them because they really get into the details of it. He -- I love people like this.

He went out of his way to pull a light bulb out of the light display to show how to get a little cover over it so that you can see the brake lights in the sunlight of Las Vegas, the one that has out by the stuff. It's like -- wow, this guy really lives and breathes stuff, which is great.

And so I think we have the opportunity to do something in the permanent that would be the best recent sportsbook in the Midwest. And that's -- as I've said many time on these calls, that's a business we've been hesitant to do it ourselves because not only is a unique expertise, but it's a small company..

If we end up with the team and one of our markets in the Super Bowl and -- and we're not -- we're not in there and if the other team has not one of our markets, we'd be unbalanced. He's got enough of a business with a base of here in Las Vegas or people come from all over that he doesn't have that problem.

And its private company, so if he -- If he has a bad quarter because the wrong team won the super bowl, he is okay. Right? And so -- so we're happy to partner with them and he's -- he's got the good online stuff and its kind of everybody knows DraftKings.

But this guy's private company does pretty good job and the place he has Downtown is like -- I didn't quite realist. I knew up by the scream fully at this big design and they charge like 20 bucks to get out by the pool and on top on the roof. When you go out there, there's like six swimming pools and he kept them heated all winter long.

So like not my swimming pools and Las Vegas close in the winter. Here made it so people were out there sitting in heated water in like 50 degree temperatures watching football games in January. And I was like that worked, is all yet worked really well. And I was like good on you.

and he had the windows on that side of is hotel tower, the extra thick glass because he knew was blasting sound out by the pool and they didn't want to keep people up, but not.

So when somebody told me that they had dinner the other night in the steakhouse on top opinions and they could hear everything going on by his pool a block away, that's when we got extra thick windows on his guestrooms, so he doesn't really hear. So maybe let's play desk to stepping up.

Spending this point, whereas the steakhouse on top opinions, and its thicker windows, but this get -- this guy pays attention to his business I like that we try to pay attention to our business, so I think it's going to be really good partnership.

And to your -- the beginning of your question, we do expect you're going to walk in to our America play sportsbook and say, wow, that is our goal..

Yeah. That's our goal..

To follow-up on that, I guess the $5 million annual skin fees, does that include only sportsbook online sports betting, or is that also iGaming if legalized? And then secondly, does Circa have online sports betting in Indiana, or Colorado, or is that an opportunity with the Churchill skin?.

They -- currently they're in -- they are in Indiana and Colorado. I'm pretty sure they are up and running. They're not interested in being with us in Indiana and Colorado. I think they are up and running. If they're not, it's because they probably have a deal with somebody else. There other companies we're talking with for Indiana and Colorado.

That is true. It is not -- they are not in Internet gaming that I'm aware of, but our agreement is strictly for sports bet. If Internet gaming becomes legal in Illinois, then we would be able to do that separately..

Good. One more for me, switching over to the core business.

Anything you've seen in March into April, and even early May, given all the macro challenges? Anything impacting the consumer that you've noticed?.

I will tell you, April last year was one of the best months in this company's history and I think that was the stimulus checks that came out mid-March. So we don't have our month closed yet, but I think April is going to be a little behind last year. Now it's fairly in the quarter and I hope we can make that up.

But I think even our budget showed us being down a little bit in the second quarter. So we have a little bit of a -- I mean, what those stimulus checks work for us? I don't know, but I mentioned earlier it might have been $3 million of income and a good chunk of that would be second quarter comparisons.

Apart from that, April was actually a pretty decent month. But you're looking at some portion of the revenues last year were a blip over any April in any year before that. And so this April compared well with that in any prior April, except last year.

And other than that, if there is -- you can remember a year ago, you still had mask requirements in some places, we don't have that now. People are back to their normal lives. The senior citizens who disappeared in the pandemic because they're afraid of getting sick and dying, they're now vaccinated and there are.

That part of segment is back for us, back to where it was pre -pandemic, which is a good thing. And we've kept some of the younger people. So when I look at the April results, the only thing I see that stands out a little bit is we definitely got a lift last year from the stimulus checks.

