Full House Resorts - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered steady top-line growth: revenue rose 7.3% year over year to $75.1M, while net loss narrowed to $(9.8)M and diluted EPS improved to $(0.27) from $(0.33). Adjusted EBITDA was $11.5M, modestly below Q1 2024 due to ramp costs in Colorado.
• Against Wall Street, FLL posted a small beat on revenue and EPS, with Adjusted EBITDA essentially in line; consensus revenue ~$74.19M vs actual $75.06M, EPS consensus $(0.29) vs actual $(0.27), EBITDA consensus ~$11.57M vs reported $11.49M (near-flat) (values retrieved from S&P Global)*.
• American Place momentum accelerated: March gaming revenue hit a property record $10.9M; the database surpassed 100,000 members, and marketing upgrades are underway to deepen database-driven growth.
• Silver Slipper improved operations under new leadership, lifting operating income by $0.6M despite a $0.7M revenue decline; Chamonix revenue grew 33.9% YoY, while management identified “several million dollars” of annual cost savings to support profitability in seasonally stronger Q2/Q3.
• Strategic catalysts: breaking ground on the permanent American Place in 2H 2025 (target opening by Aug 2027), Colorado profitability expected in Q2, and debt market flexibility to refinance 2028 notes and fund build-out without near-term equity issuance.

What Went Well and What Went Wrong

What Went Well

• American Place set a new monthly record with $10.9M March gaming revenue and surpassed 100,000 loyalty members; CEO: “we not only crossed $10 million… we nearly reached $11 million” and “our player database… surpassing 100,000 members”.
• Silver Slipper operational turnaround: “operating income improved by $0.6 million despite a $0.7 million decline in revenues… refreshed a large portion of the slot floor”.
• Colorado revenue growth: West segment revenues up 19.8% to $15.6M; Chamonix/Bronco Billy’s revenues +33.9% YoY with a new GM already identifying “several million dollars” of annual cost savings.

What Went Wrong

• Chamonix profitability still pressured: West segment Adjusted Segment EBITDA was $(2.5)M vs $(0.1)M last year, reflecting ramp inefficiencies and snowy weather.
• Elevated cost base and taxes: American Place expenses increased for advertising, expanded food options, and higher gaming tax rate with revenue growth.
• Contracted sports wagering exposure: operator exits to be effective in CO (June 2025) and IN (Dec 2025) with uncertainty about replacing on similar terms.

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen, and welcome to the Full House Resorts first quarter 2025 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 8th of 2025. I would now like to turn the conference over to Adam Campbell. Please go ahead.

Adam Campbell (Corporate Controller)

Thank you. Good afternoon. Welcome to our first quarter earnings call. 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 provision of federal security laws. I would also like to remind you that the company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption "Forward-looking Statements" for the discussion of risks 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 that we issue. Lastly, we are broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release as well as all other SEC filings. With that said, we're ready to go.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Good afternoon, everyone. We'll be quick with the comments today, and we'll go into Q&A relatively quickly. We do have a lot of positive things to talk about this afternoon regarding the quarter, especially at our three biggest properties. At Silver Slipper, we have Angie Truebner-Webb as our new General Manager there. If you recall, she came to us from Rising Star, where she did a great job in taking that property from essentially break-even and earning pretty meaningful income out of that property for the last few years. We also have several new department heads that she's brought in over there as well. That team has found ways to grow our bottom line. Adjusted property EBITDA grew by 21% versus last year's first quarter. That's despite a small decline in property revenue.

We think the bulk of those changes are occurring, and we believe that so far we have more than $2 million of annualized cost savings there. To put it in perspective, last year we did about $12 million, a little over $12 million of adjusted EBITDA at Silver Slipper, and we think this year we've got a very good shot of hitting the mid-teens. At Chamonix and Bronco Billy's, we also have a new General Manager. Brandon Lenssen is our new GM there. He previously ran some casinos for Bally's and Blackhawk. He got his start as a gaming regulator, for what it's worth, up in Canada, so he knows that side too. He had several senior roles at marketing companies that specifically targeted the gaming industry. Brandon came to us late in the first quarter, so the first quarter results do not include much of his efforts yet.

Revenue grew 34% in the first quarter. Expenses grew at a similar pace, and so our EBITDA was still at a little bit of a loss, but sequentially we did improve versus the fourth quarter of 2024. Now we are in a phase where we can focus on continuing to grow the business while also improving the bottom line. The revenue growth piece is simple to state, but as you guys know, it always takes time. We built a beautiful building with unparalleled amenities in our market, and we intend to use that to bring a customer to town that has historically never visited. If you ever wanted proof that we are in a very undersaturated market, all you need to do is look at the market's gaming revenue. We have more than doubled our gaming market share without any meaningful impact at all to the other gaming operators.

On the cost side, we've already found several million dollars of cost to take out of the system on an annualized basis. They include over $1.5 million of annual savings in the food and beverage department, a new overtime approval process that has eliminated more than 90% of our overtime costs. That adds up to more than $800,000 per year and about $350,000 of annual savings by using our own team to replenish the minibars in the rooms. On the slot side, we've found another $300,000 of savings as well, simply by switching from revenue share to flat daily fee economics for some of the lease games that we don't own in the building. On the marketing side, we've also improved, especially on the targeting of our marketing and especially on our various social channels.

That should let us be more efficient, but also allow us to continue to grow the top line. A new VP of Advertising started here a few months ago, and literally we have a brand new CMO that we signed yesterday. He'll be starting next week to help further improve our marketing, starting first with Chamonix. That new CMO came to us via Isle of Capri. He was the VP of Marketing there for a while, left the industry for a brief moment of time, and then most recently was head of marketing for a very large Indian casino in Southern California. At American Place, we actually, we've never had a flip it around there. At American Place, we've consistently had year-over-year growth. That continued here in the first quarter, where we had an all-time record gaming revenue month in March.

