Financial Performance Highlights - Total revenues increased by 72.8%, from $41.4 million to $71.5 million [34] - Adjusted EBITDA increased by 165.9%, from $7.8 million to $20.6 million [34] - The Temporary contributed $6.8 million to Adjusted EBITDA in 3Q23 [34] Segment Performance - Midwest & South revenues increased by 77.4% to $52.553 million for the three months ended September 30, 2023 [5, 23] - Midwest & South Adjusted Segment EBITDA increased by 110.6% to $11.750 million for the three months ended September 30, 2023 [5, 23] - Contracted Sports Wagering revenues increased by 619.9% to $7.905 million for the three months ended September 30, 2023 [5, 23] - Contracted Sports Wagering Adjusted Segment EBITDA increased by 625.0% to $7.852 million for the three months ended September 30, 2023 [5, 23] Project Updates - A $250 million project in Cripple Creek, Colorado, is slated to include a luxurious new casino [4] - The project in Cripple Creek, Colorado, is scheduled to open on December 26, 2023 [13]

Other The Temporary / American Place. We were selected by the IGB to develop and operate American Place in Waukegan, Illinois. While the larger permanent facility is under development, we are operating The Temporary by American Place, which opened in February 2023. During 2023, we expect to invest approximately $75 million into this project (excluding pre-opening expenses and capitalized interest), consisting largely of $50 million of upfront gaming license payments remitted in the first quarter of 2023 (se ...

Financial Data and Key Metrics Changes - The company reported a 34% increase in revenues, primarily driven by the performance of the temporary casino in Illinois [78] - Adjusted EBITDA declined, but the temporary casino generated $4.1 million despite accounting charges, indicating a respectable performance for its first full quarter of operations [67][68] - The gaming revenue in July reached approximately $7.8 million, up about $1 million from the previous month, showing positive trends [104] Business Line Data and Key Metrics Changes - The temporary casino is ramping up operations and has become the third in the state for table games, indicating strong market penetration [51][80] - The company is focusing on increasing the number of table games and has expanded from 28 to 48 tables, although staffing limitations currently allow for only 30 to be operational on weekends [72][71] - The Silver Slipper property faced cost issues, with payroll rising significantly without a corresponding increase in revenue, which the company is working to control [68] Market Data and Key Metrics Changes - The company is experiencing competitive pressures in Indiana due to a new casino opening, impacting revenue performance [106] - In Illinois, the company is preparing for the opening of the Chamonix casino, which is expected to enhance market presence and revenue generation [57][60] Company Strategy and Development Direction - The company is actively designing the permanent American Place casino, incorporating lessons learned from the temporary operations, although construction has not yet started due to legal challenges [61] - The Chamonix casino is set to open on December 26, 2023, with significant investments in high-end amenities and marketing strategies to attract customers [58][82] - The company plans to enhance its marketing efforts to build a customer database, which is crucial for long-term revenue growth [105][81] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upward trends in admissions and gaming revenue, indicating a positive outlook for the temporary casino's performance [79][104] - The company is facing challenges with rising construction costs and competitive pressures but remains focused on long-term growth and profitability [106][108] - Management highlighted the importance of building a strong customer database to improve marketing efficiency and drive future revenue [81][105] Other Important Information - The company is not considering equity issuance for financing, indicating a preference for other funding sources [8] - The sports book operation is expected to start generating revenue in mid-August, contributing to overall financial performance [65] Q&A Session Summary Question: What are the expected margins for the Colorado property as it ramps up? - Management indicated that current EBITDA margins are in the high teens, with expectations that they will exceed 20% as operations stabilize and marketing efforts drive more traffic [100][104] Question: How is the Silver Slipper property performing amid competition? - Management noted that while competitive pressures exist, the primary issue has been rising internal costs, which they are working to control [106] Question: What is the timeline for financing the permanent casino? - Management stated that refinancing existing bonds will become cheaper starting in February, allowing for more favorable financing conditions [49][108]

