U.S. Markets closed

Edited Transcript of FLL earnings conference call or presentation 26-Feb-19 9:30pm GMT

Q4 2018 Full House Resorts Inc Earnings Call

Las Vegas Mar 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Full House Resorts Inc earnings conference call or presentation Tuesday, February 26, 2019 at 9:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Daniel R. Lee

Full House Resorts, Inc. - President, CEO & Director

* Lewis A. Fanger

Full House Resorts, Inc. - Senior VP, CFO & Treasurer

================================================================================

Conference Call Participants

================================================================================

* David Brian Bain

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

* Jordan Maxwell Bender

Macquarie Research - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, everyone. Welcome to the Full House Resorts Fourth Quarter Earnings Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Lewis Fanger, Chief Financial Officer of Full House Resorts. You may begin.

--------------------------------------------------------------------------------

Lewis A. Fanger, Full House Resorts, Inc. - Senior VP, CFO & Treasurer [2]

--------------------------------------------------------------------------------

All right. Thank you. Good afternoon, everyone. Welcome to our fourth 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.

And also, we may make reference to non-GAAP measures such as adjusted EBITDA and adjusted property EBITDA. For a reconciliation of those measures, please see our website as well as the various press releases that we issue. And lastly, we're also broadcasting this conference call at fullhouseresorts.com where you can find today's earnings release as well as all of our SEC filings.

And with all that said, we did have a pretty phenomenal quarter. We actually gave you guys a big hint of that on the last time we spoke to you all, but revenues are up 8%, adjusted EBITDA more than doubled, up 108% versus last year. Part of that was last year's fourth quarter had some adverse weather, but part of it is while it was just the wrap up of some new amenities that we've been introducing over the last couple of years and our focus on the cost structure, including we're starting at Silver Slipper.

Looking at the property specifically, Silver Slipper, we do have several new amenities there. There is the Oyster Bar that opened up in the middle of 2017. A few months ago, we launched the new sports betting area. That all helped lead to great results at that property. It's really firing on all cylinders right now. If you look at revenues, they are up 20% for the quarter. Adjusted EBITDA was up 74%, that's the highest ever fourth quarter for EBITDA at the property. Gross gaming revenue was the highest ever. Restaurant covered us, where we're also the highest ever, up 10% over last year. And even with all those records and guest volumes up, payroll for the year was virtually flat, increasing less than 1%.

Rising Star. We have a new GM over there. He's been there about 6 months now. He's done a great job. And if you think about that property back in its peak more than 20 years ago, it made $50 million a year in EBITDA. That was when it was the first and only casino that was opened in the area. Now with Ben there, it's helpful to have some fresh eyes on the property, and he's really gone in and started to reinvest in some of the ways we do things. And so you see -- you're starting to see that in the results. If you look at revenues, there was a small decline, but when you look at adjusted EBITDA, it improved pretty meaningfully. Last year's EBITDA was only $7,000. My joke is we can buy 1/3 of a slot machine with last year's EBITDA.

This year, we got it up to about $706,000. In the meantime, we're introducing ramping up some of your newest amenities, includes our ferry boat, which makes us the closest casino to Boone County, Kentucky. And Boone County for those of you that don't know is the home of about 130,000 people, and also the Cincinnati International Airport. It takes time to ramp up those new services like the ferry boat, and as an example, if you use Google Maps to navigate, it takes some time to get a ferry boat inserted as the fastest route option. It's a process, but it's one we've been making our way through and it's starting to populate now.

Bronco Billy's, should have been an up quarter, except for snow that hit in the area on December 29. That's a market that whenever there is a threat of snow, we find that our guests stay closer to home and find other things to do. And quite frankly, that's in part because there are so few hotel rooms in town and people don't want to get stranded in the snow without a room. If you look at our own place, we only have 36 rooms. And so it was a little unfortunate to have that snowstorm hit on New Year's weekend, but it did. In the meantime, we also opened up our newest Christmas Casino, opened there on November 1. Not a big building at all. It operates off the existing Bronco Billy's backbone, so we don't need a separate GM or a separate HR team or anything like that. We do have to pay the lease for the space, but from a labor point of view, it's not an expensive space to operate. So far, the initial response has been good. And if you look at November as an example, we saw an 8% uptick in revenue at the property.

For the full year, Bronco EBITDA was down. Dan will touch on this, but the good news is we've been doing a thorough review of operations at Bronco Billy's, and we've identified a few areas for improvement. In a lot of instances, we have some self-inflicted problems over there, but one of them is in marketing. And as an example, when we took over Bronco Billy's, we found out that there are some point liability buckets that didn't have an expiration date, and so you had points for people that have moved, points for people that had passed away, but also points for people that were still good customers of ours. And so we made some tweaks. We gave out a few extras to make things right. We put in expiration dates on some of the points that hit EBITDA, but that's not a permanent expense item. It's just a momentary bump there.