We crossed $10 million for the first time, almost reached $11 million. Most of you probably saw April's gaming revenues yesterday. We did well despite having a low hold for the month of April. We crossed 100,000 guests in our database for the first time at American Place. The pace of new names going into the database has not really slowed down in recent months. That's a good sign because it strongly suggests that we aren't done growing in our temporary casino quite yet. Two other quick notes. We completed the sale of Stockman's on April 1st, so we no longer have any relation to that property. On the balance sheet side, we did extend the maturity date of our revolver from March of 2026 to January of 2027.

We also started voluntarily paying down some of that revolver balance with our excess cash, having recently taken the balance down to $25 million. I'm sure I forgot something, Dan. You want to clean up in there?

Dan Lee (CEO)

I just mentioned that we are going to open a poker room here in the next couple of months in Illinois. We didn't have one. We're adding one. When you say the temporary is not done growing, that's part of it. You mentioned marketing. You know, in the casino world, marketing has changed pretty dramatically in the last several years. You still have casino hosts dealing with the highest-end people, and you still have sales and marketing people trying to book groups and conventions and so on. A lot of it is database marketing, dealing with the database and trying to figure out how to market to them with free play offers and all this sort of thing. We were probably behind the curve on that versus some other casino companies.

We have reached out and hired a chief marketing officer for the company, somebody who we think knows that stuff and can help us be more savvy. That is going to be particularly important in Colorado, where we have a great property and our revenues are not where they should be. I guess that is the main thing. I mean, it is a lot of management changes, and I think that is one of the things I would really say. We have significantly upgraded the operating management of this company in the last year compared to where it was. I mean, not that it was bad, but I think we are much better now. That is it. Happy to take questions.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Jordan Bender of Citizens. Your line is already open.

Jordan Bender (Senior Equity Research Analyst)

Hey, everyone. Good afternoon. You know, it seems like you're making good progress across multiple properties in the portfolio. I want to start in Colorado. You know, we're starting to head into, I guess, the busy season on the mountain. I guess, can we kind of get a glimpse of what April and May look like there? In terms of, you know, you lost money there in the quarter, just kind of what that looks like as well from an expense standpoint as we head into Q2. Thank you.

Dan Lee (CEO)

Seasonally, Q2 is quite a bit better than Q1, and I think it will be making money in the second quarter, whereas it lost a little bit of money in the first quarter. There are two things involved in that. One is we hope to continue to grow revenues. We've had great revenue growth since Chamonix opened, and we think that will continue as it matures. On the expense side, we found a lot of low-hanging fruit. I mean, those of you who have known me, I do not--I'm not quick to make management changes. I tend to back the people and try to help them evolve. In this case, it became obvious we had to make some wholesale changes, and we have.

There are some things like they were operating a pop-up buffet facility that was really supposed to be just for the opening because we did not have 980 Prime done yet, but they ran it throughout the year, and we lost like $1,500,000 on it, which is ridiculous. We have a deal with a laundry company where we pay by the pound, but there is supposed to be a true-up done each month or quarter. I think it is each quarter. Nobody had done the true-up, and that was several hundred thousand dollars. Lewis mentioned a few other things. Having a fresh set of eyes, we also hired an outside consultant. We enlisted help from our GM in Chicago, and we descended on the property. Frankly, I fired three people in about 10 minutes, and we took over, and we found all sorts of shit.

We had chefs selling boxes of crab meat to other restaurants and so on. We have cleaned it up kind of ruthlessly, and we will continue to find ways to reduce costs and improve revenues. I think it will be profitable in the second quarter. I think it'll be more profitable in the third quarter and show a profit for the year and grow from there. You know, people forget. I mean, I'm old, and I was part of the team that opened Bellagio and Treasure Island and Monte Carlo, and there were some birthing pains with each of those too. Twenty-five years later, they're all known to be solid successes. That will be true here too. It's a great property and a great market, and it will be an upward trend from here.

Even a couple of years ago, at about this time, we were talking about how difficult it was to hire people in Chicago and get them through the gaming licensing. We had our challenges there too. Once we got it under control, it has been up every quarter since it first opened. It will be the same here. We did not touch much on it because I knew the question would come up, but I will go ahead and answer the question. You know, we are right now working on the design very diligently for building the permanent American Place. We have a top architectural firm by the name of WATG. We have some of their most talented people working on this. They did all the work for the Venetian and Palazzo and a number of other places in town.

It's probably the largest architectural firm that only deals with hospitality. They do hotels all over the world, but a number of casinos. Frankly, we went to town studying Durango Station. In fact, I spent so much time in the back of the house, they started to think I worked there. They did a lot of smart things there. We've kind of learned from that and incorporated that into the design for the permanent American Place. We hope to break ground. We intend to break ground in the second half of this year, maybe even late in the third quarter. Along those lines, we enlisted Richardson & Company. Bill Richardson and I were—I was at Mirage Resorts. He was one of the major owners of a company called Goldstrike Inc.

We did the joint venture for what is today Park MGM, which may be the most successful, in terms of ROI, most successful resort on the entire Las Vegas Strip. It has been very, very successful. He was the guy who built it. He had a construction background, and then he became, when Circus Circus acquired Goldstrike, he became one of the bigger shareholders of Circus Circus and had a construction background. He built the expansion on Luxor, built Mandalay Bay. When Mandalay Bay got sold to MGM, he started a construction company that, by the way, built Durango Station, built Flamingo Fontainebleau, built the West addition of the Convention Center, built the Sphere, maybe the largest construction company in Las Vegas today. His partner in that is Yvette Landau. Many of you may know Ellis Landau. That is his wife. She is a very competent lawyer.