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements detail the company's recent financial performance and position [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Consolidated Statements of Operations | Metric (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $59,382 | $44,383 | $109,488 | $85,806 | | Operating Income (Loss) | $594 | $8,219 | $(6,392) | $13,522 | | Net Loss | $(5,600) | $(4,355) | $(17,015) | $(4,245) | | Basic Loss Per Share | $(0.16) | $(0.13) | $(0.49) | $(0.12) | | Diluted Loss Per Share | $(0.16) | $(0.13) | $(0.49) | $(0.12) | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20at%20June%2030%2C%202023%20and%20December%2031%2C%202022) Consolidated Balance Sheets | Metric (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $671,134 | $595,329 | | Total Liabilities | $586,801 | $495,538 | | Stockholders' Equity | $84,333 | $99,791 | | Cash and Equivalents | $35,501 | $56,589 | | Restricted Cash | $78,078 | $134,587 | | Long-term Debt, net | $463,654 | $401,852 | [Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Consolidated Statements of Changes in Stockholders' Equity | Metric (in thousands) | January 1, 2023 | March 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $99,791 | $89,141 | $84,333 | | Net Loss (Q1 2023) | N/A | $(11,415) | N/A | | Net Loss (Q2 2023) | N/A | N/A | $(5,600) | | Stock-based compensation | N/A | $748 | $655 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Consolidated Statements of Cash Flows | Metric (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $1,702 | $4,188 | | Net Cash Used in Investing Activities | $(139,204) | $(65,026) | | Net Cash Provided by Financing Activities | $59,905 | $93,936 | | Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | $(77,597) | $33,098 | - Cash used in investing activities for H1 2023 included a **$50.3 million gaming license payment** for The Temporary/American Place and capital expenditures for Chamonix and The Temporary/American Place[217](index=217&type=chunk) [Condensed Notes to Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) [Note 1 — Organization](index=8&type=section&id=Note%201%20%E2%80%94%20Organization) - Full House Resorts, Inc owns, leases, operates, develops, manages, and/or invests in casinos and related hospitality and entertainment facilities[33](index=33&type=chunk) - The Company operates six casinos and is constructing Chamonix Casino Hotel and designing the permanent American Place casino destination, operating The Temporary by American Place in the interim[39](index=39&type=chunk) - The Company benefits from **seven permitted sports wagering "skins"** – three in Colorado, three in Indiana, and one in Illinois[39](index=39&type=chunk) [Note 2 — Basis of Presentation and Significant Accounting Policies](index=8&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) - The Company updated its reportable segments to Midwest & South, West, and Contracted Sports Wagering, effective Q1 2023, reflecting continued growth and realignment[34](index=34&type=chunk)[40](index=40&type=chunk) - In March 2023, the Company paid **$50.3 million** to the Illinois Gaming Board for required gaming license fees for The Temporary and American Place, which is deemed to have an indefinite economic life[50](index=50&type=chunk) - Revenue recognition for contracted sports wagering includes one-time "market access" fees recorded as long-term liabilities and recognized ratably over contract terms, plus a percentage of revenues subject to annual minimums[57](index=57&type=chunk) Deferred Revenue | Deferred Revenue (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Current | $2,000 | $1,651 | | Net of Current Portion | $8,524 | $8,856 | | Total | $10,524 | $10,507 | [Note 3 — Leases](index=12&type=section&id=Note%203%20%E2%80%94%20Leases) - The Company entered into a **99-year ground lease** for American Place in Waukegan, Illinois, with annual rent being the greater of $3.0 million or 2.5% of gross gaming revenue[82](index=82&type=chunk) - The Silver Slipper Casino Land Lease extends to 2058 with annual minimum rent of $0.9 million plus contingent rents of 3% of gross gaming revenue above $3.65 million per month[84](index=84&type=chunk) Lease Costs | Lease Costs (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Lease Costs | $2,976 | $1,631 | $5,559 | $3,295 | Lease Balances | Lease Balances (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Lease Assets | $53,759 | $24,145 | | Total Lease Liabilities | $51,851 | $22,211 | [Note 4 — Long-Term Debt](index=15&type=section&id=Note%204%20%E2%80%94%20Long-Term%20Debt) - In February 2023, the Company issued an additional **$40.0 million of senior secured notes**, increasing the total outstanding under the 2028 Notes to $450.0 million. Proceeds were used for The Temporary's opening (including Illinois gaming license fees) and general corporate purposes[96](index=96&type=chunk) - The Revolving Credit Facility due 2026 was amended in February 2023, increasing permitted additional indebtedness to $40.0 million and allowing for the issuance of the Additional Notes[5](index=5&type=chunk)[103](index=103&type=chunk) Long-Term Debt | Long-Term Debt (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Revolving Credit Facility due 2026 | $27,000 | $0 | | 8.25% Senior Secured Notes due 2028 | $450,000 | $410,000 | | Less: Unamortized debt issuance costs and discounts/premiums, net | $(13,346) | $(8,148) | | Total Long-Term Debt, net | $463,654 | $401,852 | [Note 5 — Income Taxes](index=18&type=section&id=Note%205%20%E2%80%94%20Income%20Taxes) - The Company continues to assess the realizability of deferred tax assets and maintains a valuation allowance against those that cannot be offset by existing deferred tax liabilities[109](index=109&type=chunk) Effective Income Tax Rate | Effective Income Tax Rate | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Rate | (11.1)% | 459.3% | (3.2)% | 1.0% | [Note 6 — Commitments and Contingencies](index=19&type=section&id=Note%206%20%E2%80%94%20Commitments%20and%20Contingencies) - Management does not expect the outcome of pending legal proceedings to have a material adverse effect on the Company's financial position, results of operations, and cash flows[111](index=111&type=chunk) - The Company entered an agreement with Circa Sports for on-site and online sports wagering in Illinois, receiving a **$5 million market access fee** and expecting revenue payments (subject to a $5 million annual minimum) to begin in August 2023[112](index=112&type=chunk) - A potential "Reconciliation Payment" for Illinois gaming licensure, calculated three years after