And I know that the big infrastructure bill was another big government surging money into the economy. But it's not immediate. You didn't go check in your mailbox and that's going to be customers of ours who get a contract to build a new bridge, or build new road and that will eventually end up in the economy and eventually end up with us.

But it's not the same as a stimulus check in terms of the immediacy of getting into people's pockets and ending up in our casino -- in our slot machines. And I recognize, but it's not like everybody got a stimulus check and went to a casino. Some people went to a stimulus check and went to a casino.

And I think if you we're to -- if you could get the Best Buy numbers, I know the Best Buy here had a line of people buying -- trying to buy televisions and I think it was probably much bigger, positive for Best Buy than it was for us. But it was positive for us for sure..

Thanks. Helpful detail as always, Dan Lee. Good luck, guys..

The next question is from Chad Beynon with Macquarie. Please go ahead..

Hi. Afternoon, guys. Thanks for taking the question. Lewis, you mentioned the current status of the balance sheet. You're at $318 million of cash. So that indicates that you haven't spent much on. Can you just help us think about how the CapEx should look through the remainder of 2022 and what will slip more into’23? Thanks..

Yes. Well, we did spend roughly about $15 million for what it's worth. This is the point at where it really starts to ramp up. So here in the second quarter, like as I say, my gut says we're about $25 million of CapEx here in the second quarter.

That's going to ramp up towards $45 million of CapEx in the third quarter, and then maybe a little more from that in the fourth quarter. So it is starting to get in the ramp up base.

And if you think about it, just from a site level point-of-view, as you get more people on site showing up, not just for the steel, but now people on the inside with electricians, and plumbers, and that sort of stuff, that's -- by having more cars in the parking lot and people working, that's when you see the number really start to go up.

So -- rough figures, that's how it's looking to ramp up from here..

I mean, we actually know the commitments we've made are quite a bit ahead of the money that's actually been spent. And so you commit for somebody to make a light fixture, or furniture, or steel, right? And so some foundry somewhere is making steel to our specifications.

We have to buy that, but we don't actually pay for it until it's delivered to the property and accepted by us. And so the commitments are what -- if we look at the construction progress, we have that at the end of March, as showed..

Well, we --.

Relatively a small number, like 10% of the 250..

About $45 million..

We've spent out-the-door $45..

Of the $250, we spend $45..

Yeah. But I'll bet our actual commitments that we would be obligated to pay for if we stop construction, for example, is probably at least $45 million..

Yeah. I would agree with that..

It's -- we're well into it at this point. In fact, we're pretty close to the point where we will be able to have the total GMP from our contracted principals. And so most of the risk is behind us at this point..

And then -- and then if it helps you as well, Chad, for the temporary, we're about $7 million of spend here so far of the $100. The -- a big number, the fee that's due to the Gaming Commission that doesn't happen until after the doors open.

But what was that number, Alex? $32 million?.

Shortly after it opens I think $32 million..

The slot machines are $20..

We don't pay for those until they're delivered..

Yeah. And so here in the second quarter, you could have a sizable number. So far it's just a lot of deposits, but you could have a number that's in the ballpark of $30 million here this quarter and then the balance in 3Q should prep for an October opening..

And, Lewis, sorry if I missed this, what was the reason why the opening day got pushed back? Was that just more certainty in giving the licensing and the permits and everything? Just going to be a hair later than I think what you said..

Yes, maybe I was a little optimistic. I was like, okay, we need to get this tent here, so we actually paid them a little premium to get the tent quickly while the tent has to go up on a foundation.

We went to the town, so we just want to build this quick ring foundation so we can start building a tent, and then we'll design the parking lots and everything else. They were like, "No, hold on. We want to look at the whole thing, review it in its entirety. We need to first hire outside consultants.

" And there's a process they have to go through to hire outside consultants. As a municipality they can't just pick somebody, they have their own little RFP. And so they hired the outside consultants we had to get up to speed on the process.

And literally, so we designed all the parking lots, and then their outside consultant wanted the handicap parking to be in a different spot, so that the people in their wheel chairs wouldn't have to cross any traffic.

And we've pointed out that that's not actually what the ADA Code requires, and we wanted it to be very much like Red Rock Casino here, which works very well. And we went back and forth on that. So eventually we got there, and we pulled the building permit on Friday.