They qualify as a WBE. We have enlisted them to be like a project manager for us in Chicago. It is important that the contractor be local because they will know the trades and the subs and all that. There is not a lot being built in Las Vegas these days. Bill had some extra expertise that he is going to give to us. Obviously, we pay for it to help make sure that the project runs smoothly. We are lining up the construction expertise to make it a very smooth project. We will need to raise the money for it sometime in the next year. I mean, we can do the early stages out of cash flow. We are watching the bond market pretty carefully because that is where we intend to go. Everything was doing great until we started talking about tariffs, and then all hell broke loose.

Hopefully, we will get back to a more normal market. We have quite a bit of time to figure that out and multiple ways to finance it. That is where we are going with that.

Lewis Fanger (President, CFO, Treasurer and Board Member)

You got more than what you bargained for there, Jordan, but I'm going to add a little bit to Dan. If you look at the bond markets, I will say this: the bond markets today versus what you saw back in early April after the tariffs were announced, that market has really come roaring back in a big way. It's really right now open for bigger companies, not quite us yet. If you look at just kind of spreads in general and recent deals that have priced and go through the list of things, that's off to a promising start. Look, I don't know when the market will be open for us. The reality is, as Dan said, we can go well into 2026 before we need to be out in the debt market. We don't need to be on those debt markets today.

I think the reality is, I think the markets are going to open up sooner than what I would have told you three weeks ago.

Dan Lee (CEO)

I will also tell you that technically we do not have a date by which we must open the permanent. The way the law is written in Illinois, there is an outside date at which we can operate the temporary. That outside date is April of 2027. We would like to open the permanent by not April. We would like to open the permanent by August of 2027 because we have 600 employees, and we want to transition them very smoothly over. We probably spent $5 million or $10 million hiring and training those employees. If we ended up opening, let's say, in October 2027, we'd end up paying a bunch of employees for not working. If we were a bigger delay than that, you might be faced with laying people off and trying to hire them back later, which we'd rather not do.

Now, I think if we had to, we could go to the legislature and get the law changed. We already did that once because of the Potawatomi lawsuit. We pay over $20 million a year of gaming taxes, and of course, we employ a lot of people. Nobody wants us to have a gap between the temporary and the permanent. As long as we work diligently, we should be able to build this inside of two years. That's about the time frame that Penn is spending to build their place in Aurora. It's about how long it took the Seminoles to build their place in Rockford. Our place is similar in size and scale to those. That's where we're going.

Back when the bond market fell apart, when tariffs were first mentioned, I started thinking, okay, what do I do if I can't get the money in the next 18 months? The answer is you go back to the legislature and get the law changed. You just run the company as is. We would actually generate more cash flow and have to borrow less so that it wouldn't be the worst thing in the world. In terms of construction price, you know, when you look at the whole budget, which is $325 million, it basically breaks into thirds. About 1/3 of that, a little less than 1/3 it, is soft costs, things like capitalized interest and design fees and that sort of thing. About 1/3 of it is actual material. That's where the price of steel comes into play.

Steel is a relatively small part of the overall price of material. I mean, there's a lot of concrete in the building, for example, and electrical wiring and stuff like that. You know, one of the things about tariffs is like, just like Apple said, they're importing iPhones now from India as many as they can. I'll bet if you live in India and you buy an iPhone, you're going to get one from China. There are all sorts of ways around this. If you don't want to pay 145% tariff out of China, those phones go to India, and then we get phones from India. Somebody goes down to Mar-a-Lago, kisses the ring, and then they decide that, oh, iPhones do not have to pay tariffs, which is what they did do. We are kind of watching this.

The price of steel is that's the one thing that clearly jumped, and it jumped as soon as they put a tariff on foreign steel. That's a relatively modest part of the project. The other third is the labor, all the electricians and carpenters and so on that it takes to actually build this. While it's a union job, so the wages are somewhat set, nevertheless, you will get better efficiency in a recession than you would normally. The subcontractors will be a little hungrier if there's less being built. If all this tumult results in a recession, we may benefit from that more in the cost of construction than it would impact us in our normal operations. You know, we operate these regional casinos. We're a cheap vacation.

When you hit a recession, people might be hesitant to come to Las Vegas. Certainly, Canadians are hesitant to come to Las Vegas. We do not get any Canadians in our places. You know, the dollar is down. It is about 10% more expensive to go to Europe now than it was four months ago. If people stay home and do domestic vacations instead of going to Europe, that would benefit us. I think we are in pretty good shape relative to the tumult that is going out there in the world. I mean, would I prefer that everything be stable? Of course I would. When you look at the choppy terrain, I think we are in pretty good shape for it. I am sorry. You answered a simple question. We gave you a 15-minute answer.

Lewis Fanger (President, CFO, Treasurer and Board Member)

My goal, Jordan, was to leave things for people to ask questions about, but Dan took it all with you.

Jordan Bender (Senior Equity Research Analyst)

I think he answered everyone's question in the process. For the interest of time, I'll leave it at that. Thanks for all the comments, guys.

Dan Lee (CEO)

Thank you, Jordan.

Operator (participant)

Your next question comes from John DeCree of CBRE. Your line is already open.

Max Marsh (Equity Research Analyst)

Hey, guys. This is Max Marsh on for John. Thanks for taking the question. Obviously, you guys just finished the sale of Stockman's, three biggest properties in a better position now. Strategically, how are you thinking about the rest of the portfolio at this time?