operations, may be required, equal to 75% of the most lucrative trailing 12-month adjusted gross receipts, offset by prior licensing fees[113](index=113&type=chunk) [Note 7 — Earnings (Loss) Per Share](index=19&type=section&id=Note%207%20%E2%80%94%20Earnings%20(Loss)%20Per%20Share) - Anti-dilutive share-based awards were excluded from the calculation of diluted loss per share due to the net loss[120](index=120&type=chunk) Earnings (Loss) Per Share | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Basic Loss Per Share | $(0.16) | $(0.13) | $(0.49) | $(0.12) | | Diluted Loss Per Share | $(0.16) | $(0.13) | $(0.49) | $(0.12) | [Note 8 — Share-Based Compensation](index=20&type=section&id=Note%208%20%E2%80%94%20Share-Based%20Compensation) - In January and Q2 2023, the Company issued performance-based shares to executives, vesting based on compounded annual growth rates of Adjusted EBITDA and Free Cash Flow Per Share for three-year periods ending 2023, 2024, and 2025[121](index=121&type=chunk) - As of June 30, 2023, there was approximately **$2.9 million of unrecognized compensation cost** for unvested stock options (expected over 2.2 years) and **$2.0 million** for unvested restricted/performance-based shares (expected over 1.4 years)[118](index=118&type=chunk) Compensation Expense | Compensation Expense (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Stock options | $372 | $302 | $702 | $520 | | Restricted and performance-based shares | $283 | $185 | $701 | $310 | | Total | $655 | $487 | $1,403 | $830 | [Note 9 — Segment Reporting and Disaggregated Revenue](index=22&type=section&id=Note%209%20%E2%80%94%20Segment%20Reporting%20and%20Disaggregated%20Revenue) - The Company changed its reportable segments to Midwest & South, West, and Contracted Sports Wagering in Q1 2023, based on geographic regions and income type[125](index=125&type=chunk) - Adjusted Segment EBITDA is the measure of segment profit, defined as earnings before interest, taxes, depreciation, amortization, preopening, impairment, asset write-offs, disposals, development costs, and non-cash share-based compensation[126](index=126&type=chunk) Segment Revenues | Segment Revenues (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Midwest & South | $49,911 | $32,936 | $90,713 | $62,882 | | West | $8,089 | $9,278 | $16,213 | $17,924 | | Contracted Sports Wagering | $1,382 | $2,169 | $2,562 | $5,000 | | Total Revenues | $59,382 | $44,383 | $109,488 | $85,806 | Adjusted Segment EBITDA | Adjusted Segment EBITDA (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Midwest & South | $9,391 | $9,149 | $20,077 | $16,239 | | West | $177 | $1,684 | $234 | $2,191 | | Contracted Sports Wagering | $1,361 | $2,196 | $2,522 | $4,964 | | Total Adjusted Segment EBITDA | $10,929 | $13,029 | $22,833 | $23,394 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, condition, and future outlook [Executive Overview](index=26&type=section&id=Executive%20Overview) - The Company's primary business involves ownership and/or operation of casino and related hospitality and entertainment facilities, including six operating casinos and two under development (Chamonix and American Place)[136](index=136&type=chunk) - The Temporary by American Place opened in February 2023 and will operate until the permanent American Place facility is completed[136](index=136&type=chunk) - The Company benefits from **seven permitted sports wagering "skins"** – three in Colorado, three in Indiana, and one in Illinois[136](index=136&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) - The Temporary by American Place opened in February 2023, featuring 940 slot machines, 48 table games, and two restaurants, with a fine-dining restaurant and sportsbook expected later in the year[142](index=142&type=chunk) - A new 10-year mobile sports wagering agreement in Colorado began in March 2023, replacing a previous operator, bringing the total active Colorado sports wagering agreements to three with **annual minimums of $3 million**[143](index=143&type=chunk) - The Illinois retail and mobile sports wagering contract, signed in May 2022, includes a **$5 million upfront fee** and a minimum of **$5 million annual revenue**, with payments commencing in August 2023[144](index=144&type=chunk) - In February 2023, the Company issued an additional **$40 million in senior secured notes** and amended its credit facility to fund The Temporary's opening (including Illinois gaming license fees) and for general corporate purposes[146](index=146&type=chunk)[147](index=147&type=chunk) [Key Performance Indicators](index=28&type=section&id=Key%20Performance%20Indicators) - Key performance indicators include slot coin-in and table game drop (volume), slot win and table game hold percentages (win rates), hotel occupancy rate, and Adjusted EBITDA/Adjusted Segment EBITDA (profitability)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - Adjusted Segment EBITDA is a GAAP measure of segment profitability, while Adjusted EBITDA is a non-GAAP measure used for overall performance evaluation and debt covenant compliance[151](index=151&type=chunk)[228](index=228&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) [Consolidated operating results](index=29&type=section&id=Consolidated%20operating%20results) - The Temporary contributed approximately **$20.3 million** and **$30.7 million** to revenues for the three and six months ended June 30, 2023, respectively[241](index=241&type=chunk) - Operating expenses increased primarily due to The Temporary's operations, including $6.9 million in SG&A and $6.3 million in D&A for the three months, and $9.1 million in SG&A, $10.3 million in D&A, and $10.1 million in preopening costs for the six months[156](index=156&type=chunk) Consolidated Operating Results | Metric (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $59,382 | $44,383 | $109,488 | $85,806 | | Operating Expenses | $58,788 | $36,164 | $115,880 | $72,284 | | Operating Income (Loss) | $594 | $8,219 | $(6,392) | $13,522 | | Net Loss | $(5,600) | $(4,355) | $(17,015) | $(4,245) | [Interest and Other Non-Operating Expenses](index=31&type=section&id=Interest%20and%20Other%20Non-Operating%20Expenses) - Other non-operating income for the six months ended June 30, 2023, included **$0.4 million from insurance settlement proceeds** related to hurricane damage[256](index=256&type=chunk) Interest Expense, Net | Interest Expense, Net (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Interest expense (excluding bond fee amortization and discounts/premiums) | $10,062 | $8,660 | $19,082 | $16,051 | | Capitalized interest | $(4,097) | $(2,083) | $(7,569) | $(3,461) | | Interest income and other | $(1,076) | $0 | $(2,352) | $0 | | Total Interest Expense, Net | $5,633 | $6,988 | $10,452 | $13,387 | [Income Tax Expense](index=33&type=section&id=Income%20Tax%20Expense) - The Company does not expect to pay federal income taxes or receive refunds for 2023 due to anticipated taxable losses and continues to evaluate the need for a valuation allowance on deferred tax assets[245](index=245&type=chunk) Income Tax Provision (Benefit) | Income Tax Provision (Benefit) (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Income Tax Provision (Benefit) | $561 | $5,567 | $526 | $(45) | | Effective Income Tax Rate | (11.1)% | 459.3% | (3.2)% | 1.0% | [Operating Results – Reportable Segments](index=33&type=section&id=Operating%20Results%20%E2%80%93%20Reportable%20Segments) Segment Performance | Segment Performance | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Midwest & South Revenues | $49,911 | $32,936 | $90,713 | $62,882 | | Midwest & South Adjusted Segment EBITDA | $9,391 | $9,149 | $20,077 | $16,239 | | West Revenues | $8,089 | $9,278 | $16,213 | $17,924 | | West Adjusted Segment EBITDA | $177 | $1,684 | $234 | $2,191 | | Contracted Sports Wagering Revenues | $1,382 | $2,169 | $2,562 | $5,000 | | Contracted Sports Wagering Adjusted Segment EBITDA | $1,361 | $2,196 | $2,522 | $4,964 | [Midwest & South](index=34&type=section&id=Midwest%20%26%20South) - Midwest & South total revenues increased by **51.5% (QoQ)** and **44.3% (YoY)** for the three and six months ended June 30, 2023, primarily due to The Temporary's opening[262](index=262&type=chunk) - Same-store revenues (excluding The Temporary) declined by **10.2% (QoQ)** and **4.6% (YoY)** due to lower casino revenue and a timing difference in the $2.1 million "free play" sale at Rising Star[262](index=262&type=chunk)[201](index=201&type=chunk) - The Temporary contributed **$4.1 million** and **$7.7 million** to Adjusted Property EBITDA for the three and six months ended June 30, 2023, respectively, offsetting same-store Adjusted Segment EBITDA declines[174](index=174&type=chunk) - The Temporary is not yet at full capacity due to regulatory restrictions (e.g., operating hours, table game wagers) and staffing constraints, with plans to open a third restaurant and on-site sportsbook in H2 2023[202](index=202&type=chunk) [West](index=35&type=section&id=West) - Total revenues for the West segment decreased by **12.8% (QoQ)** and **9.5% (YoY)** due to planned business disruptions from Chamonix construction, including reduced capacity and temporary absence of hotel rooms and self-parking[176](index=176&type=chunk) - Adverse weather, particularly heavy snowfall in Nevada, impacted Grand Lodge Casino's results in Q1 and Q2 2023, delaying seasonal residents' return[178](index=178&type=chunk) - Adjusted Segment EBITDA decreased to **$0.2 million** for both the three and six months ended June 30, 2023, due to Chamonix construction disruptions, additional operating expenses for valet/shuttle services, and maintained payroll despite reduced activity[179](index=179&type=chunk) [Contracted Sports Wagering](index=37&type=section&id=Contracted%20Sports%20Wagering) - Revenues and Adjusted Segment EBITDA decreased for both periods, primarily because the prior-year periods included accelerated revenue recognition from two agreements that ceased operations in May 2022[208](index=208&type=chunk) - The Company is evaluating options for its remaining idle skin in Indiana (utilize itself or find a replacement operator)[208](index=208&type=chunk) - Revenue payments for the Illinois sports skin are contractually due to begin in August 2023, with an **annualized minimum of $5 million**[226](index=226&type=chunk) [Corporate](index=37&type=section&id=Corporate) - Corporate expenses declined by **55.2% (QoQ)** and **24.4% (YoY)** for the three and six months ended June 30, 2023, mainly due to decreased accrued bonus compensation, partially offset by increased third-party professional services[209](index=209&type=chunk) [Non-GAAP Financial Measure](index=38&type=section&id=Non-GAAP%20Financial%20Measure) - Adjusted EBITDA is a non-GAAP measure defined as earnings before interest, taxes, depreciation, amortization, preopening expenses, impairment, asset write-offs, disposals, project development/acquisition costs, and non-cash share-based compensation[228](index=228&type=chunk) - Adjusted EBITDA is used as a supplemental disclosure to GAAP measures, widely used in the gaming and hospitality industries for performance evaluation and as a basis for valuation[228](index=228&type=chunk) Adjusted EBITDA Reconciliation | Adjusted EBITDA (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(5,600) | $(4,355) | $(17,015) | $(4,245) | | Operating Income (Loss) | $594 | $8,219 | $(6,392) | $13,522 | | Adjusted EBITDA | $10,507 | $12,086 | $20,632 | $20,483 | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2023, the Company had **$113.6 million in cash and