# Full House Resorts Inc: Form 10-Q for the period ended Jun 30, 2023

- Company: [Full House Resorts Inc](/companies/fll.md) (CIK 891482)
- Form: 10-Q
- Filed: 2023-08-09
- Accepted by EDGAR: Aug 8, 2023, 19:47 ET
- Period: 2023-06-30
- Accession: 0000891482-23-000032
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/891482/000089148223000032/fll-20230630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/891482/000089148223000032/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $59.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $109.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Selling, general and administrative | 3 months, 2023-04-01 to 2023-06-30 | $21.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2023-01-01 to 2023-06-30 | $39.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $594.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | −$6.4m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $561.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $526.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | −$5.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | −$17.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.16 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | −$0.49 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.16 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | −$0.49 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 34,496,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 34,453,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $1.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $89.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-06-30 | $35.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $127.5m | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $671.1m | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $66.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $586.8m | us-gaap:Liabilities |
| Long-term debt | at 2023-06-30 | $463.7m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2023-06-30 | $84.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 57,505 characters.

This management’s discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties. Please see “*Forward-Looking Statements”* for a discussion of the uncertainties, risks and assumptions that may cause our actual results to differ materially from those discussed in the forward-looking statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes for the fiscal year ended December 31, 2022, which were included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 16, 2023. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods. Full House Resorts, Inc., together with its subsidiaries, may be referred to as “Full House,” the “Company,” “we,” “our” or “us,” except where stated or the context otherwise indicates.

### Executive Overview

Our primary business is the ownership and/or operation of casino and related hospitality and entertainment facilities, which includes offering casino gambling, hotel accommodations, dining, golf, RV camping, sports betting, entertainment, and retail outlets, among other amenities. We currently operate six casinos: five on real estate that we own or lease and one located within a hotel owned by a third party. Construction continues for a seventh property, Chamonix Casino Hotel (“Chamonix”), adjacent to our existing Bronco Billy’s Casino and Hotel in Cripple Creek, Colorado. We are also designing our permanent American Place casino destination, which will be built adjacent to a temporary facility that we opened in February 2023 named The Temporary by American Place (“The Temporary”). We intend to operate The Temporary until the opening of the permanent American Place facility. Additionally, we benefit from seven permitted sports wagering “skins” – three in Colorado, three in Indiana, and one in Illinois. Other companies operate or will operate these online sports wagering websites under their brands, paying us a percentage of revenues, as defined, and subject to annual minimum amounts.

The following table identifies our segments, along with properties and their locations:

|  |  |  |
| --- | --- | --- |
| ​ | ​ | ​ |
| **Segments and Properties** | ​ | **Locations** |
| **Midwest & South** | ​ | **​** |
| The Temporary by American Place (opened on February 17, 2023) and American Place (under development) | ​ | Waukegan, IL (northern suburb of Chicago) |
| Silver Slipper Casino and Hotel |  | Hancock County, MS (near New Orleans) |
| Rising Star Casino Resort |  | Rising Sun, IN (near Cincinnati) |
| **West** | ​ | **​** |
| Bronco Billy’s Casino and Hotel |  | Cripple Creek, CO (near Colorado Springs) |
| Chamonix Casino Hotel (scheduled to open December 26, 2023) | ​ | Cripple Creek, CO (near Colorado Springs) |
| Grand Lodge Casino (leased and part of the Hyatt Regency Lake Tahoe Resort, Spa and Casino) |  | Incline Village, NV (North Shore of Lake Tahoe) |
| Stockman’s Casino |  | Fallon, NV (one hour east of Reno) |
| **Contracted Sports Wagering** | ​ | ​ |
| Three sports wagering websites (“skins”) | ​ | Colorado |
| Three sports wagering websites (“skins”), one of which is currently idle | ​ | Indiana |
| One sports wagering website (“skin”), commencing in August 2023 | ​ | Illinois |

We manage our casinos based primarily on geographic regions within the United States and type of income. Starting in the first quarter of 2023, we updated our reportable segments to Midwest & South, West, and Contracted Sports Wagering, reflecting a realignment within the Company as a result of our continued growth.

Our financial results are dependent upon the number of patrons that we attract to our properties and the amounts those guests spend per visit. While we provide credit at some of our casinos if permitted by local gaming regulations, most of our customers wager with cash or pay for non-gaming services with cash or credit cards. Our gaming revenues are primarily derived from slot machines, but also include table games, keno, and sports betting. In addition, we receive a significant amount of revenue from our hotels and our food and beverage outlets. We also derive revenues from our golf course at Rising Star, our recreational vehicle parks (“RV parks”) as owned at Rising Star and managed at Silver Slipper, our ferry service at Rising Star, and retail outlets and entertainment. We often provide hotel rooms, food and beverages, entertainment, ferry usage, and golf privileges to casino customers on a complimentary basis; the value of such services is included as revenue in those categories, offset by contra-revenue in the casino revenue category. As a result, the casino revenues in our financial statements reflect patron gaming wins and losses, reduced by the retail value of complimentary services, the value of free play provided to customers, the value of points earned by casino customers that can be redeemed for services or free play, and adjustments for certain progressive jackpots offered by the Company.

We may experience significant fluctuations in our quarterly operating results due to seasonality, variations in gaming hold percentages, and other factors. Consequently, our operating results for any quarter, especially contrasted with different seasonal quarters, are not necessarily comparable. Results for any particular quarter or year may not be indicative of future periods’ results.

Our market environment is highly competitive and capital-intensive. Nevertheless, there are significant restrictions and barriers to entry vis-à-vis opening new casinos in most of the markets in which we operate. We rely on the ability of our properties to generate operating cash flow to pay interest, repay debt, and fund maintenance and certain growth-related capital expenditures. We continuously focus on improving the operating margins of our existing properties through a combination of revenue growth and expense management. We also assess growth and development opportunities, which include capital investments at our existing properties, the development of new properties, and the acquisition of existing properties.

#### Recent Developments

***The Temporary / American Place.*** In February 2023, we opened The Temporary by American Place, a temporary facility in Waukegan, Illinois, that we will operate while we design and construct the larger, permanent American Place facility. The Temporary currently includes approximately 940 slot machines, 48 table games, two restaurants, and a center bar. We expect to open a fine-dining restaurant and a sportsbook later this year. The permanent American Place facility is expected to include a world-class casino with a state-of-the-art sportsbook; a premium boutique hotel comprised of 20 luxurious villas; a 1,500-seat live entertainment venue; and various food and beverage outlets. To accommodate operations for The Temporary, as well as construction of the permanent American Place facility, we entered into a 99-year ground lease and purchase option with the City of Waukegan. For more information, see Note 3.

