FULL HOUSE RESORTS INC

Previous wording

Our primary business is the ownership and/or operation of casino and related hospitality and entertainment facilities, which includes offering, among other amenities, casino gambling, hotel accommodations, dining, golf, RV camping, sports betting, entertainment and retail outlets. We currently operate seven casinos: six on real estate that we own or lease and one located within a hotel owned by a third party. In February 2023, we opened our temporary American Place facility, which we are permitted to operate until August 2027; we have begun the design work for the permanent gaming resort facility that we plan to build on adjoining land. In December 2023, we began the phased opening of our newest property, Chamonix Casino Hotel (“Chamonix”), located adjacent to our existing Bronco Billy’s Casino in Cripple Creek, Colorado. Additionally, we benefit from seven permitted sports wagering “skins” – three in Colorado, three in Indiana, and one in Illinois.

Current wording

Our primary business is the ownership and/or operation of casino and related hospitality and entertainment facilities, which includes offering, among other amenities, casino gambling, hotel accommodations, dining, golf, RV camping, sports betting, entertainment and retail outlets.

Previous wording

We set minimum and maximum betting limits for our slot machines and table games based on market conditions, customer demand and other factors. Our gaming revenues are derived from a broad base of guests that includes both high- and low-stakes players. At Silver Slipper, our sports book operations are in partnership with a company specializing in race and sports betting. At Rising Star, Bronco Billy’s, and American Place, we have contracted with other companies to operate our online sports wagering skins under their own brands in exchange for a percentage of revenues, as defined, subject to annual minimum amounts. Our operating results may also be affected by, among other things, overall economic conditions affecting the disposable income of our guests, weather conditions affecting access to our properties, achieving and maintaining cost efficiencies, taxation and other regulatory changes, and competitive factors, including but not limited to, additions and improvements to the competitive supply of gaming facilities, as well as pandemics and similar widespread health emergencies.

Current wording

We set minimum and maximum betting limits for our slot machines and table games based on market conditions, customer demand and other factors. Our gaming revenues are derived from a broad base of guests that includes both high- and low-stakes players. At Silver Slipper, our sports book operations are in partnership with a company specializing in race and sports betting. At Rising Star, Bronco Billy’s, and American Place, we have contracted with other companies to operate our online sports wagering skins under their own brands in exchange for a percentage of revenues, as defined, subject to annual minimum amounts; the same company also operates our on-site sports book at American Place. Our operating results may also be affected by, among other things, overall economic conditions affecting the disposable income of our guests, weather conditions affecting access to our properties, achieving and maintaining cost efficiencies, taxation and other regulatory changes, and competitive factors, including but not limited to, additions and improvements to the competitive supply of gaming facilities, as well as pandemics and similar widespread health emergencies.

Previous wording

Chamonix Casino Hotel. Designed to integrate with our adjacent Bronco Billy’s Casino, Chamonix is the only luxury casino hotel located near the Colorado Springs metropolitan area. On December 27, 2023, we began its phased opening, starting with the casino, meeting space, and approximately one-third of its 300 guestrooms. The remainder of Chamonix’s guestrooms came online gradually during the first quarter. Our high-end steakhouse, 980 Prime, began welcoming its first guests in April 2024, while our rooftop pool and portions of our spa opened in late-May 2024. During the second half of 2024, we expect to complete the opening of Chamonix’s spa and unveil its street-front jewelry store.

Current wording

Chamonix Casino Hotel. Designed to integrate with our adjacent Bronco Billy’s Casino, Chamonix is the only luxury casino hotel located near the Colorado Springs metropolitan area. On December 27, 2023, we began its phased opening, starting with the casino, meeting space, and approximately one-third of its 300 guestrooms. The remainder of Chamonix’s guestrooms came online gradually during the first quarter. Our high-end steakhouse, 980 Prime, began welcoming its first guests in April 2024, while our rooftop pool and portions of our spa opened in late-May 2024. We completed the opening of Chamonix in the fourth quarter of 2024 with the jewelry store and the rest of the spa.

Previous wording

Contracted Sports Wagering Amendments and Settlements. In July 2024, we entered into amendments with a contracted party to settle overdue payments owed to our subsidiaries in Colorado and Indiana totaling $2.9 million for approximately $2.1 million, with such payment due to us in the third quarter of 2024. These amended sports wagering contracts also included the reduction of certain future annual amounts, which are now required to be paid in advance of each annual term.

Current wording

Contracted Sports Wagering Amendments and Settlements. In July 2024, we amended two contracted sports wagering agreements, resulting in the collection of a total of $2.1 million. Specifically, these amendments settled overdue payments owed to our subsidiaries in Colorado and Indiana, reduced certain future annual amounts due to us under the agreements, and now requires such annual fees to be paid in advance of each annual term.