And then lastly at Northern Nevada. We had a lot of snow, and snow is always good for that property because we need a normal ski season for the Hyatt, where we are, as well as the other ski areas to be full. And when we -- when there is snow, we do well. And so for the fourth quarter of 2018, we had a much better quality guest in the door that, along with the Stockman's revamp, led to EBITDA that was up 114%. So good quarter overall. Looking over to Dan to pipe in with a few words.

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

A few things that Lewis -- I can expand on from what Lewis said. At the Silver Slipper, in May, we're renovating the casino with the new carpet, wallpaper, table tops, new flooring and the buffet. And it'll be -- it's a different color scheme, so we're not just replacing the existing carpet with the same carpet. And it'll look and feel like a little more high-end place. It's the first time it's been remodeled since it opened a dozen years ago. So I think it's going to make a pretty big difference to the place and it kind of continues what we've been doing. Property has been up pretty consistently for the 3 years we've been here. So -- but I think it'll probably go to new heights this year.

At Rising Star, we're also doing a number of things. We recently introduced a resort fee in the hotel, which is pretty common in hotels these days. We no longer operate our buffet at breakfast, but instead, we offer a Fairfield Inn or DoubleTree Hotel type of buffet that's kind of free and that's what you get for your resort fee, if you will. But it's much less expensive for us to have that free buffet than it was to operate the full buffet at the volumes we were having. And we're actually going to modify one of the existing restaurants so that we can operate it more meals at the day and turn the buffet into something that just operates on weekends, which is frankly something most of our competition in that market is already at. We are the only people who have been operating buffet 3 meals a day, 7 days a week, and we've already stopped the breakfast portion. And frankly, we're one of the very few people who operate 7 days a week lunch and dinner. And when you really run the math on it, it's not very economical for us to operate that midweek on many days of the week. So we're making some of the changes there.

We're making some changes in the casino with some of these, what are they called, podium gaming...

--------------------------------------------------------------------------------

Lewis A. Fanger, Full House Resorts, Inc. - Senior VP, CFO & Treasurer [4]

--------------------------------------------------------------------------------

Stadium gaming.

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [5]

--------------------------------------------------------------------------------

Stadium gaming facility which we're installing in the next few weeks. Once we have that installed, we will offer fewer $5 tables and perhaps not operate the casino. The table game is part of the casino in the wee hours of the morning. We do now at Rising Sun, and we don't do in our other markets, so when you get into 5:00 in the morning at Rising Star, we'll have more employees at the table games generally than there are customers. And we don't want to eliminate it until we have the kind of stadium gaming alternative, which gives you an ability to play craps or blackjack in kind of a table games type setting.

And if you really run the math on a $5 blackjack table, if the people sitting at that table are really betting only $5 a hand, even if the table is full, you don't cut the payroll. And so you'll hear other companies doing that as well of trying to move away from the $5 dealer-dealt game and moving that game to more of a mechanized one. And frankly that's, I think, a philosophy throughout the company and throughout the economy as minimum wages go up and unemployment goes down, we're looking for every way we can to substitute technology for payroll. And so that's marketing kiosks, it's -- maybe it's front desk kiosks. It's any way we can satisfy things with a kiosk or drive people to -- we're improving our websites so people can make the reservations for hotel rooms and special events online and maybe we don't have to have the same staffing at the call centers and so on. That's the Rising Star.

Bronco Billy's, which was the only property we have that was down for the year and down for the quarter. And there were a number of things happened there. The -- and some of it's related to the fact that we're getting ready to expand it. For one or least and participating games, we have more of them and our cost of that went up by over $200,000. And part of that is we know that as we start construction of the new hotel, we're going to close part of the casino, and we actually tear down part of it and we refurbish part of it. It's probably 1/4 of the casino space. We don't want to buy new slot machines today and then put them in a warehouse for 2 years while we're under construction. So to the extent that we've introduced new machines, we've done it with least and participating games and because they can be given back to the slot company at any given time, and so that effectively cost us about $200,000 during the year.

And once we get the parking garage open, then we end up closing a part of the casino and that will be later this year. We're starting the parking garage shortly. It'll take 8 to 10 months to build it. And when it's done, then we can start building the hotel on the surface parking. But as part of building that hotel, we actually closed part of the existing casino. So I didn't want to spend money buying new machine, so we ended up leasing machines and that hurt the recent results by a small amount, but if you were to look at what the cost of buying those machines would have been at $25,000 each, and then having them sit idle for 2 years, at which point the game might have gotten stale. I think it was the right thing to do, but it did effect the immediate results.

