Full House Resorts, Inc.

Good afternoon and welcome to Full House Resorts First Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, you may press star then two. Please note this event is being recorded. I would now like to turn the conference over to Louis Fanger, CFO of Full House Resorts. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to our first quarter 2022 earnings call. As always, before we begin, we remind you that today's conference call may contain forward-looking statements that we're making under the Safe Harbor Provision of Federal Securities Laws I would also like to remind you that the company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption forward-looking statements for the discussion of risks that may affect our results. Also, we may make reference to non-GAAP measures such as adjusted EBITDA for a reconciliation of those measures. Please see our website as well as the various press releases that we issue. And lastly, we're broadcasting this conference call at fullhouseresorts.com where you can find today's earnings release as well as all of our SEC filings. And with that said, I was going to talk about our newest news really quick with Circus Sports and then let Dan go into operations and our growth projects. But, you know, we did just announce today our newest agreement with Circus Sports to develop and manage the on-site sports book at the temporary as well as at American Place. If you've been to the Circa Resort here in Las Vegas, you'll know exactly why we're working with them. They have an amazing sports book here in town. It's the largest in the world. It's three stories tall with a podcast studio. Really fun and great sports book. They really embrace sports. If you haven't seen it in person, you need to. But they also have a mobile app in several states. As a part of our agreement, they'll use our expected sports skin in Illinois to launch their Circa Sports mobile sports app throughout the state. And then usually we don't go into some of the details of these agreements because of confidentiality clauses, but this is a larger one, and so disclosure-wise we think it's wise to give out some of the details. This agreement had a $5 million market access fee that was paid last week upon the contract signing. As typical with those market access fees, We'll amortize it over the eight-year life of this contract once operations go live. Also similar to our other skin agreements, we do share in the revenue subject to an annual minimum. That minimum is $5 million per year, which of course also doesn't start until operations begin. Beyond the eight-year initial term, there are two potential four-year renewal periods, both at Circa Sports' option. And so for those of you keeping track, We do have seven total skins, this one that we expect in Illinois, three in Colorado, and three in Indiana. We're getting back one skin in Colorado and one skin in Indiana. We get both of those back in the middle of May, as we previously reported. And so when you total all the annual minimums from our various contracts, we're sitting at $9 million per year, not including anything incremental from the two skins that cease in mid-May. We certainly hope and believe that we'll find a replacement operator in each of Indiana and Colorado. And so we do think that the $9 million figure should go higher.

With that said, do you want to... Yeah, I'll just point out that the market access fee that we've charged on each of these agreements is not refundable. So we don't take it into income. GAAP has us amortize it over the life of the contract, but it's not refundable. And so there is... similar market access fees, I think it was a total of $3 million on the Churchill deals. Churchill opted to exit the business. It's a little bit surprising because they were like the first people in it. But they're exiting the business. They don't get that back, so we will take in the income.