Previous wording

Same-store Adjusted Segment EBITDA is Adjusted Segment EBITDA further adjusted to exclude the Adjusted Property EBITDA of properties that have not been in operation for a full year. Adjusted Property EBITDA is defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening expenses, certain impairment charges, asset write-offs, recoveries, gain (loss) from asset disposals, project development and acquisition costs, non-cash share-based compensation expense, and corporate-related costs and expenses that are not allocated to each property.

Current wording

Same-store Adjusted Segment EBITDA is Adjusted Segment EBITDA further adjusted to exclude the Adjusted Property EBITDA of properties that have not been in operation for a full year. Adjusted Property EBITDA is defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening expenses, impairment charges, asset write-offs, recoveries, gain (loss) from asset sales and disposals, project development and acquisition costs, non-cash share-based compensation expense, and corporate-related costs and expenses that are not allocated to each property.

Previous wording

The following tables summarize our consolidated operating results for the three and six months ended June 30, 2024 and 2023:

Current wording

The following tables summarize our consolidated operating results for the three and nine months ended September 30, 2024 and 2023:

Previous wording

The following discussion is based on our condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023.

Current wording

The following discussion is based on our condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023.

Previous wording

**Revenues.**Consolidated total revenues increased by 23.8% (or $14.1 million) and 31.0% (or $33.9 million) for the respective three and six months ended June 30, 2024, compared to the prior-year periods. This was primarily due to a full six months of operations in 2024 at American Place, which opened on February 17, 2023. Revenues during the 2024 periods also benefited from the phased opening of Chamonix, which began on December 27, 2023. Additionally, revenues in 2024 reflect the contractual commencement of a sports wagering agreement in Illinois on August 15, 2023. To a lesser extent, contracted sports wagering revenue benefited from an acceleration of deferred revenue for a sports agreement that ceased operations in April 2024.

Current wording

**Revenues.**Consolidated total revenues increased by 5.8% (or $4.1 million) and 21.0% (or $38.1 million) for the respective three and nine months ended September 30, 2024, compared to the prior-year periods. This was primarily due to a full nine months of operations in 2024 at American Place, which opened on February 17, 2023. Revenues during the 2024 periods also benefited from the phased opening of Chamonix, which began operations on December 27, 2023.

Previous wording

**Operating Expenses.**Consolidated operating expenses increased by 21.1% (or $12.4 million) and 22.3% (or $25.8 million) for the three and six months ended June 30, 2024, compared to the prior-year periods. These increases were primarily due to the commencement of operations at American Place in February 2023 and Chamonix in December 2023. For American Place, these expenses included a $3.9 million increase in selling, general and administrative costs for the six months ended June 30, 2024, compared to the prior-year period. Depreciation and amortization for American Place was $4.9 million and $10.3 million for the three and six months ended June 30, 2024. For Chamonix, these expenses included $4.4 million in selling, general and administrative costs, and $4.1 million in depreciation and amortization for the three months ended June 30, 2024. For the six months ended June 30, 2024 at Chamonix, those amounts were $8.2 million and $7.8 million, respectively.

Current wording

**Operating Expenses.**Consolidated operating expenses increased by 19.7% (or $12.1 million) and 21.4% (or $37.9 million) for the three and nine months ended September 30, 2024, compared to the prior-year periods. These increases were primarily due to the commencement of operations at American Place in February 2023 and Chamonix in December 2023 and resulted in increased casino, food and beverage, hotel, selling, general and administrative and depreciation expenses. For American Place, these expenses included a $4.4 million increase in selling, general and administrative costs for the nine months ended September 30, 2024, compared to the prior-year period. For Chamonix, these expenses included a $7.2 million increase in selling, general and administrative costs, as well as a $10.8 million increase in depreciation and amortization for the nine months ended September 30, 2024, compared to the prior-year period.

Previous wording

The increases in net interest expense for the three and six months ended June 30, 2024 were primarily due to reductions in capitalized interest, as construction of the temporary American Place facility and Chamonix are largely complete. Additionally, as we invested cash into the construction of both projects, our cash balances were lower during the 2024 period, resulting in reduced interest income. Further, we issued $40.0 million of Additional Notes in February 2023, so the prior-year period reflects only a partial quarter of the related interest expense.

Current wording

The increases in net interest expense for the three and nine months ended September 30, 2024 were primarily due to reductions in capitalized interest, as construction of the temporary American Place facility and Chamonix was largely complete during the 2024 periods. Additionally, as we invested cash into the construction of both projects, our cash balances were lower during the 2024 period, resulting in reduced interest income. Further, we issued $40.0 million of Additional Notes in February 2023, so the prior-year period reflects only a partial quarter of the related interest expense.

