UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2024
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File No. 1-32583

FULL HOUSE RESORTS, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		13-3391527 (I.R.S. Employer Identification No.)

One Summerlin, 1980 Festival Plaza Drive, Suite 680 Las Vegas, Nevada (Address of principal executive offices)		89135 (Zip Code)

(702) 221-7800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	FLL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☑	Emerging growth company ☐
Non-accelerated filer ☐	Smaller reporting company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

At November 4, 2024, there were 35,601,097 shares of Common Stock, $0.0001 par value per share, outstanding.

Table of Contents

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX


		Page
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023	3
	Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	6
	Notes to Condensed Consolidated Financial Statements	8
	Note 1 ⸺ Organization	8
	Note 2 ⸺ Basis of Presentation and Significant Accounting Policies	8
	Note 3 ⸺ Assets Held for Sale	14
	Note 4 ⸺ Leases	15
	Note 5 ⸺ Long-Term Debt	18
	Note 6 ⸺ Income Taxes	20
	Note 7 ⸺ Commitments and Contingencies	21
	Note 8 ⸺ Earnings (Loss) Per Share	21
	Note 9 ⸺ Segment Reporting and Disaggregated Revenue	21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	43
Item 5.	Other Information	43

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 6.	Exhibits	44

Signatures		45

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues
Casino	$	56,116	$	50,240	$	162,474	$	131,586
Food and beverage		11,100		9,086		31,272		25,419
Hotel		4,693		2,560		11,287		7,052
Other operations, including contracted sports wagering		3,778		9,657		14,070		16,974
		75,687		71,543		219,103		181,031
Operating costs and expenses
Casino		22,582		19,437		63,876		49,771
Food and beverage		11,561		8,330		32,035		24,815
Hotel		3,160		1,164		7,706		3,611
Other operations		610		691		2,391		1,878
Selling, general and administrative		26,738		22,017		76,958		61,823
Project development costs		52		21		55		45
Preopening costs		42		1,051		2,462		12,634
Depreciation and amortization		10,493		8,468		31,444		22,482
Loss on disposal of assets		—		7		18		7
Gain on sale of Stockman’s		(2,000)		—		(2,000)		—
		73,238		61,186		214,945		177,066
Operating income		2,449		10,357		4,158		3,965
Other (expense) income
Interest expense, net		(11,047)		(5,867)		(32,320)		(16,319)
Gain on settlements		—		29		—		384
		(11,047)		(5,838)		(32,320)		(15,935)
(Loss) income before income taxes		(8,598)		4,519		(28,162)		(11,970)
Income tax (benefit) provision		(126)		(74)		211		452
Net (loss) income	$	(8,472)	$	4,593	$	(28,373)	$	(12,422)

Basic (loss) earnings per share	$	(0.24)	$	0.13	$	(0.82)	$	(0.36)
Diluted (loss) earnings per share	$	(0.24)	$	0.13	$	(0.82)	$	(0.36)

See notes to condensed consolidated financial statements.

Table of Contents

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share data)


	September 30,		December 31,
	2024		2023
ASSETS
Current assets
Cash and equivalents	$	25,936	$	36,155
Restricted cash		7,664		37,639
Accounts receivable, net		5,847		5,332
Inventories		2,306		1,839
Prepaid expenses and other		3,959		3,674
Assets held for sale		2,487		—
		48,199		84,639

Property and equipment, net		450,315		457,907
Operating lease right-of-use assets, net		56,528		44,704
Finance lease right-of-use assets, net		1,312		2,318
Goodwill		19,477		21,286
Other intangible assets, net		92,200		76,271
Deposits and other		687		1,332
	$	668,718	$	688,457
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	9,449	$	12,794
Income taxes payable		—		489
Construction payable		6,364		20,667
Accrued payroll and related		9,143		4,097
Accrued interest		4,744		14,248
Other accrued expenses and current liabilities		19,761		19,779
Current portion of operating lease obligations		3,964		4,784
Current portion of finance lease obligations		1,897		1,694
Liabilities related to assets held for sale		79		—
		55,401		78,552

Operating lease obligations, net of current portion		53,122		40,248
Finance lease obligations, net of current portion		1,245		2,705
Other long-term liabilities, net of current portion		33,091		16,075
Long-term debt, net		467,389		465,153
Deferred income taxes, net		1,895		1,684
Contract liabilities, net of current portion		4,756		6,192
		616,899		610,609
Commitments and contingencies (Note 7)
Stockholders’ equity
Common stock, $0.0001 par value, 100,000,000 shares authorized; 35,446,627 and 35,302,549 shares issued and 35,446,627 and 34,590,150 shares outstanding		4		4
Additional paid-in capital		114,804		113,329
Treasury stock; 712,399 common shares at December 31, 2023		—		(869)
Accumulated deficit		(62,989)		(34,616)
		51,819		77,848
	$	668,718	$	688,457

See notes to condensed consolidated financial statements.