***Sports Wagering in Colorado.*** In December 2022, we entered into a contract with a third party to operate mobile sports wagering under our permitted third skin in Colorado. The 10-year agreement began its contractual term in March 2023. Such agreement replaces an unrelated operator that ceased operations in May 2022. In total, we have three sports wagering agreements in Colorado, for which we receive a percentage of revenues (as defined), subject to annual minimums totaling $3 million. For more information, see Note 2.

***Sports Wagering in Illinois.*** In May 2022, we signed a retail and mobile sports wagering contract for Illinois. Upon signing the agreement, we received an upfront fee of $5 million, which was capitalized and will be amortized over the eight-year term of the agreement upon commencement. We will receive a percentage of revenues (as defined), subject to an annual minimum of $5 million. Under the agreement, the Company will begin to receive revenue payments for its Illinois sports skin in August 2023, irrespective of whether its sports wagering operations have begun. For more information, see Note 6.

***Debt Financing.*** In February 2023, we issued an additional $40 million of senior secured notes (the “Additional Notes”) and further amended the indenture governing the 2028 Notes (collectively, the “Amended Indenture”). The Additional Notes are treated as a single series of senior secured debt securities with the existing $410 million aggregate principal amount of 8.25% Senior Secured Notes due 2028 (the “2028 Notes”) and as a single class for all purposes under the Amended Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Proceeds from the offering of our Additional Notes, net of related expenses and discounts, were approximately $34 million and were used: (i) to open The Temporary, including the payment of related Illinois gaming license fees in March 2023, and (ii) for general corporate purposes.

Also in February 2023, we entered into a Second Amendment to our Credit Agreement with Capital One (the “Credit Facility”), which, among other things, increased the amount of additional indebtedness permitted under the Credit Facility, thereby allowing for the issuance of the Additional Notes. For more information, see Note 4.

### Key Performance Indicators

We use several key performance indicators to evaluate the operations of our properties. These key operating measures are presented as supplemental disclosures because management uses these measures to better understand period-over-period fluctuations in our casino and hotel operating revenues. These key performance indicators include the following and are disclosed in our discussions, where applicable, for certain jurisdictions on segment performance:

#### Gaming revenue indicators:

Slot coin-in is the gross dollar amount wagered in slot machines and table game drop is the total amount of cash or credit exchanged into chips at table games for use by our customers. Slot coin-in and table game drop are indicators of volume, and are monitored on a consolidated basis in relation to slot and table game win. Such metrics can be influenced by marketing activity and are not necessarily indicative of profitability trends.

Slot win is the difference between customer wagers and customer winnings on slot machines. Table game hold is the difference between the amount of money or markers exchanged into chips and customer winnings paid. Slot win and table game hold percentages represent the relationship between slot win and coin-in and table game win and drop. Both the slot win and table game hold percentages are monitored on a consolidated basis in our evaluation of Company performance.

#### Room revenue indicators:

Hotel occupancy rate is an indicator of the utilization of our available rooms. Complimentary room sales, or the retail value of accommodations gratuitously furnished to customers, are included in the calculation of the hotel occupancy rate.

#### Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted Segment EBITDA Margin and Adjusted Property EBITDA:

Management uses Adjusted EBITDA as a measure of our performance. For a description of Adjusted EBITDA, see “Non-GAAP Financial Measure.” We utilize Adjusted Segment EBITDA, a financial measure in accordance with generally accepted accounting principles in the United States of America (“GAAP”), as the measure of segment profitability in assessing performance and allocating resources at the reportable segment level. For information regarding our operating segments, see Note 9. In addition, we use Adjusted Segment EBITDA Margin, which is calculated by dividing Adjusted Segment EBITDA by the segment’s total revenues.

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 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.

### Results of Operations

#### Consolidated operating results

The following tables summarize our consolidated operating results for the three and six months ended June 30, 2023 and 2022:

*(In thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ ​ ​ ​ ​ Increase / (Decrease) | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ ​ ​ ​ ​ Increase / (Decrease) |
| --- | --- | ---: | --- | ---: | ---: | --- | ---: | --- | ---: | ---: |
| Revenues | ​ | $59,382 | ​ | $44,383 | 33.8% | ​ | $109,488 | ​ | $85,806 | 27.6% |
| Operating expenses | ​ | 58,788 | ​ | 36,164 | 62.6% | ​ | 115,880 | ​ | 72,284 | 60.3% |
| Operating income (loss) | ​ | 594 | ​ | 8,219 | (92.8)% | ​ | (6,392) | ​ | 13,522 | (147.3)% |
| Interest and other non-operating expenses, net | ​ | 5,633 | ​ | 7,007 | (19.6)% | ​ | 10,097 | ​ | 17,812 | (43.3)% |
| Income tax provision (benefit) | ​ | 561 | ​ | 5,567 | (89.9)% | ​ | 526 | ​ | (45) | 1,268.9% |
| Net loss | ​ | $(5,600) | ​ | $(4,355) | 28.6% | ​ | $(17,015) | ​ | $(4,245) | 300.8% |

*(In thousands)*

| ​ ​ ​ Casino revenues | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Increase / (Decrease) ​ ​ | ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Increase / (Decrease) ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Slots | ​ | $38,022 | ​ | $25,838 |  | 47.2% | ​ | $69,549 | ​ | $51,365 |  | 35.4% |
| Table games | ​ | 7,247 | ​ | 3,534 |  | 105.1% | ​ | 11,599 | ​ | 6,810 |  | 70.3% |
| Other | ​ | 90 | ​ | 116 |  | (22.4)% | ​ | 198 | ​ | 397 |  | (50.1)% |
| ​ | ​ | 45,359 | ​ | 29,488 |  | 53.8% | ​ | 81,346 | ​ | 58,572 |  | 38.9% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Non-casino revenues, net** | ​ |  | ​ |  |  | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Food and beverage | ​ | 8,673 | ​ | 6,933 |  | 25.1% | ​ | 16,333 | ​ | 13,444 |  | 21.5% |
| Hotel | ​ | 2,348 | ​ | 2,407 |  | (2.5)% | ​ | 4,492 | ​ | 4,586 |  | (2.0)% |
| Other | ​ | 3,002 | ​ | 5,555 |  | (46.0)% | ​ | 7,317 | ​ | 9,204 |  | (20.5)% |
| ​ | ​ | 14,023 | ​ | 14,895 |  | (5.9)% | ​ | 28,142 | ​ | 27,234 |  | 3.3% |
| **Total revenues** | ​ | $59,382 | ​ | $44,383 |  | 33.8% | ​ | $109,488 | ​ | $85,806 |  | 27.6% |

