“There’s no way around it. It was not a good quarter and I’m not happy about it.”
So began Full House Resorts’ third-quarter earnings call, with an unhappy CEO Dan Lee. His dissertation on the company’s performance occupied 31 minutes of the 68-minute conference with Wall Street analysts.
Lee characterized the results from the new Chamonix as “particularly disappointing.” He said the Colorado casino was now complete, save for “some fancy lights and curbing in the parking lot.”
“The good news,” Lee said about Chamonix, “is that when you look at the magnitude of the market, our revenues have considerable room to grow, so that should bode well for profits in 2025.”
Lee explained that a lack of marketing hurt the 300-room resort, although its occupancy “has built significantly.” That was accomplished partly through buying mailing lists of potential customers and by dint of giving away midweek room nights. A convention also boosted business.
“Not all mailing lists are created equal,” Lee warned, saying that one cost $1 per name and generated a three percent response rate, or 462 people out of 15,000 on the list. Of those 462 customers, 380 gambled and Full House won an average of $188 apiece. Another campaign generated just an 0.8 percent response and only half of those customers gambled, losing $48 a head, “which barely pays for cleaning the room. It was a bust.”
Looking ahead, Lee continued, Chamonix will buy fewer mailing lists and is launching a pair of new TV ads immediately after the election. The company has also hired a new vice president of advertising who starts next week.
Lee is also aiming to hire more casino hosts. “A casino host is like a stockbroker: They bring customers with them.” Marketers are also on his wish list. Chamonix started with one salesperson. “We should have had five.”
Chamonix was said to be drawing 20 percent of its new-patron signups from the Denver area, not a traditional Full House market. “But we’re nowhere close to where we think we can be” overall, Lee said. “It might take us two or three years. “If they’re in the fifth or sixth inning,” he continued, referencing competitor Monarch Casinos & Resorts’ most recent earnings call, “we’re still in the first.”
“We’re warming up,” CFO Lewis Fanger interjected with a laugh.
“To get to where we need to be, we need to find new people and get them to come,” Lee resumed. He cited amenities like a tour of a nearby bordello museum or visits to a goat farm that was so popular that extra tours had to be arranged.
Regarding other Full House properties, Lee said that the Grand Hyatt Lodge on Lake Tahoe had lost much of its convention and meeting business due to planned summertime construction, which then was canceled. “Happily, we’re there for a very long time,” he added.
Lee elaborated that Full House is in little danger of being turfed out of the Grand Hyatt, as its owners, who include members of the Pritzker family and computer mogul Larry Ellison, don’t want to obtain gaming licenses. He added that he was confident, because Ellison has a history of upgrading the hotels he owns “by a lot.”
Full House’s Silver Slipper on the Mississippi coast was impeded by an active hurricane season. “It feels like God’s bowling and I’m the tenpin every time,” lamented Lee.
Asked whether the Silver Slipper had been tarnished by Boyd Gaming’s new Treasure Chest casino in Kenner, Louisiana, Lee responded, “It’s a pretty long drive” for his customers and “the [former Treasure Chest] boat was a 30-year-old dump.”
He continued that New Orleans-area casinos had been sapped by slot routes that Churchill Downs placed in OTB parlors. “I suspect that they’re getting back some of that business from Churchill.”
What was more impactive on Silver Slipper was a new promotional campaign by nearby Hollywood Casino. “After years of dealing with suboptimal general managers, now they have a good one, damn it,” Lee mock-fumed.
Silver Slipper General Manager John Ferrucci is retiring shortly and will be replaced by Angela Truebner-Webb from Full House’s Rising Star casino in Indiana. “Frankly, she did a very good job at that geographically difficult property,” Lee said, adding that he hoped she would bring fresh ideas to Biloxi. Her place in the Hoosier State will be taken by Jeff Mitchy, from an Arizona tribal casino. Mitchy, said Lee, “knows the area very well. We were happy to get him back to us and he knows how to operate a new casino.”
The last remark was an allusion to Full House’s desired casino in the Fort Wayne area, which would entail the abandonment of Rising Star. The latter, Lee asserted, is surrounded and outgunned on the Ohio River. “It makes money, but not a lot.” Fort Wayne, by contrast, has 650,000 inhabitants and no nearby casino. Lee predicted he could go on paying Rising Star’s taxes out of Fort Wayne-derived profits, which he expected will be five times greater.
He conceded that the Indiana Legislature might not approve the relocation soon, if at all. “If you don’t try, you don’t get.” Rising Star’s revenues took an immediate hit when news of the proposed move hit the newspapers, Lee said, causing erroneous expectation of an immediate shutdown. “It unnerved both our employees and our customers.”
“The bright spot in the quarter” was The Temporary at American Place, in Waukegan, Illinois. It generated a $7.7 million return on investment, “its best quarter to date,” according to Lee. He cited the explosive revenue growth of Hard Rock Rockford’s permanent casino as cause for optimism about the eventual permanent American Place.
Lee said the Rockford debut “had no impact on us,” but that venerable Grand Victoria, in Elgin, wasn’t so fortunate. He went on to say of Hard Rock, “Their theme is to hang Taylor Swift’s old uniform up and people gawk at it. Our theme will be more interesting.”
Full House also recorded a $9 million sale of Stockman’s Casino, in Fallon, Nevada, during the quarter. Lee dismissed the property. “Fallon is very small,” he said. “It didn’t fit in the portfolio.”
Explaining his corporate philosophy, Lee said, “We want to go into underserved markets, because you get higher return on investment,” unlike in California or on the Las Vegas Strip.
“I apologize for the quarter. We will do better,” Lee concluded.