Table of Contents

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands)


				Additional							Total
	Common Stock			Paid-in		Treasury Stock			Accumulated		Stockholders’
	Shares	Dollars		Capital		Shares	Dollars		Deficit		Equity
Balance, January 1, 2024	35,302	$	4	$	113,329	712	$	(869)	$	(34,616)	$	77,848
Stock-based compensation	—		—		709	—		—		—		709
Net loss	—		—		—	—		—		(11,272)		(11,272)
Balance, March 31, 2024	35,302		4		114,038	712		(869)		(45,888)		67,285
Options exercised and restricted stocks vested	—		—		(198)	(209)		256		—		58
Stock-based compensation	—		—		740	—		—		—		740
Net loss	—		—		—	—		—		(8,629)		(8,629)
Balance, June 30, 2024	35,302		4		114,580	503		(613)		(54,517)		59,454
Options exercised and restricted stocks vested, net	145		—		(482)	(503)		613		—		131
Stock-based compensation	—		—		706	—		—		—		706
Net loss	—		—		—	—		—		(8,472)		(8,472)
Balance, September 30, 2024	35,447	$	4	$	114,804	—	$	—	$	(62,989)	$	51,819


				Additional							Total
	Common Stock			Paid-in		Treasury Stock			Accumulated		Stockholders’
	Shares	Dollars		Capital		Shares	Dollars		Deficit		Equity
Balance, January 1, 2023	35,302	$	4	$	110,590	895	$	(1,091)	$	(9,712)	$	99,791
Options exercised	—		—		12	(4)		5		—		17
Stock-based compensation	—		—		748	—		—		—		748
Net loss	—		—		—	—		—		(11,415)		(11,415)
Balance, March 31, 2023	35,302		4		111,350	891		(1,086)		(21,127)		89,141
Options exercised and restricted stocks vested	—		—		(65)	(166)		202		—		137
Stock-based compensation	—		—		655	—		—		—		655
Net loss	—		—		—	—		—		(5,600)		(5,600)
Balance, June 30, 2023	35,302		4		111,940	725		(884)		(26,727)		84,333
Restricted stocks vested	—		—		(91)	(10)		12		—		(79)
Stock-based compensation	—		—		726	—		—		—		726
Net income	—		—		—	—		—		4,593		4,593
Balance, September 30, 2023	35,302	$	4	$	112,575	715	$	(872)	$	(22,134)	$	89,573

See notes to condensed consolidated financial statements.

Table of Contents

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)


	Nine Months Ended
	September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(28,373)	$	(12,422)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		31,444		22,482
Amortization of debt issuance costs, discounts and premiums		2,236		2,042
Non-cash change in ROU operating lease assets		2,199		2,810
Stock-based compensation		2,155		2,129
Loss on disposal of assets		18		7
Gain on sale of Stockman’s		(2,000)		—
Provision for (recovery of) credit losses		215		(13)
Gain on settlements		—		(384)
Other operating activities		—		437
Deferred income taxes		211		452
Increases and decreases in operating assets and liabilities:
Accounts receivable		(730)		(4,177)
Prepaid expenses, inventories and other		(752)		(643)
Income taxes payable		(489)		—
Operating lease liabilities		(1,969)		(2,654)
Contract liabilities		(5,361)		(1,611)
Accounts payable and other liabilities		203		(5,248)
Net cash (used in) provided by operating activities		(993)		3,207
Cash flows from investing activities:
Capital expenditures		(44,626)		(119,898)
Proceeds from insurance settlement related to property damage		—		355
Proceeds from sale of Stockman’s		7,000		—
Acquisition of intangible assets		(1)		(50,251)
Other		(70)		—
Net cash used in investing activities		(37,697)		(169,794)
Cash flows from financing activities:
Proceeds from Senior Secured Notes due 2028 borrowings		—		40,000
Payment of debt discount and issuance costs		—		(6,494)
Borrowings under revolving credit facility		13,000		42,950
Repayment of revolving credit facility borrowings		(13,000)		(15,950)
Repayment of finance lease obligations		(1,257)		(1,159)
Proceeds from exercise of stock options		189		75
Other		(186)		(19)
Net cash (used in) provided by financing activities		(1,254)		59,403

Net decrease in cash, cash equivalents and restricted cash, including cash classified within current assets held for sale		(39,944)		(107,184)
Less: cash classified within current assets held for sale		(250)		—
Net decrease in cash, cash equivalents and restricted cash		(40,194)		(107,184)
Cash, cash equivalents and restricted cash, beginning of period		73,794		191,176
Cash, cash equivalents and restricted cash, end of period	$	33,600	$	83,992

See notes to condensed consolidated financial statements.

