Full House Resorts - Earnings Call - Q2 2025

Executive Summary

• Q2 revenue of $73.9M rose 0.6% y/y but fell 1.5% q/q; diluted EPS was $(0.29), and Adjusted EBITDA was $11.1M as American Place set record net revenue while Chamonix’s full run-rate costs weighed on consolidated profitability.
• Results missed S&P Global consensus: revenue $73.9M vs $77.9M*, Adjusted EBITDA $11.1M vs $13.7M*, and EPS $(0.29) vs $(0.20)*, driven by continued Chamonix ramp costs and lighter contracted sports wagering versus prior-year acceleration. Values retrieved from S&P Global.
• Management highlighted: record quarter at American Place ($30.7M revenue), Chamonix sequential cost cuts (~$1.2M in Q2 vs Q1) with ~$4–5M annualized savings identified, and marketing revamp now underway in Q3.
• Liquidity remained adequate: $32.1M cash, $450M senior secured notes due 2028 (callable), and $25M drawn on the revolver; financing options for the permanent American Place include bonds, alternatives (REIT/private), and timing flexibility.
• Near-term stock catalysts: continued outperformance at American Place (poker room addition, database growth), evidence of sustained EBITDA positivity at Chamonix into 2H25, and visibility on permanent Waukegan financing progress.

What Went Well and What Went Wrong

What Went Well

• American Place delivered record net revenue ($30.7M, +12.7% y/y) and record operating profit; management expects 2025 American Place EBITDA growth “~20%” and noted July growth “~30%” y/y with a poker room ready pending regulatory green light.
• Chamonix costs fell by ~$1.2M sequentially (Q2 vs Q1) and ~$4M in annualized savings have been identified; management indicated July was EBITDA-positive and expects continued improvement as marketing revamps scale in Q3.
• Cash/liquidity remained solid with $32.1M cash; operator of the Indiana sports skin reversed its exit and prepaid through 2031 for $1.5M, providing cash flow visibility in the contracted sports segment.

What Went Wrong

• Consolidated results missed Street: revenue ($73.9M vs $77.9M*), Adjusted EBITDA ($11.1M vs $13.7M*), and EPS ($(0.29) vs $(0.20)*) as Chamonix’s ramp-phase inefficiencies outweighed American Place strength. Values retrieved from S&P Global.
• West segment Adjusted Segment EBITDA was $(1.1)M vs $0.9M LY, reflecting Chamonix’s early-stage inefficiencies; contracted sports wagering revenue/EBITDA declined y/y on prior-year accelerated revenue that did not repeat.
• Silver Slipper revenue declined y/y amid reduced comping and a temporary parking garage closure over a key weekend, though management said EBITDA would have been flat excluding a non-cash item.

Transcript

Speaker 3

Meetings, and welcome to the Full House Resorts' second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Lewis Fanger, President of Full House Resorts. You may begin.

Speaker 4

Go ahead and kick it off, Adam. Sorry. Thank you. Good afternoon, everyone. Welcome to our second 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 captions "Forward-Looking Statements for the Discussions of Risk that May Affect Our Results." Also, we make reference to non-GAAP measures such as adjusted EBITDA. For reconciliation of those measures, please see our website as well as various press releases that we issue. Lastly, we also are broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release as well as our SEC filings. With that, back to you, Lewis.

Speaker 1

Good afternoon, everyone. I know it's a busy day for many of you today, so we'll keep our prepared remarks on the brief side, and then we'll head quickly into questions. We're actually sitting here at American Place today, so we'll start there. We're very pleased with how our temporary American Place facility has ramped up. In the second quarter, we had record revenue. It was $30.7 million, up about 13%. We also had record adjusted property EBITDA of $8.9 million, which was up 17%. I don't think the July gaming figures are out quite yet in Illinois, but rest assured we had another very solid month of growth in the month of July. That growth is not by accident. Part of our continued growth is due to customer awareness, which continues to improve by the day.

After all, we are still a relatively new casino, and building awareness is a natural part of any casino ramp. One encouraging sign is the number of new signups into our database, which recently crossed 107,000 people. New signups into the database continue at the same pace that we saw several quarters ago, which is a great sign for us. We also continue to grow because we continue to fine-tune the amenities that we have here at American Place. As an example, one of our restaurants that we opened with originally had way too many seats, so we put up some curtains, turned half of it into a comedy club, started bringing in comedians like Kevin Nealon, and it's helped increase our visibility as well as our overall operations. Similarly, we've had customer inquiries for the longest time about why we don't have a poker room.