equivalents**, including $78.1 million of restricted cash for Chamonix construction[216](index=216&type=chunk) - Management believes current cash balances, available borrowing capacity under the Credit Facility, and operating cash flows will be sufficient to meet liquidity and capital needs for the next 12 months[216](index=216&type=chunk) - The Company expects to invest approximately **$75 million** in The Temporary/American Place project in 2023 (excluding pre-opening and capitalized interest), including $50 million for gaming license payments, and will likely need additional financing for the permanent American Place facility[222](index=222&type=chunk) - For Chamonix, the Company expects to invest **$115 million in 2023** and the remaining balance in 2024, with an expected opening on December 26, 2023[237](index=237&type=chunk) [Off-balance Sheet Arrangements](index=42&type=section&id=Off-balance%20Sheet%20Arrangements) - The Company has no off-balance sheet arrangements that are material to its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources[188](index=188&type=chunk) [Critical Accounting Estimates and Policies](index=42&type=section&id=Critical%20Accounting%20Estimates%20and%20Policies) - Critical accounting estimates and policies are described in Note 2 of the 2022 Form 10-K, and there have been no significant changes in estimation methods since the end of 2022[189](index=189&type=chunk) [Forward-Looking Statements](index=43&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements regarding growth strategies, construction budgets, operational performance, capital investments, sports wagering contracts, and financial resources, among others[191](index=191&type=chunk) - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of the Company's control, potentially causing actual results to differ materially[192](index=192&type=chunk) - The Company undertakes no obligation to publicly update or revise any forward-looking statements as a result of future developments, events, or conditions, except as required by law[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material quantitative or qualitative disclosures about market risk are reported - This section is marked "Not applicable," indicating no material quantitative or qualitative disclosures about market risk[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures as of the reporting date - As of June 30, 2023, the CEO and CFO concluded that the Company's disclosure controls and procedures were **effective at a reasonable assurance level**[196](index=196&type=chunk) - There have been **no changes in internal control over financial reporting** during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[198](index=198&type=chunk) [PART II OTHER INFORMATION](index=44&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal proceedings are not expected to materially impact the company's financial position - The Company is subject to various legal and administrative proceedings in the normal course of business[159](index=159&type=chunk) - Management does not believe that the final outcome of these matters will have a **material adverse effect** on the Company's consolidated financial position or results of operations[159](index=159&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) Key risks include regulatory challenges for growth projects and litigation concerning casino licenses - Growth projects, including Chamonix and American Place, may be subject to additional regulatory restrictions, delays, or challenges[160](index=160&type=chunk) - Lawsuits filed by an unsuccessful bidder for the Waukegan casino license could negatively impact the Company's ability to secure financing for American Place, delay its opening, or affect licensing[165](index=165&type=chunk) - The Illinois Gaming Board approved The Temporary to operate for a third year, but there's a risk of an operations gap between its closing and the permanent American Place opening if construction is delayed further by lawsuits or other factors[166](index=166&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) A list of exhibits filed with the report includes agreements and officer certifications - Exhibits include employment agreements, certifications of principal executive and financial officers (pursuant to Exchange Act Rule 13a-14(a)/15(d)-14(a) and 18 U.S.C. section 1350), and Inline XBRL documents[168](index=168&type=chunk) [Signatures](index=47&type=section&id=Signatures) The report is certified and signed by the Chief Executive Officer and Chief Financial Officer - The report was signed on August 8, 2023, by Daniel R. Lee (CEO) and Lewis A. Fanger (CFO), certifying compliance with the Securities Exchange Act of 1934[171](index=171&type=chunk)[172](index=172&type=chunk)

Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Delaware (State or other jurisdiction of incorporation or organization) FULL HOUSE RESORTS, INC. (702) 221-7800 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: (E ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended: December 31, 2022 ☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____ to ____ Commission File No. 001-32583 FULL HOUSE RESORTS, INC. (Exact name of registrant as specified in its charter) Delaware 13-3391527 (State or Other ...

Full House Resorts, Inc. (NASDAQ:FLL) Q4 2022 Results Conference Call March 7, 2023 4:30 PM ET Company Participants Lewis Fanger - Chief Financial Officer Daniel Lee - President and Chief Executive Officer Conference Call Participants David Bain - B. Riley Securities Ryan Sigdahl - Capital Group Chad Beynon - Macquarie Edward Engel - ROTH MKM Jordan Bender - JMP Securities John DeCree - CBRE Operator Greetings, and welcome to the Full House Resorts Inc., Fourth Quarter Earnings Call. At this time, all parti ...