Previous wording

For the three and six months ended June 30, 2024, we had no other non-operating expense. The prior-year period had $355,000 of other non-operating income, consisting primarily of insurance settlement proceeds from hurricane damage at Silver Slipper in 2020.

Current wording

For the three and nine months ended September 30, 2024, we had no other non-operating expense. For the three months ended September 30, 2023, we had other non-operating income of $29,000, consisting of net settlement proceeds from a sports wagering contract that ended in May 2022. For the nine months ended September 30, 2023, we had other non-operating income of $0.4 million, consisting primarily of insurance settlement proceeds from hurricane damage at Silver Slipper in 2020.

Previous wording

Income Tax Expense. We recognized an income tax benefit of $79,000 and an income tax provision of $0.3 million for the respective three and six months ended June 30, 2024, which resulted in effective income tax rates of 0.9% and (1.7%), respectively. For the three and six months ended June 30, 2023, we recognized respective income tax provisions of $0.6 million and $0.5 million, which resulted in effective income tax rates of (11.1%) and (3.2%), respectively. The changes in the effective income tax rates were primarily due to the effects of tax amortization on indefinite-lived intangibles in 2024, as well as certain permanent differences between tax and financial reporting purposes.

Current wording

Income Tax Expense. We recognized an income tax benefit of $0.1 million and an income tax provision of $0.2 million for the respective three and nine months ended September 30, 2024, which resulted in effective income tax rates of 1.5% and (0.7%), respectively. For the three and nine months ended September 30, 2023, we recognized an income tax benefit of $74,000 and an income tax provision of $0.5 million, which resulted in effective income tax rates of (1.6%) and (3.8%), respectively. The changes in the effective income tax rates were primarily due to the effects of tax amortization on indefinite-lived intangibles in 2024, as well as changes in valuation allowances.

Previous wording

We do not expect to pay any federal income taxes or receive any federal tax refunds related to our 2024 results. As we have incurred losses in prior periods, we anticipate any current-year taxable income will be offset by tax carryforwards from prior years. We continue to evaluate, on a quarterly basis, the ability to realize our deferred tax assets and the need for a valuation allowance. The valuation allowance, and the potential reversal of such allowance, have no bearing on the taxes actually paid by the Company.

Current wording

While we paid $0.5 million in state income taxes to Illinois during the current year related to our prior-year results, we are unable to determine if we would pay any state income taxes or receive any state tax refunds related to our 2024 results until year-end. However, we do not expect to pay any federal income taxes or receive any federal tax refunds related to our 2024 results. As we have incurred losses in prior periods, we anticipate any current-year taxable income will be offset by tax carryforwards from prior years. We continue to evaluate, on a quarterly basis, the ability to realize our deferred tax assets and the need for a valuation allowance. The valuation allowance, and the potential reversal of such allowance, have no bearing on the taxes actually paid by the Company.

Previous wording

The following table presents the financial results of our Midwest & South operations on a same-store basis for the three and six months ended June 30, 2024 and 2023 for revenues and Adjusted Segment EBITDA; see “Non-GAAP Financial Measure” for additional information.

Current wording

The following table presents the financial results of our Midwest & South operations on a same-store basis for the three and nine months ended September 30, 2024 and 2023 for revenues and Adjusted Segment EBITDA; see “Non-GAAP Financial Measure” for additional information.

Previous wording

The following table presents the financial results of our Contracted Sports Wagering operations on a same-store basis for the three and six months ended June 30, 2024 and 2023 for revenues and Adjusted Segment EBITDA; see “Non-GAAP Financial Measure” for additional information.

Current wording

The following table presents the financial results of our Contracted Sports Wagering operations on a same-store basis for the three and nine months ended September 30, 2024 and 2023 for revenues and Adjusted Segment EBITDA; see “Non-GAAP Financial Measure” for additional information.

Previous wording

Our Midwest & South segment includes Silver Slipper Casino and Hotel, Rising Star Casino Resort and American Place. Total revenues for the three and six months ended June 30, 2024 increased by 11.1% (or $5.5 million) and 21.4% (or $19.4 million), respectively, due to the continued ramp-up of operations at American Place. Additionally, the six-month period in 2023 reflects only a partial period of operations at American Place, which opened in February 2023. Excluding results from American Place, same-store revenues declined by 4.6% (or $1.4 million) and 4.9% (or $2.9 million) for the respective three and six months ended June 30, 2024, in part due to adverse winter weather over several weekend periods during the first quarter of 2024, followed by severe storms and tornados in the second quarter.