The second thing that we had happened and I think maybe we made a little bit of a mistake in letting accounting drive a questionable business decision. But Pioneer was a private company, and they would give people the ability to eat in the restaurants without any expiration date. And so they had quite a few points out there that people could -- there were people who were entitled to $10,000 of free meals and it would never expire. So they could eat in our restaurants forever. Now they might have been 85 years old. They -- when they die, it ends, right? And so as a private company, they didn't worry about it very much.

And frankly, if you think about your airline frequent traveler programs, some of them have expiration dates, some don't. Like I'm in the Southwest Airlines one, I don't think they ever expire, and I got a ton of points in there. And of course, my mentality is that some day I'm going to retire and travel around the world on Southwest Airlines, I guess, right. And which will probably never happen, but that's the mentality you have. And if they ever sent me a notice saying, we've changed our rules and you have to use all those points in the next 6 months, I would be pretty pissed off. But in effect, that's kind of what we did with our customers, we said we're changing the program, the points you have are going to expire. But on the good side, we're going to give you a lots of new points, and we're going to cup new food and we've got all these new programs and so on.

So we had a lot of promotional stuff going on to kind of offset a little bit of an accounting decision where we kind of said, look, it's a public company. We did take a charge of $100,000 to reflect what we thought was the accrued but on previously booked reliability related to these points that never expire. But as a practical matter, we also started telling the customer that you got to use these points and then we didn't want the customers pissed at us, so we did more stuff to them. That probably cost us. Well, I know just in the -- that we had $400,000 more comps than we had in the previous year. So it's in the hundreds of thousands of dollars that, that cost us. And I think it's kind of a onetime item going forward. We can go back to kind of normal ways. We've made the change, and so on. And so I think going forward, we will have less promotional spending and be back to a new normal.

The third thing that happened is on taxes. Colorado has a steeply progressive tax scheme that favors small casinos. And for example, on the first $2 million of revenue, the gaming tax is only 0.25%. That's essentially almost free. And the next $3 million is taxed at only 2%. And then it kind of ramps up until you get to -- I think it's $13 million or more in revenues and then it's 20%, which is still relatively low for regional gaming. But it's $13 million. Now if you're a Ameristar running in Black Hawk $175 million or $200 million of gaming win, this doesn't matter very much because you hit that $13 million pretty quickly. The way Bronco Billy's evolved and it's true of a number of the casinos in Colorado, it was one small casino in the middle of the block. And it was the best run one by Mark, who's actually getting ready for a well-earned retirement. Sorry to see him go, but -- so we're trying to figure that arrangements out. But Mark has run it 28 years, and he started out in the middle of the block and it was the best run place, and gradually, the casino took one side, wasn't doing so well and was available. And so not just he, but other casinos at the same time looked at, gee, do we acquire the place next door. It's only taxed at 2%. But if we combine the 2 licenses, we go to a higher tax tier and it's hard to make that economically work. And so the gaming commission, the different parties, including I presume Bronco Billy's, this would have been 20 years ago. Once the gaming commission says that, okay, if we buy the place next door, but continue to operate it as a separate license, so both of the casinos stay on the low tax tier. And then the question was asked later about a third license. The state law only allows you to have 3 licenses, so it sort of caps out at 3. And so we have 3 licenses there. By the way, our principal competitor has 3 licenses too, that's Triple Crown, and then I think the Century guys have 2 licenses. So it's a pretty standard thing that goes on.

And the gaming commission allows it to happen except for 2 things: you have to operate a cage with each license and you -- and which then means incurring payroll and some tied-up capital. And the TITO tickets from one can't used in another, which creates some customer confusion. So if you walk through Bronco Billy's today, there is a couple of steps. And at the top of the steps, you're in Billy's and at the bottom of the steps, you're in Bronco Billy's and the TITO tickets from Billy's aren't used in Bronco Billy's, and so you have red tickets, blue tickets and it's a little confusing, but we have very regular customers and they all are accustomed to it.

Now having explained all that, if you were to take our revenues and divide it equally amongst the 3 licenses, that would be the maximum savings you could get and that would be about $1.5 million. We don't get it quite equally. You're never going to get it equally, because you literally have a line of a building that if you're on that carpet, you're in one casino. If you're on this carpet, you're in the other casino. And your revenue is never going to fall perfectly equally. We were $650,000 from perfect this past year. In other words, the way the revenues fell we didn't save $1.5 million, we saved $900,000. We didn't really save that either because it's probably $0.5 million of cost from operating the 3 different cages.

