Full House CEO “not happy” with Q3 as net loss remains

Revenue during the three months to 30 September was actually higher by 5.9% year-on-year. The $75.7 million (£58.5 million/€70.3 million) surpassed $71.5 million that Full House posted in Q3 2023 with growth in all but one segment.

Casino, hotel and food and beverage revenue increased at Full House. However, revenue from other operations, including contracted sports wagering, fell 60.8% on the back of a sports betting deal concluding in Colorado.

The opening of its Chamonix Casino in Colorado aided topline growth in Q2 and total revenue from the state was up 178% year-on-year, even without a full advertising campaign.

However increased costs across the business more than offset slight revenue growth in Q3, leading to its net loss. Lee spoke of his frustration at this in the operator’s earnings call yesterday (6 November), saying Full House must look at expenditure moving forward to preserve future growth.

“There’s kind of no way around it,” Lee said. “It was not a good quarter and I’m not happy about it. Colorado in particularly was disappointing.”

Lee wants Full House to stop “wasting” dollars

Lee went on to say that Full House must make savings in certain areas to allow for profit to return in 2025. This, he said, could include both payroll and marketing spend.

“There’s some things like gaming taxes that grow with revenue, but things like payroll should not grow going forward and our revenues should be able to grow,” Lee said. “That should bode well for profits in 2025.

“We also made some marketing expenses that didn’t help the quarter. We just hired a new vice president of advertising for the entire company, somebody who’s got over 20 years of experience in the industry and she starts next week. She will help us make sure we’re targeting the advertising correctly and not wasting dollars.”

Sports betting declines overshadows casino growth in Q3

Breaking down Q3, operations in the Midwest and South generated the most revenue. Total revenue for the quarter hit $54.5 million, up 3.6%. This segment includes American Place in Indiana, Silver Slipper Casino and Hotel in Missippi and Rising Star Casino Resort in Illinois.

Full House noted continuing growth at American Place’s temporary site, although construction of a permanent facility is on hold due to litigation brought by the Potawatomi tribe against the Illinois Gaming Commission. Struggles at Silver Slipper, due to several storms hitting the Mississippi Gulf coast area in Q3, impacted visitor numbers.

Also in this segment, Full House is exploring plans to relocate the Rising Star Casino Resort to another Indiana location. Such a move would require legislative approval and would likely not complete for several years.

Elsewhere, West revenue rocketed 74.8% to $19.4 million, helped by the recent opening of Chamonix Casino Hotel in Colorado. Other locations in the region include Bronco Billy’s Casino, also in Colorado, as well as Grand Lodge Casino and Stockman’s Casino in Nevada.

Other developments in the West include an amended lease agreement for the Grand Lodge Casino, brokered in July. In addition, Full House in August agreed to sell the operating assets of Stockman’s to Clarity Game for a total of $9.2 million. This generated a $2.0 million gain in Q3.

Finally, contracted sports wagering revenue, covering on-site and online activities, dropped 77.2% to $1.8 million. This reflects the absence of the agreement that ceased in Colorado after April 2024, with its previous partners WynnBet and Churchill Downs both exiting the vertical. The $1.8 million figure also includes money paid back from a settlement agreement in Indiana, in July 2024.

Full House counts the cost of higher operating expenses

Turning to costs, operating expenses were 19.6% higher at $73.2 million, with notable rises across casino activities, food and beverage, hotel and selling, general and administrative.

This pushed operating profit down 76.9% to $2.4 million. When including finance costs, this left a pre-tax loss of $11.0 million, compared to last year’s $5.8 million loss.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) also dropped 43.2% to $11.7 million. The decline stems from a significant drop in contracted sports betting’s contribution, which CEO Lee said was caused by deferred revenue from market access agreements being realised in the prior year figures. This “makes the comparison look worse than it actually was” he admitted.

Full House paid $126,000 in income tax, leaving a net loss of $8.5 million, in contrast to last year’s $4.6 million profit. That 2023 figure, however, was massaged by $4.5 million worth of tax benefits.

Year-to-date loss hits $28.4 million

Looking at performance in the year-to-date, revenue for the nine months to 30 September hit $219.1 million, up 21.1%. However, the rest of the figures made for similar reading as in Q3.

Higher operating costs meant operating profit was only able to rise 5.0% to $4.2 million. In addition, after finance costs, pre-tax loss reached $28.2 million, far higher than $12.0 million last year.

After paying $211,000 in tax, net loss for the period topped $28.4 million, compared to last year’s $12.4 million loss. In addition, adjusted EBITDA fell 7.3% to $38.3 million.

However, Lee remains positive about current performance at Full House, saying if current trends continue, the operator could be set for a good year in 2025.

“Now I will also note that we actually are doing pretty well in October and November with some swings in win percentage and there’s some seasonality,” Lee said. But I’m hoping to have a fourth quarter that at least looks better than the third quarter. And then I think we’re set up to have a pretty good 2025.”