Current wording

Our Midwest & South segment includes Silver Slipper, Rising Star and American Place. Total revenues for the three and nine months ended September 30, 2024 increased by 3.7% (or $2.0 million) and 14.9% (or $21.3 million), respectively, due to the continued ramp-up of operations at American Place. Additionally, the nine-month period in 2023 reflects only a partial period of operations at American Place, which opened in February 2023. Excluding results from American Place, same-store revenues declined by 7.9% (or $2.3 million) and 5.9% (or $5.2 million) for the respective three and nine months ended September 30, 2024, in part due to adverse winter weather over several weekend periods during the first quarter of 2024, followed by severe storms and tornados in the second quarter, as well as an active storm season in the Silver Slipper’s Mississippi Gulf Coast area, where several significant storms adversely impacted visitation to the property during the third quarter of 2024.

Previous wording

Reflecting the February 2023 opening of American Place, casino revenue increased by 12.5% (or $4.8 million) and 25.1% (or $16.8 million) for the respective three and six months ended June 30, 2024. For the three months ended June 30, 2024, slot revenue for the segment increased by 11.3% (or $3.6 million), and table games revenue increased by 18.3% (or $1.2 million). For the six months ended June 30, 2024, slot revenue for the segment increased by 19.7% (or $11.3 million), and table games revenue increased by 56.8% (or $5.5 million). Excluding results from American Place, same-store casino revenue declined by 6.4% (or $1.2 million) and 8.4% (or $3.2 million) for the respective three and six months ended June 30, 2024, primarily due to lower slot and table games volumes at Silver Slipper and Rising Star. In addition to the adverse weather noted above, Rising Star continues to compete with a relatively new racetrack casino that opened in September 2022 in Northern Kentucky.

Current wording

Reflecting the February 2023 opening of American Place, casino revenue increased by 3.8% (or $1.5 million) and 17.1% (or $18.3 million) for the respective three and nine months ended September 30, 2024. For the three months ended September 30, 2024, slot revenue for the segment increased by 5.3% (or $1.8 million), while table games revenue declined by 3.2% (or $0.2 million). For the nine months ended September 30, 2024, slot revenue for the segment increased by 14.5% (or $13.1 million), and table games revenue increased by 31.4% (or $5.3 million). Excluding results from American Place, same-store casino revenue declined by 10.5% (or $1.9 million) and 9.1% (or $5.1 million) for the respective three and nine months ended September 30, 2024, primarily due to lower slot and table games volumes at Silver Slipper and Rising Star. In addition to the adverse weather noted above, Rising Star continues to compete with a racetrack casino that opened in September 2022 in Northern Kentucky.

Previous wording

Non-casino revenue increased by 6.7% (or $0.8 million) and 10.8% (or $2.5 million) for the respective three and six months ended June 30, 2024, largely due to increases in food and beverage revenue. Food and beverage revenue rose 10.0% (or $0.8 million) and 16.2% (or $2.4 million) for the respective current-year periods, reflecting increased operating hours and the February 2024 opening of a new restaurant at American Place.

Current wording

Non-casino revenue increased by 3.6% (or $0.4 million) and 8.4% (or $3.0 million) for the respective three and nine months ended September 30, 2024, primarily due to increases in food and beverage revenue. Food and beverage revenue rose 7.6% (or $0.6 million) and 13.1% (or $3.0 million) for the respective current-year periods, reflecting increased operating hours and the February 2024 opening of a new restaurant at American Place.

Previous wording

Adjusted Segment EBITDA increased by 30.7% (or $2.9 million) and 24.3% (or $4.9 million) for the respective three and six months ended June 30, 2024, reflecting improved efficiencies at American Place versus its first year of operations. Adjusted Property EBITDA at American Place was $7.6 million and $15.0 million, respectively, for the 2024 periods. Such amounts reflect growth of 83.5% and 94.3% when compared to Adjusted Property EBITDA of $4.1 million and $7.7 million for the respective 2023 periods. Same-store Adjusted Segment EBITDA declined from $5.3 million to $4.7 million (or 10.8%), and from $12.4 million to $10.0 million (or 19.2%), for the three and six months ended June 30, 2024, primarily due to overall declines in casino revenues and adverse weather during the first half of 2024 at Silver Slipper.

Current wording

Adjusted Segment EBITDA declined by 12.8% (or $1.5 million), but rose by 10.6% (or $3.4 million) for the respective three and nine months ended September 30, 2024, reflecting improved efficiencies at American Place versus its first year of operations. Adjusted Property EBITDA at American Place was $7.7 million and $22.7 million for the respective 2024 periods. Such amounts reflect growth of 13.6% and 56.5% when compared to Adjusted Property EBITDA of $6.8 million and $14.5 million for the respective 2023 periods. Same-store Adjusted Segment EBITDA declined from $5.0 million to $2.5 million (or 48.8%), and from $17.3 million to $12.5 million (or 27.7%), for the three and nine months ended September 30, 2024, primarily due to overall declines in casino revenues and adverse weather through the third quarter of 2024 at Silver Slipper.