Now moving one license down to the Christmas Casino actually hurts us somewhat on that because it's not doing 1/3 of the revenues at the whole complex. So it makes it even a little more out of balance. And so -- but in the year, our gaming taxes were up -- I think it was about $150,000. And it was just a matter of the balancing because our revenues were -- well, our net revenues were flat, but we gave away a lot more free play because of the other things we are talking about, so our gross revenues were up. And in Colorado, they tax the gross revenues. You do not get a tax break on free play.

So that -- now all of that -- I know it's complicated and it sounds like big numbers, but that's because we're so small. And when we're all done building the hotel and the improvements for the casino and so on, I think our revenues will probably be 2 or 3x what they are today. And at the higher revenue numbers, this little tax savings by having 3 licenses becomes pretty insignificant. And so, for example, Ameristar and Black Hawk doesn't even bother. They don't want the customer confusion of saying, well, these are red tickets and those are blue tickets and they don't want to have to operate 2 cages and so on. And so I think this tax thing is kind of a temporary issue and it's something that hurt us this past year and it's something you kind of manage, because it is real money and a few hundred thousand dollars. But those 3 things are really why Bronco Billy's was down last year. Our payroll was about flat despite the fact that the minimum wage has been going up there every year and -- but it was more participation games, it was more promotional stuff and then gaming taxes with the 3 main things going on in there.

So when Lewis said, we were trying to understand the operations of Bronco Billy's a little better, that's really so and I think we have a good handle on it now, and we're trying to improve the results even as we get ready to build the bigger project.

The lawsuit that was filed after we got approval to close Second Street in the alley has been resolved. We won. So at this point, we're working with a contractor. It should be ready to go in a couple of weeks on the parking garage and it'll take 8 to 10 months to build. And so we're pretty excited to move on to the next step. With the -- most of our competition in town has parking garages, we don't. It matters when it snows or rains, which it does pretty often here in the mountains. Our parking garage has been the most convenient parking garage in town, but the main reason to build it is to allow us to then build a 4-star hotel where the surface lots are today. And to put in perspective, on -- a Bronco Billy's does about $98 of win per machine per day in a market that on the same basis -- and that's gross win, but on the same basis, the state provides the numbers of the citywide and the citywide average about $75. So we do better than average in the city.

But if you look at Black Hawk, Black Hawk averages over $200. And Ameristar seems to be over $400 per machine per day. Now machines don't gamble, people gamble. But -- and Ameristar has about 1,200 machines, we have about 900 machines. The big difference is they have 536 guestrooms running high occupancy at 2 people per room. I stayed there last Friday. They charged me $270 per room, standard room. And so you start running that math and saying, well, there is wealthy people in Colorado Springs too, we can do the same thing in Black Hawk that Ameristar did -- or the same thing at Cripple Creek that Ameristar did in Black Hawk. And I don't think we get to $400 per machine per day, but if you work backwards on more people in the property and how much those people are going to gamble per person and divide it by a 1,000 slot machines, I think we can do significantly better than we are today. So we're at about $100 per machine per day, Ameristar is at $400, Black Hawk, in general, is at $200. I think we can be close to the Black Hawk average and based on just having more people in town. It's a unusual market. At 6:00, 7:00 in the evening, the town clears out because everybody wants to drive back down the road, it's not a bad road, but it gets dark at night and there's a lot of deer out there. In fact not too long ago, I almost hit a llama. Some llama got out of its farm and was standing along the side of the road, and so people tend to leave, and most casinos are busiest in the evening. And in Cripple Creek, we're busy in the afternoon just because there aren't hotel rooms.

Otherwise, as a company, we're looking at other stuff all the time. This is the time of the year where state legislatures are in session. There's lots of stuff going on. As you know, we've had proposals and have proposals for Terre Haute, Indiana. There is a fill on the Indiana legislature, keeps getting twisted and modified. Everybody is tugging and pulling to try to get some advantage out of it, including us, and we'll see where it ends up.