Fast forward to today when we took an underperforming corner of the casino and transformed it into a small poker room. We just concluded an operations play day for the new poker room, which went well, and we're prepared to open it as soon as we get the green light from regulators. If you think about EBITDA growth at American Place, we earned a little over $29 million in all of 2024. For 2025, we are expecting to have something like 20% growth for the full year. Switching over to Chamonix. There are three major points that I want to make about Chamonix. First, our own gaming revenue continues to grow, and we have done that while having negligible impact on gaming revenues for the rest of the city. That's a very important point because it tells you that our gaming market continues to be undersaturated.

Otherwise, our competitors as a whole would be down 20% or 30% or some big number, but they're not. What that in turn should tell you is that our gaming revenues at Chamonix are nowhere near done growing. This is a market that has been starving for high-quality gaming product. We are the first and only high-quality product in Cripple Creek, and we need to build awareness, which takes time. It is happening in real time, and as awareness continues to grow, we will be the beneficiary. Second, at this point, our cost structure is pretty much fully baked. That means as those revenues continue to grow, we will see meaningful flow-through down to EBITDA. Third, although preliminary, given that we haven't closed the books yet, it does appear that we will be EBITDA positive in July at Chamonix. With that said, let's talk specifically about Chamonix's second quarter.

Very late in the first quarter, we hired a new General Manager followed by a new Chief Marketing Officer halfway into the current second quarter. Given the long lead time for the team to analyze the marketing database and to send out marketing mailers, there wasn't much impact that our new team could make here in the second quarter. We are seeing their effects in the third quarter with gaming revenue continuing to grow in July. From a cost perspective, though, our new GM could and did have an immediate effect. If you compare sequential quarters, so comparing the second quarter of 2025 to the first quarter of 2025, what you'll see is revenue was virtually flat at $11.6 million. If you look at operating expenses, you'll see massive improvement. Operating expenses were $1.2 million lower versus the first quarter of 2025, implying nearly $5 million in annual cost synergies.

It's made up of a collection of small things that don't impact the customer experience, like new labor controls to improve scheduling and limit unnecessary overtime. We don't think we're done with those cost savings yet. Perhaps more importantly, though, we are not yet done growing revenues. Those two items in concert are what will propel Chamonix to the profitability levels that we believe it can achieve. Our other properties are less important than the two that I just mentioned, but they're still important and they are holding their own. Silver Slipper is the lion's share of the remaining properties. Revenue there was down $1.6 million as we reined in some overcomping levels. Adjusted property EBITDA would have been flat except for a one-time non-cash accounting item. We also had a parking garage issue that briefly closed our garage heading into a key holiday weekend.

Stockman's Casino was sold on April 1, so that dropped out of our consolidated financials in this year's second quarter. We also have a new General Manager at Grand Lodge Casino up in Lake Tahoe. He came to us from a large Native American casino near Sacramento. His work experience has been focused on player development and casino operations, and we think he's going to be a great addition up there. Maybe a quick comment on the potential for us to refinance our existing debt, and then I'll turn it over to Dan. We do continue to believe that the debt markets are the appropriate place for our financing of the permanent American Place facility. Accordingly, we, like probably many of you, watch the debt markets extremely closely. The debt markets hit a temporary blip when the tariff noise happened in April.

Since then, we've been pleased to watch the high-yield markets rebound somewhat swiftly. The high-yield markets have become increasingly accommodative, though obviously we have not yet publicly launched a deal. That's all I had, Dan. You want to take some cleanup there?

Speaker 4

Launch a deal publicly or privately.

Speaker 1

Very true. Very true.

Speaker 4

We keep watching for an opportunity, and I think that will come. As a practical matter, we're allowed to operate the temporary casino here at American Place until August of 2027. As long as we get underway with construction sometime this year, we can make that deadline. I think as a practical matter if the bond market didn't cooperate and we had to delay that, we can probably get an extension of the period of time to operate the temporary. After all, we pay about $25 million a year in tax revenue and employ over 500 people. We had to do that before with the Potawatomi lawsuit. I'm confident we could do it again. The first choice is for the bond market to cooperate and allow us to get the financing done and get going with construction. That would be best for all worlds.

The high-yield market tends to have windows that open and close. At the moment, it's open somewhat of a crack, a little more than a crack.

Speaker 1

A lot more than a crack, actually.