Previous wording

Our West segment includes Grand Lodge Casino (“Grand Lodge”), Stockman’s Casino, Bronco Billy’s Casino, and Chamonix Casino Hotel, which began its phased opening on December 27, 2023. The market in Cripple Creek, Colorado, is seasonal, favoring the summer months. Our Nevada operations have historically been seasonal, with the summer months accounting for a disproportionate share of annual revenues. Additionally, snowfall levels during the winter months can often affect operations, as Grand Lodge is located near several major ski resorts. While Grand Lodge typically benefits from a “good” snow year, resulting in extended periods of operation at the nearby ski areas, excessive snow levels can also result in challenging driving conditions or the closure of roads leading to the property.

Current wording

Our West segment includes Bronco Billy’s, Chamonix, Grand Lodge, and Stockman’s, which is currently held for sale (see Note 3). The market in Cripple Creek, Colorado, is typically seasonal, favoring the summer months. Our Nevada operations have historically been seasonal, with the summer months accounting for a disproportionate share of annual revenues. Additionally, snowfall levels during the winter months can often affect operations, as Grand Lodge is located near several major ski resorts. While Grand Lodge typically benefits from a “good” snow year, resulting in extended periods of operation at the nearby ski areas, excessive snow levels can also result in challenging driving conditions or the closure of roads leading to the property.

Previous wording

Total revenues increased by 87.3% (or $7.1 million) and 73.8% (or $12.0 million) for the respective three and six months ended June 30, 2024, primarily due to the phased opening of Chamonix, which was designed to integrate with existing operations at Bronco Billy’s.

Current wording

Total revenues increased by 74.9% (or $8.3 million) and 74.3% (or $20.3 million) for the respective three and nine months ended September 30, 2024, primarily due to the phased opening of Chamonix, which was designed to integrate with existing operations at Bronco Billy’s.

Previous wording

Casino revenue increased by 64.4% (or $4.6 million) and 57.6% (or $8.2 million) for the respective three and six months ended June 30, 2024, reflecting contributions from Chamonix and improved operating conditions at Bronco Billy’s. Slot revenue accounted for most of the increases in the respective 2024 periods. It increased by 71.8% (or $4.5 million) and 62.8% (or $7.8 million), despite decreases in slot volumes at Grand Lodge and Stockman’s for the current-year periods. Table games revenue rose by $0.1 million (or 9.6%) and $0.4 million (or 22.1%) for the respective three and six months ended June 30, 2024, attributable mostly to our Colorado operations.

Current wording

Casino revenue increased by 44.1% (or $4.4 million) and 52.0% (or $12.5 million) for the respective three and nine months ended September 30, 2024, reflecting contributions from Chamonix and improved operating conditions at Bronco Billy’s. Slot revenue accounted for most of the increases in the respective 2024 periods. It increased by 49.5% (or $4.0 million) and 57.5% (or $11.8 million), despite decreases in slot volumes at Grand Lodge for the current-year periods. Table games revenue rose by $0.3 million (or 18.7%) and $0.7 million (or 20.4%) for the respective three and nine months ended September 30, 2024, attributable mostly to our Colorado operations.

Previous wording

Non-casino revenue increased by 247.8% (or $2.5 million) and 189.3% (or $3.8 million) for the respective three and six months ended June 30, 2024. Food and beverage revenues increased by $0.9 million and $1.4 million for the respective 2024 periods, and hotel revenues rose by $1.5 million and $2.2 million, respectively. These improvements came from Chamonix, which gradually opened its approximately 300-room hotel throughout the first quarter of 2024. Guest volume increases from Chamonix’s new hotel also benefited food and beverage venues throughout Chamonix and Bronco Billy’s.

Current wording

Non-casino revenue increased by 331.9% (or $3.9 million) and 242.4% (or $7.7 million) for the respective three and nine months ended September 30, 2024. Food and beverage revenues increased by $1.4 million and $2.8 million for the respective 2024 periods, and hotel revenues rose by $2.4 million and $4.6 million, respectively. These improvements came from Chamonix, which gradually opened its approximately 300-room hotel throughout the first quarter of 2024. Guest volume increases from Chamonix’s new hotel also benefited food and beverage venues throughout Chamonix and Bronco Billy’s.

Previous wording

Adjusted Segment EBITDA improved by 388.7% (or $0.7 million) and 212.4% (or $0.5 million) for the respective three and six months ended June 30, 2024. Current-period results reflect the phased opening of Chamonix Casino Hotel, which is currently operating less efficiently than expected in future quarters. Elevated expenses include the training of new employees and additional marketing costs expected to benefit future operations, as well as the cost of operating many amenities at the new resort while continuing to complete construction. Results in the current-year period also reflect significant snowfall over several weekends – when guest traffic at our casinos is typically strongest – in the first quarter, and the loss of electrical power to the entire city of Cripple Creek for three days.