*(In thousands)*

| ​ ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2023 ​ ​ ​ | ​ ​ ​ | ​ ​ ​ 2022 ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Increase / (Decrease) ​ ​ | ​ ​ ​ ​ | ​ ​ ​ Six Months Ended June 30, 2023 ​ ​ ​ | ​ ​ ​ | ​ ​ ​ 2022 ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Increase / (Decrease) ​ ​ |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Slot coin-in | $643,965 ​ | ​ | $470,735 ​ | ​ | 36.8% | ​ | $1,184,199 ​ | ​ | $932,903 ​ | ​ | 26.9% |
| Slot win(1) | $46,889 ​ | ​ | $35,241 ​ | ​ | 33.1% | ​ | $87,985 ​ | ​ | $69,476 ​ | ​ | 26.6% |
| Slot hold percentage(2) | ​ 7.3% | ​ | ​ 7.5% | ​ | (0.2) pts | ​ | ​ 7.4% | ​ | ​ 7.4% | ​ | — pts |
| Table game drop | $39,335 ​ | ​ | $18,509 ​ | ​ | 112.5% | ​ | $65,290 ​ | ​ | $34,090 ​ | ​ | 91.5% |
| Table game win(1) | $7,273 ​ | ​ | $3,573 ​ | ​ | 103.6% | ​ | $11,605 ​ | ​ | $6,877 ​ | ​ | 68.8% |
| Table game hold percentage(2) | ​ 18.5% | ​ | ​ 19.3% | ​ | (0.8) pts | ​ | ​ 17.8% | ​ | ​ 20.2% | ​ | (2.4) pts |

(1) Does not reflect reductions in casino revenues from “discretionary comps” (see Note 2 for more information on our customer loyalty programs).

(2) The three-year averages for slot hold percentage and table game hold percentage were 7.5% and 18.1%, respectively. As a significant portion of our results in the recent and prospective quarters reflect a new property, and the win percentages at that new property may be different from the other casinos in our portfolio, consolidated win percentages in the future may differ from those in the past.

The following discussion is based on our consolidated financial statements for the three and six months ended June 30, 2023 and 2022.

**Revenues.** Consolidated total revenues increased by 33.8% (or $15.0 million) and 27.6% (or $23.7 million) for the respective three and six months ended June 30, 2023. These increases reflect the February 2023 opening of The Temporary, which contributed approximately $20.3 million and $30.7 million, respectively. Lower volumes in both periods at the Company’s other properties contributed to gaming revenue declines of $3.1 million and $6.0 million, respectively. For non-gaming revenue, a timing difference for the $2.1 million sale of “free play” at Rising Star offset the $1.7 million increase in food and beverage revenues for the three months ended June 30, 2023, as this free play sale was completed in the second quarter of 2022 versus the first quarter of 2023. For the six months ended June 30, 2023, non-gaming revenues were adversely affected by Contracted Sports Wagering, as the prior-year period included an acceleration of deferred revenue for two agreements that ceased operations in May 2022 (see Note 2).

For more information, see “*Supplemental Information – Same-store Operating Results.”*

**Operating Expenses.** Consolidated operating expenses increased by 62.6% (or $22.6 million) and 60.3% (or $43.6 million) for the three and six months ended June 30, 2023, respectively. These increases were primarily due to the commencement of operations at The Temporary, including $6.9 million in selling, general and administrative costs and $6.3 million in depreciation and amortization for the three months ended June 30, 2023. For the six months ended June 30, 2023, The Temporary contributed to increases in operating expenses, including $9.1 million in selling, general and administrative costs, $10.3 million in depreciation and amortization, and $10.1 million of preopening costs. Operating expenses also included $1.1 million and $1.5 million of preopening costs for the respective three and six months ended June 30, 2023, related to the construction and development of Chamonix (scheduled to open on December 26, 2023).

See further information within our reportable segments described below.

### Interest and Other Non-Operating Expenses.

#### Interest Expense

Interest expense, net, consists of the following:

*(In thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Interest expense (excluding bond fee amortization and discounts/premiums) | ​ | $10,062 | ​ | $8,660 | ​ | $19,082 | ​ | $16,051 |
| Amortization of debt issuance costs and discounts/premiums | ​ | 744 | ​ | 411 | ​ | 1,291 | ​ | 797 |
| Capitalized interest | ​ | (4,097) | ​ | (2,083) | ​ | (7,569) | ​ | (3,461) |
| Interest income and other | ​ | ​ (1,076) | ​ | ​ — | ​ | ​ (2,352) | ​ | ​ — |
| ​ | ​ | $5,633 | ​ | $6,988 | ​ | $10,452 | ​ | $13,387 |

The net decreases in interest expense for three and six months ended June 30, 2023 were primarily due to increases in capitalized interest related to construction of The Temporary and Chamonix, as well as income earned from our cash balances.

#### Other Non-Operating Expenses, Net

We had no other non-operating expense for the three months ended June 30, 2023. However, for the six months ended June 30, 2023, we had $0.4 million of other non-operating income, consisting of insurance settlement proceeds from hurricane damage at Silver Slipper in 2020. For three and six months ended June 30, 2022, we had $19,000 and $4.4 million of other non-operating expenses, consisting of debt modification costs related to our notes offering in February 2022.

**Income Tax Expense.** We recognized income tax provisions of $561,000 and $526,000 for the respective three and six months ended June 30, 2023, which resulted in effective income tax rates of (11.1%) and (3.2%), respectively. For the three and six months ended June 30, 2022, we recognized a respective income tax provision of $5.6 million and an income tax benefit of $45,000, which resulted in effective income tax rates of 459.3% and 1.0%, respectively. The changes in the effective income tax rates were primarily due to our projections for pre-tax book income in 2023, the effects of tax amortization on indefinite-lived intangibles in 2023 and valuation allowances.

We do not expect to pay any federal income taxes or receive any federal tax refunds related to our 2023 results, as we have incurred losses in prior periods and anticipate an overall taxable loss for the period. We continue to evaluate the ability to realize our deferred tax assets and need for a valuation allowance on a quarterly basis. The valuation allowance, and the potential reversal of such allowance, have no bearing on the taxes actually paid by the Company.

#### Operating Results – Reportable Segments

We manage our casinos based primarily on geographic regions within the United States and type of income. For more information, please refer to our earlier discussion within “Executive Overview” above.