Table of Contents

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) – (Continued)

(In thousands)


	Nine Months Ended
	September 30,
	2024		2023
Supplemental Cash Flow Disclosure:
Cash paid for interest, net of amounts capitalized	$	38,885	$	25,539
Cash paid for income taxes		489		—

Supplemental Schedule of Non-Cash Investing and Financing Activities:
Payables and accruals incurred for capital expenditures	$	4,678	$	23,065
Note payable incurred for asset acquisition		—		1,500
Accrued liability related to asset acquisition		15,994		—
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases		—		30,178
Right-of-use asset and liability remeasurements:
Operating leases		14,023		2,341
Financing leases		—		(151)

See notes to condensed consolidated financial statements.

Table of Contents

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. ORGANIZATION

Organization. Formed as a Delaware corporation in 1987, Full House Resorts, Inc. owns, leases, operates, develops, manages, and/or invests in casinos and related hospitality and entertainment facilities. References in this document to “Full House,” the “Company,” “we,” “our,” or “us” refer to Full House Resorts, Inc. and its subsidiaries, except where stated or the context otherwise indicates.

The following table presents selected information concerning our segments:


Segments and Properties		Locations
Midwest & South
American Place^*		Waukegan, IL (northern suburb of Chicago)
Silver Slipper Casino and Hotel (“Silver Slipper”)		Hancock County, MS (near New Orleans)
Rising Star Casino Resort (“Rising Star”)		Rising Sun, IN (near Cincinnati)
West
Bronco Billy’s Casino (“Bronco Billy’s”) and Chamonix Casino Hotel (“Chamonix”)^*		Cripple Creek, CO (near Colorado Springs)
Grand Lodge Casino (“Grand Lodge”), leased and part of the Hyatt Regency Lake Tahoe Resort, Spa and Casino		Incline Village, NV (North Shore of Lake Tahoe)
Stockman’s Casino (“Stockman’s”), held for sale starting August 2024		Fallon, NV (one hour east of Reno)
Contracted Sports Wagering
One active sports wagering website (“skin”), plus two others that are currently idle		Colorado
One active sports wagering website (“skin”), plus two others that are currently idle		Indiana
One active sports wagering website (“skin”), commenced in August 2023		Illinois

__________

*	The temporary American Place facility and Chamonix opened on February 17 and December 27, 2023, respectively.

The Company currently operates seven casinos: six on real estate that we own or lease, and one located within a hotel owned by a third party. Additionally, we benefit from three active permitted sports wagering skins – one each in Colorado, Indiana, and Illinois.

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 August 2024, we entered into an agreement to sell Stockman’s to a privately-owned company (see Note 3). In October 2024, we completed the phased opening of Chamonix, our newest property located adjacent to our existing Bronco Billy’s Casino.

For additional information about the Company’s segments, see Note 9.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. As permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s 2023 annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Table of Contents

The interim condensed consolidated financial statements of the Company included herein reflect all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of annualized results for an entire year.

The condensed consolidated financial statements include the accounts of Full House and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Fair Value and the Fair Value Input Hierarchy. Fair value measurements affect the Company’s accounting for net assets acquired in acquisition transactions and certain financial assets and liabilities. Fair value measurements are also used in the Company’s periodic assessments of long-lived tangible and intangible assets for possible impairment, including for property and equipment, goodwill, and other intangible assets. Fair value is defined as the expected price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

GAAP categorizes the inputs used for fair value into a three-level hierarchy:

●

Level 1: Observable inputs, such as quoted prices in active markets for identical assets or liabilities;

●

Level 2: Comparable inputs other than quoted prices that are observable for similar assets or liabilities in less active markets; and

●

Level 3: Unobservable inputs which may include metrics that market participants would use to estimate values, such as revenue and earnings multiples and relative rates of return.

Methods and assumptions used to estimate the fair value of financial instruments are affected by the duration of the instruments and other factors used by market participants to estimate value. The carrying amounts for cash and equivalents, restricted cash, accounts receivable, and accounts payable approximate their estimated fair value because of the short durations of the instruments and inconsequential rates of interest.

Cash Equivalents and Restricted Cash. Cash equivalents include cash involved in operations and cash in excess of daily requirements that is invested in highly liquid, short-term investments with initial maturities of three months or less when purchased.