Current wording

Adjusted Segment EBITDA declined by $1.1 million and $0.6 million for the respective three and nine months ended September 30, 2024. Current-period results reflect the phased opening of Chamonix, which is currently operating less efficiently than we expect it to in future quarters. Elevated expenses include the training of new employees and additional marketing costs expected to benefit future operations, as well as the cost of operating many amenities at the new resort while continuing to complete construction. Results in the current-year period also reflect significant snowfall over several weekends, when guest traffic at our casinos is typically strongest, and the loss of electrical power to the entire city of Cripple Creek for three days, both in the first quarter of 2024.

Previous wording

For the three months ended June 30, 2024, revenues grew 108.6%, from $1.4 million in the prior-year period to $2.9 million, and Adjusted Segment EBITDA rose 89.3%, from $1.4 million to $2.6 million. Similarly, for the six months ended June 30, 2024, revenues grew 100.7%, from $2.6 million in the prior-year period to $5.1 million, and Adjusted Segment EBITDA rose 78.9%, from $2.5 million to $ 4.5 million. These results reflect the launch of our permitted Illinois sports skin in August 2023. Under the Illinois sports wagering agreement, we receive a percentage of online revenues (as defined), subject to an annualized minimum of $5 million, with minimal expected expenses. We also receive a percentage of on-site sports revenue, as defined. This agreement contributed $1.4 million in revenues, as well as Adjusted Segment EBITDA, during the three months ended June 30, 2024. For the six months ended June 30, 2024, such amounts were $2.9 million and $2.8 million, respectively.

Current wording

The segment’s results also reflect the launch of our permitted Illinois sports skin in August 2023. Under the Illinois sports wagering agreement, we receive a percentage of online revenues (as defined), subject to an annualized minimum of $5 million, with minimal expected expenses. We also receive a percentage of on-site sports revenue, as defined. For the three months ended September 30, 2024, this agreement contributed $1.5 million to revenues and $1.4 million to Adjusted Segment EBITDA. For the nine months ended September 30, 2024, such amounts were $4.4 million and $4.2 million, respectively. For both of the prior-year periods, the Illinois sports wagering agreement contributed $0.7 million to revenues and also to Adjusted Segment EBITDA.

Previous wording

We currently have two idle sports skins each in Indiana and Colorado. We continue to evaluate whether to operate them ourselves or to have other third-party operators utilize them. However, there is no certainty that we will be able to enter into agreements with other third-party operators or successfully operate the skins ourselves.

Current wording

We currently have two idle sports skins in each of Indiana and Colorado. We continue to evaluate whether to operate these idle skins ourselves or to have other third-party operators utilize them. However, there is no certainty that we will be able to enter into agreements with other third-party operators or successfully operate the skins ourselves.

Previous wording

Corporate expenses for the respective three and six months ended June 30, 2024 rose 273.5% (or $1.2 million) and 65.9% (or $1.5 million), primarily due to increases in accrued bonus compensation, as compared to the prior-year periods. Corporate expenses were $1.6 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, corporate expenses were $3.7 million and $2.2 million, respectively.

Current wording

Corporate expenses for the respective three and nine months ended September 30, 2024 rose by 36.1% (or $0.5 million) and 55.0% (or $1.9 million), primarily due to increases in accrued bonus compensation, as compared to the prior-year periods. Corporate expenses were $1.7 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, corporate expenses were $5.4 million and $3.5 million, respectively.

Previous wording

“Adjusted EBITDA” is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening expenses, certain impairment charges, asset write-offs, recoveries, gain (loss) from asset disposals, project development and acquisition costs, and non-cash share-based compensation expense. Adjusted EBITDA information is presented solely as supplemental disclosure to measures reported in accordance with generally accepted accounting principles in the United States of America (“GAAP”) because management believes this measure is (i) a widely used measure of operating performance in the gaming and hospitality industries and (ii) a principal basis for valuation of gaming and hospitality companies. In addition, a version of Adjusted EBITDA (known as Consolidated Cash Flow) is utilized in the covenants within the Credit Facility, although not necessarily defined in the same way as above. Adjusted EBITDA is not, however, a measure of financial performance or liquidity under GAAP. Accordingly, this measure should be considered supplemental and not a substitute for net income (loss) or cash flows as an indicator of the Company’s operating performance or liquidity.

Current wording

“Adjusted EBITDA” is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening expenses, impairment charges, asset write-offs, recoveries, gain (loss) from asset sales and disposals, project development and acquisition costs, and non-cash share-based compensation expense. Adjusted EBITDA information is presented solely as supplemental disclosure to measures reported in accordance with generally accepted accounting principles in the United States of America (“GAAP”) because management believes this measure is (i) a widely used measure of operating performance in the gaming and hospitality industries and (ii) a principal basis for valuation of gaming and hospitality companies. In addition, a version of Adjusted EBITDA (known as Consolidated Cash Flow) is utilized in the covenants within the Credit Facility, although not necessarily defined in the same way as above. Adjusted EBITDA is not, however, a measure of financial performance or liquidity under GAAP. Accordingly, this measure should be considered supplemental and not a substitute for net income (loss) or cash flows as an indicator of the Company’s operating performance or liquidity.