The following table presents detail by segment of our consolidated revenues and Adjusted EBITDA; see “Non-GAAP Financial Measure” for additional information. Additionally, management uses Adjusted Segment EBITDA as the measure of segment profitability in accordance with GAAP.

*(In thousands)*

| ​ ​ ​ Revenues | ​ ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2023 ​ ​ ​ | ​ ​ ​ ​ ​ 2022 ​ ​ ​ | ​ ​ ​ Increase / (Decrease) ​ ​ | ​ ​ ​ ​ | ​ ​ ​ Six Months Ended June 30, 2023 ​ ​ ​ | ​ ​ ​ ​ ​ 2022 ​ ​ ​ | ​ ​ ​ ​ Increase / (Decrease) ​ ​ |
| --- | --- | ---: | ---: | ---: | --- | ---: | ---: | ---: |
| Midwest & South |  | $49,911 ​ | $32,936 | 51.5% | ​ | $90,713 ​ | $62,882 | 44.3% |
| West |  | 8,089 ​ | 9,278 | (12.8)% | ​ | 16,213 ​ | 17,924 | (9.5)% |
| Contracted Sports Wagering | ​ | ​ 1,382 ​ | ​ 2,169 ​ | (36.3)% | ​ | ​ 2,562 ​ | ​ 5,000 ​ | (48.8)% |
| ​ |  | $59,382 ​ | $44,383 | 33.8% | ​ | $109,488 ​ | $85,806 | 27.6% |
| **Adjusted Segment EBITDA and Adjusted EBITDA** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ |
| Midwest & South |  | $9,391 ​ | $9,149 | 2.6% | ​ | $20,077 ​ | $16,239 | 23.6% |
| West |  | 177 ​ | 1,684 | (89.5)% | ​ | 234 ​ | 2,191 | (89.3)% |
| Contracted Sports Wagering | ​ | ​ 1,361 ​ | ​ 2,196 ​ | (38.0)% | ​ | ​ 2,522 ​ | ​ 4,964 ​ | (49.2)% |
| Adjusted Segment EBITDA |  | 10,929 ​ | 13,029 | (16.1)% | ​ | 22,833 ​ | 23,394 | (2.4)% |
| Corporate |  | (422) ​ | (943) | (55.2)% | ​ | (2,201) ​ | (2,911) | (24.4)% |
| Adjusted EBITDA |  | $10,507 ​ | $12,086 | (13.1)% | ​ | $20,632 ​ | $20,483 | 0.7% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ |
| **Adjusted Segment EBITDA Margin** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ |
| Midwest & South | ​ | ​ 18.8% | ​ 27.8% | (9.0) pts | ​ | ​ 22.1% | ​ 25.8% | (3.7) pts |
| West | ​ | ​ 2.2% | ​ 18.2% | (16.0) pts | ​ | ​ 1.4% | ​ 12.2% | (10.8) pts |
| Contracted Sports Wagering | ​ | ​ 98.5% | ​ 101.2% | (2.7) pts | ​ | ​ 98.4% | ​ 99.3% | (0.9) pts |

#### Supplemental Information – Same-store Operating Results

The following table presents the financial results of Midwest & South Operations on a same-store basis for the three and six months ended June 30, 2023 and 2022 for revenues and Adjusted Segment EBITDA; see “Non-GAAP Financial Measure” for additional information.

Same-store operations exclude results of new and acquired operating segments that have not been in operations for longer than a year, starting from the date of commencement or acquisition through the end of the reporting period. Accordingly, for Midwest & South, we have excluded the results of The Temporary by American Place for periods subsequent to its commencement of operations.

*(In thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ ​ ​ ​ 2022 | ​ ​ ​ Increase / (Decrease) | ​ ​ ​ | ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ ​ ​ ​ 2022 | ​ ​ ​ ​ Increase / (Decrease) |
| --- | --- | ---: | ---: | ---: | --- | ---: | ---: | ---: |
| Midwest & South same-store total revenues(1) | ​ | $29,584 ​ | $32,936 ​ | (10.2)% | ​ | $59,966 ​ | $62,882 ​ | (4.6)% |
| The Temporary by American Place |  | 20,327 ​ | — | N.M. | ​ | 30,747 ​ | — | N.M. |
| Midwest & South total revenues |  | $49,911 ​ | $32,936 | 51.5% | ​ | $90,713 ​ | $62,882 | 44.3% |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ |
| Midwest & South same-store Adjusted Segment EBITDA(1) | ​ | $5,258 ​ | $9,149 ​ | (42.5)% | ​ | $12,372 ​ | $16,239 ​ | (23.8)% |
| The Temporary by American Place |  | 4,133 ​ | — | N.M. | ​ | 7,705 ​ | — | N.M. |
| Midwest & South Adjusted Segment EBITDA |  | $9,391 ​ | $9,149 | 2.6% | ​ | $20,077 ​ | $16,239 | 23.6% |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ |
| Midwest & South same-store Adjusted Segment EBITDA margin(1) | ​ | ​ 17.8% | ​ 27.8% | (10.0) pts | ​ | ​ 20.6% | ​ 25.8% | (5.2) pts |
| The Temporary by American Place | ​ | ​ 20.3% | ​ —% | 20.3 pts | ​ | ​ 25.1% | ​ —% | 25.1 pts |
| Midwest & South Adjusted Segment EBITDA margin | ​ | ​ 18.8% | ​ 27.8% | (9.0) pts | ​ | ​ 22.1% | ​ 25.8% | (3.7) pts |

N.M. Not meaningful.

(1) Same-store operations exclude results from The Temporary by American Place, which opened on February 17, 2023.

### Midwest & South

Our Midwest & South segment includes Silver Slipper Casino and Hotel, Rising Star Casino Resort and The Temporary by American Place, which opened in Waukegan, Illinois, in February 2023. Total revenues for the respective three and six months ended June 30, 2023 increased by 51.5% (or $17.0 million) and 44.3% (or $27.8 million), primarily due to the addition of The Temporary and its casino operations. Excluding results from The Temporary, same-store revenues declined by 10.2% (or $3.4 million) and 4.6% (or $2.9 million) for the respective three and six months ended June 30, 2023, primarily due to lower casino revenue for both periods and the $2.1 million sale of “free play” at Rising Star that was outside of the current quarter, as further discussed below.