Speaker 4

It's kind of the summer doldrums, so we're looking for an opportunity. If we don't get it done, it's not the end of the world. We'll just be a little bit later. I think Lewis did a pretty good job on that, so I'm happy to go to questions. I think you mentioned July being strong. You did mention we expect to be up about 20% this year at American Place. July alone, I think, is probably up about 30%. We're doing pretty well. In Colorado, you mentioned that it's cash flow positive in July. Pretty clear to probably be cash flow positive for the third quarter. The goal is to keep it cash flow positive thereafter, although it obviously gets more challenging as you go into the off season.

I think with the changes we've made, management changes, at that property, it's a little different than American Place because it has a hotel and American Place doesn't. The hotel fills on weekends, but it doesn't fill during the week. In fact, sometimes during the week, the occupancy gets pretty low. We end up losing money operating all these amenities in a hotel when the occupancy is low. The normal fix to that is to have a sales force that works for years in advance and helps fill it midweek with meetings and conventions and so on. Quite honestly, we've just hired that sales force. We had a salesperson who, with hindsight, was pretty ineffective. We're hiring people now. There's a lead time on that. We'll eventually get there, just like almost any casino hotel, filled midweek with meetings and groups and conventions. The weekends are busy with gamblers.

Speaker 1

That sales job, though, did get a lot easier. It's not easy to try and sell space or rooms before you ever open, before people can see what you've built. I will say that at this point, it did get a lot easier.

Speaker 4

Frankly, the icon I always look at is Monarch, who does very well on Blackhawk, which is a very similar market. They do a very good job, and they have a nice property. I think our casino itself is actually nicer than theirs. I think our hotel is pretty equivalent to theirs. They're bigger than us, but we're 60% their size. They're a public company. They only have two casinos, that one and the one in Reno. They don't break it out, but the one in Reno has been around for a long time, so you can look back and see approximately what they make in Reno. The bottom line is they make somewhere north of $100 million a year in Blackhawk. It's like, wow, we're two-thirds their size. We're eventually going to be pretty profitable.

In terms of meeting room space, we actually have far better meeting room space than they do. They're in a very constrained site. They don't have much meeting room space. They really don't have a venue to have entertainment. We do. I think we will do much better, but we've had some growing pains out of the box, and we're fixing that. That's it. The Silver Slipper Casino and Hotel is doing well in a lot of ways, but Lewis mentioned the parking garage. We had a ramp in the parking garage that had developed a structural problem, and we had to close the parking garage through a key weekend while we fixed it. Most of the parking at that property is in the parking garage, so we were scrambling a bit to have valet parkers and everything.

We got through the weekend fine, and otherwise, the property's doing pretty well. In Tahoe, we're off a little bit. The Tahoe property, we're in the main tower on one side of the street, and there was a bunch of meeting room space, a restaurant, and some high-end suites that were along the beach on the other side. The hotel was bought by Larry Ellison, who is in the process of upgrading the hotel significantly. One of the first things he did was tear down the stuff all along the lake, and it's being replaced with much nicer stuff. That stuff won't be completed for another almost two years. In the meantime, there's a lot less wedding business, meeting business, less high-end suites at the property, and that has an impact on the casino. Given that, we're actually doing pretty well.

I think when it's all done, Ellison Group is going to make it into one of the leading resort hotels in the whole country, and we hope to be part of that. We're on kind of a short-term lease there, but it's been renewed many times. In the past, we've actually operated that casino for about 12 or 13 years, and we hope to continue to do so as Mr. Ellison improves the property. We continue to work on the possibility of relocating the license in Indiana. As we mentioned, I think on the last call, the state legislature approved a bill that funded a study commission that's being undertaken now by the Casino Control Commission to determine the benefits to the state from legalizing a new license or allowing one to move. We would be the logical one to move.

It will determine where it might be best to move it and what the benefits to the state would be. We're pretty confident that that study will show that there would be significant benefits, and we'll see where it goes from there.

Speaker 1

Let's go into some Q&A.

Speaker 3

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we pull for questions. Our first question comes from the line of Jordan Bender from Citizens. You may begin with your question.

Speaker 2

Hey, this is Eric Ross. I'm on for Jordan. Thanks for taking our questions. I was wondering, what are some of the early factors we should be looking at to determine success in an earnings ramp at the property in Colorado?