Restricted cash balances consist of funds placed into an interest-bearing account to fund the completion of the Chamonix construction project, in accordance with the Company’s debt covenants.

Accounts Receivable and Credit Risk. Accounts receivable consist primarily of casino, hotel, certain sports wagering contracts that pay us in arrears, and other receivables. Accounts receivable are typically non-interest bearing, recorded initially at cost, and are carried net of an appropriate reserve to approximate fair value. Loss reserves are estimated based on specific review of customer accounts including the customers’ willingness and ability to pay and nature of collateral, if any, as well as historical collection experience and current and expected economic and business conditions. Accounts are written off when management deems the account to be uncollectible and recoveries of accounts previously written off are recorded when received.

Table of Contents

Accounts receivable consists of the following:


(In thousands)	September 30,		December 31,
	2024		2023
Casino	$	628	$	343
Trade Accounts		3,326		3,479
Other Operations, excluding Contracted Sports Wagering		196		185
Contracted Sports Wagering¹		185		1,932
Other		1,665		582
		6,000		6,521
Less: Provision for credit losses		(153)		(1,189)
	$	5,847	$	5,332

__________

(1)	Starting in July 2024, annual prepayments of contracted revenue are now required in all of the Company’s active sports wagering contracts.

The following table shows the movement in the provision for credit losses recognized for accounts receivable that occurred during the period:


(In thousands)
	2024		2023
Balance at January 1	$	1,189	$	249
Current period provision for (recovery of) credit losses		215		(13)
Write-offs		(1,251)		—
Balance at September 30	$	153	$	236

At September 30, 2024, estimated loss reserves reflect activity related to two online sports wagering agreements, which remain active in Colorado and Indiana. In July 2024, the Company’s respective subsidiaries in Colorado and Indiana each amended its respective sports wagering agreement, resulting in the collection of a total of $2.1 million. Specifically, these amendments settled overdue payments owed to the Company, reduced certain future annual amounts due to the Company under the sports wagering agreements, and now requires such annual fees to be paid in advance of each annual term. Except as set forth in the respective amendments, all other terms of the sports wagering agreements remain in full force and effect.

Management regularly evaluates the adequacy of the Company’s recorded reserves. At September 30, 2024, we believe that no significant concentrations of credit risk existed for which a reserve had not already been recorded.

Other Intangible Assets. In March 2023, the Company paid $50.3 million to the Illinois Gaming Board (“IGB”) for required gaming license fees to operate the temporary American Place facility, and upon its opening, the permanent facility. Management has deemed the gaming license in Illinois as having an indefinite economic life, as such license is eligible for renewal every four years if all regulatory requirements are met. There is an additional one-time reconciliation fee, based on interim gaming revenues, which is calculated three years after commencing operations and paid over the ensuing six years. The minimum present value of this long-term obligation was determined at September 30, 2024 to be $30.9 million, which is accounted for as an increase in the cost basis for the gaming license in Illinois. See Note 7 for details.

Table of Contents

The minimum present value of the long-term obligation for the Company’s gaming license in Illinois consisted of the following, as discussed above:


(In thousands)	September 30,		December 31,
	2024		2023
Minimum IGB Reconciliation Fee*	$	42,574	$	22,092
Less: Amount representing interest		(11,675)		(7,187)
Minimum present value of IGB Reconciliation Fee	$	30,899	$	14,905

__________

*	Calculated based upon gaming revenues generated through September 2024. This one-time fee will be paid in six annual installments beginning in February 2026.

Additionally, during the second quarter of 2024, the Company retired $7.8 million of fully amortized intangible assets, which consisted primarily of acquired player loyalty programs. This resulted in net accumulated amortization of $0.4 million at September 30, 2024, compared to $8.1 million at December 31, 2023.

Revenue Recognition:

Accrued Club Points and Customer Loyalty Programs: Operating Revenues and Related Costs and Expenses. The Company’s revenues consist primarily of casino gaming, food and beverage, hotel, and other revenues (such as sports wagering, golf, RV park operations, and entertainment). The majority of the Company’s revenues are derived from casino gaming, principally slot machines.

The transaction price for a casino wager is the difference between gaming wins and losses, not the total amount wagered. As such wagers have similar characteristics, the Company accounts for its gaming transactions on a portfolio basis by recognizing net win per gaming day versus on an individual basis.

The Company sometimes provides discretionary complimentary goods and services (“discretionary comps”). For these types of transactions, the Company allocates revenue to the department providing the complimentary goods or services based upon its estimated standalone selling price, offset by a reduction in casino revenues.

