Full House Resorts Inc (FLL) 2016 Q2 法說會逐字稿

Good day and welcome to the Full House Resorts second-quarter 2016 earnings call. Today's conference is being recorded. At this time I would like to turn the conference over to Lewis Fanger, Chief Financial Officer of Full House Resorts. You may begin.

Well, good afternoon, everyone. Welcome to the Full House Resorts second-quarter 2016 earnings call. As usual, we may make forward-looking statements on this call and, if we do, well, you know the usual spiel.

And we also made reference non-GAAP results as well. For reconciliation of any non-GAAP measures, please look to our earnings release or any of our 10-Q or 10-K filings as filed with the SEC. And with that let me turn it over to Dan.

Yes, let me tell you we purposely started a little bit late because we just filed an S3 offering. We wanted to make sure that was up and available for everybody to look at so I could reference it. And it is a rights offering for $5 million. And I will address that a little more later.

I apologize, we wanted to get that out earlier this morning, but the legal profession being what it is and everything that had to be wrapped up on that it ended up being a foot race here at the end to get it filed. But it is filed, it is available and we will address it.

First let me address the earnings. Results were actually pretty good. But the quarter was complicated by the acquisition debt refinancing and win percentages that were quite compared to what they are normally. And in particular compared to last year was a little above normal.

Starting with the Silver Slipper, the revenue was up slightly despite a pretty big negative swing in win percentage. The normal at that property -- and normal varies from property to property depending on the number of times chips are used before they are lost or cashed in. And it tends to be a fairly consistent number at one property, but you can't really compare property to property.

But if you take the Silver Slipper, the average for the last three years was 17.4%, last year in the quarter was 18.7%, that is only a little bit above normal. And this year was 16.7% which is only a little below normal, but when you are comparing from year to year it actually had a pretty big impact.

The table game drop was actually up 8.2%, but the revenues we got from table games because of that swing in win percentage were actually down.

The revenues would have been worse except we had opened the hotel last year in stages between May and September and the biggest part of it opened in May. And we also therefore had the cost of operating that hotel and then the market itself has gotten pretty promotional.

The Hollywood Casino in particular has all sorts of promotions that we have had to react to and somewhat lesser at [Island Grand] as well. The bottom line is our [EBDIT] at that property was down about 11%. If the win percentage had been flat EBDIT would have been about flat as well. So that was Silver Slipper.

At Rising Star revenue was up 2.4%; in that case actually win percent helped a little. The norm is 18.7%; we were at 17% this year but it was kind of an abnormally low 14.2% last year. The income was off just a little this property operates pretty close to breakeven so you get big percentage swings. But it was at $437,000 versus $592,000.

Now we had some promotional stuff, we keep trying different things with this property. Kind of it is like the patient in the hospital; you keep giving it heart shock and adrenaline and everything else, right. And it has shown a lot of improvement in the last few quarters.

This quarter we had some stuff that worked, like we have now a passport party that happens once a month that celebrates a different country each time. So in March it was Saint Patty's Day and in July it was France and so on. And it gives people a reason to come there on a Thursday every month.

And then at the end of the year somebody who has their passport fully stamped out gets a special prize. And that has been helpful, it is not huge, but it is helpful. It is one of the many things we try to do all the time.

But we did do one thing in the quarter that didn't work. We sponsored a balloon festival with a couple dozen hot-air balloons and it brought thousands of people to the property and a lot of publicity but frankly few of those people seemed to go into the casino and even fewer gambled. So we lost a little bit of money on the balloon festival.

I think if it wasn't for the balloon festival the quarter would have been -- well, still probably not quite flat but close. And there's a lot of stuff we are looking to do at Rising Sun that we think will make it a more solid property.

In Northern Nevada it is off-season at the Hyatt in the second quarter. The peak season for them is the third quarter which we are now in the heart of. It had a swing and win percentage in the quarter, there 15.8% is normal. Last year it did 18.0%, this year it did 12.1%.

So again last year was a bit above normal, this year was quite a bit below normal and the swing from year to year was pretty big. And then it happened in the off-season.

Now, Fallon, which is the other half of Northern Nevada segment, is less seasonal and it did just fine and table games are pretty irrelevant there. But because of the swing and win percentage the Northern Nevada segment was off, did about $624,000 versus $679,000.

Again if the win percentage had been normal it actually would have been up nicely over the prior year. Third quarter is by far the most important quarter there and it seems to be doing fine.

Bronco Billy's, recognize we are just halfway through the third quarter, so knock on wood. Bronco Billy's contributed $1.1 million in the 48 days in the quarter. Real happy to have the property, good property, good team of people there. And it provides pretty important diversity for us.