Speaker 4

We're already started by having the expense structure reduced, and some of that will be easy, just not really easy, but putting constraints on overtime. We actually changed the pay week so that when we figure out that if you had the pay week ending on, say, a Sunday, the time where all of a sudden you need to pull people in to staff is on a weekend. That's when you're busy. We shifted it, I believe, to Thursday. The idea is that if you pull somebody in on a Saturday or Sunday and it's the end of the pay week, you end up paying overtime. If the pay week ends on Thursday and you end up having somebody work on a Saturday or Sunday, you can tell them to take Tuesday and Wednesday off so you don't end up in overtime. It's just a simple example. We did that.

We're doing better with our laundry contract, doing better with staffing our housekeeping contract. Those are both done by outside parties, and we're saving quite a bit of money there. The cost reductions, as Lewis mentioned, are already running $5 million a year. In fact, had we put those in place a year ago, we would be profitable on a 12-month basis. The cost savings have begun and are already showing benefits. There are some expenses of some of the people we've replaced get severance pay, and that's dragging us a little, but obviously that ends at some point. Now it's getting the marketing up. Just like at American Place, where we've built a mailing list and we target it properly and we work on it, it's a slow process. It's a steady process. It is an underserved market. There's a lot of business out there to get.

We just have to go out and get it. We have actually about five people now. We have a Corporate Chief Marketing Officer. We have a Corporate Director of Advertising. Both of them are doing some of the role that we had an outside advertising agency do before. Some of their cost is actually offset by the advertising agency stuff. At the property, we have a new Director of Marketing who we hired, who has a long history of being in that role at a number of successful properties. He joined us from the Hollywood in Toledo. He used to work in Blackhawk, and he and his wife wanted to get back to Colorado, and we were happy to facilitate that. A lot of experience. We have a new Director of Sales just starting. The difference between marketing encompasses everything.

Sales is really focused on getting meetings, conventions, and so on in place. In fact, not long ago, Lewis and I were having dinner with, actually, I think it was your bankers at Citizens at Durango Station. The GM at Durango Station came by, and they only have 200 rooms. We asked how they were doing. We couldn't get a room that night. It was fully booked. He said, "Yeah, they were doing very well with the Nevada Society of Tax Accountants." I was like, "Who knew that they'd go to Durango Station for their thing?" The room rate was $800 that night because there were enough tax accountants who wanted to stay there. They had driven up the room rate. The GM at Durango Station told us he had actually removed the rooms from the casino block because the tax accountants were paying so much money.

I said, "How many people do you have in sales and marketing?" He stopped and thought for a moment, and he says, "Four plus an assistant." I said, "We're trying to hire our first one, and we have 300 rooms." Now we have a couple. That shows you where that's something, honestly, we should have done three years ago. Now we're trying to play catch-up. That will pay dividends over the long term. We're there. In the normal marketing, we're looking at stuff. There are different AI programs that we can use to improve our marketing where you go to the AI consultants who come in and say, "Okay, here we have this database." It's a very large database there because the property's operated 25 years. A lot of people in that database are dead. It's like, "Look through this database. Look who might just be a summer customer.

Look who might, we haven't seen for a while, but is probably still around. What do we go and tell them and what do we do with them?" Spending less money on network TV buys and more money on targeted internet banner ads and so on, all sorts of stuff that we're trying to get more sophisticated. We're trying to be better. That will pay off over the long term. I think what you'll see, we're already on your, we are 100% of the growth in Cripple Creek. Cripple Creek as a town, the revenues are growing. We're all of that. We're not 200%. In other words, with the other guys netting us out, are not down. That's what we always thought. We thought we would grow the market, and we are growing the market.

We just need to grow the market more, and we need to continue growing it for some period of time, and I think we will. In fact, if you look at the state of Colorado as a whole, we are 100% of the growth in the state of Colorado over the past six months, maybe the last past 12 months. I think that will continue to be the case. There is nothing new being built anywhere in Colorado, right? There is nothing anywhere in the horizon being new built in Cripple Creek. We have no new competition to worry about. We're in the center of the state, so anything that happens in New Mexico or Kansas or Wyoming is irrelevant. The economies of both Denver and Colorado Springs are robust. The towns are growing. We're in a market with rising tide.

Out of the box, it's disappointing to me that we're not making more money than we have been. We have a solid base, and I think going forward, we will grow revenues and we will keep costs down, and it will ultimately be a very successful property. In fact, I was telling somebody we had dinner with last night. When we opened, when I worked with Steve Wynn and we opened Beau Rivage in Mississippi, at first we considered it kind of a disappointment because it struggled a little bit out of the box. Now, you know, 25 years later, it's still the leading casino in Mississippi, makes $100 million a year, costs $670 million to build. The first year or two, we struggled. We even almost bought an airline to run airline programs and so on.