Dan Lee (CEO)

You got the three big properties. I sometimes refer to us as a three-legged stool, which is Mississippi, Chicago, and Colorado. The casino in Tahoe has always been on a short string. Hyatt will not do a long-term lease for something like that. We have operated it now for almost 15 years. It keeps extending. We have a good relationship with them. The owner, which is Larry Ellison, is now fixing the place up. We hope to continue there. We make good money there, and we have a good relationship with Hyatt. As they fix up the place, we think it only gets better. If you were to try to sell it, you would not get much for it because it is a short-term lease. It is a nice business for us, and we are happy to have it. The only other significant asset is the Rising Star.

Tough market. It was the first casino in the region. It made a lot of money in the early days. Since then, newer casinos have opened every direction from it. Our strategy there is to try to relocate it. There is a progressive tax rate in Indiana, and at the lowest revenue level, you pay the least gaming tax. There used to be three casinos in that level: us and two places up in Gary that were old traditional river boats as well. In the last five years, the state allowed those two to relocate. One is right off the interstate in Gary, and it is now the number one casino in the state. The other relocated to Terre Haute, where Churchill opened about a year ago, and it is doing very well as well. We went to the legislature and asked if we could relocate.

The legislature passed a bill, which has either been signed by the governor or is sitting on his desk, and we expect it to be signed, that calls for the Gaming Commission to have a study of what markets could you add casinos to that would be most beneficial to the state. I will tell you right now, I'd be astounded if the study showed anything other than the two largest cities in the state, which are Indianapolis and Fort Wayne.

Lewis Fanger (President, CFO, Treasurer and Board Member)

By the way, it was signed, Dan.

Dan Lee (CEO)

Okay, it was signed. Okay. So there's a $100,000 study by a third party that'll be taken by year-end. And I'm quite certain that study is going to say Indianapolis with 2 million people has no casino, and Fort Wayne with 600,000 people has no casino. Now, Caesars has two casinos, each of which is 30 mi outside of Indianapolis. And then the Churchill one in Terre Haute is 50 mi outside of Indianapolis. And, of course, they don't want it to be Indianapolis. But the city of Indianapolis has some historic buildings in need of renovation. They'd be interested in having it. And so that'll be an interesting thing to play out. Caesars lobbied very hard to have this not happen and ended up changing it. So it doesn't say specifically relocate.

It says what's the biggest opportunities because they're trying to figure out how to make the opportunity theirs. They first tried to kill it, and they weren't successful at that. At the end of the day, they're not going to want it in Indianapolis. I'm hoping that they will become our ally and say, okay, let's go to Fort Wayne. Frankly, if we could go to Indianapolis, that'd be very interesting. We've been dealing with New Haven, which is a suburb of Fort Wayne that's interested in this. We think it's a great market. The people in Fort Wayne to gamble have to drive like an hour. This is a big opportunity for Fort Wayne, and it would be for us, and it would be for the state. We think the study is going to show that.

There will be an argument in the next year's legislative session whether this is a new license or can it be a relocation of a license. In the politics of Indiana, a relocation of a license is not an expansion of gaming, and there are two precedents for it. We will argue that we should be allowed to relocate. Even Rising Sun is in favor of it because we told them that we would pay them twice the taxes we are paying them now. We would just pay it from the casino in Fort Wayne. We told their employees if they stick with us until the day we relocate, we will pay them one year's pay. Even our own employees are rooting for us to relocate. The economics of that new facility are strong enough that we are working on that.

The economics of relocating Rising Sun far exceed what we could sell Rising Sun for. That is our strategy there. We have the three-legged stool, we have Rising Sun, and we have Tahoe. We are pretty busy. Things are offered to us all the time to acquire. We are pretty picky because we think we have a pretty bright future just with what we have on our plate right now. Never say never. If somebody wants to sell us Seasons Palace at two times cash flow, we would look at it, of course. They are not likely to do that, though.

Max Marsh (Equity Research Analyst)

Great. Thank you for that. If I could just ask a quick follow-up here. Curious about the trajectory of the sports wagering contract business. Obviously, a couple of those fell out in January. Any expectations around either replacing those or whether the outlook for the balance of those contracts might be at risk? How are you guys thinking about that?

Dan Lee (CEO)

That business has evolved to being dominated by DraftKings and FanDuel. MGM's a strong third party. There are a few other parties in it. Thankfully, Circa's one of those. Circa has kind of a niche here in town. They have one of the larger sports books. It might be the largest sports book in town. They have a few states like Illinois where they're trying to be a niche player as well. That's by far our most important contract. We have unused skins in Indiana and Colorado. Unlikely that we'll be able to do a joint venture with anybody on anywhere close to the terms of what we used to have. We obviously look for it all the time. It's difficult.

In fact, DraftKings and FanDuel have come out this past year in different markets and tried to get online gaming approved. Even where it has to be done in conjunction with a brick and mortar, the brick and mortar have generally opposed it because it would be so dominated by a handful of firms that you do not have a large number of firms looking for licenses. For example, in Colorado, you know DraftKings and FanDuel already have their partnerships. We do not think anybody would call us up and say, "Hey, we want to get into the Colorado market. We will give you a piece of the deal." In terms of us doing it ourselves, we are pretty busy these days. Those people who have tried to compete with DraftKings and FanDuel have found it is a lot of headwinds on that.

MGM has done okay. They're big enough. There are a number of other players who have kind of folded and just sold their businesses to DraftKings and FanDuel.

Max Marsh (Equity Research Analyst)

Great. Thank you guys very much.