And by the way, they've been working with us -- they've been very good work with, as has been the Gaming Commission. I think we were a little too optimistic about how quickly we could get going.

With hindsight, they were probably right to -- in fact, we got a message from the Gaming Commission at one point that was actually very clear, and they said, we were rushing, so you want the Gaming taxes, and you want the employment. And they're like, "It's more important to do it right than you do it fast." And I remember I get that message.

Okay, that's pretty clear. And it was very simple statement. And so we were like, Okay, take a deep breath, let's design it and meet their approval and so on. And so we now have, I mean it took us seven weeks longer than we had hoped in order to get the permit to put this in. And I think that was a function of us being overly optimistic of that process.

And I think they forced us to go down a more methodical process which would hindsight was by the smart thing to do anyway. And as a result, will open in the fall instead of the summer. This leads into the permanent and that's a 30-year business.

So whether you open in October or July on the grand scheme of things and the overall shareholder value, it's more important to do it right than to it fast..

Yeah agree. And then separately and I think we've heard from all of the operators a lot of your competitors and other companies and other markets. It sounds like the reinvestment rates for players hasn't really changed and everyone continues to be rational.

I guess the big market for you guys, Mississippi, you called out some of the things that caused a little bit of a decline, but within that region is Biloxi and base St. Louis being rational at this point, and then the properties across the Louisiana line as well. Thanks..

Recognize, we compete more probably with Harrah's in downtown New Orleans and the Fair Grounds than we do with Biloxi. Biloxi is pretty way east of us. And even the casinos in Baton Rouge are probably more important competitors than Biloxi. Bay St. Louis and Gulfport are important. And yes, they are being rational.

We deal with this little bit like, should we stop offering crab? Should we put quantity limits on the crab? But two-thirds of the buffet is cooked and so we've just bitten the bullet buying crab and hopefully it's only for these prices for a limited period of time because it's important to our customers.

So maybe that's being a little irrational, but putting a perspective, our buffet is now $50 on a weekend in the evening. The average person per buffet eats two pounds of crab. At $17 a pound, that's $34 with the crab, before you get to stakes or any other cost of food, let alone the payroll.

So if somebody really does eat two pounds of crab, and on average they do, we are upside down on the buffet. And I could raise the price even more but two-thirds are comped anyway, so it doesn't matter. So I could take crab off the buffet and our current earnings be better but that's what we're known for.

And so it's like we'll sustain the pain for a little while longer and hopefully guys are going catch a lot of crab. It's crap seasons right now so hopefully this will come back to normal..

Okay. Perfect. Thanks guys, and congrats on the circuit partnership..

Thanks..

Thanks, Chad..

The next question is from Edward Engel with ROTH Capital. Please go ahead..

Hi. Thank you for taking my question.

I'm just wondering, Golden Nugget acquired Wildwood in Cripple Creek, I was wondering if you've heard if any plans that they have for that property?.

you can do the surface parking, which is really most of our parking, even at Chamonix will be surface parking, but we do have a garage coming in. And in surface parking is like $2,000 or $3,000 a space. You can build a garage and that's about $30,000 a space. You can bury the garage.

Cosmo was built in Las Vegas with a buried garage, a lot it's a buried garage. And you're digging a big hole in the ground and putting a garage in that hole, and then putting the hotel on top of it. That's really expensive, not only digging the hole, but then you have to all sorts of special ventilation.

And even with the special ventilation and sprinklers, and all that stuff, it's still not a very pleasant garage. Every time I might go down to Cosmo, I hate that garage. And why they would do that in Cripple Creek? I have no idea.

So they've got a five-story deep parking garage, and the lowest floor floods all the time because it's underneath the water table. And then they built a pretty simple casino on top of it, I think there's been $80 million. It went bust really fast.

And then one of the key guys became a debtor in positions that are running it and they got maneuver it and it got sold to a out of Scottsdale who owned it. So it's run by this guy, owned by a. And I think he saw what we were saying about how the town needs more hotel rooms. So he persuaded the to build this little hotel with 100 rooms.

