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Losses widen at Full House Resorts in first half


US casino operator Full House Resorts has put a year-on-year increase in net loss for the first half of 2020 primarily down to the temporary closure of its brick-and-mortar properties due to the novel coronavirus (Covid-19) pandemic.

Net revenue in the six months to June 30 totaled $45.4m, a drop of 44.8% from $82.2m in the same period last year.

Full House closed its casinos in Mississippi, Indiana, Nevada and Colorado in the middle of March. The first site – Silver Slipper Casino and Hotel in Mississippi – did not reopen until 21 May, while the others followed in the first few weeks of June.

This period of closure meant casino income took a significant hit, with revenue from casino operations dropping 44.1% to $31.7m. Food and beverage revenue also fell 48.6% to $9.0m, while hotel revenue was down 53.5% to $2.7m and other revenue – including online sports betting – slipped 4.8% to $2.0m.

Breaking down the results for each casino, the Silver Slipper Casino was the most successful in H1, generating $24.2m in revenue, though this was 36.7% lower than last year.

The Rising Star Casino Resort in Indiana followed with in revenue $10.3m, down 54.2%, then Bronco Billy’s Casino in Colorado with $6.7m, a drop of 49.6%. Full House’s Northern Nevada Casinos lagged behind with $4.2m in revenue for H1, down 48/8% year-on-year.

The shutdown of brick-and-mortar facilities meant operating costs and expenses were reduced by 32.9% from $79.0m to $53.0m. Casino costs were down 41.0% to $13.8m, while food and beverage spend was halved to $9.2m and hotel costs lowered from $4.8m to $1.6m.

Elsewhere, other operations expenses were down 54.6% to $835,000, while the costs associated with project development was slightly down to $4.0m. Selling, general and administrative costs – the main outgoing for Full House – were down 11.3% to $22.8m.

However, despite lower costs, the sharp drop in revenue meant that Full House posted an operating loss of $7.8m for the first half, compared to a profit of $3.2m last year.

Other expenses in the period totalled $3.4m, which meant loss before tax stood at $11.0m, compared to a loss of $2.3m at the same point in 2019. After taking into account $91,000 in tax benefits, Full House posted a net loss of $11.1m, compared to a $2.6m loss last year.

Reflecting on the first, half, Full House president and chief executive Daniel Lee said that while its casinos are now open again, the operator will continue to feel the impact of Covid-19 due to the ongoing restrictions in place across the states in which it is active.

“We still have significant constraints on our operations in order to ensure social distancing and address appropriate health safety concerns,” Lee said. “For example, we are not operating table games in Colorado and we have significantly limited our table game capacity in other markets.

“We are also incurring additional costs to sanitize equipment between guests, to police social distancing, to take temperature scans at every entrance, to have employees serve guests at buffets that were previously self-serve, and to provide masks and other protective equipment to employees and guests.”

Lee also referenced Full House’s progress with online sports betting, saying that the operator continues to “make great strides” in this market.

“Two of our six permitted ‘skins,’ or sports wagering websites, are now live, as Smarkets launched its sports wagering app in Colorado on 4 June,” he said. “It joins Churchill Downs’ BetAmerica, which launched in Indiana at the end of last year.

“Our final four skins are expected to launch in the third quarter, pending the receipt of customary regulatory approvals. When all of our contracted sports wagering websites have commenced operations, our sports wagering revenue, based on the contractual minimums, should total at least $7.0m on an annualized basis.”

Focusing on Full House’s performance during the second quarter – the period in which it was most impacted by the closures – net revenue was down 65.2% to $14.5m.

Silver Slipper Casino and Hotel only reopened on May 21, while the Grand Lodge Casino and Stockman’s Casino did not resume activities until June 4. Bronco Billy’s Casino and Hotel and Rising Star Casino Resort both reopened on June 15.

Costs were reduced by 52.9% to $18.7m, but Full House still posted an operating loss of $4.2m, down from a profit of $1.9m at the same point in 2019. Loss before tax amounted to $6.7m, and after paying minimal tax, its net loss also came in at $6.7m, compared to a loss of $1.0m last year.

“We continue to focus on our financial liquidity,” Lee said. “At the start of the pandemic, we stopped construction of our parking garage at Bronco Billy’s in order to conserve capital.

“We are currently in the process of finalizing a covenant waiver with our lenders for the June 30 period, and continue to discuss covenant amendments for future quarters. We continue to be very cautious, recognizing that the risks of the pandemic period are not yet entirely behind us.”