Previous wording

The following table presents a reconciliation of net loss and operating income (loss) to Adjusted EBITDA:

Current wording

The following table presents a reconciliation of net (loss) income and operating income to Adjusted EBITDA:

Previous wording

Operating expenses deducted to arrive at operating income (loss) in the above tables for the three-month periods ended June 30, 2024 and 2023 included facility rents related to: (i) Midwest & South of $1.4 million during each of 2024 and 2023, and (ii) West of $0.6 million in 2024 and $0.7 million in 2023.

Current wording

Operating expenses deducted to arrive at operating income (loss) in the above tables for the three-month periods ended September 30, 2024 and 2023, included facility rents related to: (i) Midwest & South of $1.4 million during each of 2024 and 2023, and (ii) West of $0.6 million in 2024 and $0.5 million in 2023.

Previous wording

Operating expenses deducted to arrive at operating income (loss) in the above tables for the six-month periods ended June 30, 2024 and 2023 included facility rents related to: (i) Midwest & South of $2.8 million in 2024 and $2.3 million in 2023, and (ii) West of $1.3 million in 2024 and $1.5 million in 2023.

Current wording

Operating expenses deducted to arrive at operating income (loss) in the above tables for the nine-month periods ended September 30, 2024 and 2023, included facility rents related to: (i) Midwest & South of $4.1 million in 2024 and $3.7 million in 2023, and (ii) West of $1.9 million in 2024 and $1.5 million in 2023.

Previous wording

As of June 30, 2024, we had $44.7 million of cash and equivalents, including $13.6 million of restricted cash dedicated to Chamonix’s construction. Chamonix began opening in phases beginning in December 2023, and is expected to complete construction in the third quarter of 2024. We estimate that between $10 million and $15 million of cash is used in our current day-to-day operations, including on-site cash in our slot machines, change and redemption kiosks, and cages. We believe that current cash balances, together with the available borrowing capacity under our revolving credit facility and cash flows from operating activities, will be sufficient to meet our liquidity and capital resource needs for the next 12 months of operations. Over the last several years, we invested in two large construction projects that are now open to the public: American Place, which opened in February 2023, and Chamonix, as noted above.

Current wording

At September 30, 2024, we had $33.6 million of cash and equivalents, including $7.7 million of restricted cash dedicated to Chamonix’s construction. In October 2024, we substantially completed construction of Chamonix, which began opening in phases since December 2023. We estimate that between $10 million and $15 million of cash is used in our current day-to-day operations, including on-site cash in our slot machines, change and redemption kiosks, and cages. We believe that current cash balances, together with the available borrowing capacity under our revolving credit facility and cash flows from operating activities, will be sufficient to meet our liquidity and capital resource needs for the next 12 months of operations. Over the last several years, we invested in two large construction projects that are now open to the public: American Place, which opened in February 2023, and Chamonix, as noted above. Such construction activity is now substantially completed.

Previous wording

**Cash flows – operating activities.**On a consolidated basis, cash provided by operations during the six months ended June 30, 2024 was $5.7 million, compared to cash provided by operations of $1.7 million in the prior-year period. Trends in our operating cash flows tend to follow trends in operating income, excluding non-cash charges, but are also affected by changes in working capital. During the current period, we benefited from a full six months of operations at American Place, which opened in February 2023.

Current wording

**Cash flows – operating activities.**On a consolidated basis, cash used in operations during the nine months ended September 30, 2024 was $1.0 million, compared to cash provided by operations of $3.2 million in the prior-year period. Trends in our operating cash flows tend to follow trends in operating income, excluding non-cash charges, but are also affected by changes in working capital. During the current period, we benefited from a full nine months of operations at American Place, which opened in February 2023. Net interest expense rose when compared to the prior-year period, the result of declines in both interest income and capitalized interest, as we began the phased opening of Chamonix in December 2023.

Previous wording

**Cash flows – investing activities.**On a consolidated basis, cash used in investing activities during the six months ended June 30, 2024 was $33.9 million, primarily related to Chamonix. Cash used in investing activities during the prior-year period was $139.2 million, which included a gaming license payment of $50.3 million required to open American Place, as well as capital expenditures to construct Chamonix and American Place.

Current wording

**Cash flows – investing activities.**On a consolidated basis, cash used in investing activities during the nine months ended September 30, 2024 was $37.7 million. These investments primarily related to the construction of Chamonix, partially offset by proceeds from the sale of Stockman’s. Cash used in investing activities during the prior-year period was $169.8 million, which included a gaming license payment of $50.3 million required to open American Place, as well as capital expenditures to construct Chamonix and American Place.