Many of the Company’s casino customers choose to earn points under its customer loyalty programs. As points are accrued, the Company defers a portion of its casino revenue based on the estimated standalone value of loyalty points being earned by the customer. The standalone value of loyalty points is derived from the retail value of food, beverages, hotel rooms, and other goods or services for which such points may be redeemed. A liability related to these customer loyalty points is recorded, net of estimated breakage and other factors, until the customer redeems these points for various loyalty program benefits, primarily for “free casino play,” complimentary dining, or hotel stays, among others, depending on each property’s specific offers. Upon redemption, the related revenue is recognized at retail value within the department providing the goods or services. Unredeemed points are forfeited if the customer becomes and remains inactive for a specified period of time. Such liabilities were approximately $0.9 million at September 30, 2024 and $0.8 million at December 31, 2023, and these amounts are included in “other accrued expenses and current liabilities” on the condensed consolidated balance sheets.

Revenue for food and beverage, hotel, and other revenue transactions, as described in “Other Revenues” below, includes the retail value of (i) discretionary comps and (ii) comps provided in return for redemption of loyalty points. Additionally, the Company may collect deposits in advance for future hotel reservations or entertainment, among other services, which represent obligations of the Company until the service is provided to the customer.

Table of Contents

Deferred Revenues: Market Access Fees from Sports Wagering Agreements. The Company entered into several agreements with various unaffiliated companies allowing for online sports wagering within Indiana, Colorado and Illinois, as well as on-site sports wagering at American Place (the “Sports Agreements”). As part of these long-term Sports Agreements, the Company received one-time “market access” fees, which are recorded as long-term liabilities and then recognized as revenue ratably over the initial contract terms (or as accelerated due to early termination), beginning with the earlier of operations commencement or contractual commencement. In the third quarter of 2023, a contracted party ceased online operations in Indiana and Colorado, thus creating one available skin in each state. Another contracted party ceased online operations in Colorado during the second quarter of 2024, resulting in $0.9 million of accelerated revenue from market access fees.

Indiana. Under the Company’s one active Sports Agreement in Indiana that commenced in December 2021, we receive a percentage of revenues (as defined), subject to an annualized minimum amount. Additionally, a $1.0 million market access fee, received upon signing of the agreement, is being amortized over the initial 10-year term of the agreement. In July 2024, the agreement was amended to settle overdue payments and to reduce future annual amounts for the remainder of the initial term through November 2031 (as well as for any renewal periods), which resulted in minimum annualized straight-line revenues of $0.5 million through the remainder of the current term. The Company also has two idle skins, which the Company could operate itself or allow third-party operators to utilize. There is no certainty that the Company will be able to enter into agreements with other third-party operators or successfully operate the skins itself.

Colorado. Similarly in Colorado, under the Company’s one active Sports Agreement that commenced in June 2020, we receive a percentage of revenues (as defined), subject to an annualized minimum amount. Additionally, a $1.0 million market access fee, received upon signing of the agreement, is being amortized over the initial 10-year term of the agreement. In July 2024, the agreement was amended to settle overdue payments and to reduce future annual amounts for the remainder of the initial term through June 2030 (as well as for any renewal periods), which resulted in minimum annualized straight-line revenues of $0.5 million through the remainder of the current term. The Company also has two idle skins, which the Company could operate itself or allow third-party operators to utilize. There is no certainty that the Company will be able to enter into agreements with other third-party operators or successfully operate the skins itself.

Illinois. Under the Company’s Sports Agreement in Illinois, we receive a percentage of revenues (as defined), subject to a minimum of $5.0 million per year. A market access fee of $5.0 million is being amortized over the eight-year term of the Sports Agreement, which began its contractual term in August 2023.

In addition to the market access fees, deferred revenue includes annual prepayments of contracted revenue. With the July 2024 amendment of two Sports Agreements, all of the Company’s active Sports Agreements require the prepayment of contracted revenue.

Deferred revenues consisted of the following, as discussed above:


(In thousands)		September 30,		December 31,
	Balance Sheet Location	2024		2023
Deferred revenue, current	Other accrued expenses and current liabilities	$	2,250	$	6,175
Deferred revenue, net of current portion	Contract liabilities, net of current portion		4,756		6,192
		$	7,006	$	12,367

Other Revenues. The transaction price of rooms, food and beverage, and retail contracts is the net amount collected from the customer for such goods and services. The transaction price for such contracts is recorded as revenue when the good or service is transferred to the customer over their stay at the hotel or when the delivery is made for the food, beverage, retail and other contracts. Sales and usage-based taxes are excluded from revenues.

