Executive Summary / Key Takeaways

• Full House Resorts is poised for significant growth, driven by the ramp-up of its new American Place and Chamonix properties, which are expected to substantially increase the company's EBITDA in the coming years.
• The temporary American Place casino in Illinois is demonstrating strong performance, with Q3 2025 revenues up 14% to a record $32 million and Adjusted Property EBITDA rising 16% to $9 million, with management projecting a $50 million run rate EBITDA for the temporary facility and $100 million for the permanent structure.
• Chamonix Casino Hotel in Colorado is undergoing a successful operational turnaround under new management, showing a 167.9% increase in Adjusted Segment EBITDA to $3.2 million in Q3 2025, with expectations for comfortable profitability in 2026 and an eventual $50 million annual EBITDA.
• The company's strategic application of technology, including TITO system unification and advanced digital marketing, is enhancing customer experience and driving significant cost efficiencies, directly contributing to improved profitability.
• FLL maintains a strong liquidity position and plans to finance the $302 million permanent American Place facility primarily through debt markets, explicitly ruling out equity issuance at current valuations, and anticipates not paying cash taxes until at least 2029.

A New Era of Growth: Full House Resorts' Strategic Transformation

Full House Resorts, Inc. (FLL), established in 1987, has evolved into a dynamic regional casino and hospitality operator, strategically positioning itself for a new era of growth. The company's core business involves owning, leasing, operating, developing, managing, and investing in casinos and related hospitality and entertainment facilities across the United States. FLL's overarching strategy centers on developing high-quality gaming and resort products in undersaturated regional markets, coupled with a relentless focus on operational efficiency and targeted marketing. This approach is designed to maximize returns from its significant capital investments, particularly in its newest properties.

The company's journey has been marked by strategic expansions and operational refinements. A pivotal moment was the launch of the temporary American Place facility in Waukegan, Illinois, in February 2023, marking a significant entry into the lucrative Chicagoland market. This was closely followed by the phased opening of the Chamonix Casino Hotel in Cripple Creek, Colorado, completed in October 2024. These developments represent FLL's commitment to building modern, attractive destinations that can capture substantial market share. Concurrently, the company has streamlined its portfolio, notably divesting Stockman's Casino in April 2025, a move not expected to materially impact its financial results.

FLL operates in a highly competitive landscape, facing off against industry giants like Caesars Entertainment (CZR), MGM Resorts International (MGM), Boyd Gaming Corporation (BYD), and Penn Entertainment (PENN), as well as smaller regional players. While larger competitors often boast greater scale, brand recognition, and diversified digital offerings, FLL carves out its niche through localized market penetration and a focus on integrated, value-added experiences. For instance, FLL's properties, such as Silver Slipper and Rising Star, emphasize accessibility and community integration, offering amenities like RV parks and golf courses that cater to a specific regional demographic. This contrasts with Caesars' large-scale, destination-driven approach or MGM's focus on luxury experiences. FLL's strategic positioning allows it to compete effectively on cost management and customer-focused amenities, often leading to superior margins in its targeted segments, even if its overall revenue growth and cash flow generation are more conservative than those of its larger, more diversified rivals.

Operational Technology: The Unseen Edge

Full House Resorts leverages operational technology and strategic applications of existing systems to enhance its competitive standing and drive profitability. While not developing proprietary hardware, the company's focus on optimizing customer experience and efficiency through smart technology implementation provides a tangible edge.

A key initiative is the TITO (Ticket-In, Ticket-Out) system unification across its three casino licenses in Cripple Creek, Colorado. This technological integration allows customers to use a TITO ticket seamlessly in any of the Chamonix and Bronco Billy's licenses, eliminating previous customer confusion where tickets from one license would not work in another. This enhancement is not merely a convenience; it is expected to generate approximately $700,000 in annual cost savings by enabling the potential consolidation of three casino cages into one. This operational streamlining directly boosts the bottom line and improves the overall customer journey, a critical differentiator in a competitive market.