Company Operations - Full House Resorts operates five casinos and is constructing two additional properties: Chamonix Casino Hotel in Colorado and The Temporary in Illinois[120]. - The company has seven permitted sports wagering "skins," with five contracted and four currently operational as of September 30, 2022[120]. - An agreement with Circa Sports was established to develop and manage on-site sportsbooks at The Temporary and American Place, with a non-refundable market access fee of $5 million received[133]. Financial Performance - Consolidated total revenues decreased by $5.8 million (12.4%) for the three months ended September 30, 2022, and by $9.7 million (7.1%) for the nine months ended September 30, 2022, primarily due to the absence of government stimulus programs and competitive pressures from online sports wagering[144]. - Operating expenses increased by $2.9 million (8.0%) for the three months and by $6.4 million (6.1%) for the nine months ended September 30, 2022, mainly due to preopening costs for new projects and higher insurance and food costs[145]. - Net loss for the three months ended September 30, 2022, was $(3,577) thousand compared to a net income of $4,619 thousand in the prior year, representing a decrease of 177.4%[144]. - Adjusted EBITDA for the three months ended September 30, 2022, was $7.8 million, compared to $13.6 million in the prior-year period[182]. - The company experienced a net loss of $3.6 million for the three months ended September 30, 2022, compared to a net income of $4.6 million in the prior-year period[182]. Revenue Breakdown - The company’s revenues are primarily derived from slot machines, table games, keno, sports betting, hotels, and food and beverage outlets[124]. - Casino revenues from slots decreased by $2,839 thousand (9.9%) for the three months and by $9,092 thousand (10.5%) for the nine months ended September 30, 2022[144]. - Non-casino revenues, net of food and beverage, decreased by $1,281 thousand (4.0%) for the three months and remained relatively stable with a decrease of $378 thousand (1.8%) for the nine months[144]. - Total revenues for the Mississippi segment decreased by 7.2% to $19,981,000 for the three months ended September 30, 2022, and by 8.4% to $62,432,000 for the nine months ended September 30, 2022, primarily due to declines in casino revenue[158]. - Total revenues for the Indiana segment decreased by 23.4% to $9,639,000 for the three months ended September 30, 2022, and by 5.3% to $30,069,000 for the nine months ended September 30, 2022[161]. - Total revenues for the Colorado segment decreased by 30.8% to $4,385,000 for the three months ended September 30, 2022, and by 31.6% to $12,732,000 for the nine months ended September 30, 2022, due to construction disruptions[166]. - Total revenues for the Nevada segment increased by 22.6% to $6,290,000 for the three months ended September 30, 2022, and by 11.6% to $15,868,000 for the nine months ended September 30, 2022[158]. Segment Performance - Adjusted Segment EBITDA for the Mississippi segment decreased by 34.7% to $4,235,000 for the three months ended September 30, 2022, and by 33.1% to $15,442,000 for the nine months ended September 30, 2022[160]. - Adjusted Segment EBITDA for the Indiana segment decreased by 64.8% to $1,343,000 for the three months ended September 30, 2022, and by 16.3% to $6,374,000 for the nine months ended September 30, 2022[165]. - Adjusted Segment EBITDA for the Colorado segment decreased by 97.7% to $36,000 for the three months ended September 30, 2022, and by 101.0% to $(49,000) for the nine months ended September 30, 2022[169]. - Adjusted Segment EBITDA for the Nevada segment increased by 48.3% to $2,280,000 for the three months ended September 30, 2022, and by 9.2% to $4,557,000 for the nine months ended September 30, 2022[160]. Costs and Expenses - Interest expense increased to $8,682 thousand for the three months ended September 30, 2022, compared to $6,557 thousand in the prior year, reflecting higher costs associated with new debt issuance[149]. - The effective income tax rate for the three months ended September 30, 2022, was (0.8%), compared to 2.0% in the prior year, primarily due to tax amortization effects and valuation allowances[152]. - Corporate expenses declined by 14.6% (or $0.2 million) and 14.0% (or $0.7 million) for the three and nine months ended September 30, 2022, primarily due to a decrease in accrued bonus compensation[179]. Future Outlook - The Temporary project is expected to open within the next three months, while the Chamonix project is anticipated to open in mid-2023, contributing to future revenue growth[145]. - The Illinois sports operations are anticipated to begin in Spring 2023, with a minimum expected revenue contribution of $5 million annually from a third-party agreement[178]. - The company plans to invest approximately $100 million in Chamonix for 2022 and $125 million in 2023, with an expected opening in mid-2023[197]. - The company plans to invest approximately $40 million in 2022 and $60 million in 2023 for The Temporary, including significant upfront gaming license payments[198]. Cash Flow and Debt - As of September 30, 2022, the company had $241.8 million in cash and equivalents, including $156.1 million in restricted cash for Chamonix's construction[188]. - Cash provided by operations during the nine months ended September 30, 2022, was $40,000, a decrease from $19.3 million in the prior-year period, primarily due to reduced revenues and income[189]. - Cash used in investing activities during the nine months ended September 30, 2022, was $117.2 million, mainly for capital expenditures related to Chamonix and The Temporary/American Place[190]. - Cash provided by financing activities during the nine months ended September 30, 2022, was $93.7 million, compared to $235.5 million in the prior-year period[191]. - Long-term debt as of September 30, 2022, was $410.0 million, with no drawn amounts under the Credit Facility[193]. - The company has significant outstanding debt and contractual obligations, with principal debt maturing in February 2028[192]. - The company expects current cash balances and available borrowing capacity to meet liquidity needs for the next 12 months[188]. Operational Challenges - The company faces significant fluctuations in quarterly operating results due to seasonality and variations in gaming hold percentages[125]. - Economic uncertainty from the COVID-19 pandemic has led to increased costs, labor shortages, and supply chain disruptions impacting operations and construction projects[128]. - The construction budget for Chamonix was revised from $180 million to approximately $250 million due to supply chain issues and inflation[197]. Internal Controls and Legal Matters - The company completed an evaluation of its disclosure controls and procedures as of September 30, 2022, concluding they are effective at a reasonable assurance level[210]. - There have been no changes in internal control over financial reporting that materially affected the company during the last fiscal quarter[212]. - The company is subject to various legal and administrative proceedings but does not expect these to have a material adverse effect on its consolidated financial position or results of operations[213].