Eventually, if you build a quality product, it catches on and it grows and the customers learn it's there and it'll be fine. We will be fine in Colorado.

Speaker 1

I've said this maybe a few times in the past, but I think what people forget is we've been in Cripple Creek, not we, sorry, residents of Colorado Springs have looked at Cripple Creek for the last 20-plus years, and they've seen it as a market where there's just really bad product. Not simple product is maybe the right thing to say. There hasn't been elevated product ever. Part of what we've been going against is we need to change 20-plus years of what I would call negative branding, and we need to get people to realize, wait a minute, this is a brand new Cripple Creek. That is happening. I'll tell you, when we look at our database, we, of course, look at all these different segments. The segment we're doing the best is the $750 and higher average daily theoretical win. That's our top-tier player.

That player has embraced and continues to embrace the property. We've run quite a few focus groups just over the last few months. What we've heard overwhelmingly from people, and usually you run these focus groups and people are quick to give you their complaints, it's been a little bit of the opposite for us where we run these focus groups and the feedback has been, "Yeah, the offers you're giving me are as good as the offers I'm getting for Blackhawk. Your rooms are great. Your property is great. I just haven't had a good player host that reaches out to me on a regular basis or whatever it is." Part of our challenge is we need to make sure that we're cultivating that higher-end player. The ultimate good news for us is they have been coming. They like the place.

We just need to do a little more fishing in that world. We'll get there as the brand continues to become more out there.

Speaker 4

Actually, the other comparison I just thought of is when I was part of the group that put together the Borgata in Atlantic City. When it opened, the Atlantic City product at that time had gotten pretty dated and not particularly good. The Borgata was a completely different type of product. It took a little while for people to recognize that the Borgata was better than the product that had previously existed. Now, 20 years later, the Borgata's been very successful. Sorry, long-winded answer to the question.

Speaker 2

No, that was great. Thanks. Just another follow-up on Colorado. If you guys could provide any color around convention mix or bookings and what the Chamonix is looking like heading into the summer, that'd be great. Thank you.

Speaker 1

Summer for us really tends not to be the group business time. It's really heading into the winter months. I think Dan mentioned we just hired a brand new Group Director, literally, I think today. Yeah. Stay tuned. The facility itself now is open. It's beautiful. People that are booking groups are not worried about if the place will be open on time. All the stuff, all the problems you had before opening have largely gone away. There's still some lead time because some of these groups will plan a year in advance or six months in advance. It doesn't necessarily happen overnight. I will say we have people now in that group department that we're happy with, and I think they're going to do a very good job. Probably a better question to ask us in another quarter.

Speaker 4

Yeah, the summer, we're doing much better occupancy, but it is the summer in the mountains of Colorado. Back in the first and second quarter, there were some midweek days where occupancy was very anemic. We're hoping to not have that as we go into the off season this fall.

Speaker 3

Thank you. Our next question comes from the line of Connor Parks with CBRE. You may proceed with your question.

Speaker 2

Hey everyone, thanks for taking my questions. First, popular discussion this earnings season has been around the Big Beautiful Bill and the impact to gaming and around regional gaming. Could you provide an update or maybe thoughts overall on the potential impact to your customers in any market, any database, whether it be no tax on tips or senior impacts? That'd be great. Thank you.

Speaker 1

I think to the extent that any of our customers have more money in their pockets, it's always a good thing. To the extent you have reduced taxes, whether it be on tips or tax rates that don't go up or whatever it is that's ultimately beneficial around our seats, the one thing you might not be thinking of is we do have NOLs, net operating losses, that we continue to build up on, just try to continue to build, I should say. Part of the changes in that bill actually benefit us. If you would have asked me six months ago when we expect to work through all of our NOLs, I would have told you maybe by the end of 2029. These days, I think it's probably not until the end of 2030.

I think we have the ability to accumulate NOLs, even more NOLs than we would have under the old tax plan and fewer limitations on their use.

Speaker 4

I should mention we get, on a tax basis, accelerated appreciation on these new properties, which is part of what builds the NOLs. It is a non-cash charge that results in cash savings on taxes, is kind of what it really is. That is a good thing. The other thing is no tax on tips. To the extent a lot of our employees receive tips, it probably will put less pressure on us when people are seeking raises. It is like, your income after taxes is up quite a bit. I think if people are feeling more money in their pocket, they are less likely. I say this, I am sure I have employees listening, but hardly a day goes by I do not have somebody asking for a raise. Now I have something to push back on.

