Full House Resorts Inc Q2 FY2023 Earnings Call

Greetings, and welcome to the Full House Resorts Inc. Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lewis Fanger, CFO of Full House Resorts. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to our second quarter earnings call. Before we begin, we did post some slides on the website. So if you go to investors.fullhouseresorts.com, you'll see that bronze banner. And if you hover over company info, you can go to the presentation section and find some of the slides that we'll discuss today, including a bunch of current photos of some work going on at Chamonix. 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 securities laws. I'd also like to remind you that the Company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for the discussion of risks that may affect our results. Also, we may make reference to non-GAAP measures such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as the various press releases that we issue. And lastly, we're 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 that said, ready to go, Dan.

All right. It's kind of a complicated quarter, so I'm going to figure out where to start. But we're busy these days, and the business kind of falls into four categories. One is still ramping up the temporary. This was its first full quarter of operations, and it did well, and it is getting better. The table games are starting to be a bigger factor, and we're still hiring more dealers. We now rank third in the state in table games as of the July numbers that came out yesterday. Our steakhouse should arrive in late September. It's disappointingly late. It's basically a large diner. It's coming in seven trucks, and they're trying to line up the permits to bring these oversized trucks from Florida to Illinois. And it's got to be assembled and opened, so it probably doesn't get open until sometime in the fourth quarter. The sports book should be up and running in September. So we're still pulling it together and still hiring people, but the trends are pretty good, and it's profitable. So it's going very much the way most successful new casinos go. The second big task is completing construction of Chamonix in Colorado. It's pretty unusual for a company our size to undertake two things at the same time, but we didn't pick the timing in Illinois, and that's how it ended up. And so we're preparing for it to open on December 26. It's not only completing the construction, which is a job in half, but also preparing for the opening. Along those lines, we made some pretty good progress with the staff, the high-end restaurant, which we intend to be one of the best, if not the best restaurant in the entire State of Colorado. We've done a deal with Barry Decadence from Barry's Prime Down at Circa. They used to run the 9steakhouse at the Palms. And before that, Barry was with REO, which is Charlie Palmers Company and was in Manhattan and he moved to Las Vegas, opened the one at Mandalay quite a few years ago. But this is a guy who's had Michelin Stars before. He knows how to run high-end restaurants in a casino setting. So we're excited to have them as part of the team. It's an outside chef deal, very much like most of the restaurants at Bellagio, where they get a percentage of revenues and a percentage of profit for running it, but it's our restaurant, so they're motivated to make it their restaurant as well. We have a pretty small part of the overall business, but we have a prominent jewelry store on the property. We have a consultant from Santa Fe, who's got a successful business there called Rock & Feather, and she's helped them pull together how to make our jewelry store special. In terms of new hires, we just hired Brett Modell, who I think started work actually today. That's a pretty important hire. He's Director of Non-Gaming Operations. Recognize that this is a high-end hotel that we're building here, and our team there has not operated a lot of this high-end stuff before, so we needed somebody with that experience. Brett grew up in New York City, but he's actually fluent in Mandarin. He's fully American; his wife is from China. He trained at Wynn Macau and then he helped open casinos in Vietnam and Nepal. He worked for Aman Resorts for a while in Bhutan. After working in China, he was running a hotel in Crested Butte, which is where we found him, and he and his family were relocating to our part of Colorado. We're excited to have him on board to ensure that the hotel, the spa, the meeting space, the food and beverage all live up to the expectations that high-end customers demand. So he's an important hire, and he starts today. The third task, of course, is we have an existing company with existing properties, and that's had some challenges. In particular, in this quarter, the Silver Slipper experienced some cost issues. The payroll went up quite a bit, and the revenues did not, which impacted the bottom line, and we're getting that back under control. We have a freeze on any new hires; we're looking at staffing numbers, and we'll get it under control. At Tahoe, there was a huge winter, and the gradual melting of snow delayed the return of summer visitors, which is pretty important. Now we're in the heart of the summer and it's doing better, but it affected it in the second quarter. It's an off-season quarter for the Tahoe property, and so it was down. In Colorado, the construction of Chamonix has been affecting Bronco Billy's for quite some time. That continues to be the case. The lack of parking has impacted our operations. We try to operate valet parking as best we can, and we shuttle from an outside lot, but all of our competition