In New Mexico, they started a process last year with the request for proposals for the last gaming license in New Mexico, and we've put in a proposal. There are 5 proposals. We have an option on our site, the closest to New Mexico. The Racing Commission did not come to an agreement yet. One of the other proponents filed a lawsuit to try to prevent them from reaching an agreement. They had hired a third-party to do a study of the different proposals and our proposal came out ahead in, I think, every category they had, which is not surprising. We proposed to invest $200 million and everybody else was like $50 million, $60 million projects, so our project was bigger, provides more jobs, more tax revenues, more creativity than the other jobs and that's basically what the consultant study said. And so the -- one of the proposals that was kind of the weakest proposal filed a lawsuit saying the study was flawed. While it's easily rectified that the study was flawed, put in your own study. But one of the things that we found out in the meantime that was in the press was it turns out the Chairman of the Racing Commission is part owner of some resources with one of the other proposals. And the guy with that proposal has also made pretty big political contributions in the state. We don't play that game. And sometimes that means we lose. I remember one time when I was at Pinnacle, we had a proposal at a major city. It was clearly the best proposal and then the mayor of that city in a private room told me that we would have to give 10% of the project to one of his buddies in order to get the project. And we refused to do it. We weren't chosen. The project that was chosen did have the buddy in as a partner. The mayor is in prison. And so we don't play that game. If it's a clean competitive process, we're happy to compete for it and come up with something that we think is best in the state. In the case of New Mexico, we sent a letter to the Head of the Racing Commission and kind of put the new governor on notice as well, saying that we thought he should recuse himself because he has conflicting business interest with one of the other proposals. He has not yet recused himself. Typically, well, every member of the Racing Commission is appointed by the governor. We now have a new governor who is different political party than the old governor, and we don't yet know what she's going to do, but we didn't want to sit here quietly knowing that the Chairman of the Racing Commission has a clear conflict of interest and has refused to recuse himself, so we made some noise about it.

Along the same lines, the State of Virginia just passed a bill that may legalize casinos there. That's something we'll look at. So this is the time of the year where stuff happens in that area. And it's tough to know where there is a real opportunity for us and where there isn't. But we pay attention to all of it. Frankly, we have quite a few growth opportunity just with Cripple Creek and there is no government approvals needed at this point. We have everything we need to do that expansion and that's going to keep us busy for the next couple of years.

So all those other states by the time they get through enabling legislation and everything else, it would follow the construction work we're planning to do with Cripple Creek. And I will tell you also while the parking garage is under construction, we will need to figure out how to raise approximately $115 million to build the balance of the project. And so we'll be looking at the financial markets and trying to figure out the right way to do that. It'll be mostly debt. I don't know if it could be entirely debt or whether we'd bring in a partner or a REIT or there's many different ways we can do it. We want to get the parking garage started. We have enough cash plus our cash flow generated from operations to do that. And there's -- I don't want to raise the money now and then sit on it for a year paying interest or taking fee on it or something, while we just build the parking garage. So we're trying to get the parking garage going, so that we are shovel-ready when we raise the money to go ahead on the rest of the project.

Lewis, did I miss anything? I think I got everything right? What's up?

--------------------------------------------------------------------------------

Lewis A. Fanger, Full House Resorts, Inc. - Senior VP, CFO & Treasurer [6]

--------------------------------------------------------------------------------

Yes, if you want -- anything on Indiana, Dan, I don't know?

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [7]

--------------------------------------------------------------------------------

I just -- and I just said Indiana is -- look, I think it was Mark Twain who said nobody is safe when the state legislature is in session, and I've seen it go both ways. So the bill in Indiana seems like every day has some new twist and turn in it, and we watch it. So...

--------------------------------------------------------------------------------

Lewis A. Fanger, Full House Resorts, Inc. - Senior VP, CFO & Treasurer [8]

--------------------------------------------------------------------------------

All right. Well, let's see some questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) We'll hear first today from David Bain with Roth Capital.

--------------------------------------------------------------------------------

David Brian Bain, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [2]

--------------------------------------------------------------------------------

I was hoping you guys could have planned on the $40 million casino hotel investment by Triple Crown in Cripple Creek. And how that could differ or help? I did see one comment by one of your managers that it's a helpful thing. I hope what you're doing and the first mover advantage matter. They're claiming that they can begin construction this summer.