Revenue by Source. The Company presents earned revenue as disaggregated by the type or nature of the good or service (casino, food and beverage, hotel, and other operations comprised mainly of retail, golf, entertainment, and contracted sports wagering) and by relevant geographic region within Note 9.

Table of Contents

Income Taxes. For interim income tax reporting for the three and nine months ended September 30, 2024, the Company estimates its annual effective tax rate and applies it to its year-to-date pretax income or loss.

Reclassifications. The Company made certain minor financial statement presentation reclassifications to prior-period amounts to conform to the current-period presentation. Such reclassifications had no effect on the previously reported results of operations or financial position.

Earnings (Loss) Per Share. Earnings (loss) per share is net income (loss) applicable to common stock divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects additional dilutive effects for all potentially-dilutive securities, including share-based awards outstanding under the Company’s stock compensation plan, using the treasury stock method.

Stockholders’ Equity and Stock Incentive Plans. In June 2024, the Company’s Chief Executive Officer adopted a Rule 10b5-1 Trading Plan designed to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c). His Rule 10b5-1 Trading Plan, which had a term until November 29, 2024, concluded in October 2024. This trading plan related to 943,834 options that were nearing their 10-year expiration date, with any stock sales intended to satisfy costs associated with the option exercise, including income taxes. Of the 943,834 options, 180,794 were returned to the Company to offset approximately $898,546 of option exercise costs. Of the remainder, 225,000 shares were sold under the Rule 10b5-1 Trading Plan (including 70,530 shares sold during the third quarter of 2024 and 154,470 shares sold during October 2024). Mr. Lee used such proceeds to pay the remaining option exercise costs due to the Company, and to pay the required withholding of income taxes related to the option exercise.

Leases. The Company determines if a contract is, or contains, a lease at inception or modification of the agreement. A contract is, or contains, a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period of time in exchange for consideration. Control over the use of the identified asset means that the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

For material leases with terms greater than a year, the Company records right-of-use (“ROU”) assets and lease liabilities on the balance sheet, as measured on a discounted basis. For finance leases, the Company recognizes interest expense associated with the lease liability, as well as depreciation (or amortization) expense associated with the ROU asset, depending on whether those ROU assets are expected to transfer to the Company upon lease expiration. If ownership of a finance lease ROU asset is expected to transfer to the Company upon lease expiration, then it is included with the Company’s property and equipment; other qualifying finance lease ROU assets, based on other classifying criteria under Accounting Standards Codification 842 (“ASC 842”), are disclosed separately as “Finance Lease Right-of-Use Assets, Net.” For operating leases, the Company recognizes straight-line rent expense.

The Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less. However, costs related to short-term leases with terms greater than one month, which the Company deems material, are disclosed as a component of lease expenses when applicable. Additionally, the Company accounts for new and existing leases containing both lease and non-lease components (“embedded leases”) together as a single lease component by asset class for gaming-related equipment; therefore, the Company does not allocate contract consideration to the separate lease and non-lease components based on their relative standalone prices.

Finance and operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement, plus any qualifying initial direct costs paid prior to commencement for ROU assets. As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate as estimated by third-party valuation specialists in determining the present value of future payments based on the information available at the commencement date and/or modification date. The expected lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term for operating leases. For finance leases, the ROU asset depreciates/amortizes on a straight-line basis over the shorter of the lease term or useful life of the ROU asset as applicable, and the lease liability accretes interest based on the interest method using the discount rate determined at lease commencement.

Table of Contents

Preopening costs. Preopening costs are related to the preopening phases of new ventures, in accordance with accounting standards regarding start-up activities, and are expensed as incurred. These costs consist of payroll, advertising, outside services, organizational costs and other expenses directly related to both the Chamonix and American Place developments.

Debt Issuance Costs and Debt Discounts/Premiums. Debt issuance costs and debt discounts/premiums incurred in connection with the issuance of debt have been included as a component of the carrying amount of debt, and are amortized/accreted over the contractual term of the debt to interest expense, using the straight-line method, which approximates the effective interest method. When its existing debt agreements are determined to have been modified, the Company amortizes/accretes such costs to interest expense using the effective interest method over the terms of the modified debt agreement.

Accounting Pronouncements:

ASU 2023-09, Income Taxes, Topic 740, Improvements to Income Tax Disclosures (“Update 2023-09”). In December 2023, the FASB issued Update 2023-09 to improve income tax disclosure requirements, primarily related to rate reconciliations and income taxes paid. Update 2023-09 is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of the adoption of Update 2023-09 to the consolidated financial statements and related disclosures.