has on-site parking. We also don't have an on-site hotel; we have a Battenberg two blocks away. All of that will change when Chamonix opens. But at the moment, Bronco Billy's is making money in the summer; however, it wasn't in the second quarter. Rising Star in Indiana is doing okay, especially considering there is a competitor that didn't exist a year ago, that's the Churchill Casino at Sharp Park. I think it’s a mature market, so when someone adds a casino to a mature market like that, it becomes a market share game, and I think we're holding our own. The fourth task that we're busy with is designing the permanent American Place. We are incorporating a lot of what we've learned from the temporary. We haven't started construction yet; we're actively designing it, which costs some money. There’s a lawsuit from the Potawatomi tribe, our competitor to the north, who filed multiple lawsuits not against us, but against the city and the state, that may end up delaying the start of our construction and financing. I think ultimately, the lawsuits will be resolved, allowing us to move forward. That just happened last week; we thought this issue was pretty much gone, but they had appealed something, and the appellate court sent it back to a lower court, putting it back into flux a little bit. There’s unusual stuff because we have a lower tax rate in Indiana than most other casinos since we're the smallest one, and there's a progressive tax rate in Indiana. We have found it makes sense for us to sell our free play to players in a higher tax bracket, and we've done that every year for about five years now. We did it this year in the first quarter for $2.1 million, which was the same amount we did last year, but it was in the second quarter last year. Looking at year-over-year results, this affects things. Generally, we'll do it as early in the year as possible because you never know when unforeseen events may happen, like during the pandemic year when we were closed for three months. Fortunately, we had already sold the free play before that shutdown because if we hadn't, we might not have sold it for as much as we were able to sell it for. Regarding sports books, Churchill exited the online sportsbook business in the second quarter of last year. When they did that, they had paid us an upfront fee plus a percentage of the revenues. The upfront fees of these deals go into deferred revenue; when they pulled out, that accelerated the unamortized deferred revenues, leading to about $1 million of revenue and income in last year's second quarter. One of those sportsbooks that they backed out of, we now have a deal with a new company who paid us a new upfront fee and is paying us on a regular basis. The key figure here is the sports book operation in Chicago, where we repaid $5 million upfront, which again is deferred revenue. We will receive a minimum of $5 million a year from that, which starts in the middle of August, regardless of whether the sports book is actually up and running or not. We expect them to be operational pretty soon, and if they're successful, we will get more than $5 million a year. This is by far the biggest of these agreements. In Illinois and Indiana, each casino is allowed three websites; in Colorado, each casino has one website, but we have three licenses. There are quite a few small casinos in Colorado, each receives a license. In Illinois, there are 13 total casinos, and each gets one website. The population of Illinois is much larger than Colorado or Indiana combined, so each website is worth much more, which is why our agreement in Illinois is very important and expected to come on stream in the next week. There were some accounting issues, not unusual in a new casino. For example, our progressive slot machines have a progressive type jackpot; we missed starting those at zero. The amount when you open can be charged to pre-opening costs and is a liability. We missed recording about $300,000 for this, so we took that charge in the second quarter. We have a new finance person who helped us discover that. We believe we have everything straightened out now, but that was a bit of a surprise. We continue to incur training costs in Illinois as we are trying to hire more dealers. We are running our own dealer school and we pay dealers their wage during this training; we will also cover relocation costs. We're gradually getting there; we currently have enough dealers to operate 30 games on Saturday nights, with a potential maximum of 50. One of our key competitors has increased their dealer limits to $20,000 a hand. We don't want to do that until we have more experienced dealers. That's the main unusual stuff. All of this will clear up over the next few quarters. A year from now, we should be pretty mature at both new properties and generating a significant amount of free cash flow. On the presentation we put online, as Lewis mentioned, revenues increased 34%. This rise comes mainly from the temporary, which accounts for more than all of it. Adjusted EBITDA declined, but a good portion of that is due to the timing of the free play, the $1 million I mentioned from deferred revenue, and the temporary made $4.1 million despite the accounting charge I referred to. There are a couple of other smaller accounting charges, making it closer to 4.5% to 5% if you back those out. While this isn't where we expect it to stabilize, for our first full quarter of operations, it's respectable. We expect to have sports betting available soon. My comfort with the results in Illinois is reflected in the following slides. If you look at admissions, they have been trending up nicely since April. Initially, when we opened, many