Operator (participant)

Your next question comes from Ryan Sigdahl of Craig-Hallum Capital Group. Your line is already open.

Ryan Sigdahl (Senior Research Analyst)

Hey, good afternoon, guys. Good to hear your Chamonix's. You expect to get to positive EBITDA in Q2 and for the year. Curious though, when you think you can get to, say, $20 million+ of EBITDA, which ultimately you need to get to to cover the cost of capital, just what you built and took on from a debt standpoint for the property.

Dan Lee (CEO)

I'm still looking at being able to do much more than $20 million. When we hired Brandon, I said, "I'm thinking of a five-year time frame. I'd like it to be well above $20 million by 2030." Does it get to $20 million this year? No. Next year, maybe not. It'll be headed that way. Three years out, we should be at $20 million. When you look at the magnitude of the property and the facilities we have, and you look at Monarch, which is about 50% bigger than us. In other words, we're 2/3 of their size. They're doing $100 million a year. If they can do $100 million a year, why can we not do $50 million? We're not going to get there overnight. With a five-year time frame, that's possible.

You know.

I mean, it might go $10 million, $20 million, $30 million, $40 million, $50 million. I mean, if you want a rough guess, you could put that out for the next five years. Okay. You know, and I said to Brandon when I hired him, I said, "The trajectory is kind of more important. I mean, I want it to be trending positively and nicely positively." That is the same thing we have going on in Chicago, where we are trending positively. You know, I think the temporary casino will make something in the mid-30 millions this year, probably in the $40 millions next year. Might hit $50 million before we open the permanent. The permanent is going to be a big jump in revenues after that. There are a number of cases now where you can look at where a permanent casino replaced a temporary casino, and the permanent did twice the revenues.

If you have a significantly better facility and recognize our permanent is about 200,000 sq ft. It's just under 200,000 sq ft. Now, that's including back of house and everything. And that's roughly twice the size of the temporary. So just by size, we can do better revenue. But also, it's a higher quality. It's a much nicer place. You know, I recently went down and looked at the Treasure Chest casino that Boyd opened in Jefferson Parish. It's a suburb of New Orleans. Typical of Boyd, like they are so good at making the buffalo jump off a nickel. I mean, you go in and you look up at the ceiling, and they have a grid in there for acoustic tiles. They didn't spend $10 a tile to put the tiles in. They just have a grid. I talked to one of their supervisors.

We try not to look up. But it's doing much better than the crummy boat they operated there for 20 years. And it's the same market. It's the same people. It's the same location. And it's doing twice the revenues. Frankly, if they'd spent a little bit more and made it a little bit nicer, they might be doing three times the revenues of what they were doing in the old one. When you pull up to it, it looks like they hired an architect from Costco. But they're doing very well, is my point. And I think if they had spent a little bit extra, they'd be doing even better. But that's not Boyd's DNA. They're a very successful company, and they are in part successful by what they don't spend. And they did that at Treasure Chest. But you have Treasure Chest.

You have the Seminole Casino in Rockford, which is doing very, very well since they opened their permanent back at the end of August. You have a couple of places in Virginia now where permanents have replaced temporaries. If you go to our temp, you know, if you just look at the numbers, our temporary looks great. If you actually go and look at it, if you drive by during the day, it looks like where the Department of Motor Vehicles stores salt. It's a big sprung structure, has zero curb appeal. At night, we have these giant projectors that try to project stuff on it to make it look interesting. Once you go inside, it's pretty nice. We did spend the money to make it look like a real casino on the inside.

On the outside, I go there with Uber drivers all the time, and they pull up this, "What the heck is this?" I said, "It's a casino." Really? You know our permanent will have curb appeal, and that might make a big difference.

Ryan Sigdahl (Senior Research Analyst)

Very good. Just moving on to a lot of personnel changes, general managers. Curious, I guess, what gives you confidence? Because the previous ones also had good resumes, good backgrounds, good experience, et cetera, et cetera, et cetera. I guess, what gives you confidence in the new leadership team at Silver Slipper and at Chamonix?

Dan Lee (CEO)

Sure. John Ferrucci had run the Silver Slipper very well for many, many years. He was in his 70s. It was time to retire. He earned a good retirement. He's still a consultant to us for a year. Angie, he was Angie's mentor. She worked in the accounting department at the Silver Slipper. She grew up in East Germany. It's a very interesting background. She was a foreign student over here and ended up living here. When we promoted her to Finance Director in Rising Sun, she did a good job. When the GM left, we made her the GM. She pretty quickly doubled the income of the place in a tough market, despite new competitors.

When John opted to retire, I thought, "Well, she's the obvious person to bring down there." A lot of times, just a fresh set of eyes finds things. I mean, like we deal a lot with Hyatt. Hyatt seems to have a strategy of moving their GMs every three years or so, which creates a lot of tumult. It gives you a fresh set of eyes all the time. It's actually not a crazy strategy. I think just having that fresh set of eyes will improve the stuff there. We had to replace Angie in Cincinnati. Jeff Mitch, he used to work with Lewis and I at Pinnacle. We knew he was a very competent guy. His wife is from the town next to Rising Sun. Her daughters are adults now and just had their first grandchildren.

Jeff had sent me an email a long time ago that he was working for the Big Indian Tribe down in Tucson, Arizona. He was commuting from Cincinnati because his wife wanted to be with her daughters and grandchildren. If he ever had an opportunity to go back, I was like, "Wow, this is an opportunity," because he's a very qualified guy, overqualified for Rising Sun, but the perfect guy to build out Fort Wayne. I reached out for him. His email had sat in my little file you put that I might need this someday. When we moved Angie down, I reached out for Jeff. That's how that worked. In Colorado, I realized after we opened that the guy we had running it was just in over his head. There was just one thing after another.