Bronco Billy's is summer seasonal also with the third quarter being the most important quarter. And the earnings historically, and we think prospectively are in the ballpark of about $5 million a year of EBDIT.

Now in the quarter we did $1.1 million, so something seems wrong there because $1.1 million -- we had it for about half the quarter, $1.1 million times two would be $2.2 million. How come we are not looking for $8.8 million of EBDIT? And there is a little nuance here that I think is important to understand.

There is a progressive tax rate in Colorado, as there is also in Indiana. And the way the state does it, their fiscal year starts September 1 of each year. And your first revenue is taxed lower because you are in the lower tax tier. And over the course of the state's fiscal year, as your cumulative revenues get higher your tax rate goes up.

So you would think that they would forecast revenue for the year and do some sort of true up but they don't. So in the third quarter of every year both in Indiana and in Colorado we have kind of an abnormally low gaming tax rate. And then in the second quarter, second fiscal quarter, which is the -- no, second calendar quarter which is the fourth fiscal quarter we have a higher tax rate.

July 1.

July 1, right. So their first fiscal quarter is our third calendar quarter, right. And their fourth fiscal quarter when we have the high tax rate is our second quarter, okay. And usually it doesn't matter because it is kind of consistent year-to-year.

Maybe it makes the property, both in Indiana and in Colorado, look a little more seasonal than it is because the -- seasonally the third quarter, third calendar quarter is the most important quarter. That also happens to be the quarter, the way the state does their taxes, where we have the lowest tax rate. And so it makes it look like the earnings are really important in the third quarter and they are.

Now -- but there is a nuance here and that was that we bought this in the middle of May. And so the state viewed us as a new gaming licensee, which we are, and from that stub period from May 13 to June 30 we were taxed at a low rate because it was a new entity. And that is probably about half of that $1.1 million of income that we had.

And so, we do smooth it out going forward but we had a benefit here -- we smoothed it out for GAAP purposes going forward. But we did have a benefit in the second quarter that accounted for about half of that $1.1 million. And the results frankly were good. Other than that they were consistent with prior year and I think consistent with our expectation of about $5 million a year of [EBDIT] at Cripple Creek.

If you go below the EBDIT line, interest expense was up to the acquisition, not surprisingly. We paid for Bronco Billy's 100% with debt and that was the most -- more expensive second-tier debt. And then there were a lot of costs related to the acquisition, lawyers, accountants, licensing and so on.

There were debt issuance costs related to the refinancing of our debt and the modifications of our debt. And then frankly, we provided warrants to [Summit], the second lien lender, for 5% of the Company, the warrants under certain circumstances become redeemable warrants albeit we can pay them with another note that has a four-year extension.

But, that is enough to give a typical GAAP accountant a complete conniption. So they spent weeks trying to figure out how to account for that. And the end result is we have kind of this redeemable warrant issue.

The funny thing is in future quarters if our stock goes up then we have a liability that has gone up and therefore there is a little charge. And if our stock goes down we have a liability that's gone down and therefore we get a little credit -- all of which gets the GAAP accountants very excited and the bottom line is it really doesn't matter very much. It is not a very big number to us.

You will notice our depreciation charge was down despite the acquisition and that is because we bought the Silver Slipper three years ago, there are a number of assets, particularly of the gaming license that was assigned a three-year life, and that is now faded.

And the player database.

The player database, right, the player database. So that is what happened in depreciation.

Now let me address the S3. First, when we did the deal and it was a complicated deal -- you have to remember this Company had danced around its covenants on that first lien debt for quite some time.

And when the new management team came in and we started dealing with the banks we found out that probably over the half the banks had us in their workout group and you are really dealing with bankruptcy lawyers who are trying to get repaid. And we started talking about extending the maturity and refinancing the debt and they just don't know how to spell that.

So we dealt with that for a while and then we found Cripple Creek and we got the operations turned around and it was time to try to refinance everything. And we did get there in the end with the first lien debt. They allowed us to buy Cripple Creek using second lien debt, etc., etc.

But one of the things they wanted to see us do was raise by $5 million of equity. I understand it, we were making a $30 million acquisition, they wanted at least a piece of it to be equity financed.

But they didn't require us to do it, instead they incentivized us to do it with an agreement that if we didn't do it by May 2017 our interest rate would go up 0.5%, which is about $200,000 a year to us. So we raised $5 million.

If all we did was set a bonfire and burned up the money it still gets as a 4% return on the $5 million because we save it on the interest expense.