tourists would come into town, what Mike Edson used to refer to as 'lucky loose.' People would come to look at the casino but wouldn't gamble much. Over time, we built a mailing list and started replacing tourists with gamblers. Since April, we've seen a steady increase in admissions, which is reflected in the following slide. Our slot coin-in has also been steadily increasing. Our table games drop has likewise increased. On table games, this is also influenced by the fact that we are offering more tables at any given time and operating them for more hours than before, allowing for larger bets over time. If you plotted these charts on the same scale, you would see that the growth for table game drops is actually increasing faster than the slot coin-in, resulting from the increased table availability. Much of our growth currently is coming from table games, although we are still seeing growth in slots. Slots will always be the primary segment of our business, but table games will play a significant role in some markets, even if not in others. Looking back when we opened, we had 28 table games. By mid-May, that number increased to 36, and currently, we have 48. However, we don't have enough dealers to operate all 48 games. About 30 tables are open on weekends, but we pull people from potential shifts during the week to have more tables open on weekends. Generally, our table games have a minimum bet of $15, although during certain times of the week, we have a $100 table as a loss leader. As I mentioned earlier, in July, we were third in the state, which is impressive for a venue that's only been open for a few months. We expect to extend our table game hours to 4 a.m.; currently, we close at 2 a.m. Our guest database is now at about 40,000 people, which is significant since we started at zero. Eventually, this will allow us to become more efficient with our marketing costs. We are still spending considerable amounts on marketing and advertising to get our brand out there and to let people know we exist. Over time, we are gradually becoming more targeted, thanks to a larger database. It’s similar to a fishing analogy; if you show up at a lake you’ve never fished before, you may not know where the fish are, so you try different spots. As you learn the area and gain experience, you discover which spots are more fruitful. We are progressively doing that with our casino in a market we have no previous experience in. On Chamonix on Page number 10, we show the original renderings of the project. It's very large for Cripple Creek standards. I remind myself that it’s about 10% of the size of the casinos we've built in Las Vegas. But it’s a significant effort for our small company; the budget is $250 million. It's a high-end casino with 300 guest rooms. I remember when Steve Wynn opened the Golden Nugget in Atlantic City; it had 500 guest rooms and was generating $100 million a year in income 25-35 years ago. With the right people and enough guest rooms, you can be very profitable. I mentioned the steakhouse; we also have a rooftop pool and spa, a beautiful parking garage, and we plan to open on December 26. We'll receive construction turnover early in December, and our employees will undergo practice sessions before going home for Christmas with their families, and we'll open the day after. This experience resembles a family gathering where everyone comes together for Christmas, and the following day, they want to find something to do. We hope to provide that opportunity at our opening. We are planning a significant party for December 31, serving as both an opening celebration and a New Year’s Eve event. Page number 12 showcases the facade's intricate brickwork; our building is constructed with real brick, unlike some competitors who use brick veneer that has begun peeling. Our investment covers sophisticated brickwork that integrates seamlessly with the town's historical architecture. Most hotel rooms are within the glass structure on top of the building, designed to blend in and reflect the clouds and mountains. A jewelry store takes up a square building in front, and once we obtain city approval, we will close Second Street since this building will sit across it. One of the commissioners wanted to avoid a gap in the street facade, suggesting we put an old streetcar there for tourist information, but we chose to build a jewelry store in a streetcar-sized space. This addition aligns well with casino culture, allowing customers to use their winnings to purchase jewelry, making it a valuable amenity for the city. The high-end restaurant is located through the windows on the left; a chimney exists for valet pickup and an outdoor fireplace to warm guests while waiting for their cars. This is essential in a cold climate; the main valet entrance is located behind the jewelry store. The next page shows the main gaming area. The tall outer windows will be shaded with curtains inside since we aim to limit sunlight exposure inside the casino, but we want to maintain a regal appearance on the outside. The following page displays the table games pit. As I mentioned earlier, the large window on the outside will feature curtains. The table games area is designed elegantly, featuring intricate moldings. To the left, you can see a steel door that will typically be open; it serves as a fire escape to the historic building. The initial historic building construction will also be partially done; we need to ensure there's a firewall in between. As you go through that door and continue walking, you will find yourself at Bronco Billy's. I'm not sure why Lewis included a public restroom image, other than to show how nice they appear.