It's a stick-built motel, it's like a Fairfield inn. It passed. And it's actually across the street from his casino. But we've heard that it doubled their income from like $5 million to $10 million a year..

That's what we heard, yeah..

Which is great. I mean, it kind of proves our point and we're going to have a high-end 300 room hotel. And so watching their little motel open a year ago, their income went up a lot and then Tillman buys it.

Well Tillman is actually a pretty good casino Operator and recognize I worked for Steve when I worked before that at Drexel Burnham, was at Mike Milton. Biggest eagle I've met was Tilman Fertitta, right? But he's good at running as business, he is actually really good at running this business, so we will hand that off.

And he's probably be proud, say it's a big Eagle. But and so I expect them to commend and fix it up and do things with it and which the right. And Scott steel probably wasn't willing to do. And I think that's an important part of turning Cripple Creek into a better destination.

So I -- I think it's great that golden like it's coming there and I would expect them to fix it up and he is kind of on the edge of town now he is on the edge of town as you come into town. But everybody wants to come down to the main street anyway. So it's like the M Resort.

It's in Las Vegas technically, it's on the strip, but it's not we really where you want to be. And so I think -- but I think a little bit of money into that property will enhance it and enhance the experience of the town. And I don't think we would have done it and I'll bet Tillman will. And so when I heard that, I thought that's probably a good thing.

I've met Tillman a couple of times. He's actually a nice guy. Big ego, but not a bad guy. And maybe he's earned the right type of big ago. So great..

Thanks, Dan. And Dan, technically we're out of time, but if you can keep it short, we've got one last question..

Alright..

The next question is from -- yes. The next question is from David Levine with MidOcean. Please go ahead..

Hey, David..

Hey guys, how is it going? I appreciate the time. A couple if I could squeeze them in. First one just on The Temporary. Anything left that we should know about? That's major in terms of approvals. I noticed in the press release, it just said subject to customary regulatory approvals. Wasn't entirely sure what that related to.

I know that a lot of these are not a big deal, but just wanted to confirm. And then it has your outlook change at all in terms of what you've called out in terms of what that The Temporary can do from an EBITDA perspective or you still feel pretty good about that? Thanks..

I feel really good about it. Literally this was better deal than I thought it was when we got the deal. I was -- we got the deal. I -- I've been to Waukegan a few times. It's a down low cross built town. And then I started looking around, I'd to say, wait a minute, Lake County, Waukegan is the capital city of Lake County.

And Lake County is like 700,000 people. Waukegan is only 80,000. And Lake County is one of the wealthier counties in the country. And really there are some neighborhoods pretty close to us that are pretty wealthy.

And that's like -- in fact, I went down to Cosmo this weekend to specifically eat at China Poblano because we have a big American restaurant, burgers and pizza, what you'd expect, and then we had another restaurant we kept labeling it Estech. And it's like, we'll, what is ethnic because the population is 22% Hispanic, and 8% Asian.

But the Asians gamble. And so which is -- well, China Poblano is both. It's Chinese and Mexican and actually works pretty well. So we actually have trademarked the name Senora Wong, and we're going to have Senora Wong, which will be Asian and Mexican. And so you start running into stuff like that.

And the other regulatory they recognized in our business, you need approval of a Gaming Commission at every step of the way, as it should be. And so they're constantly looking over your shoulder, it takes their approval. I will tell you so far, while it took Illinois a long time to decide who would get this license.

But since they chose us, they've been very nice to work with. They have an agent who is assigned to us, been very reasonable. He is not a pushover but is very reasonable. I haven't met him yet, but all the people that have worked with him say he comes through when they need it on various approval. So I don't think that will be an issue.

It's a union construction environment which has its challenges. We've found out that one of our subs was about to give a contract to a non-union shop that we had to stop that. I had to say, "No, this is supposed to be union job. It's got to go to union job. " So we have those challenges.

But the big one was getting started and we've started -- and now we've started. We have an MOU with the city for what the lease will be. We have yet to have that lease finalized.

So our lawyers are working with their lawyers to finalize the lease, but the MOU is very much in line with what was discussed with the Gaming Commission when the license was awarded. And I don't expect it to be any problem there.