Furthermore, FLL is aggressively adopting advanced digital marketing strategies. The company is transitioning away from costly physical mailers to more efficient email-based campaigns and utilizing AI consultants to analyze its extensive customer databases for highly targeted offers. This shift has already proven effective at American Place, which ceased physical mail a year ago, finding that email response rates are "just as good" while costing "nothing" compared to the $1-2 per person (and $20 per acquired customer) for physical mailers. This technological pivot significantly reduces marketing expenses, a crucial component of SG&A, and enhances the effectiveness of customer acquisition and retention efforts, particularly vital for the ramp-up phases of new properties.

The introduction of electronic craps tables (Interblock) at Chamonix also exemplifies FLL's pragmatic use of technology. These tables allow the company to offer a popular game with reduced labor requirements, potentially operating with just one or no staff members. This improves labor efficiency and expands gaming options with lower operational overhead, contributing to better margins. These technological applications, while not groundbreaking inventions, are strategically deployed to create a more seamless customer experience, reduce operational costs, and enhance marketing effectiveness, forming a critical component of FLL's competitive moat and long-term growth strategy.

Financial Performance and Segment Dynamics

Full House Resorts delivered a strong performance in the third quarter of 2025, reflecting the successful ramp-up of its key growth assets. Consolidated total revenues increased by 3% to $77.95 million for the three months ended September 30, 2025, and by 3.60% to $226.95 million for the nine months, compared to the prior-year periods. This growth was primarily fueled by the "continued ramp-up of operations at our two newest properties, American Place and Chamonix". Adjusted EBITDA for the quarter rose 26% to $14.8 million, demonstrating significant operational leverage.

The Midwest South segment, encompassing American Place, Silver Slipper, and Rising Star, was a primary driver of this growth. Total revenues for the segment increased by 7% to $58.33 million in Q3 2025, and by 5.30% to $173.30 million for the nine months. American Place, the temporary facility in Illinois, continues to "fire on all cylinders," achieving record revenue of $32 million (up 14%) and record Adjusted Property EBITDA of $9 million (up 16%) in Q3 2025. This strong performance underscores the market's receptiveness to FLL's offering in Lake County, a demographically rich area. The segment's Adjusted Segment EBITDA rose by 12.70% to $11.55 million in Q3 2025, benefiting from American Place's momentum and operational efficiencies at Silver Slipper.

The West segment, including Chamonix and Grand Lodge, also showed significant improvement. Despite a 7.20% decline in total revenues for Q3 2025, largely due to the sale of Stockmans Casino and renovation disruptions at Grand Lodge, the segment's Adjusted Segment EBITDA surged by 167.90% to $3.21 million in Q3 2025. Notably, Chamonix/Bronco Billy's contributed $2.10 million to this figure, a substantial turnaround from a negative $0.7 million in the prior-year period. This dramatic improvement reflects the impact of new management and aggressive cost-cutting initiatives.

The Contracted Sports Wagering segment saw revenues decline by 8.8% in Q3 2025 and 19.6% for the nine months, primarily due to fewer active skins. However, the extension and prepayment of the Indiana skin agreement through December 2031 for $1.5 million provides a stable revenue stream. Corporate expenses decreased by $0.30 million and $0.50 million for the three and nine months ended September 30, 2025, respectively, due to lower bonus compensation and professional service fees.

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From a liquidity perspective, FLL reported $30.90 million in cash and equivalents at September 30, 2025. The company's cash flows from operating activities were a use of $2.10 million for the nine months ended September 30, 2025. With $450 million in principal debt outstanding under its Notes and $30 million under its Credit Facility, FLL's Illinois operations alone are currently sufficient to cover its interest expense. Management believes its current cash, available credit, and operating cash flows will cover its liquidity needs for the next 12 months, with minimal capital expenditures anticipated until the permanent American Place construction begins.