Dan, really quick. On Slide number 13 as well, it's important to note that the existing properties are integrated very tightly. You won’t have to leave Bronco Billy's to access Chamonix casino. It's essentially attached.

Yes, it's a lot like going from Tomorrowland to Fantasyland at Disneyland. It has a different theme; you have to go through an arch that says 'Welcome to Bronco Billy's' in one direction and 'Welcome to Chamonix' in the other. The points are transferable from one to the other, but each has its own unique theme. Chamonix has a more modern European and sophisticated effect, while Bronco Billy's embodies the historic Wild West charm of Cripple Creek. On Page number 14, you can see the back of the property, highlighting our parking garage that connects directly to the casino. Certain decorative elements are yet to be added, but overall, we’re making progress. You can also see that without occupancy permits, we can't utilize the parking garage for Bronco Billy’s right now since the elevators lead directly into the Chamonix casino. Page number 16 features the table games pit. There are elegant designs being integrated throughout the area, and a fire door will connect the new Chamonix building to the historic structure. I won’t elaborate on the restroom beyond stating it looks quite nice. Slide number 18 displays the escalators that lead to the meeting space on the second floor. Significant surface parking is accessible via this floor. On Slide number 19, you can see the main ballroom, which is spacious by Colorado standards. This offers a crucial advantage over competitors, enabling us to efficiently fill in midweek gaps with meetings and events due to the availability of high-quality meeting space, which our competitors lack. One more thing to mention, the layout allows us to organize outdoor events in the courtyard, which connects directly to the meeting rooms and provides easy access from the parking lot via the escalators. In the guest rooms, not all have both showers and bathtubs, but many do. Many rooms have a freestanding bathtub and a glass-door shower. Page 24 shows a room design featuring a Murphy bed, accommodating couples traveling together or offering additional space for families.

I think we're ready for questions, operator.

Thank you. We will now begin the question-and-answer session. One moment, please, while I gather questions. Our first question comes from Jordan Bender with JMP Securities, please go ahead.

Good afternoon, thank you for taking my question. I want to start on the funding for the permanent casino in Illinois. Looking at my model, it seems you’ll need to raise the permanent funding sometime in the middle of next year. Can you provide an update on that timing, as well as the optionality for potential sources of that funding? Thank you.

Well, we've always maintained that the timing you've mentioned is roughly what we anticipate. Our existing bonds become callable in February, which will make refinancing them cheaper. However, that's still seven months away. The bond market has its trends; it's not a great bond market today, but it isn't horrible either. And now we have the pending lawsuit that may also factor into things. Fortunately, on our license, there’s no deadline for when we must open. However, some limitations exist regarding how long we can operate the temporary facility. It's possible that might be revisited. We want to move forward as quickly as possible because we believe the permanent establishment offers greater profitability than the temporary one. We continue to refine the design, as I previously mentioned. While you’re correct in thinking that we'd like to arrange financing by the middle of next year, if financing comes at an exorbitantly high interest rate, we would need to reassess our options. We still have a standby facility with a large private equity firm, though it’s a costly option. We aim to secure financing at a lower rate, and our stock is inexpensive at these prices. Therefore, issuing equity is not an option we would contemplate. We could explore a REIT deal, as they have with the downtown project where a REIT provides most or all of the financing. Once Chamonix opens, we should generate considerable free cash flow, making financing easier the longer we take. We'd prefer to move sooner rather than later, but delays can be beneficial as they may improve financing options. So, we're not in a rush; we have about a year to consider this issue.

Great. As a follow-up, turning to Colorado, historically the property has seen margins of around 10% to 20%. As it ramps up, do you think it could exceed that 20% margin? What will the ultimate margin profile look like when fully ramped?

Yes, I believe we can achieve quite high margins there, similar to what Monarch does. The gaming tax in Colorado follows a progressive rate, capping at 20%. If you're the leading property in a market, you typically see better margins due to less marketing being required. Once, a long time ago, the CFO of MGM called me when I was at Mirage Resorts and wanted to know our advertising spending. I answered $5 million. He said that wasn’t possible since MGM spends $30 million. I had to clarify that a significant portion of our cost was for advertising the volcano attraction. The MGM needed to market their facilities more extensively. By being the best property in the market, we expect our margin profile to improve significantly over time. This won’t happen immediately; it takes time to reach those targets.