But actually a very good sign of how well the city is willing to work with us, they're allowing us to start construction on the MOU. So we're starting construction on a piece of land we don't know and we're not even leasing yet. So we're starting construction on a piece of land that the city owns and intends to lease to us in accordance with the MOU.

So we're all working together to make this happen as quickly as it can. So don't expect there to be a prop. I will tell you that when we went through the -- we spent a day the other day going through construction timeline. It could slip into November. It's also possibly be done in September, but I think it's unlikely, and worst-case is December.

But it's somewhere in that --.

In terms of the customary approval thing, that's like no, you just don't think that's really a big deal, just from the --.

No..

Yeah. And to help you out, David, Illinois is one of those states, as are many, where you don't get your gaming license until the second before you open. So you're going to see that language up until we open, not -- just so you don't get freak out. It will continue for another quarter or two..

You'll see that same language when we refer to Colorado. I think you'll see that same language. Any casino company building any casino anywhere is subject to gaming approvals..

Yes..

And if I could just squeeze one in on Colorado. Obviously, you're still a year out, so there's a lot to do.

But anything major that we should be looking for in terms of major milestones that could cause issues or you'll feel a lot more comfortable once it's complete? I know I've probably ask this question over the course of last couple of months, but I'm just curious your thoughts on that, like anything major? The timeline where you feel like the major hurdles are coming..

For example, we're just about to open, or we've done it yet, we're about to open a new table games at a different part of Bronco Billy's so we can take the old table games pit and refurbish it. And we're going to be doing lots of stuff like that in the next year.

Moving shit around within Bronco Billy's is going to be confusing for everybody but it's what you have to do to do it. There is a milestone. There's a point we're getting there where we have, as I mentioned at GMP, contract from HP. But otherwise, we're at the point where the stuff is just unreal since I just finished it.

Helenka is sitting here as the head designer. She and I did have an epiphany about two weeks ago that one of the cages in Bronco Billy's was designed in the wrong place and the bathrooms were on the wrong place. We swapped it. And it was an oversight shift. That shouldn't have been there.

And so we're at the point where you really try hard not to make changes like that because we just want the construction people to finish. And so there's purposely trying to keep my fingers out of it because I know that change orders at this point are expensive.

And in Chamonix it's -- and even if that was in Bronco Billy's, it was a little later in the process than Chamonix. And Chamonix we're trying not to make any changes at all..

One, I said one last --.

Just let the construction guys build it. They are building it now. And literally, I said to our head of construction, I said the other day, I said, "If you need me to jump on anybody because they're not being timely, let me know. But otherwise, just build what we told you to build. " Let them do it..

What's your last question there, David?.

Yes, thanks. So just so I get the sportswear wagering stuff right. So with this new Circa deal, obviously it's going into kick in when -- once The Temporary opens. It will be $9 million on sports wagering, with an upside If you get additional partners in Indiana and Colorado for those two skins, and then upside also on Circa.

So it's kind of $9 million at minimum with upside.

Is that the right way to think about sports wagering?.

There's a gap. We lose Churchill May 15th..

Well, if the $9 million doesn't have Churchill in it, yes..

Right. No, but you --.

Run rate. I'm just saying run rate. Yeah..

Yeah, we're currently seven. We're going to lose three, and we pick up five..

That's right..

But there's several months here where we are at four..

Right..

Yes..

Yes..

Well, the $9 million is the way to think about it, like the base case kind of run rate with potential. You are getting those other ones back..

And we will get something for the other schemes. We just don't have it under contract yet..

And just a modest correction to what you said there, David. Technically we share on the revenue with all the schemes. So it's not just potential for additional upside with Circa, it's potential upside with all of them. But you are right, it's $9 million with more to come, hopefully..

Yeah..

Alright, guys. Thanks a lot..

You got it. Thanks, David..

This concludes our question-and-answer session, and I'll turn the conference back over to Dan Lee for any closing remarks..

Now, I wish it we are better day in the market because I think we have a pretty good situation here and -- but we got taken down along with everyone else and hopefully we'll grow out of it eventually. Thank you everybody for listening to us on a rough day..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..