More importantly, we are not going to have a bonfire with the money. We have located a whole bunch of things that we think have potential very high returns for us. And it adds up to about $10 million. And that is apart from about $3 million a year of maintenance CapEx or about $6 million over two years. And I tend to think of this as two years because it's going to take us about two years to get all this stuff done.

Now the biggest part of maintenance CapEx is slot machines, at least half of it. And this Company has bought very few slot machines in recent years. The machines are getting old. Our change machines frankly break down all the time where people try to change out their tickets and those suckers are about $25,000 each.

Even stuff like the roof in Fallon leaks. You go up there when it is raining, fortunately it is the high desert, it doesn't rain that often. But when it does rain the stuff actually knows where to put the buckets because they know where the leaks are.

All of that is being fixed and to the tune of about $6 million over a two-year timeframe. But apart from that there is $10 million of stuff that we think we can put money to work at that will significantly augment earnings.

So fixing the change machines or fixing the roof doesn't do anything for earnings, it is just something you have to do or the property falls apart. But there is $10 million of stuff that we think gets a good return, frankly a very high return.

And so, this is all in the S3 and we actually referenced some of it in the -- most of it in the proxy -- the intro letter to the proxy that we had a couple months ago. And the proxy actually has some pictures that we dropped in it.

Frankly we wanted to drop them into the S3 today but we got -- things got so hectic we didn't have time to do it. But they would be the same pictures that are in the proxy. So they are readily available.

But starting with the Grand Lodge, which is leased from Hyatt; that lease was coming due in September 2018. But more importantly at the property, which is a really nice hotel on the north shore of Lake Tahoe with over 1,000 feet of frontage right on the lake and surrounded by homes that are millions of dollars and tens of millions of dollars.

And frankly it is virtually impossible to replicate that hotel today, with the environmental regulations and the cost of land at Tahoe I don't think you could build another hotel like that, at least not in our lifetime.

So very special property, Hyatt has taken very good care of it. They have put quite a bit of money into it in the last few years into the hotel adding a wonderful spa and a great pool area and so on.

But nobody has put any money in the casino in like 15 years. And it was kind of a catch 22 because they viewed the casino as ours and we viewed the casino as a short-term lease, so why should either one of us put money into it.

And so, we sat down with the Hyatt folks and said let's bring the casino up to the level of the rest of the hotel. We will contribute part of the money. It ended up being we put up $1.5 million, they put up $3.5 million. That rent goes from $1.5 million a year to $2 million a year, but we added five years to the lease.

And you can compute that many, many different ways. But since we make about $3 million a year net of rent there the ROI on it is stratospheric no matter how you calculate it. And so it is a good relationship with Hyatt, we know the casino side of it, they know the hotel side of it.

We have hired the design firm of TAL Studio who does frankly a lot of work for Wynn, very talented people, we have worked with them before at L'Auberge and at River City in St. Louis. And they have come up with a great refurbishment plan for the property.

Now it is summer seasonal but they have a strong second season there, which is the ski season when the ski areas are open, leaving the shoulder seasons, the fall and spring, being pretty weak.

And so the plan is to go in there and between mid-March -- and we may screw up a little bit of the tail end of the ski season -- and mid-June, we need that long a period of time and even that is moving very quickly. That is when we plan to do this refurbishment. We won't actually close the casino, we will do it half by half.

But frankly we need to order the carpet in September and stuff like that in order to have it all in a warehouse in February so we are ready to go and move quickly in that timeframe. So that is about $1.5 million of it and a very high ROI.

At Stockman's, we figured out that Stockman's used to have about a 35% market share in Churchill County and it is down to 25%. And there is no new competition or anything, it is just the property got kind of beat up. And so we have been fixing up a little bit.

But we also figured out that there is a major weakness, the parking lot, the principal parking lot almost everybody parks in is on the east side of the building. There is no entrance to the east side of the building because that is where the back of the house and the kitchens are.

So you literally have to walk around the corner of the building to the south side where there is a pretty nondescript entrance to go in. There are two nice casino entrances on the west side of the building that nobody ever uses because there is an administrative office building that blocks your view of them. And it is a 40-year-old cinderblock building that is nothing special and it was originally a strip mall it doesn't even lay in itself very efficiently for offices.

And I am not sure how that ended up. There must have been a dispute with a neighbor and the neighbor decided to screw them by blocking their entrances or something. But it has been that way for decades.

And finally one day I called the fellow who is our manager there day to day and I said, you know, I am thinking about blowing up your offices. And he is like, thank God somebody would finally have the courage to do that, because he has been dealing with this for decades.