To provide additional context, consider our experience with Silver Slipper. Before its hotel opened, casino revenues would drop off substantially during the night. This was mainly due to guests not wanting to drive home tired or intoxicated. Once the hotel opened, the utilization of our assets, such as slot machines and restaurants improved significantly, enhancing margins considerably.

That’s very helpful. I appreciate it.

Monarch doesn’t break out Reno from Black Hawk, but prior to the opening of Black Hawk, they were seeing revenue figures around $100 million there. They have only two properties, but it's clear they are performing well. Although they are located an hour west of Denver while we are less than that from Colorado Springs, they still face significant competition. It’s worth noting that assembling land in Cripple Creek is challenging; it took us years. Beyond that, we expect to be the leading casino in the region for some time.

Thanks, Dan. Thank you, Lewis.

Next question comes from Ryan Sigdahl with Craig-Hallum Capital Group; please go ahead.

Good afternoon, gentlemen. You've covered a lot, so I have two more specific questions. Both related to the temporary aspect: how much of a cost burden does the dealer school present? I understand it’s necessary, but I'm curious about the cost involved. Additionally, regarding revenue, how have margins trended over the past couple of months and into July with the increase in revenue?

The dealer school isn't a major expense; it's likely between $30,000 to $50,000 monthly, which includes the salaries of those being trained and their instructors. There are other employees being trained as well, but the dealer school is manageable. There has been some drag on margins; our marketing campaign is still robust, and as we grow our database, we will become more efficient. That said, we've been profitable during our first full quarter of operations, which is commendable, considering many casinos operate at a loss initially. Look at Bellagio; their inaugural quarter wasn't stellar, and they’ve now achieved significant profitability for over 25 years. We are off to a good start; while revenues and profits aren't where we want them yet, trends are favorable.

Currently, EBITDA margins are running in the high teens. As I mentioned, marketing spending is higher because we need to attract customers who may disregard the temporary facility's appearance based on its exterior. Once they enter, they realize that it’s much more appealing inside. Therefore, our marketing efforts to build our database and transition the perception of our venue are crucial and may continue for a few more months. The trends are positive. In July, we recorded gaming revenue of around $7.8 million, marking about a $1 million increase from the previous month. So the trends are promising, which gives us optimism.

Most casinos in the state have been operating for over 20 years. Rivers, for instance, has been operational for approximately 12 years. The only recent competitor is the new casino in Rockville, which opened about a year before us. After just a few months in operation, we've achieved the position of third in table games and sixth or seventh overall, which is impressive given that our competitors had a substantial head start.

I'll provide an additional data point: When you look at the first full month results of Rivers Casino, they annualized to approximately $409 million. However, looking a year later, that figure was roughly $406 million, while today, they’re close to $600 million a year in gaming revenue. Although they have expanded since their opening, we can expect similar upward moves in our revenue as we establish our operations here.

Thank you, Dan and Lewis. Best of luck in the coming quarters.

Next question comes from Chad Beynon with Macquarie; please go ahead.

This is Sam on behalf of Chad. Thanks for taking the questions. Could you speak to any consumer trends or changes in the promotional environment during the quarter and into August?

We have so many significant projects ongoing that this queries seem less pressing. Regarding Silver Slipper, the property has complained about competitive impacts from nearby competitors. However, when delving into the numbers, we identified that our rising costs were more to blame, and we're looking to rein that in. I can’t claim there isn’t competitive pressure, but whether that's tied to broader economic conditions remains uncertain. In Indiana, revenue has softened; whether that stems from wider economic issues is complicated since a new casino has opened across the river. I can’t identify signs of recession specifically; it’s hard for us to pinpoint since we have so much going on right now. A larger casino operator like Penn National, with numerous properties nationwide, might provide better insight into that question.