He was deeply in over his head. Six, eight months ago, I enlisted a headhunter. We interviewed all sorts of people. The more we got into it, the more in over their heads we found they were. We made wholesale changes. I'm confident it will do better. In fact, the guy we hired, this consultant who went up there for a week kind of undercover, he stayed there as if he was a gambler. He looked around. This is the guy who built up the San Manuel Tribe Casino in California. It's one of the most successful casinos in the country. He now has a consulting practice mostly for Indian tribes and helping to figure out stuff like this. He spent a week there undercover just taking notes.

I called the property and said, "I'm sending this consultant in to help us figure out how to get it better." He spent a week dealing with the management team trying to learn what we could from him. I fired the management team. He helped us transition and helped us interview replacement people. He said, "Look, this property has all sorts of opportunity. It's just mismanaged." It's kind of funny. I've given the example a few times where when we built Bellagio, had we taken the management team from the Golden Nugget Laughlin and put them into Bellagio, they would have failed. In effect, that's kind of what we did. We had the management team from the old Bronco Billy's stepping into Chamonix. They didn't know what to do.

It's funny when I give that example, those in the know, the management team at the Golden Nugget Laughlin at the time was headed by Bill Hornbuckle. He ended up leaving and joining MGM and, of course, working his way up in MGM and learned a lot. Today, he's a very competent CEO of MGM. When I give that example, had we taken Bill Hornbuckle and put him in charge of Bellagio at that time, even Bill, as competent as he is, probably would have failed because he needed the experience that he gained in the last 20 years. You know the fault is on me. The team we had had never run a place like Chamonix, never opened a place like Chamonix. You know, for example, they should have had a sales and marketing team two years ago.

When Marriott builds a new hotel, they hire a sales and marketing team when they break ground. We never really did. All of a sudden, we're open, and we have very little business on the books for this great meeting room space we have. Once you finally realize it, it's like, "Okay, we have to do a restart." It's almost like turning your computer off and turning it back on. That's what we've done.

Ryan Sigdahl (Senior Research Analyst)

Very good. Thanks, guys. Good luck.

Dan Lee (CEO)

Thanks.

Operator (participant)

Your next question comes from Chad Beynon of Macquarie. Your line is already open.

Sam Shah (Analyst)

Hey, guys. This is Sam on for Chad. Thanks for taking our question. Maybe just one from us. With margins at American Place approaching 30% almost, how should we think about that for the rest of the year, just given what you're seeing from current trends?

Dan Lee (CEO)

It's kind of funny. We've been playing with that a little bit. I think you know the margins will stay roughly in that level. The permanent will be higher. Because the permanent, first off, just economies of scale. Doing more revenues per sq ft, which the permanent will probably do, gets you higher margins. Offsetting that a little bit is as you go up in revenues, the tax rate gets higher in Illinois. The other thing is we're a little bit encumbered. That 30% margin is despite over $100,000 a month we pay to rent the kitchens, which are modular kitchens attached to the building. The offices are also in rented construction trailers. When we go to the permanent, we save a couple million a year in rent because parts of the temporary, big parts of the temporary facility, are leased modular stuff.

In the permanent, it will not be. It will be part of the building costs. I think the margins on the permanent will be in the mid-30%, possibly even a little above the mid-30%. That is not unusual for a high-grossing regional casino. I think you will not get much above 30% until we get the permanent open. I think you will get a nice lift when we get the permanent.

Lewis Fanger (President, CFO, Treasurer and Board Member)

We'll also have a better customer in the permanent building, which will also flow down pretty nicely to the bottom line.

Dan Lee (CEO)

Yeah.

Sam Shah (Analyst)

Great. Thanks. Thanks for the color. Have a good second quarter.

Dan Lee (CEO)

Thank you.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Probably out of time. I'm looking at the clock. Maybe one, possibly two more questions.

Dan Lee (CEO)

If we stay here long enough, nobody can go listen to Golden Gaming.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Oh, they're on it now, Dan, We actually do still have a lot of people. Let's take one. We do not have as much to talk about anyway. We are more fun. Let's take maybe one or two more. We will see.

Operator (participant)

Okay. Thank you. Your next question comes from Ricardo Chinchilla of Deutsche Bank. Your line is already open.

Ricardo Chinchilla (Research Analyst)

Hey, guys. Thank you so much for squeezing me in. I was just going to ask one quick one, given that you guys have given us so much great color. Since Liberation Day, have you guys seen any particular change in visitation frequency or spend per trip from some of your customers? Is there any difference between the high end or the low end of the database that it's worth noting? Thank you.

Dan Lee (CEO)

Okay. Actually, before I say that, I gave a little dig there at Golden Gaming. Blake Sartini is a neighbor of mine. He's a really good guy. That is a little unfair. They're a good company. Going back on your question of Liberation, not really. I'm not sure we would. You know, just to walk you through a few things. Like at the Silver Slipper, which is a market where nobody new has been added to the market or anything, although there is a little positive thing. Churchill Downs, through the fairgrounds, operates a group of about 15 off-track betting parlors that, under Louisiana law for a while now, they've had video poker machines. I think it's 50 machines, if I recall. Then they got a little law through that allowed them to have historical racing machines, which is basically a slot machine.

For a while now, they've been operating slot machines in these little places that are scattered all over New Orleans. There's a lawsuit that came out of Slidell that went all the way to the Supreme Court. Those machines have now been ruled not legal. It's an expansion of gaming. That would take a statewide referendum. They didn't. You couldn't just do it in the legislature. They have to remove their slot machines. That's not a huge plus for us, but it is a plus. It's not a huge negative for Churchill. They're a big company. That's indicative of the little political fights that happen sometimes in the industry. You know our results were down a little bit. The revenues were down a little. Our profit was up a lot.