Speaker 2

Thank you. Shifting gears to Waukegan and the plan there, helpful color around how you're thinking about the timeline and the update on financing. I guess working backwards from August 2027, at what point must you go into the regulators for a request for an extension, or at what point might you start thinking about that more seriously? Should the debt capital markets not be receptive over the next couple of months?

Speaker 4

In vague terms, I think if we can get a shovel in the ground by year-end, the very early stages do not take a whole lot of money. We actually just submitted to the city for a building permit of our foundations, literally two days ago, I think. We have given them the foundation plan to try to get the permit so we have that out of the way. The initial stage is literally a guy driving a bulldozer, pushing dirt around, and then following him, you have a handful of people putting the foundations. Not a lot of money, but it does take time. As long as we can get that started somewhere in the second half of this year, even if we did not quite have the bond issue done, you might start that just so you buy some time.

At some point, you start looking at the bonds have a call premium that goes away in February now. I hope we get this done well before that and we will end up paying a premium. If you slipped into next year before you could get going, if you had a gap, let's say you had to close the temporary in August because the state did not let you operate past August, but you were ready to open in September or October, you might just choose to pay everybody to keep the workforce together. Just like Wynn paid everybody during the pandemic. You can figure out the cost of that. That costs us some money, but it also costs money to disband a workforce and start a new one.

I do not think it gets to that because if you go to the state and you say, "Look, we do not want to have to lay everybody off and we want to continue to pay taxes, is that okay with you?" I think the state's going to say, "Yes." I am not really worried about whether we had it. If you had a very modest gap, you would probably just pay people and keep it together because we have a great workforce here. In fact, we have won all sorts of awards as being one of the top employers in Chicago.

Speaker 1

The only casino on that list.

Speaker 4

Yeah, the only casino on the list. Of course, we want to keep it all together. I'm not actually worried about it. Obviously, in the 10-K, we have to disclose that our permission to operate the temporary only goes until August of 2027. We did once before seek approval and received it to have that date extended by two years. Now, we're saying all this, the bond market as of today looks like we can get this done. It just happens to be the August doldrums. If the bond market holds together several weeks, we can probably go get this done. We were pretty much ready to go get it done last March. Then all the discussions of tariffs and Liberation Day, the bond market went away from us for a while. It's pretty much back to where it was.

Not quite back to where it was then, but pretty close.

Speaker 1

Not quite, but it has pulled back extremely quickly. It's rebounded pretty quickly. I will say that.

Speaker 4

By the way, it doesn't have to be the bond market. We have multiple ways to finance this. You notice Bally's went and used GLPI to finance their casino. That's always an option for us. We actually still have in place a backup financing with a private equity firm that's pretty expensive, so we hope not to use it, but we do have it. We have other ways to do this, but we think the best route is bond market.

Speaker 2

Makes sense. Thank you.

Speaker 3

Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. One moment while we pull for questions. Our next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed with your question.

Speaker 0

Hey guys, good afternoon. This is Will on for Ryan. Wanted to hop back to Chamonix. You talked a lot about the cost savings that you found and started to implement through the new GM and CMO. Obviously, it's pretty early. Curious what changes you're making to the marketing strategy and how you think about maybe balancing the current client base in Chamonix versus the one you're trying to attract.

Speaker 4

There are a lot of things, and frankly, the Marketing Director at the property just started work a couple of days ago, right? He's still trying to drink from a firehose. I'll give you one simple example: a big thick mailer every month that was pretty expensive to print and pretty expensive to mail and had not done a very good job of getting emails of its customers. We've been avidly trying to get emails, and to put that in perspective, here at American Place, we stopped sending physical mail a year ago, Jeff, and we only send email. It's way cheaper to only send email. To put that in perspective, if you're sending out a mailing piece with some promotion in it that costs you, let's say, $1 to print it and mail it, and that would be a pretty low number with the cost of postage these days.

If you get a 5% takeup rate, which would be pretty normal for something like that, then it's costing you $20 for a customer to take up your offer. If you do it in email, it costs you nothing. Frankly, what we found at American Place is the.

Speaker 1

Open rate.

