A further update to its proposed casino development in Waukegan, Illinois, has been provided by Full House Resorts, with the company being one of three project bidders.
This has seen the company sign a letter of agreement with a multi-billion – dollar investment management company that it claims has casino building project expertise.
Under the terms of the commitment letter, the investment firm will provide approximately $300 m of non-recourse, development capital to build the site, as well as a temporary casino while the permanent venue is under construction, anticipating completely financing the American Place project.
Daniel Lee, Full House Resorts’ president and CEO, explained: “We continue to be one of three companies vying for a gaming license in Waukegan, Illinois. Last week, the Illinois Gaming Board indicated that it expects to choose its preferred developer in 2021, seemingly most likely in the spring or summer.
“We believe our American Place proposal is the most creative and dynamic of the proposals and should generate the greatest amount of investment, tax revenues and jobs for Waukegan and its surrounding communities. To augment our application, we recently executed a commitment letter to fund American Place, including both a temporary casino and the permanent facility.
“The commitment letter is with a multi-billion-dollar investment management firm that has experience with casino construction projects. Under the commitment letter and if chosen by the Illinois Gaming Board, Full House would invest $25m in the project as equity, will own no less than 60 per cent of the project, and will receive management fees for operating the casino and related amenities. As noted, the company currently has $34m of cash and equivalents.
“All of the project financing is anticipated to be limited to the Waukegan project and would not be guaranteed by Full House or its other subsidiaries. We look forward to the opportunity to formally present our proposal to the Illinois Gaming Board in the coming months.”
In its third quarter financial report, which announced a small decrease in sales to $42 m (2019: $44.3 m) due to operational constraints during the COVID-19 pandemic, the Las Vegas based casino developer and operator made the update.
For the reporting period ended September 30, 2020, net income rose to $7.7 million (2019: $704,000), with adjusted EBITDA finishing at $12.5 million, an improvement of 115.6 percent from $5.8 million in the third quarter of 2019. This strong development mainly reflects new marketing programmes and changes in personnel at the assets of the organisation.
“We had a phenomenal third quarter,” added Lee. “As we noted last quarter, we chose to reopen our properties conservatively in terms of amenities and hours of operation, given the uncertainty of the customer response to reopening in the midst of a pandemic.
“We are pleased that customers have generally responded positively, recognising that it is possible to operate a casino with appropriate social distancing and health safety measures. We think our positive results also reflect that people generally drive rather than fly to our casinos and that we do not rely on potentially pandemic-unfriendly amenities such as shows, nightclubs or convention facilities. Finally, we installed new slot management systems at two of our more important properties in late 2019.
“We used the pandemic-closure period to familiarise ourselves with those systems, analyse our customer data from late 2019 and early 2020, and reinvent our key marketing strategies, including our loyalty programs. All of these factors helped our operating income more than triple, and our Adjusted EBITDA more than double, over the prior-year quarter.
“We think that much of this improvement is sustainable. All of our properties still have operating restrictions in order to maintain social distancing, including the number of slot machines that we are permitted to operate, the number of people that we can accommodate at each table game, and restrictions on the types of food service we can offer, as well as the seating capacity of our bars and restaurants.
“In Colorado, we are still unable to offer any table games. Even with these restrictions, several of our properties, including our Colorado property, had their best months in history during the quarter.”