You kind of wonder, is that a recession? I think it was really a very rainy Mardi Gras. Mardi Gras is one of our busiest weekends. This year kind of got rained out. I do not think it was a recession. I think it was rainy. In Colorado, everything is new. Hard to tell. Chicago, still everything is new and growing. Hard to tell.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Both of those markets are so unsaturated that even if they weren't new, I don't know that we'd ever feel it.

Yeah, right. Exactly. At Tahoe, it was not a very strong winter. Larry Ellison tore down part of the building to replace it. It has much less banquet space. He tore down the highest-end suites. You know, we are still doing okay. You know, it is kind of like, was that a recession? Or was that the fact that he tore down part of the hotel to rebuild? I think the second thing is more important than the first thing. That is a good question for somebody like Penn National or Boyd, who has dozens of properties all over the country. I am not sure we would know. I guess a lot of this tariff stuff affects international stuff. Like Canadians do not know. There are all these news stories about how bookings of flights coming to the U.S. for this summer are down a lot.

Dan Lee (CEO)

You know if somebody from Europe wanders into one of our casinos, our jaws drop open. So I do not think that impacts us at all.

Ricardo Chinchilla (Research Analyst)

Got it. If I may have a mulligan on that question then, could you quickly give us some capital expectations and liquidity for the second half of the year? Thank you.

Dan Lee (CEO)

I'm sorry, the first part of that?

Lewis Fanger (President, CFO, Treasurer and Board Member)

The second part was liquidity.

Dan Lee (CEO)

Yeah. Our liquidity is in good shape. Now, as you start spending money on the permanent American Place out of cash flow, then your surplus cash does not grow. Right? We are watching it pretty carefully. Eventually, somewhere in the next year, we expect to refinance. You know our bonds mature in 2028. Nobody ever waits until the end. You would refinance in 2027 anyway. Refinancing, they are callable now at 102.

Lewis Fanger (President, CFO, Treasurer and Board Member)

102 and change. Yeah.

Dan Lee (CEO)

Yeah. So you know it's the normal time frame where you would refinance the bonds in the foreseeable future. We think the most economical way to finance the permanent American Place is to refinance our debt with a new debt structure, which might include a bigger credit facility so we don't have to carry as much negative carry on the debt while we build, and a new bond deal. You refinance the existing debt. As part of that, you raise the money to build the permanent American Place. That's our expected strategy. There are other means for us to do it. We think that even in a bond market that might be a little choppy, we still think that's the most efficient way to do it. You have to remember, even these bonds won't be outstanding all that long.

You get the permanent American Place open. We will jump to a better tier of credit and can probably refinance them yet again. When you model everything out and you start looking at it, whether you pay 9% or 8% on the debt does not move the needle all that much. That is probably not out there all that long. We will get the debt refinanced at the right time. If we did not build American Place, we would start building up cash pretty fast. Of course, we intend to build it. We do pay pretty close attention to our liquidity because up until, you know, when we say we can start construction without redoing the bonds, as we do that, we have to make sure that as construction accelerates, we are watching carefully our liquidity.

Lewis Fanger (President, CFO, Treasurer and Board Member)

I'm going to take a different stab at it. Maybe that'll help you too. If you think about the way our cash flows typically go, especially Colorado, you know a lot of our business tends to be second, third quarter seasonal. Over the next two quarters, you should see an outsized effect from EBITDA for what it's worth. The spend on the American Place facility from here is extremely modest for what it's worth. Maintenance CapEx, historically for us, has been in the ballpark of $3 million a year. You know some years is as high as $5 million. It's, again, not a huge number. From a cash tax point of view, you know we ran some very preliminary analysis with our outside tax consultants the other day.

We're not looking to pay cash taxes because of all the stuff we've built and the depreciation shields that we get from that. We're not expecting to pay cash taxes through at least 2029. There's some chatter on some tax laws getting changed and potentially some retro tax effects as well. If some of those things come into play, then it could be well into 2030 before we're paying cash taxes. I think when you take all of that in its totality, we're just fine. I mean, you know we always talk about how we can go well into 2026 before we need to be out in financing for the permanent. A big part of it is because, quite frankly, you just don't spend a lot of money here in the near term on the permanent.

You don't spend a lot of money leveling out the land or pouring foundations.

Dan Lee (CEO)

The spending right now is on architects and civil engineers and so on. That is probably in the next three months less than $1 million. That will grow in the fall. At some point, you pull a permit and you start the foundation. Initially, that is a guy driving a bulldozer. It is not a lot of people. It is late in the construction project that the spending per month gets high. Most of the money to build the permanent American Place will actually be spent in 2027, second half of 2026. Some of it is even post-opening because you paid those bills in arrears. Our need for outside capital is really your way.

Lewis Fanger (President, CFO, Treasurer and Board Member)

I think the only other thing to kind of reinforce there is Silver Slipper is on the up tick now. Colorado is certainly on the up tick. It was a cash drain over the last several years and is on the verge of becoming a cash generator, a positive for the business. That's obviously extremely helpful. You have American Place, which continues to grow as well. And not insignificantly, by the way. I think when you take all of that in its totality, you know we're mindful of the capital markets and where they are. The reality is I did not need to be in the market a month ago. I don't need to be in the market tomorrow. You know we can sit tight for a little bit and prepare for the right day.

Ricardo Chinchilla (Research Analyst)

I'm going to go to the caller. Thank you so much.