Financial Performance - Consolidated total revenues decreased by 1.9% (or $0.8 million) to $41.423 million, primarily due to the absence of government stimulus programs and adverse hold percentages at two properties[137] - Operating expenses increased by 7.8% (or $2.6 million) to $36.120 million, driven by higher food and beverage costs and preopening costs for The Temporary[139] - Casino revenues decreased by 9.3% to $29.084 million, with slot revenues down 5.7% to $25.527 million and table game revenues down 15.3% to $3.275 million[137] - Non-casino revenues increased by 21.6% to $12.339 million, with "Other" revenues rising significantly by 99.2% to $3.649 million[137] - The company reported a net income of $110, compared to a net loss of $3,445 in the prior year, marking a 103.2% increase[137] - Adjusted EBITDA for the same period was $8,397 million, down from $10,769 million in the prior year, reflecting a decrease of approximately 22%[172] - Cash used in operations during the three months ended March 31, 2022, was $8.0 million, compared to cash provided by operations of $8.3 million in the prior-year period[177] Segment Performance - Total revenues for the Mississippi segment decreased by 4.7% to $21.3 million, with casino revenue declining by 8.5% or $1.4 million[151] - Adjusted Segment EBITDA for the Mississippi segment decreased to $6.0 million from $7.6 million in the prior year, impacted by competition from online sports wagering in Louisiana[153] - Total revenues for the Colorado segment decreased by 28.3% to $4.2 million, largely due to planned business disruptions for the Chamonix construction project[157] - Adjusted Segment EBITDA for the Colorado segment decreased by 118.7% to ($0.3 million) due to construction disruptions and increased operating expenses[161] - Total revenues for the Nevada segment increased by 1.0% to $4.4 million, driven by a 6.9% increase in slot revenue[164] - Adjusted Segment EBITDA for the Nevada segment decreased to $0.8 million from $1.2 million in the prior year, reflecting adverse table games hold and increased labor costs[165] - Contracted Sports Wagering segment revenues increased to $2.8 million from $1.0 million in the prior year, reflecting the addition of a new skin and acceleration of deferred revenue[167] Construction and Development - The company is constructing two additional properties: Chamonix Casino Hotel in Colorado and The Temporary in Illinois, expected to open in Fall 2022[117] - The construction budget for Chamonix was revised to approximately $250 million, up from $180 million, due to supply chain issues and inflation[185] - The company plans to invest approximately $125 million in Chamonix in 2022 and $100 million in 2023, with an expected opening in Q2 2023[185] - The company is expected to invest approximately $100 million throughout 2022 for The Temporary, pending regulatory approvals[186] Financing and Cash Flow - The company closed a private offering of $100 million in additional 8.25% Senior Secured Notes due 2028 to fund development and general corporate purposes[129] - Cash used in investing activities was $31.9 million, primarily for capital expenditures related to Chamonix and The Temporary, compared to $3.4 million in the prior-year period[178] - Cash provided by financing activities was $94.1 million, a decrease from $235.4 million in the prior-year period, largely due to different financing activities undertaken[179] - As of March 31, 2022, the company had $319.5 million in cash and equivalents, including $210.5 million of restricted cash for Chamonix construction[176] - Long-term debt as of March 31, 2022, was $410.0 million, with no drawn amounts under the credit facility[181] Corporate Governance and Compliance - The company completed an evaluation of its disclosure controls and procedures as of March 31, 2022, concluding they are effective at a reasonable assurance level[198] - There have been no changes in internal control over financial reporting that materially affected the company during the last fiscal quarter[200] - The company is subject to various legal and administrative proceedings but does not believe these will have a material adverse effect on its consolidated financial position[201] Economic and Market Conditions - The company anticipates ongoing impacts from COVID-19, including supply chain disruptions and inflationary pressures affecting operations and construction projects[125] - Interest expense increased to $6.4 million for the three months ended March 31, 2022, compared to $4.5 million in the prior year, primarily due to the issuance of Additional Notes in February 2022[142] - The company expects to reverse the tax benefit recognized as of March 31, 2022, in future periods as pre-tax book income offsets the year-to-date pre-tax loss[144]