In the case of Silver Slipper, as a follow-up to Dan's point, our admissions are down due to a '21 and over' policy that we didn’t have a year ago. You now must enter the casino to access the buffet, so you’d expect admissions to decline. Wind per admission has risen, but because the denominator is lower, you can anticipate that number rising. We're seeing more rated players lately as opposed to unrated ones, indicating a potential drop-off in unrated play, although it appears that rated customers are still participating.

Great to hear. As a follow-up, any updates on your strategy concerning the remaining sports betting skins, and what about future iGaming opportunities in your operational states?

We still have one remaining, which is in Indiana, and we’re actively looking for a suitable operator. With iGaming on the horizon, should it become legalized in our regions, we will have to evaluate potential partnerships and follow through our own approach. It’s possible we may pursue both strategies; offering one license to an operator while retaining another for ourselves. We opted not to dive into sports betting personally due to the risks involved, such as becoming imbalanced if a local team is in a championship game. Instead, we decided to partner with experienced operators to share in the revenue. However, in iGaming, where players can participate in slots online, the many independent statistical events create a safer scenario for us. This is especially true as we have a solid database to draw from; our physical casino's customer base provides an accessible audience to market to. If individuals are unable to visit us physically or want to play virtually, we can encourage them to use our online platforms. Many casinos have successfully utilized their mailing lists to build an online clientele, which is a direction we’ll consider when the time is right.

Thanks for the insights, Dan and Lewis.

Next question comes from Edward Engel with ROTH MKM; please go ahead.

Thanks for taking the question. Regarding dealers in Blackhawk, when do you anticipate being able to operate 40 to 50 tables on weekends? Might that be possible by the end of the year, or is this more based on a gradual progression?

We’re likely about a month away from operating 40 to 50 tables weekly. We’re making progress. Most experienced dealers are already employed at rivers, so we've had to become creative in our recruitment efforts. We're offering relocation bonuses for experienced dealers from locations such as Wisconsin and developing our own dealer training program. In Colorado, we face a less demanding environment since many existing dealers at current casinos are enticed by the modern facilities we’re constructing. We aim to be prepared to operate the full table game pit by the time Chamonix opens in December.

Helpful, thank you. Regarding the Serta Sportsbook, which opens in September, are there any marketing events planned? I assume that would be on their expense line?

For the in-house sportsbook, we share revenue. While we haven’t figured out all the details yet, we will certainly publicize its opening and hold some type of event, but I don’t anticipate it will be a substantial expense. I guess we probably have time for one last question.

Last question comes from John DeCree with CBRE; please go ahead.

Hi, Dan and Lewis, thanks for taking my question. Just to circle back to the topic of margins, could you discuss where you see margins landing in the temporary setup? Is it more dependent on normalizing labor costs and marketing expenditures, or is the larger driver a result of increasing revenue as the facility ramps up?

It's a blend of both; as revenues trend upward, as indicated by results in admissions and revenue per admission, it will influence our gaming tax positively. While higher revenue generally leads to increased taxes, payroll and operational costs remain relatively fixed. Even with a 50% revenue increase, payroll probably wouldn’t escalate by more than 10%. Meanwhile, on the marketing side, we expect to become more efficient over time. However, marketing expenditures won't simply vanish; our goal currently is to inform potential customers that our temporary facility has much more to offer than meets the eye. To add context, in Illinois, regulatory procedures can delay processes; once the sportsbook is set to open, we'll need time to engage our customers and facilitate awareness. This implies there may be associated marketing costs for the opening and promotion of the sportsbook. As a general note, turnover fluctuations are common in new casinos. When we opened Bellagio, we started with around 10,000 employees and lost about a third within a few months as some staff members realized they weren't suited for the jobs. This would necessitate ongoing hiring and training, which would again affect costs. As we seek to stabilize our workforce, our costs will normalize. Generally, no casino sees peak margins in their first quarter; commonly, maximum margins trend upward over time, taking around two years to stabilize. The normalized margin is expected to be around 30% in Illinois; it could be higher, depending on our operational efficiency and other factors. In Colorado, we're optimistic that margins may eventually surpass that due to a more favorable gaming tax structure.

That makes sense. Thank you for your insights.

I think we're done here. Thank you all for attending.

Thank you, John. Thank you everyone. We're very busy, and over the next six months, everything will normalize. We're eager to open Chamonix and eventually move forward with plans for the permanent casino; we will proceed when the timing is appropriate. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.