Dan Lee (CEO)

You mentioned it briefly, but I'll underline it again. Chicago's not very seasonal. There's a little bit of seasonality, but not much. Silver Slipper, same thing, not very seasonal. Rising Sun, Colorado, and Tahoe are all seasonal, favoring the summer. It's almost like all the casinos in Atlantic City, they make at least half their earnings for the year they make in July and August. In those three markets, it's similar. We make most of our money in the summer, disproportionate money in the summer.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Hey, Dan, we've got two minutes. If you can take one last question really quick, let's do it.

Dan Lee (CEO)

Okay.

Operator (participant)

Okay. We can take the last question. It's for Dwayne Moyers of SMH Capital Advisors. Your line is already open.

Dwayne Moyers (Analyst)

Yeah. Thank you for all the color on everything. If the bond market doesn't open back up, kind of what are your opportunities? Is there joint ventures available? You know, besides going back to the legislature and how likely is that to get approved? I know that they don't want any downtime and they're collecting taxes off of it.

Dan Lee (CEO)

OK. First off, I think it's highly likely to be approved because they don't want us to lay off 600 people and start paying gaming taxes. The last time we had to do that was the Pottawattamie lawsuit. It was readily approved. If we went now and said, look, the tumult in the bond market is causing us to have an additional delay, we'd like to have additional time, I believe we would get it. I don't think we need to do that. You have to remember, in the bond market, and some of you are in the bond market, every day they get interest payments. The cash starts to build up. At some point, the floodgates break. They have to go put that money to work. We're waiting for that to happen. It will happen.

The windows open and close pretty regularly in the bond market. If it did not, certainly a joint venture would be a possibility. Do not need to go there. I think that is pretty expensive. We could do a REIT, like Bally's is doing downtown. We get phone calls from REIT guys all the time. We are one of the few casino companies that still owns most of our real estate, virtually all of our real estate. We have never gone the REIT route. We could do Waukegan as a REIT. Or we could REIT our other projects and do a sale leaseback and raise cash that way. That ultimately is very expensive capital because you cannot unwind it. It goes on forever. I would rather not go that route. We could. You just suck it up and pay a little higher interest rate.

As I said a minute ago, you know it's not going to be outstanding for all that long. There is some interest rate where you get the bonds done, even in a rough market. We don't have our backs to the wall. We have about a year to figure this out. I'm confident the bond market will return to normal somewhere in the next year. The one thing that I'm certain we will not do is issue equity or anything equity-related at a price anywhere close to where our stock is now. That would be the most expensive capital we could do. That is not going to be done.

Lewis Fanger (President, CFO, Treasurer and Board Member)

I think, too, what you can't forget is if you go back to COVID, you had a debt market that shut down for all the reasons that you know. You didn't have a functioning debt market. If you fast forward to today, like I mentioned at the start of the call, you do have a debt market that's starting to function behind the scenes. It was, you know, look, if we went out at the end of March, the market was extremely functioning. We could have gone out and gotten a very good, well-priced debt deal done. We weren't ready back then for what it's worth.

Dan Lee (CEO)

Yeah. It was a price day.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Yeah. Yeah. The world kind of unwound kind of overnight. Just do not forget that as quickly as it all unwound, it can wind back into a positive light. It has been doing that in real time over recent weeks. I would just kind of reinforce that for you.

Dan Lee (CEO)

I want to point out one other thing. Back when we were competing for this license against some companies that were bigger than us, to prove that we could finance it, we arranged a backup financing with a large private equity firm. That agreement requires us to keep it anonymous. It is a very large firm. It is expensive. We would have to tweak some of the covenants in our existing debt. It is still there. We do have a backup financing facility that we could turn to. I would much rather do that than anything related to equity or even the REIT thing.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Yeah.

Dan Lee (CEO)

We have a number of avenues we can go to to get this done.

Lewis Fanger (President, CFO, Treasurer and Board Member)

I just want to, look, the likelihood that the debt markets are completely shut down for the next year for smaller companies, that's extremely unlikely for what it's worth.

Dan Lee (CEO)

We have lots of alternatives. One of the alternatives is just stall. Worst case is, listen, I would not want to do this. I'm fighting very hard not to do it. If you ended up closing the temporary and opening the permanent a year later, financially, our company would be fine. Now, I'd rather not do that because of the 600 employees and so on. If that's what the position you were in and the legislature did not give you the reprieve, financially, our company would be fine.

Dwayne Moyers (Analyst)

You don't not lose the license if you don't open the permanent.

Dan Lee (CEO)

Exactly. That's my point. There is no deadline by which we have to open the permanent. There is only a deadline on which we operate the temporary. We are rushing, not rushing. We are diligently working towards opening the permanent at the time that the temporary has to be closed so we can transition the employees over smoothly. That's in our best interest. It's also in the best interest of the state, which is why I'm confident that if we needed a little gap in there where we could operate the temporary longer, I think we'd get it. I mean, this is a pretty rational state. The governor has been behind the scenes very supportive of this because we do pay a lot of taxes. We're doing our best to be a good licensee. I think the Gaming Commission recognizes that.

As long as we are operating diligently to fulfill all the promises that we have made to the state, they'll work with us.

Dwayne Moyers (Analyst)

OK. OK. That clears a lot. OK. Thank you very much.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Yeah. Thank you.

Dan Lee (CEO)

All right. Thank you, everybody. We look forward to chatting another quarter, Dan.

Lewis Fanger (President, CFO, Treasurer and Board Member)

Chatting another quarter.

Dan Lee (CEO)

Thank you.

Operator (participant)

Thank you, ladies and gentlemen. This concludes.