Financial Performance - Casino revenues increased to $130,431,000 in 2021, up 43.7% from $90,812,000 in 2020[358] - Net income for 2021 was $11,706,000, compared to a net income of $147,000 in 2020, representing a significant increase[358] - Basic earnings per share rose to $0.36 in 2021, compared to $0.01 in 2020[358] - The company reported operating income of $37,554,000 in 2021, a substantial increase from $10,476,000 in 2020[358] - Total revenues for the Company in 2021 reached $180.159 million, with casino revenues contributing $130.431 million[515] - Adjusted Segment EBITDA for 2021 was $54.947 million, reflecting strong operational performance across segments[515] - The Company reported a net income of $11.706 million for the year, with income before income taxes at $12.141 million[515] - The Company incurred total depreciation and amortization expenses of $7.219 million in 2021[515] - Interest expense for the year was reported at $23.657 million, impacting overall profitability[515] Financial Position - Total assets increased to $473,842,000 in December 2021, up from $212,616,000 in December 2020[360] - Cash and equivalents grew to $88,721,000 in December 2021, compared to $37,698,000 in December 2020[360] - Long-term debt increased to $301,619,000 in December 2021, up from $106,832,000 in December 2020[360] - Total cash and cash equivalents as of December 31, 2021, amounted to $265.3 million, including $176.6 million of restricted cash for the Chamonix project[374] - The balance of accounts receivable reserves at the end of 2021 was $257,000, up from $176,000 in 2020, indicating a cautious approach to credit risk[522] Internal Controls and Audit - The Company maintained effective internal control over financial reporting as of December 31, 2021, based on criteria established in the Internal Control — Integrated Framework (2013) issued by COSO[338] - The audit opinion expressed by Deloitte & Touche LLP on the financial statements was unqualified, indicating no material misstatements were found[339] - The Company’s management is responsible for maintaining effective internal control over financial reporting and assessing its effectiveness[340] - The audit included evaluating the accounting principles used and significant estimates made by management, ensuring the financial statements are free of material misstatement[349] - The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting[342] Tax and Deferred Assets - The Company reported a valuation allowance for its US federal and certain state deferred tax assets amounting to $9.9 million as of December 31, 2021[352] - As of December 31, 2021, the Company had federal net operating loss carryforwards totaling $14.1 million and state tax carryforwards of $86.3 million[481] - The Company recorded a valuation allowance against its deferred tax assets (DTAs) as it has not met the "more likely than not" threshold for realization[483] - The Company has $1.1 million and $0.6 million of deferred tax liabilities relating to goodwill and other indefinite-lived intangibles as of December 31, 2021, and 2020, respectively[484] - Deferred income tax asset valuation allowance decreased to $9,866,000, down from $11,108,000 in 2020, reflecting improved tax asset management[523] Strategic Initiatives and Expansion - The company plans to continue expanding its market presence and investing in new projects to drive future growth[361] - The company is developing the Chamonix Casino Hotel in Cripple Creek, Colorado, which is expected to expand its operational footprint[365] - The company plans to open a temporary casino facility named The Temporary by American Place in Waukegan, Illinois, in Summer 2022[366] - The company is focusing on market expansion and new product development as part of its strategic initiatives moving forward[517] Debt and Financing - The company raised $310 million from Senior Secured Notes due 2028 and $42.9 million from an equity offering, enhancing its liquidity position[363] - The Company issued $310 million aggregate principal amount of 8.25% Senior Secured Notes due 2028, refinancing prior notes and adding approximately $8 million to unrestricted cash[434] - The Company closed a private offering of $100 million aggregate principal amount of additional 8.25% Senior Secured Notes due 2028, sold at a price of 102.0% of the principal amount[435] - The Company entered into a First Amendment to Credit Agreement, increasing the borrowing capacity from $15.0 million to $40.0 million, maturing on March 31, 2026[444] - The Company has no drawn amounts under the Credit Facility as of December 31, 2021[447] Lease and Property Management - The company recognized total lease costs of $6.808 million for 2021, an increase from $5.840 million in 2020[472] - The company purchased Carr Manor for $2.8 million, adding approximately 1.6 acres to its land ownership in Cripple Creek[476] - The company has future minimum lease payments totaling $41.625 million for operating leases and $3.748 million for financing leases[474] - The company has a finance lease for a hotel at Rising Star Casino Resort, with a purchase option based on the original cost of $7.7 million, currently netting $3.3 million[469] Stock Options and Compensation - As of December 31, 2021, the Company had 3,221,956 stock options outstanding with a weighted average exercise price of $2.19[500] - The Company recognized compensation expense of $966,000 for stock options in 2021, up from $405,000 in 2020[500] - The weighted-average grant date fair value of options granted in 2021 was $5.68, significantly up from $0.95 in 2020 and $0.94 in 2019[504] - Expected volatility for 2021 was 65.99%, an increase from 60.78% in 2020 and 46.17% in 2019[503]