Casino revenue increased by 80.6% (or $17.1 million) and 57.6% (or $24.5 million) for the respective three and six months ended June 30, 2023, with the opening of The Temporary more than offsetting casino revenue declines at Silver Slipper and Rising Star. For the three months ended June 30, 2023, slot revenue for the segment increased by 71.2% (or $13.2 million) and table games revenue increased by 155.3% (or $3.9 million). For the six months ended June 30, 2023, slot revenue for the segment increased by 53.6% (or $20.0 million) and table games revenue increased by 96.5% (or $4.8 million). Excluding results from The Temporary, same-store casino revenue declined by 9.1% (or $1.9 million) and 9.8% (or $4.2 million) for the respective three and six months ended June 30, 2023, primarily due to lower slot and table games hold percentages at Silver Slipper versus the prior-year periods. To a lesser extent, same-store slot revenue for both periods was adversely impacted by lower slot volumes at Rising Star versus the prior-year periods, most likely due to the opening of a new, competing racetrack casino in September 2022 in Northern Kentucky.

Non-casino revenue declined slightly by 0.9% (or $0.1 million) during the quarter. This decline in the second quarter of 2023 reflects a timing difference for the $2.1 million sale of “free play” at Rising Star, as it was sold in the first quarter of this year versus the second quarter of 2022 (see Note 2). Food and beverage and other non-casino operations for the segment nearly helped to offset the decline during the quarter. Hotel revenues for the segment remained relatively flat for both the three and six months ended June 30, 2023, as The Temporary does not have hotel operations. For the six months ended June 30, 2023, non-casino revenue increased by 16.2% (or $3.3 million), primarily due to increases in food and beverage revenues of $2.7 million, including contributions of $1.4 million from The Temporary.

Adjusted Segment EBITDA increased by 2.6% (or $0.2 million) and 23.6% (or $3.8 million) for the respective three and six months ended June 30, 2023. These increases reflect the opening of The Temporary, which generated $4.1 million and $7.7 million of Adjusted Property EBITDA, offsetting same-store Adjusted Segment EBITDA declines of approximately $3.9 million each for the respective three and six months ended June 30, 2023. Same-store operations were affected by declines in casino revenues; higher operating costs, such as property insurance costs at Silver Slipper; and, for the three-month period, the timing difference for the sale of Rising Star’s free play.

Of note, The Temporary is not yet operating at full capacity. Various factors, including regulatory processes, resulted in the casino operating with certain restrictions for the first quarter and a portion of the second quarter. These restrictions included limitations on operating hours for the table games department, operating hours for the remainder of the casino, and maximum wagers for table games. Additionally, the property has continued to overcome staffing constraints by hiring and training new employees, including casino dealers. As new dealers are hired and trained, the Company expects to operate all of its 50 permitted table games at peak periods, whereas it currently operates approximately 30 table games on a typical weekend evening. The shortage of dealers also affects the number of tables that we operate in non-peak periods. Similarly, due to staffing constraints, The Temporary operated only one of its major restaurants in the first quarter, followed by a second restaurant that opened in April. The operating hours of both restaurants are expanding gradually, in response to customer demand and in accordance with the hiring of additional employees. A third restaurant, as well as an on-site sportsbook, are expected to open in the second half of the year.

### West

Our West segment includes Grand Lodge Casino, Stockman’s Casino, Bronco Billy’s Casino and Hotel and, upon its expected opening in December 2023, will include Chamonix Casino Hotel. The market in Cripple Creek 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 Casino is located near several major ski resorts. While we typically benefit from a “good” snow year, resulting in extended periods of operation at the nearby ski areas, excessive snow levels can result in challenging driving conditions or the closure of roads leading to Grand Lodge.

Total revenues decreased by 12.8% (or $1.2 million) and 9.5% (or $1.7 million) for the respective three and six months ended June 30, 2023, primarily due to planned business disruptions to accommodate the construction of Chamonix. These significant construction disruptions include temporarily-reduced gaming and restaurant capacity, as well as the temporary absence of all on-site hotel rooms and on-site self-parking. To alleviate the lack of on-site parking, Bronco Billy’s currently offers, and incurs the cost of offering, complimentary valet parking, as well as a free shuttle service to an off-site parking lot.

Casino revenue decreased by 14.6% (or $1.2 million) and 11.0% (or $1.8 million) for the respective three and six months ended June 30, 2023, largely due to the construction disruptions mentioned above. Slot revenue declined by 14.4% (or $1.0 million) and 12.6% (or $1.8 million), while table games revenue declined by 17.5% (or $0.2 million) and remained flat at $1.8 million for the respective three and six months ended June 30, 2023. Declines in gaming volumes during both periods were also impacted by adverse weather in Nevada, especially at Grand Lodge, where extremely heavy snowfall in February and March 2023 created challenging driving conditions and trip cancellations to our property. During the second quarter of 2023, lingering snowfall near Lake Tahoe delayed the return of seasonal residents to Incline Village, which also adversely affected Grand Lodge’s results.

Non-casino revenue was relatively flat for the three and six months ended June 30, 2023. Food and beverage revenues increased by 11.9% (or $0.1 million) and 10.5% (or $0.1 million) for the respective three and six months ended June 30, 2023, which offset declines in hotel revenues for both periods, primarily for the reasons noted above at Bronco Billy’s.

Adjusted Segment EBITDA decreased to $0.2 million each for the three and six months ended June 30, 2023. The decreases for both periods were due to disruptions from the construction of Chamonix described above, including additional operating expenses related to the operation of our new valet and parking shuttle service. The casino has also maintained much of its payroll, despite reduced activity levels, anticipating the need for the larger workforce required to open and operate Chamonix. Declines were also due to continued adverse weather at Grand Lodge.

In addition to construction disruption due to our neighboring Chamonix project, we are currently undergoing a modest refurbishment of a portion of Bronco Billy’s, which began in May 2022. While Bronco Billy’s casino refurbishment was completed in December 2022, the restaurant refurbishment will continue to impact the property until its anticipated completion in December 2023. When Chamonix opens, Bronco Billy’s will share the on-site parking garage, valet and surface parking capacity of the new casino, and also benefit from Chamonix’s adjoining 300-guestroom hotel.

### Contracted Sports Wagering

The Contracted Sports Wagering segment consists of our on-site and online sports wagering skins in Colorado, Indiana and, upon commencement, Illinois.

For the three months ended June 30, 2023, revenues and Adjusted Segment EBITDA were both $1.4 million, a decrease from $2.2 million in the prior-year period. For the six months ended June 30, 2023, revenues were $2.6 million and Adjusted Segment EBITDA was $2.5 million, a decrease from the respective $5.0 million each in the prior-year period. These results reflect all three of our permitted skins now contractually live in Colorado and two of our three skins live in Indiana, while the prior-year periods include accelerated revenue recognition for two agreements that ceased operations in May 2022 as one of the Company’s contracted parties ended its online and retail operations. In December 2022, we entered into a sports wagering agreement to replace such operator in Colorado, which went contractually live in March 2023. We are currently evaluating whether to utilize the remaining skin in Indiana ourselves or to utilize a replacement operator for such skin. However, there is no certainty that we will be able to enter into an agreement with a replacement operator or successfully operate the skin ourselves.