Previous wording

**Cash flows – financing activities.**On a consolidated basis, cash used in financing activities during the six months ended June 30, 2024 was $0.9 million, compared to cash provided by financing activities of $59.9 million in the prior-year period. During 2023, net borrowings from the Credit Facility totaled $27.0 million, and we received $40.0 million of gross proceeds from the issuance of our Additional Notes to open American Place.

Current wording

**Cash flows – financing activities.**On a consolidated basis, cash used in financing activities during the nine months ended September 30, 2024 was $1.3 million, compared to cash provided by financing activities of $59.4 million in the prior-year period. During 2023, net borrowings from the Credit Facility totaled $27.0 million, and we received $40.0 million of gross proceeds from the issuance of our Additional Notes to open American Place.

Previous wording

We have significant outstanding debt and contractual obligations, in addition to planned capital expenditures related to the completion of Chamonix. Our principal debt matures in February 2028. Certain planned capital expenditures designed to grow the Company, such as the permanent American Place facility and the potential future expansion of Silver Slipper, may require additional financing and/or temporarily reduce the Company’s ability to repay debt.

Current wording

We have significant outstanding debt and contractual obligations. Our principal debt matures in February 2028. Certain planned capital expenditures designed to grow the Company, such as the permanent American Place facility, may require additional financing and/or temporarily reduce the Company’s ability to repay debt.

Previous wording

**Long-term Debt.**At June 30, 2024, we had $450.0 million of principal indebtedness outstanding under the Notes and $27.0 million outstanding under the Credit Facility. We also owe $2.0 million related to our finance lease of a hotel at Rising Star. With the exception of the Credit Facility, all of our debt is at fixed interest rates. See Note 4 for details on our debt obligations.

Current wording

**Long-term Debt.**At September 30, 2024, we had $450.0 million of principal indebtedness outstanding under the Notes and $27.0 million outstanding under the Credit Facility. We also owe $1.8 million related to our finance lease of a hotel at Rising Star. With the exception of the Credit Facility, all of our debt is at fixed interest rates. See Note 5 for details on our debt obligations.

Previous wording

**Capital Investments.**In addition to normal maintenance capital expenditures, we expect to make significant capital investments related to the completion of Chamonix and, in the future, the permanent American Place facility.

Current wording

**Capital Investments.**In addition to normal maintenance capital expenditures, we made significant capital investments related to the completion of Chamonix, and we expect to do the same for the permanent American Place facility.

Previous wording

Chamonix. We began the phased opening of Chamonix on December 27, 2023. To fund Chamonix’s construction, we issued our 2028 Notes and placed a portion of such proceeds into a restricted cash account dedicated to the completion of Chamonix’s construction (see Note 4). As of June 30, 2024, the balance of such restricted cash account was approximately $13.6 million, which we expect to invest in the second half of 2024. In April 2024, we opened Chamonix’s high-end steakhouse, followed by its rooftop pool and portions of its spa in May 2024. During the third quarter of 2024, we expect to complete construction of the spa and a street-front retail store.

Current wording

Chamonix. We completed the phased opening of Chamonix in October 2024, with the property’s high-end steakhouse opening in April 2024, its rooftop pool and portions of its spa opening in May 2024, and completion of its spa and jewelry store in the second half of 2024. To fund Chamonix’s construction, we issued our 2028 Notes and placed a portion of such proceeds into a restricted cash account dedicated to the completion of its construction (see Note 5). At September 30, 2024, the balance of such restricted cash account was approximately $7.7 million.

Previous wording

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 American Place facility, which opened in February 2023. As previously noted, we have been approved to operate the temporary American Place facility until August 2027, thus delaying any expected meaningful capital expenditures for the permanent American Place facility until 2026 and 2027. During the second half of 2024, we may invest modest additional amounts, primarily related to construction planning for the permanent American Place facility. While we expect to internally generate a portion of the needed funds to complete American Place, we will likely need additional financing. Lawsuits filed by an unsuccessful bidder for the Waukegan gaming license – and against parties unrelated to us – may impact our ability to arrange such financing and, therefore, delay the start of meaningful construction.

Current wording

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 American Place facility, which opened in February 2023. Lawsuits were filed by an unsuccessful bidder for the Waukegan gaming license, against parties unrelated to us. As a result of such lawsuits, we sought and received an extension period in which we can operate the temporary casino, which now extends to August 2027. We expect to internally generate a portion of the needed funds to complete American Place, but we will likely need additional financing. While there is no certainty that we will be able to do so, we intend to arrange such additional funding with the refinancing of our existing debt. Such debt is currently callable and otherwise scheduled to mature in February 2028.