FLL

Business Context and Reporting Period

Company: Full House Resorts, Inc. (FLL)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three months ended March 31, 2026
Operations: The Company owns, leases, and operates casinos and hospitality facilities in Nevada, Colorado, Illinois, Indiana, and Mississippi. Key properties include American Place (IL), Silver Slipper (MS), Rising Star (IN), Chamonix/Bronco Billy's (CO), and Grand Lodge (NV). The Company also operates contracted sports wagering "skins."

Key Financial Metrics

Note: Debt principal includes $450.0 million in Senior Secured Notes and $30.0 million in Revolving Credit Facility borrowings.

Material Changes vs. Prior Period

• Revenue Decline: Total revenues decreased 0.8% year-over-year. This reflects growth at American Place and Rising Star, offset by the sale of Stockman's Casino (completed April 2025) and the termination of a contracted sports wagering agreement.
• Operating Income Improvement: Operating income increased 218.4% to $2.4 million, driven by a 3.0% reduction in operating expenses and improved efficiency at Chamonix.
• Segment Performance:
  • Midwest & South: Revenues up 3.8%; Adjusted Segment EBITDA up 13.1%.
  • West: Revenues down 13.0% due to the Stockman's sale and renovation disruptions at Grand Lodge; however, Adjusted Segment EBITDA improved 28.3% due to cost reductions at Chamonix.
  • Contracted Sports Wagering: Revenues down 34.6% due to fewer active skins compared to the prior year.
• Net Loss Reduction: Net loss narrowed by 16.5% to $8.2 million, primarily due to higher operating income and a reduction in the income tax provision.

Guidance, Outlook, and Risks

• American Place Construction: The Company intends to begin foundation work for the permanent American Place facility soon, pending Illinois Gaming Board approval. The project is estimated to cost approximately $302 million (excluding capitalized interest) and is anticipated to open in 18 to 24 months. A bill to extend the temporary facility's operation by 18 months beyond August 2027 has been introduced in the Illinois legislature.
• Liquidity: Management believes current cash balances ($31.4 million) and available credit facility capacity are sufficient for the next 12 months. However, significant capital investments for the permanent American Place facility will likely require additional financing.
• Debt Obligations: The Company has $450 million in Senior Secured Notes due February 2028 and a $40 million revolving credit facility extended to August 2027. The Company is currently compliant with financial covenants.
• Contingencies: The Company has accrued a $56.8 million "Reconciliation Payment" to the Illinois Gaming Board, payable over six years starting in 2026. The present value of this obligation is $48.4 million.
• Risks: Key risks include regulatory delays for the permanent American Place facility, construction cost overruns, and the potential inability to secure additional financing for capital projects.

Investor Verification Checklist

• Capital Funding: Verify the Company's strategy and timeline for securing the ~$302 million required for the permanent American Place facility, given the current cash balance of $31.4 million.
• Regulatory Approval: Monitor the status of the Illinois legislative bill to extend the temporary American Place operating license and the Illinois Gaming Board's approval for permanent facility construction.
• Debt Maturity: Assess the refinancing risk associated with the $450 million Senior Secured Notes maturing in February 2028.
• Segment Margins: Review the sustainability of cost reductions at Chamonix and the ramp-up trajectory for the new property.
• Illinois Reconciliation Fee: Confirm the impact of the $56.8 million long-term obligation on future cash flows and liquidity.