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Yes, man, I think that's great. But if you were to look at a map, first off, if you look at the Triple Crown property in general, it's a little convoluted. There was a giftshop they never bought out. It's a private company and the owner of that company has just got sideways with the owner of the giftshop. So they have 2 casinos that abut each other and then a third one that is 25 feet away. And they have a whole series of catwalks to kind of go around behind that gets very convoluted and you park -- and their sense of arrival is you park in a parking garage and you go into those catwalks and their lobby for their hotel is like on the third floor and probably 1/3 of their rooms have no windows. You see that no windows are out. I stayed in one once and it was like a textured window that looked out on a light shaft, which is almost the same as no window. And the rooms are really small what they have. And so they are -- a company is kind of prone to, we'll get by, nobody is confused with this. Well, if you look carefully at what they're building and they have some sexy renderings, but they have 2 pieces of land on Myers Avenue, not Bennett Avenue, that are each relatively small and they didn't ask to close Third Avenue, but they plan to bridge over. So they've asked City Council to be able to bridge over it. And they have hotel rooms on both sides of Third Avenue. And now their casino is not on Myers and not even on Third Avenue. And so their sense of arrival in the future will apparently be the same as it is today, which is pull another parking garage, park your car, which is not a great sense of arrival. Then you'll take an elevator down to a new lobby that they're a building on the corner of Myers and Third and you check-in. Now let's suppose you're on the fourth floor on the east side of Third Street, you take the elevator up to the third floor and cross a bridge into the building that's on the east side of Third Street where you'll take another elevator to go -- either go up or down because most of the rooms won't be on the third floor. So now you decide to go to the casino, you go back to the third floor across the bridge through the catwalk system to the casinos that are actually up on Bennett Avenue and take an elevator down to one of those casinos. And so it's kind of like more of the same, if you will. And I looked at it and I thought, okay, that's fine. That's a good thing actually. They are adding 150 rooms in the market, the market doesn't have enough rooms. Now I looked at the cost that they have, they said $30 million to $40 million for 150 rooms. And at first, I thought, am I confused because our whole project is $135 million, and we get about 186 incremental rooms, but ours also has replacement of a good chunk of our casino and refurbishment -- a light refurbishment of the rest of it, has a parking garage that we don't have. It has a real sense of arrival, and we have a lot of meeting and convention space that we intentionally made bigger than our hotel actually needs because if you in the future get a smart convention up to this town, we want the people staying at Triple Crown's hotels, they have to come over to our convention space at the back of our casino rather than people at our hotel having to go to a convention in the third place. So to some extent we had kind of banked that there would be other hotel rooms. Now then I went and did a very careful analysis of what Ameristar built, what they spent in their place. Now they -- that property was originally built by a partnership out of Dallas and run by Hyatt and they had $150 million invested and -- but they didn't have a hotel. They just built the casino and a parking garage. And it didn't offer anything different than what was already in Black Hawk. And initially, its revenues per machine or per table game were no different than the other ones like Black Hawk, and they had pretty high-cost debt and a expensive management fee to Hyatt, and so they went bankrupt. Ameristar bought it out of bankruptcy for $120 million. And Craig Neilsen was a very bold, creative guy, despite being a quadraplegic, he's really an amazing guy. And I knew him, and I remember him talking to me. He was going to have to move a mountain to build a hotel. Ameristar, by the way, is on 5 acres. We own 5 acres in Cripple Creek. Very similar amount of land. But they went straight up in order to get it. And we can't go that tall at Cripple Creek because of the architectural code, but they are 50 stories tall with the swimming pool on the roof and it's quite stacked and the Ameristar casino is actually on 2 levels, whereas ours would be one level, although there are some stair stepping that goes up. And -- but he literally moved a mountain. I think they -- that they had blasting and earthmoving going on for about a year before they could build the hotel. And he paid a lot of attention into the design of it. Well, then after buying Ameristar, he improved the casino, put in better slot machines and decor and then he built this big hotel and the hotel was, I think, $235 million. I'm quoting off my memory sitting here. And I think they'd put about $50 million into the renovation of the casino. And when you add that all up and divide it by the number of guestrooms or divide it by the square footage, it's very similar in a price per guestroom or price per square footage of what we're planning in Cripple Creek. Then I went, looked at the Monarch numbers. Very similarly, they are in the midst of building a big improvement and expansion. Again, they a built parking garage, they're improving their casino, they're building a hotel. And our numbers on a price per guestroom or price per square foot are very, very similar to what Monarch is spending. And when I looked at what Triple Crown announced, it's the mismatch. And so which one doesn't belong here? It's like, Triple Crown, which tells me either they're deluding themselves to think they could build this with $30 million to $40 million and there's probably some of that or what they're really going to build is motel 6, not a 4-star hotel and there's probably a little bit of that too. But the fact that they announced that it was $30 million to $40 million, doesn't mean it's going to be $30 million to $40 million and I went back and doubled checked my math to make sure we weren't making a mistake and -- because our place is all designed and bid to contractors and so on. And we're not wasting money. That's the number. And the fact that somebody else says they think they could build another hotel for less, I don't know how, go to town. We're all going to be cleaning from the carpenters and the same electricians. I guess, we have a little bigger budget, so maybe we'll have a better chance of getting those people and recognize it. Well, Cripple Creek is a small town. Colorado Springs is not, and of course, Denver is not. And so like our parking garage is a, what we call it, it's a -- there's a construction term for it. Think of it as tanker toys. The slabs are poured in Colorado Springs and they're prefab and they're put on a truck, brought up and a crane puts them in place. So a lot of the stuff can actually be done not in Cripple Creek because Cripple Creek is a very small town.