Speaker 4

The open rate and response on email is just as good as it is with physical mail. Making that transition, and the person who was running the property was very old school. He would write a letter from him about the whole thing. Even though we said several times we should get emails, we should migrate to emails, he really hadn't done it, we are now doing it. That's just one example. I am confident that the new marketing team we hire, which has, frankly, amongst the group, a lot of experience. I mean, we have, they're all new, but we have a stronger marketing team than any other casino company our size at this point. They're all new. Give them time, right? With time, we will do very well. In fact, a number of them came out of the early Harrah's days where Gary Loveman ran the property.

He was a Professor of Marketing at Harvard Business School before he became CEO of Harrah's and really created the state-of-the-art marketing programs that Harrah's had. The whole industry has been learning from that ever since. We're getting up to speed, but it doesn't happen overnight.

Speaker 1

I don't remember the stat, Dan. You may. The current ad campaign, I believe, will touch 80% of Colorado Springs on average four times.

Speaker 4

Something like that, yeah.

Speaker 1

Don't quote me on those exact numbers, but they're pretty much in that ballpark. I mean, keep in mind, I think a lot of people forget this. We weren't fully open. Effectively, we've only been open since October of last year. We've effectively only been open for, you know, whatever that is, 10 months or whatever it is.

Speaker 4

Frankly, part of the issue we had going through the winter was when you say fully open, we have a spa that's open every day. We have a jewelry store that's open every day that wasn't a year ago at this time. When your hotel's very low occupancy midweek, you're losing money on that. As you improve occupancy, everything, like the lowest point in income was this past winter when you had all the expenses of operating all that stuff and not enough revenues. Now we're getting smarter about it in many ways. It doesn't happen overnight, but it is happening. The cost savings started right away and are getting better. We're actually in the market for the new finance director to help get a better handle of our own results so we can focus in better on even more cost savings.

The cost savings are kind of easier to figure out. To improve the marketing and get results takes longer.

Speaker 1

We've got one other benefit. It's almost maybe a little fuzzier, but you know, over the years, we've accumulated these different casinos in Colorado, and they're all adjoining, and you never walk outside. We have three different casino licenses throughout Chamonix and Bronco Billy's Casino and Hotel. What we've been focused on for the last several months is effectively where it's a customer hindrance is if you cash out in one of the licenses and then take that ticket up to another license, you can't use it. We have people that do that. They think the machine is broken because the TITO ticket won't work from one machine up the stairs into another machine. The other piece where we don't benefit is because we have three different licenses, we have to have three different cages open.

We are expecting sometime in the fourth quarter, hopefully, at one point we thought it was going to be mid-October. I don't know if we'll quite get all the approvals by then, but we do expect to be in beta testing here relatively shortly to effectively unify that TITO system where you can use that TITO ticket in any of our three licenses. We'll only have to have one casino cage open. If you think about cost savings all over again, by having one cage instead of three cages open 24 hours a day, it's something like $700,000 a year in savings, on top of a much, much better customer experience. You know, think about it, if you're a high-end customer especially, little hindrances like that are just a pain in the butt.

Speaker 4

By the way, this is something our new GM, Brandon, had put, the Tito tickets being usable in all three licenses. He at one point ran the Bally's properties in Blackhawk, and he was able to get the regulators to approve that at their property. They use a different slot system than we do. We have the Konami system. Brandon, earlier in his career, had actually been a regulator with Ontario Lotteries dealing with slot machines. He knew how to talk regulatorys, if you will. He is working with Konami to get the system changes in place to satisfy. They are very focused on making sure the taxes are paid appropriately. If you modify the systems right, you can make them comfortable about the taxes. The consolidating into one cage has not been done before. We think we can get there, but that is less certain than the Tito tickets.

Tito tickets are a big thing for the customers, though. The other thing I would tell you is anybody on the call, if you have not been to Cripple Creek, you really should go and see it. It makes you feel a lot more comfortable when you see the property. Those who have been there and met with the new management, some of them had been there with the old management, and they get it. It is like, okay, this new management is pretty smart, and they are working the right way, and so on. Not to overplay it, if you go and visit the property, and we are happy to set it up for anybody, you will understand better why we have confidence that this will be successful.

Speaker 1

Hey, Dan, sorry, I didn't mean, if you have another question, feel free. I was going to say to Dan, we have time for maybe one more after you. Feel free if you have something else there.

Speaker 0

I was just going to ask on the legacy properties. I think Rising Star, at least according to the state gaming data, had its first, I think, year-over-year growth in a little while. Curious if there's anything to note there on the legacy properties. That's all. Thanks, guys.