ASU 2023-07, Segment Reporting, Topic 280, Improvements to Reportable Segment Disclosures (“Update 2023-07”). In November 2023, the FASB issued Update 2023-07 to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Update 2023-07 is to be applied retrospectively and is effective for financial statements issued for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of the adoption of Update 2023-07 on the consolidated financial statements and related disclosures.

The Company believes that there are no other recently-issued accounting standards not yet effective that are currently likely to have a material impact on its financial statements.

3. ASSETS HELD FOR SALE

On August 28, 2024, the Company entered into an agreement with privately-owned Clarity Game Propco LLC (“Propco”) and Clarity Game Opco LLC (“Opco” and together with Propco, “Clarity”) to sell Stockman’s for total gross proceeds of $9.2 million, plus certain expected working capital adjustments at closing. The sale was designed to be completed in two phases: the sale of Stockman’s real property for $7.0 million to Propco, which closed on September 27, 2024; and the sale of certain remaining operating assets and related liabilities for $2.2 million (excluding any expected positive adjustments for working capital) to Opco, upon the receipt of customary gaming approvals. Since the disposition of Stockman’s is not expected to have a major effect on the Company’s operations and financial results, such sale does not qualify for presentation as discontinued operations.

To accommodate Clarity while it seeks its gaming approvals, the Company will temporarily continue to operate Stockman’s under the West segment. Upon the second closing that is expected to occur in early 2025, the Company will transfer all operations of Stockman’s to Opco. During the third quarter of 2024, the Company recognized a $2.0 million gain from the sale of Stockman’s real property to operating income, net of $0.7 million in transaction costs.

Table of Contents

The carrying amounts of Stockman’s assets and liabilities held for sale consisted of the following:


(In thousands)	September 30,
	2024
ASSETS
Current assets
Cash	$	250
Inventories		46
Total current assets held for sale		296
Property and equipment, net		378
Goodwill		1,809
Other intangible assets, net		4
Total assets held for sale	$	2,487
LIABILITIES
Current liabilities
Other accrued expenses and current liabilities	$	79
Total liabilities related to assets held for sale	$	79

4. LEASES

The Company has no material leases in which it is the lessor. As lessee, the Company has finance leases for a hotel and certain equipment, as well as operating leases for land, casino and office space, equipment, and buildings. The Company’s remaining material lease terms, including extensions, range from greater than one year to approximately 97 years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants, but the land leases at Silver Slipper and American Place do include contingent rent, as further discussed below.

Operating Leases

Waukegan Ground Lease through February 2122 and Option to Purchase. In January 2023, the Company’s subsidiary, FHR-Illinois, LLC, entered into a 99-year ground lease (the “Ground Lease”) for approximately 32 acres of land (the “City-Owned Parcel”) with the City of Waukegan in Illinois (the “City”). The ground lease commenced concurrently with the opening of American Place on February 17, 2023. The City-Owned Parcel and an adjacent 10-acre parcel owned by the Company comprise the location of American Place, including its temporary facility. Annual rent under the Ground Lease is the greater of (i) $3.0 million (the “Annual Guaranteed Minimum Rent”), or (ii) 2.5% of gross gaming revenue (as defined in the lease) generated by American Place.

The Company has the right to purchase the City-Owned Parcel at any time during the term of the Ground Lease for $30 million. If it does so prior to the opening of the permanent American Place facility, then it must continue to pay rent due to the City under the Ground Lease until the permanent casino is open.

Silver Slipper Casino Land Lease through April 2058 and Option to Purchase. In 2004, the Company’s subsidiary, Silver Slipper Casino Venture, LLC, entered into a land lease for approximately 31 acres of marshlands and a seven-acre parcel on which the Silver Slipper Casino and Hotel is situated. Annual minimum rent is $0.9 million throughout the lease term until 2058, plus contingent rents of 3% of gross gaming revenue (as defined in the lease) in excess of $3.65 million per month.

Through October 1, 2027, the Company may buy out the lease for $15.5 million, plus a seller-retained interest in Silver Slipper Casino and Hotel’s operations of 3% of net income (as defined) for 10 years following the purchase date.

Table of Contents

Bronco Billy’s / Chamonix Lease through January 2035 and Option to Purchase. The Company’s subsidiary, FHR-Colorado LLC, leases certain parcels, including a portion of the hotel and casino, under a long-term lease. The lease term includes six renewal options in three-year increments to 2035. The Company exercised its fourth renewal option to extend the lease term through January 2029, with current annual lease payments of $0.4 million. Annual minimum rent will increase to $0.5 million starting in February 2026 with adjustments on each anniversary thereafter, based on the consumer price index. The lease contains a $7.6 million purchase option exercisable at any time during the lease term, or as extended, and a right of first refusal on any sale of the property.