--------------------------------------------------------------------------------

Lewis A. Fanger, Full House Resorts, Inc. - Senior VP, CFO & Treasurer [4]

--------------------------------------------------------------------------------

So more rooms, Dave, are ultimately going to be better for everyone. If you think about what Dan said earlier about the town clearing out at 6 or 7 at night and what I said about the threat of snow keeps people away because they don't want to get stranded in Cripple Creek without a room and there aren't a lot of rooms. And that's not the way that -- it's not the way that it should be, and so just having more rooms will help re-energize that town to a great degree, and we get super excited for our own place. So it's all to come.

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [5]

--------------------------------------------------------------------------------

I -- look, I said it was perfect. They're going to add 150 rooms, and I think those rooms are going to be inferior to ours. That's the best of our worlds. I mean, part of the reason Bellagio was so successful was Monte Carlo was built next door and was connected to it. And that was, by the way, by design. We knew that Bellagio would get most of the gaming revenue by the people staying at Bellagio, but that to make the numbers work, you really needed to have people staying at a less expensive hotel, who would also spend part of their gaming revenue at Bellagio. And so we were the partners in Monte Carlo, which is now Park MGM, and it was part of what made Bellagio successful. So to have somebody else build the Monte Carlo, that's great.

--------------------------------------------------------------------------------

David Brian Bain, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [6]

--------------------------------------------------------------------------------

Yes. And that's very helpful actually. I guess, if I could just ask one more. The New Mexico Racing Commission. My understanding is that they have a meeting coming up on Thursday and this is on their agenda. Is the conflict perhaps going to be one of the topics? I don't know about the Chairman will be called out in an agenda, but that and then the other question would be are there changes or anything going on by competitors? Or is this simply now sort of lying and wait for the injunction? And if that's so, do you have any visibility on timing? That would be helpful.

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [7]

--------------------------------------------------------------------------------

We really don't. It's our understanding that the Attorney in General told the Racing Commission that they should not come to a decision while the litigation is outstanding. The litigation, I think, is scheduled for a hearing in April, if I recall correctly. And so this is not a fast road to anything. And of course, the governor is new in her role, and she was a congresswoman. Now she's governor, and I'm sure she is scratching her head thinking what do I do here. And it could be anything from we're going to have a whole new Racing Commission and start the process all over to we're going to reopen it, so any bid -- any of the existing bidders can improve their bid to making the Chairman step down. Typically, what happens in a situation like this, all the members submit their letters of resignation and this is true in almost every state. And the new governor decides which ones to accept and which ones not to accept. So we don't know where this is going to shake out. We made what we think is a great proposal for the State of New Mexico. We think it's the best proposal. We're standing behind it. We have publicly called for this to be a clean, honest process, and we hope and believe that it will be.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

(Operator Instructions) At this time, we'll hear next from Macquarie's Chad Beynon.

--------------------------------------------------------------------------------

Jordan Maxwell Bender, Macquarie Research - Analyst [9]

--------------------------------------------------------------------------------

It's Jordan Bender on for Chad. Sorry, if you went over this, my line was a little breaking up during the beginning of the call, but do you guys expect an impact from the Silver Slipper renovation and how long will that last, if so?

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [10]

--------------------------------------------------------------------------------

No, not really. It's a -- while that makes a pretty big change in the place, it's really just new carpet, wallpaper, the buffet gets some new carpet and furniture as well. And like there's a big ASP that we're chiseling out and putting in kind of a nicer rock ASP and you just work around it. So it's something you do during the late night shift and an off week and there'd be some weeks where you'll go in and one side of the casino will be blue and the other side of the casino will be the new red, but it shouldn't be very disruptive.

--------------------------------------------------------------------------------

Jordan Maxwell Bender, Macquarie Research - Analyst [11]

--------------------------------------------------------------------------------

Okay. And can you give us an update on -- sorry?

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [12]

--------------------------------------------------------------------------------

Yes. I was going to say, casinos change their carpet all the time and our carpet needed changing. It was getting pretty bare, but we decided we wanted to not just change the carpet to a new copy of the old pattern, we wanted to change the pattern to make it bolder colors and pop a little more and bring in some elements of the seaside location. And so like the carpet has some palm fronds in it and that sort of thing. And so we just designed it. So you will walk in and say, wow, this is different, whereas casinos change their carpet all the time, just replace the cigarette stains and most of the time, you don't notice it. So...

--------------------------------------------------------------------------------

Jordan Maxwell Bender, Macquarie Research - Analyst [13]

--------------------------------------------------------------------------------

Okay. Can you give us an update on the impact from sports betting so far in Mississippi? And is it starting to drive any incremental visitation to the property?

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [14]

--------------------------------------------------------------------------------

Well, the property has done well over the last 6 months. The sports betting is a pretty small part of EBDIT, $200,000?