Strategic Outlook and Growth Drivers

Full House Resorts' future is largely defined by the continued development of American Place and the operational optimization of Chamonix. Management's guidance for American Place is particularly compelling, projecting the temporary facility to achieve a $50 million run rate EBITDA, with the permanent facility expected to double that to $100 million. This conviction is supported by the temporary casino's "record revenue and record profitability" in Q3 2025, and a growing customer database of over 115,000 people. The permanent facility, with a reduced budget of $302 million (excluding capitalized interest), will significantly expand gaming positions and amenities, capitalizing on Lake County's wealthy demographics and undersaturated market. The company aims to break ground in the second half of 2025, targeting an August 2027 opening, and is confident in securing financing primarily through debt markets, explicitly ruling out equity issuance at current valuations.

Chamonix is expected to achieve "comfortable profitability in 2026" and eventually reach $50 million in annual EBITDA. This outlook is underpinned by the new management team's aggressive cost-cutting, which has already reduced average FTEs by 13% in Q3 2025, and refined marketing strategies targeting the "underpenetrated Colorado Springs market" and the surprisingly strong Denver feeder market. The property's table games business is "starting to thrive," with revenues up 53% year-over-year in Q3 2025, and new initiatives like Baccarat tables and a dealer school are expected to further boost this segment. The unification of the TITO system, expected in Q4 2025, will enhance customer experience and save approximately $700,000 annually in cage costs.

For its legacy properties, FLL is focused on optimization. Silver Slipper is expected to grow its Adjusted EBITDA to the "mid-teens" this year, driven by over $2 million in annualized cost savings. Rising Star in Indiana is a prime candidate for relocation, with a state-approved study underway to explore moving the license to a higher population area like Indianapolis or Fort Wayne, a move management believes would be "most beneficial to the state" and significantly enhance profitability. The company also anticipates not paying cash taxes through at least 2029 due to depreciation shields and net operating losses, providing substantial financial flexibility.

Risks and Competitive Dynamics

While the outlook is positive, several risks warrant investor attention. The financing for the permanent American Place facility, though anticipated to be secured through debt, remains a critical dependency. While management has backup private equity options and the ability to seek legislative extensions to operate the temporary facility beyond August 2027 if needed, any delays could impact the smooth transition of its 500 employees and tax revenues.

Competitive pressures are inherent in the gaming industry. The potential for a new casino in Kenosha, Wisconsin, has been a recurring concern, but FLL management views this as "far from certain" and with "very little impact" on American Place, as the vast majority of its guests originate from the immediate Chicagoland area, not Wisconsin. In Colorado, while Chamonix is gaining market share, the market remains competitive, with established players like Monarch (MCRI) and Ameristar in Black Hawk. FLL's strategy of offering a superior product and targeted marketing aims to overcome this, but sustained execution is key. The Contracted Sports Wagering segment faces intense competition from dominant players like DraftKings (DKNG) and FanDuel, limiting FLL's ability to secure new partnerships for its unused skins.

Operational execution, particularly at Chamonix, has been a challenge, with initial ramp-up difficulties leading to management changes. The success of the new team in driving both revenue growth and cost efficiencies will be crucial for the property to reach its full potential. Similarly, the relocation of Rising Star's license in Indiana is subject to legislative and regulatory approvals, which can be a lengthy and uncertain process.

Conclusion

Full House Resorts stands at a pivotal juncture, transforming from a collection of regional casinos into a growth-oriented enterprise driven by its two flagship development projects. The core investment thesis is firmly rooted in the substantial, yet still unfolding, potential of American Place and Chamonix. American Place's consistent record-breaking performance and the clear roadmap for its permanent facility, coupled with Chamonix's operational turnaround and significant growth trajectory, paint a compelling picture of future profitability.

The company's strategic application of operational technology, from TITO system unification to advanced digital marketing, is not merely an efficiency play but a fundamental enhancement of its competitive moat, directly translating into improved customer experience and stronger financial performance. While challenges such as financing the permanent American Place and navigating competitive landscapes persist, management's proactive approach, including a focus on cost control, targeted marketing, and experienced leadership, positions FLL to unlock considerable shareholder value. The anticipated substantial increase in EBITDA from these new properties, combined with a disciplined capital allocation strategy and a long runway for cash tax deferral, suggests a robust future for Full House Resorts.