The Company’s related ROU asset and liability balances on its balance sheet factor in all renewal terms through January 2035, as the Company is deemed likely to exercise each renewal unless it exercises its purchase buyout right.

Grand Lodge Casino Lease through December 2034. The Company’s subsidiary, Gaming Entertainment (Nevada), LLC, has a lease (the “Hyatt Lease”) with Incline Hotel, LLC, the owner of the Hyatt Regency Lake Tahoe Resort (“Hyatt Lake Tahoe”), to operate the Grand Lodge Casino. It is collateralized by the Company’s interests under the lease and property (as defined in the lease) and is subordinate to the liens of the Notes (see Note 5). The lessor has an option to purchase the Company’s leasehold interest and related operating assets of the Grand Lodge Casino at any time prior to lease expiration, subject to assumption of applicable liabilities. The option price is an amount equal to the Grand Lodge Casino’s positive working capital, plus Grand Lodge Casino’s earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the 12-month period preceding the acquisition (or pro-rated if less than 12 months remain on the lease), plus the fair market value of the Grand Lodge Casino’s personal property.

In July 2024, the lease was further amended to extend the term through December 31, 2034 and, additionally, permits the lessor to terminate the lease early with six months’ notice for a significant renovation of the property, on different terms than above. The current annual rent of $2.00 million will increase nominally in 2025 to $2.01 million, followed by annual increases of 2% for the remainder of the extended term. Except as set forth in the amendment, all other terms of the Hyatt Lease remain in full force and effect. Accordingly, the Company has remeasured this lease’s related ROU asset and liability balances upon the effective date of this amendment.

Corporate Office Lease through April 2030. The Company leases 4,479 square feet of office space in Las Vegas, Nevada. In September 2024, the Company entered into an amendment with the landlord to extend the lease through April 30, 2030. The current annual rent of $0.20 million will decline in February 2025 to $0.17 million, increase in February 2026 to $0.23 million, and then increase 3% annually on each anniversary for the remainder of the extended term. The amended lease also includes one renewal at the Company’s option for five years with rent to be determined at the fair market rate. Accordingly, the Company has remeasured this lease’s related ROU asset and liability balances upon the effective date of this amendment.

Stockman’s Sale-Leaseback. In connection with the sale of Stockman’s real estate that closed on September 27, 2024, the Company’s subsidiary, Stockman’s Casino, Inc., entered into a short-term lease with Propco for use of its facilities with monthly rent of $50,000. Such leaseback will terminate upon the second closing of the Stockman’s sale, when Opco has obtained the requisite gaming approvals to operate Stockman’s. See Note 3 for details.

Finance Lease

Rising Star Casino Hotel Lease through October 2027 and Option to Purchase. The Company’s Indiana subsidiary, Gaming Entertainment (Indiana) LLC, leases a 104-guestroom hotel at Rising Star Casino Resort. At any time during the lease term, the Company has the option to purchase the hotel, and approximately 3.01 acres of land on which it resides, at a price based upon the hotel’s original cost of $7.7 million, reduced by the cumulative principal payments made by the Company during the lease term. At September 30, 2024, such potential purchase price was $1.8 million. Upon expiration of the lease term in October 2027, (i) the landlord has the right to sell the hotel to the Company, and (ii) the Company has the option to purchase the hotel. In either case, the purchase price is $1 plus closing costs.

Table of Contents

The components of lease expenses are as follows:


(In thousands)		Three Months Ended				Nine Months Ended
	Classification within	September 30,				September 30,
Lease Costs	Statement of Operations	2024		2023		2024		2023
Operating leases:
Fixed/base rent	Selling, General and Administrative Expenses	$	2,030	$	2,008	$	5,957	$	5,970
Short-term payments	Selling, General and Administrative Expenses		31		—		31		22
Variable payments	Selling, General and Administrative Expenses		340		281		919		935
Finance leases:
Amortization of leased assets	Depreciation and Amortization		382		412		1,131		1,113
Interest on lease liabilities	Interest Expense, Net		61		89		210		309
Total lease costs		$	2,844	$	2,790	$	8,248	$	8,349

Leases recorded on the balance sheet consist of the following:


(In thousands)
		September 30,		December 31,
Leases	Balance Sheet Classification	2024		2023
Assets
Operating lease assets	Operating Lease Right-of-Use Assets, Net	$	56,528	$	44,704
Finance lease assets	Property and Equipment, Net⁽¹⁾		4,284		4,409
Finance lease assets	Finance Lease Right-of-Use Assets, Net⁽²⁾		1,312		2,318
Total lease assets		$	62,124	$	51,431

Liabilities