--------------------------------------------------------------------------------

Lewis A. Fanger, Full House Resorts, Inc. - Senior VP, CFO & Treasurer [15]

--------------------------------------------------------------------------------

Of EBITDA, yes, that's right.

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [16]

--------------------------------------------------------------------------------

Like $200,000 or $300,000, if I remember correctly, and we run a little better whole percentage than you would normally expect and there's absolutely no truth to the rumor that we paid off the refs of the game and kept the Saints out of the Super Bowl. But I was concerned about that because had the Saints bet on the Super Bowl, our customers were going to bet on the same, so it didn't matter what did with the line. So I actually kind of root for the same skills, they are our home team, but on a business sense, I was concerned about them being in the Super Bowl and they weren't, so we didn't have that problem. And frankly, our customer counts were up in the last half of the year, and certainly, the sports book probably helped that. But we were running pretty good results even before that. So I don't -- I think it's been a plus, but I wouldn't attribute all or even half of the improvement we had in the year to the sports book.

--------------------------------------------------------------------------------

Lewis A. Fanger, Full House Resorts, Inc. - Senior VP, CFO & Treasurer [17]

--------------------------------------------------------------------------------

Yes. If you think about, Jordan, the gross gaming revenue from that place, even excluding the sports book, we would have had a record gross gaming revenue quarter for what it's worth. So it's a place that really is firing on all cylinders and there's been a big shakeup in some of the ways we market and some of the kiosks -- kiosk ideas that Dan mentioned we're using in marketing over there, should address some of the direct mail, but we're doing a lot of smart things, the team there is doing a great job.

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [18]

--------------------------------------------------------------------------------

Yes, I'll give you 4 things that I think were important in the year there. One is the sports book, although I don't think that's first. Second, and this might be the most modern one, is the stuff that we did about 2 years ago. The Oyster Bar, the palm trees, the beach club, it's a much better sense of arrival now than it was 2 years ago. And it didn't -- I think that has an influence over time. Third, the City of Baton Rouge banned smoking at its casinos. And you'll notice that Baton Rouge's casino revenues have been down consistently for the last 9 to 10 months since that came into play. That has certainly helped us because our customers, who live on the Northshore Lake Pontchartrain go out of their driveway, they could turn right and go to bed. Or they could turn left and go to Waveland, Mississippi. And if they're smokers, they want to smoke, they can come to our place, and we have all sorts of ventilation systems to try keep our casino from being smoky, but we do allow gamblers to smoke. And then, the fourth thing was the Island View Casino, which is one of our biggest components. It's -- we have 2 primary competitors right where we are. Hollywood Casino is just a few miles from us and Island View is a little further down the road in Gulfport. But Island View is a really big property. So they're kind of a big competitor, may be our biggest competitor. And then we also compete with Harrah's in Downtown, New Orleans because the people in Northshore Lake Pontchartrain are equal distance from us as they are to Harrah's. And as I mentioned, we compete with some with Baton Rouge. We compete much less with Biloxi, which is further to the east. Well, Island View opened a big expansion last -- early last summer, they called their beach casino. It's pretty big investment. Big -- like second entire casino on their place with a bunch of new restaurants, and so on. And preparing ourselves for that, we implemented all sorts of new marketing programs that the property came up with and different ideas of how to make sure customers are like us. And we never had a blip in their expansion. And they got a rise in their revenues. I don't think they're getting a very good return on their expansion, but it was kind of like we went out with all these new marketing programs and some of it seem to work. And if you were to look at our financial statements over a period of several weeks, you can't even tell when they opened their expansion. So that was the fourth thing is just sometimes the creation of a new competitor causes you to get more creative about what you're doing and the new creative ideas turn out to be more important than the detrimental impact of the competitor. So those are the 4 things that I think happened. By the way, I should mention we are working getting the entitlements to be able to build another tower at the Silver Slipper. It's still a couple of years down the road, but it's something we're working on. So...

--------------------------------------------------------------------------------

Operator [19]

--------------------------------------------------------------------------------

And with no other questions, I'd like to turn things back to you all for closing remarks.

--------------------------------------------------------------------------------

Lewis A. Fanger, Full House Resorts, Inc. - Senior VP, CFO & Treasurer [20]

--------------------------------------------------------------------------------

Yes. No, thank you, guys. It was a great fourth quarter, and look forward to talking to you again in a few months.

--------------------------------------------------------------------------------

Daniel R. Lee, Full House Resorts, Inc. - President, CEO & Director [21]

--------------------------------------------------------------------------------

Okay. Thanks, everybody.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

And that does conclude today's conference. Again, thank you, all for joining us.