The results of this segment do not yet include income contribution from our agreement for a third party to operate on-site and online sports betting in Illinois. Under such agreement, we will receive a percentage of revenues, as defined in the contract, subject to an annualized minimum of $5 million, with minimal expected expenses. Under the agreement, the Company will begin to receive revenue payments for its Illinois sports skin in August 2023, irrespective of whether its sports wagering operations have begun. For details on our Illinois sports wagering agreement with Circa Sports, see Note 6.

### Corporate

Corporate expenses for the respective three and six months ended June 30, 2023 declined by 55.2% (or $0.5 million) and 24.4% (or $0.7 million), with increases in third-party professional services more than offset by decreases in accrued bonus compensation. Corporate expenses were $0.4 million and $0.9 million for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, corporate expenses were $2.2 million and $2.9 million, respectively.

#### Non-GAAP Financial Measure

“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 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.

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

*(In thousands)*

| ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| **Net loss** | $(5,600) | ​ | $(4,355) | ​ | $(17,015) | ​ | $(4,245) |
| Income tax provision (benefit) | ​ 561 | ​ | ​ 5,567 | ​ | ​ 526 | ​ | ​ (45) |
| Interest expense, net | ​ 5,633 | ​ | ​ 6,988 | ​ | ​ 10,452 | ​ | ​ 13,387 |
| Loss on modification of debt | ​ — | ​ | ​ 19 | ​ | ​ — | ​ | ​ 4,425 |
| Gain on insurance settlement | ​ — | ​ | ​ — | ​ | ​ (355) | ​ | ​ — |
| **Operating income (loss)** | ​ 594 | ​ | ​ 8,219 | ​ | ​ (6,392) | ​ | ​ 13,522 |
| Project development costs | ​ 17 | ​ | ​ 17 | ​ | ​ 24 | ​ | ​ 182 |
| Preopening costs | ​ 1,086 | ​ | ​ 1,534 | ​ | ​ 11,583 | ​ | ​ 2,320 |
| Depreciation and amortization | ​ 8,155 | ​ | ​ 1,834 | ​ | ​ 14,014 | ​ | ​ 3,626 |
| (Gain) loss on disposal of assets | ​ — | ​ | ​ (5) | ​ | ​ — | ​ | ​ 3 |
| Stock-based compensation | ​ 655 | ​ | ​ 487 | ​ | ​ 1,403 | ​ | ​ 830 |
| **Adjusted EBITDA** | $10,507 | ​ | $12,086 | ​ | $20,632 | ​ | $20,483 |

The following tables present reconciliations of operating income (loss) to Adjusted Segment EBITDA and Adjusted EBITDA.

*Three Months Ended June 30, 2023*

*(In thousands)*

| ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reporting segments | ​ ​ ​ ​ ​ ​ Operating Income (Loss) ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Depreciation and Amortization ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Project Development Costs ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ Preopening Costs ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Stock- Based Compensation ​ | ​ ​ ​ ​ ​ | ​ ​ Adjusted Segment EBITDA and Adjusted EBITDA ​ |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Midwest & South ​ | $1,830 | ​ | $7,556 | ​ | $— | ​ | $5 | ​ | $— | ​ | $9,391 |
| West ​ | (1,473) | ​ | 569 | ​ | — | ​ | 1,081 | ​ | — | ​ | 177 |
| Contracted Sports Wagering ​ | ​ 1,361 | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 1,361 |
| ​ ​ | 1,718 | ​ | 8,125 | ​ | — | ​ | 1,086 | ​ | — | ​ | 10,929 |
| **Other operations** |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  |
| Corporate ​ | (1,124) | ​ | 30 | ​ | 17 | ​ | — | ​ | 655 | ​ | (422) |
| ​ ​ | $594 | ​ | $8,155 | ​ | $17 | ​ | $1,086 | ​ | $655 | ​ | $10,507 |

*Three Months Ended June 30, 2022*

*(In thousands)*

| ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reporting segments | ​ ​ ​ ​ ​ ​ Operating Income (Loss) ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Depreciation and Amortization ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Gain on Disposal of Assets ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Project Development Costs ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ Preopening Costs ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Stock- Based Compensation ​ | ​ ​ ​ ​ ​ | ​ ​ Adjusted Segment EBITDA and Adjusted EBITDA ​ |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Midwest & South ​ | $7,003 | ​ | $1,281 | ​ | $— | ​ | $— | ​ | $865 | ​ | $— | ​ | $9,149 |
| West ​ | 496 | ​ | 524 | ​ | (5) | ​ | — | ​ | 669 | ​ | — | ​ | 1,684 |
| Contracted Sports Wagering ​ | ​ 2,196 | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 2,196 |
| ​ ​ | 9,695 | ​ | 1,805 | ​ | (5) | ​ | — | ​ | 1,534 | ​ | — | ​ | 13,029 |
| **Other operations** |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  |
| Corporate ​ | (1,476) | ​ | 29 | ​ | — | ​ | 17 | ​ | — | ​ | 487 | ​ | (943) |
| ​ ​ | $8,219 | ​ | $1,834 | ​ | $(5) | ​ | $17 | ​ | $1,534 | ​ | $487 | ​ | $12,086 |

Operating expenses deducted to arrive at operating income (loss) in the above tables for the three-month periods ended June 30, 2023 and 2022 included facility rents related to: (i) Midwest & South of $1.4 million in 2023 and $0.5 million in 2022, and (ii) West of $0.7 million during each of 2023 and 2022.

