Full House Sees Circa Sports Making Illinois Debut in a ‘Few Months’

Posted on: March 8, 2023, 11:16h. 

Last updated on: March 10, 2023, 02:28h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Full House Resorts (NASDAQ: FLL) delivered fourth-quarter results late Tuesday, providing investors with an update on the launch of its temporary gaming venue in Waukegan, Ill. That included commentary regarding when Circa Sports will debut in the state.

Full House
A rendering of Full House’s American Place integrated resort in Waukegan, Ill. The operator said Circa Sports could debut there in a few months. (Image: Las Vegas Review-Journal)

Last May, Circa announced it plans to enter Illinois via an arrangement with Full House. That pact allows Circa to operate a retail sportsbook at Full House’s upcoming American Place casino hotel in Waukegan and offer mobile sports wagering in the state. Circa’s Illinois launch is widely anticipated by the operator and bettors alike.

There’s a natural process that gets followed. But pending normal gaming approvals, we believe that Circa Sports could go live here in the next few months,” said Full House CFO Lewis Fanger on a conference call with analysts.

Fanger’s remarks arrived about a week after Circa Sports founder and owner Derek Stevens said he’s optimistic the company will be operational in Illinois at some point this year but couldn’t pinpoint exactly when that would happen. Assuming Fanger’s “next few months” prediction is accurate, that implies Circa will be taking bets in Illinois before the 2023 football season.

American Place Big Catalyst for Full House Shares

While there are some bumps associated with the debut of the temporary gaming venue in Waukegan, analysts believe the permanent version of American Place will be a significant driver for Full House shares, potentially boosting earnings before interest, taxes, depreciation, and amortization (EBITDA) and gross gaming revenue (GGR).

Management cited the potential for margins to ramp faster than our forecast given the fixed cost structure of its temporary facility and stated it could reach 40% EBITDA margins longer term versus our estimate of 37%. Checks indicate Waukegan GGR has accelerated over the past week to an over $105M GGR run-rate ahead of new drivers,” wrote B. Riley analyst David Bain in a report to clients on Wednesday.

Bain reiterated a “buy” rating and a $14 price target on the stock. That implies upside of approximately 40% from the March 7 close.

American Place will be larger than the current version of the company combined. The debut of the company’s Chamonix casino hotel in Cripple Creek, Colo., later this year is also forecast to be an important contributor to the operator’s top and bottom lines.

“FLL’s growth rate and valuation multiple are at opposite ends, leaving us bullish on Chamonix’s near-term impact on FLL’s share price,” added Bain.

In addition to American Place and Chamonix, Full House runs two gaming properties in Nevada, one in Indiana, Bronco Billy’s in Cripple Creek, and the Silver Slipper in Mississippi.

Full House Sports Betting Skin Update

Over the past several years, Full House marketed sports wagering skins to sportsbook operators, which has been an important source of revenue.

For those of you keeping track, once Circa goes live, the total for all six of our sports skin agreements is $10 million per year of annualized minimum revenue, and half of that $10 million is related to our agreement with Circa, which is the most valuable, the most valuable, by the way, because Illinois has so many people in the state and there just aren’t very many sports skins in the state,” said Fanger on the call.

The Full House financial boss said the company has a remaining skin in Indiana it could market to a third party or retain for itself. Circa wasn’t mentioned in connection with Full House’s Indiana skin. The Golden Gate operator is looking to expand, and Indiana is a market that could be desirable to the company.