Speaker 4

Now we have a GM there who's been with us almost a year now, and he's been making little improvements here and there. Yes, we did just show a little increase. It's a challenging property because of the competition every direction from us, most recently the Churchill property in Northern Kentucky. We have our own little niche, and we're working on it. We're never going to make a lot of money at the property, but it does make money. If we could find a way to relocate it, it would be a much more profitable business for us. We've actually told the town we're in that we would pay them more in taxes than we pay them today, even if we relocated. We think it'd be very positive for the state.

It's a long process to get state approval to relocate a license, and it's never a certain process, but it's something we're working diligently on. We think it's a win-win. If everybody was rational, it should happen. Sometimes in these cases, they're not rational. The property itself, I mean, it's a big footprint. It's a 300-room hotel, 18-hole golf course, traditional casino riverboat, but one of the nicer ones that's out there. The boat has some charm to it, has a nice decor to it, and a pavilion with a restaurant meeting room space. It's a big footprint. It's just geographically challenged. When it opened, it was the only casino in the region, and it did very well. Today, it's the oldest casino in the region, and it's got newer competition every direction.

Speaker 1

Great. Thank you both.

Speaker 4

I think our team is doing a good job in tough circumstances to keep it going.

Speaker 1

Probably time for just one last question, Dan.

Speaker 4

Yep.

Speaker 3

Okay. Our last question comes from the line of Ricardo Chinchilla with Deutsche Bank. Please go ahead with your question.

Speaker 2

Thank you so much for speaking to me. I was hoping if you could comment a little bit on the cadence of the quarter in terms of revenues. When thinking about July in terms of sequential improvement, could you give us some sense of how business has been evolving?

Speaker 4

At American Place, it's just been rock solid, up every single month for two years now in both revenue and EBITDA. That's continued into July, as we said earlier. At Cripple Creek, we've been very focused on pulling together a new management team and helping them get going. Cost savings initially, hiring people, still a couple of positions we need to fill, and now focusing on building revenues because ultimately, we need to build the revenues to get a return on our investment there that would be acceptable.

Speaker 1

In July, improved from what we saw in the second quarter, just to be very clear.

Speaker 4

Yes.

Speaker 1

Cripple Creek.

Speaker 4

Yep. In, you know, as we mentioned at the Silver Slipper Casino and Hotel, we've had a new GM there also for seven or eight months. She is very experienced from our Indiana property, and she said that there were a number of people who were basically being overcomped, and we weren't making money on them. We expected revenues to be off, and EBITDA would have been flat except for a non-cash accounting charge we had to take. It's doing well. I think it'll end up the year comfortably up. I think last year EBITDA was like $12 million. It'll probably end up around $15 million this year, and that's, you know, taken into consideration how we did in the first half. If it's not quite $15 million, it'll be close.

We talked about the Hyatt, you know, that we're actually doing pretty well considering how much of the property has been closed for its refurbishment. We'll, I think, do fine. The new GM we have there is very much kind of a player development sort of personality, and that's quite a bit different than the management team we've had in the past who had their own strengths. I expect Tony to be the sort of guy who goes out and finds high-end customers who will want to come to Lake Tahoe, rather than just somebody who checks into the hotel who might want to gamble. In other words, being a little more proactive to build their list. He's that sort of person, and I'm optimistic that that will show results again, not immediately, but over time.

Speaker 1

I think that addresses all of them.

Speaker 4

Not a great quarter. We're working hard. Actually, a great quarter for American Place, which is the most important one.

Speaker 1

That's quarter, Dan, correct?

Speaker 4

Yeah, but that's the one where we're going to build the permanent next door. Of course, that's at this point the biggest part of the company. Cripple Creek is a turnaround at this point. We're working on it. We'll get it turned around. We know how to do it. We have a team to do it. The rest of the company overall is stable to, you know, I mean, I think we're going to continue to have our challenges at Tahoe because of what's closed, but it's pretty small in the grand scheme of things. The Silver Slipper is actually trending up in general. This quarter didn't look that way because of the accounting charge, but in general, it's on a positive track as well. Nobody asked whether we'd rather buy Maverick or Century. The answer is we're pretty busy these days.

Sorry, I just wanted to wake Lewis up there. We're pretty busy with what we do. If we just accomplish what we're doing, we'll be fine. Thank you.

Speaker 3

Thank you. This now concludes our question and answer session. I would like to turn the floor back over to Lewis Fanger for closing comments.

Speaker 1

Thank you, everyone. We're excited to talk to you next quarter with some more progress and hopefully more record quarters here at American Place.

Speaker 3

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.