*Six Months Ended June 30, 2023*

*(In thousands)*

| ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reporting segments | ​ ​ ​ ​ ​ ​ Operating Income (Loss) ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Depreciation and Amortization ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Project Development Costs ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ Preopening Costs ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Stock- Based Compensation ​ | ​ ​ ​ ​ ​ | ​ ​ Adjusted Segment EBITDA and Adjusted EBITDA ​ |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Midwest & South ​ | $(2,836) | ​ | $12,812 | ​ | $— | ​ | $10,101 | ​ | $— | ​ | $20,077 |
| West ​ | (2,389) | ​ | 1,141 | ​ | — | ​ | 1,482 | ​ | — | ​ | 234 |
| Contracted Sports Wagering ​ | ​ 2,522 | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 2,522 |
| ​ ​ | (2,703) | ​ | 13,953 | ​ | — | ​ | 11,583 | ​ | — | ​ | 22,833 |
| **Other operations** |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  |
| Corporate ​ | (3,689) | ​ | 61 | ​ | 24 | ​ | — | ​ | 1,403 | ​ | (2,201) |
| ​ ​ | $(6,392) | ​ | $14,014 | ​ | $24 | ​ | $11,583 | ​ | $1,403 | ​ | $20,632 |

*Six Months Ended June 30, 2022*

*(In thousands)*

| ​ ​ ​ ​ ​ ​ Reporting segments | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Operating Income (Loss) ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Depreciation and Amortization ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Loss (gain) on Disposal of Assets ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Project Development Costs ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ Preopening Costs ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Stock- Based Compensation ​ | ​ ​ ​ ​ ​ | ​ ​ Adjusted Segment EBITDA and Adjusted EBITDA ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Midwest & South | ​ | $12,028 | ​ | $2,552 | ​ | $8 | ​ | $— | ​ | $1,651 | ​ | $— | ​ | $16,239 |
| West | ​ | 515 | ​ | 1,012 | ​ | (5) | ​ | — | ​ | 669 | ​ | — | ​ | 2,191 |
| Contracted Sports Wagering | ​ | ​ 4,964 | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 4,964 |
| ​ | ​ | 17,507 | ​ | 3,564 | ​ | 3 | ​ | — | ​ | 2,320 | ​ | — | ​ | 23,394 |
| **Other operations** | **​** |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  |
| Corporate | ​ | (3,985) | ​ | 62 | ​ | — | ​ | 182 | ​ | — | ​ | 830 | ​ | (2,911) |
| ​ | ​ | $13,522 | ​ | $3,626 | ​ | $3 | ​ | $182 | ​ | $2,320 | ​ | $830 | ​ | $20,483 |

Operating expenses deducted to arrive at operating income (loss) in the above tables for the six-month periods ended June 30, 2023 and 2022 included facility rents related to: (i) Midwest & South of $2.3 million in 2023 and $1.1 million in 2022, and (ii) West of $1.5 million in 2023 and $1.3 million in 2022.

### Liquidity and Capital Resources

#### Cash Flows

As of June 30, 2023, we had $113.6 million of cash and equivalents, including $78.1 million of restricted cash dedicated to the completion of Chamonix’s construction. We estimate that approximately $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 the 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, including construction activities.

**Cash flows – operating activities.** On a consolidated basis, cash provided by operations during the six months ended June 30, 2023 was $1.7 million, compared to cash provided by operations of $4.2 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. Our operating cash flows decreased in 2023 primarily due to our decrease in income, which includes preopening expenses of $11.6 million incurred for The Temporary (opened in February 2023) and Chamonix.

**Cash flows – investing activities.** On a consolidated basis, cash used in investing activities during the six months ended June 30, 2023 was $139.2 million, primarily for a gaming license payment of $50.3 million required to open The Temporary/American Place, as well as capital expenditures for Chamonix and The Temporary/American Place. Cash used in investing activities during the prior-year period was $65.0 million, which primarily related to capital expenditures for Chamonix and The Temporary.

**Cash flows – financing activities.** On a consolidated basis, cash provided by financing activities during the six months ended June 30, 2023 was $59.9 million, compared to cash provided by financing activities of $93.9 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 The Temporary. In February 2022, we received $102.0 million of gross proceeds from the issuance of additional notes to develop The Temporary.

#### Other Factors Affecting Liquidity

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

Our operations are subject to financial, economic, competitive, regulatory and other factors, many of which are beyond our control. Such future developments are highly uncertain and cannot be accurately predicted at this time.

#### Debt

**Long-term Debt.** At June 30, 2023, we had $450.0 million of principal indebtedness outstanding under the Notes, and $27.0 million outstanding under the Credit Facility. We also owe $2.5 million related to our finance lease of a hotel at Rising Star. With the exception of the Credit Facility, we have fixed interest rates on substantially all of our debt. See Note 4 for details on our debt obligations.

#### Other

**Capital Investments.** In addition to normal maintenance capital expenditures, we continue to make significant capital investments related to the construction of Chamonix and American Place.

*Chamonix.* 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 December 31, 2022, approximately $134.6 million of cash was reserved under our bond indentures to complete the construction of Chamonix. We expect to invest $115 million of such amount in 2023 and the remaining balance in 2024 (excluding pre-opening expenses and capitalized interest), with an expected opening of Chamonix on December 26, 2023.

*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 construction, 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 (see Note 2), costs related to the recent completion of The Temporary’s construction, as well as professional fees and limited sitework related to the permanent American Place facility. We will likely need additional financing in the future to complete the permanent American Place facility.

*Other Capital Expenditures.* Additionally, we may fund various other capital expenditure projects, depending on our financial resources. Our capital expenditures may fluctuate due to decisions regarding strategic capital investments in new or existing facilities, and the timing of capital investments to maintain the quality of our properties. No assurance can be given that any of our planned capital expenditure projects will be completed or that any completed projects will be successful. Our annual capital expenditures typically include some number of new slot machines and related equipment; to some extent, we can coordinate such purchases to match our resources.

We evaluate projects based on a number of factors, including profitability forecasts, length of the development period, the regulatory and political environment, and the ability to secure the funding necessary to complete the development or acquisition, among other considerations. No assurance can be given that any additional projects will be pursued or completed or that any completed projects will be successful.

**Hyatt Owner’s Option to Purchase our Leasehold Interest and Related Assets.** Our lease with the owner of the Hyatt Lake Tahoe to operate the Grand Lodge Casino contains an option for the lessor to purchase our leasehold interest and related casino operating assets. The lease, which has been extended several times in the past, was recently extended through December 31, 2024. We believe that we have an excellent and synergistic relationship with the lessor and hope to again extend the lease before its expiration, but there is no certainty that this will be the case. See Note 3 for more information.

### Off-balance Sheet Arrangements

We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

### Critical Accounting Estimates and Policies

We describe our critical accounting estimates and policies in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2022. We also discuss our critical accounting estimates and policies in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K for the year ended December 31, 2022. There has been no significant change in our estimation methods since the end of 2022.

### Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for which the Private Securities Litigation Reform Act of 1995 provides a safe harbor. These forward-looking statements can be identified by use of terms such as “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “future,” “possible,” “seeks,” “may,” “could,” “should,” “will,” “might,” “likely,” “enable,” or similar words or expressions, as well as statements containing phrases such as “in our view,” “we cannot assure you,” “although no assurance can be given,” or “there is no way to anticipate with certainty.” Examples of forward-looking statements include, among others, statements we make regarding our plans, beliefs or expectations regarding our growth strategies; our expected construction budgets, estimated commencement and completion dates, expected amenities, and our expected operational performance for Chamonix and The Temporary/American Place; our investments in capital improvements and other projects, including the amounts of such investments, the timing of commencement or completion of such capital improvements and projects, and the resulting impact on our financial results; our sports wagering contracts with third-party providers, including expected revenues and expenses, our expectations regarding our ability to replace our terminated sports wagering contract in Indiana, our ability to operate sports wagering contracts ourselves, and the expected commencement date of our sports wagering contract in Illinois; management’s expectation to exercise its buyout option on the Silver Slipper Casino and Hotel; our expectations regarding the potential construction of an additional hotel tower and related amenities at Silver Slipper Casino and Hotel; our expectations regarding our ability to extend the lease at the Grand Lodge Casino; adequacy of our financial resources to fund operating requirements and planned capital expenditures and to meet our debt and contractual obligations; expected sources of revenue; anticipated sources of funds; anticipated or potential legislative actions; beliefs in connection with our marketing efforts; factors that affect the financial performance of our properties; adequacy of our insurance; competitive outlook; outcome of legal and litigation matters, including those discussed below regarding third party litigation potentially impacting The Temporary/American Place; impact of recently issued accounting standards; and estimates regarding certain accounting and tax matters, among others.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, those risks discussed in Part I, Item 1A—Risk Factors and throughout Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of our Annual Report on Form 10-K for the year ended December 31, 2022, and in Part II, Item 1A—Risk Factors and elsewhere of this Form 10-Q. In addition, you should consult other disclosures made by us (such as in our other filings with the SEC or in company press releases) for other factors that may cause actual results to differ materially from those projected by us. You should read this Form 10-Q, and the documents that we reference in this Form 10-Q and have filed with the SEC, and our Annual Report on Form 10-K for the year ended December 31, 2022, with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

We undertake 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. New risks emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ significantly from those forecast in any forward-looking statements.

## Controls and procedures

As filed, 1,555 characters.

**Evaluation of Disclosure Controls and Procedures —** As of June 30, 2023, we completed an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2023, our disclosure controls and procedures are effective at a reasonable assurance level in timely alerting them to material information relating to us, which is required to be included in our periodic SEC filings.

We have established controls and procedures designed at the reasonable assurance level to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosure.

**Changes in Internal Control Over Financial Reporting —** There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

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In addition to the risk factors previously disclosed under Part I, Item 1A “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022, the following risk factor updates were identified:

***There is no assurance that our growth projects, including Chamonix and American Place, will not be subject to additional regulatory restrictions, delays, or challenges.***

We received approval of our plans for Chamonix from the appropriate Cripple Creek authorities in 2021. Our Development Agreement with such authorities, as amended, requires that we complete the project by December 31, 2023. Otherwise, the City may exercise its right of reversion for previously-vacated rights of way of portions of 2nd Avenue and a nearby alley. As the casino is currently scheduled to open on December 26, 2023, management does not believe that an extension will be necessary. However, there is no certainty that an extension would be granted if it were requested.

Regarding The Temporary and American Place, on October 21, 2019, the Forest County Potawatomi Community, the owner/operator of a casino in downtown Milwaukee and one of the unsuccessful bidders for the Waukegan casino license, sued the City of Waukegan seeking further consideration of its casino proposal.

In its complaint, the plaintiff alleges several violations of law and seeks monetary damages from the City of Waukegan. In January 2020, the City of Waukegan removed the lawsuit to the U.S. District Court for the Northern District of Illinois (the “Federal Action”). The City of Waukegan has moved for summary judgment on all claims brought in the Federal Action; such motion has been fully briefed since January 2022, and the parties are waiting for the judge’s ruling on the motion.

On November 17, 2021, the same plaintiff filed a second lawsuit in the Circuit Court of Cook County against the City of Waukegan, the Illinois Gaming Board (“IGB”), members of the IGB, and the IGB Administrator (the “State Action”). Per the State Action, the plaintiff sought, among other relief, temporary, preliminary, and permanent injunctive relief enjoining the IGB from taking formal steps toward issuing the Waukegan casino license; a declaration that the City failed to comply with the statutory requirements to certify applicants for the IGB; and a finding that the IGB, therefore, had no jurisdiction to issue an owner’s license for the Waukegan casino. The judge denied the plaintiff’s request for a temporary restraining order, which was later affirmed by the Appellate Court. On May 13, 2022, defendants in the State Action filed a motion to dismiss the State Action based upon the plaintiff’s lack of standing relating to the purported lack of compliance by the City with the certification process and that the Illinois Gambling Act does not provide for a private right of action. The trial court granted the motion and the plaintiff appealed. While the appeal was pending, on June 15, 2023, the IGB issued us an owner’s license for The Temporary/American Place, our Waukegan casino. Subsequent to the issuance of the owner’s license, defendants in the State Action sought to dismiss the appeal in the State Action as moot, given the IGB’s issuance of the owner’s license. The court granted such dismissal. However, on July 28, 2023, the Illinois Appellate Court reversed the lower court’s dismissal of the State Action, finding that the plaintiff’s action was not a private right of action under the Illinois Gambling Act and that the plaintiff had standing to pursue its claims. Although we are not a party to either lawsuit, court rulings in these actions could negatively impact our ability to secure financing for American Place, delay the opening of American Place, or otherwise affect our licensing.

Under Illinois law, a temporary casino is permitted to operate for two years, unless the IGB approves an additional year to accommodate appropriate construction. On June 15, 2023, we were approved by the IGB to operate The Temporary for this third year. Given the Potawatomi lawsuits and their possible negative impact on us (including our ability to finance American Place), it is possible that we will not be able to complete construction of American Place prior to the end of the third year, thus resulting in a potential operations gap between the closing of The Temporary and the opening of American Place. We intend to attempt to reduce the operations gap, if any. We could, for example, seek legislative relief so as to allow continued operation of The Temporary, which would permit continued employment and tax revenues while construction of the permanent American Place casino is completed. There is no certainty that such legislative relief would be achieved. Further, completion of casino construction projects such as American Place or Chamonix, generally, can be delayed by any number of items outside of our control, including by weather, labor shortages, supply chain issues or other construction delays. There is no assurance that these projects will not be subject to additional restrictions, delays, or challenges which would negatively impact us.

Filed Aug 9, 2023.
Source: SEC EDGAR, the filing index for accession 0000891482-23-000032. Last ingested by Listed: Nov 5, 2026, 19:30 ET. No prices; not investment advice.