And so, we have -- the construction trailers or modular office space arrived a couple of days ago, they've put together now. And then we are moving the executive people out of that office building. And somewhere around Labor Day the mayor and I are going to drive a bulldozer into that building.

And we are going to create a parking lot on the west side of the building, which is where it should be, where there's nice casino entrances that go in. It will dramatically change the curb appeal of the place. It is already the nicest casino in town. Now this is Fallon, this is not Bellagio.

But it is a nice casino and by giving it better curb appeal and better parking I think we can claw our way back towards the market share it had five years ago. And the return on that is quite high, that is about $1.5 million. And frankly we think we can have that done by year end. So that one is moving pretty quickly.

At Rising Star, this was a riverboat casino that originally cruised; it actually was originally the Hilton Casino in New Orleans. It was brought up to Rising Sun, Indiana and was the first casino in the region.

And in those days the first in the region includes Cincinnati, Indianapolis and Louisville, it is 6 million, 7 million people. That was originally the only casino. And so people lined up in this pavilion building to buy admission tickets to get on the casino boat.

And the casino boat was designed to make sure people could get off and people could get on quickly. They didn't really care about the sense of arrival because there were such crowds trying to get on, people paid admission fees, I mean it was crazy.

And there was this big pavilion where people could queue up and hang out or get something to eat or drink waiting for the boat to come and go. It didn't go very far because if it went more than about 100 feet it was in Kentucky and everybody was going to get arrested. But it would cast off from the dock and sit there 10 feet off the dock, it was crazy. And that was in the 1990s.

In 2001 Indiana changed the law, you didn't have to cruise anymore. In fact, so you sit at the dock. And then in 2005 the race track outside of Indianapolis were allowed to put large land based casinos; they don't have tables yet but they will have tables in about four years.

And they have slot machines in a lot of them, 2,000 slot machines. And those are very much like a Las Vegas casino. It's a sea of slot machines and the restaurants around the edge of it and so the restaurants are interspersed with the casino.

And then Ohio legalize casinos and, again, they are basically land based casinos designed like Las Vegas. So we ended up with a boat that is quite outdated at this point.

And what we call a VIP room is almost an embarrassment. There is a little pony wall about 4 feet tall, the top part of it is glass and it separates some tables and some slot machines from the rest of the casino. But otherwise that is it, that is the pure VIP, you get a pony wall.

So if you go and look at our competition they have real VIP rooms. And this is something I did at Pinnacle at Belterra where we created a VIP room as you walked right on the casino. That is convenient for the high-end players who are staying in your hotel or maybe they are down to play golf or something and they walk on and you have a VIP room that is right there. It doesn't have to be very big but it has to be nice.

And even if you are not headed for that room it kind of elevates things because you look in and say, wow, someday if I am willing to gamble $25 or $100 a hand that is where I go, that is nice. But you know what, I'm going to go find that nickel slot machine, right. So it actually elevates the experience even for the people who aren't there.

And then the pavilion, because it is no longer servicing crowds, is now this vacuous space that you walk through. And we are going to put some artificial trees in there and hang some lower lights and so on to warm it up and give you a better sense of arrival as you go into it.

And we have allocated $1.8 million for all of that stuff, most of which will be done next year. And then our casino there has way more capacity than it needs. We have had the lowest win per slot machine per day in the entire state, which is okay, it is just a sign of the times, right. And it says that we don't need the gaming capacity we have.

So we actually want to remove part of the gaming capacity and put a restaurant on the casino boat so that you have a restaurant there now. Today you have to leave our boat to go get something to eat. Then if you decide to go back to the casino we have to pay a head tax again.

So just the savings on the head tax helps pay for the restaurant. And then if we can make it a restaurant that is kind of fanciful and draws people down from Cincinnati, and we have a concept in mind, then that will also drive business.

So we have allocated $1 million for putting a restaurant in the casino. And, by the way, that excess gaming capacity that we are allowed to have under law, that was part of what drove us to make that proposal in Indianapolis to the airport Authority. Airport Authority ended up canceling their whole RFP.

I think the idea that somebody would build a casino near the airport just scared that Bejesus out of them. But now we have gotten a number of phone calls from other places in the state saying, well, if the airport doesn't want you, would you come here?

So we are still looking at the possibility of relocating our excess capacity from Rising Sun to other places. But there is no money from that in this rights offering but that is something we are still looking at.

And then we have these big parking lots, some of the parking lots haven't been used in a long time. That was part of why we had the balloon festival, we had all of the surplus land, it makes a good place to launch a bunch of balloons. Unfortunately it just didn't bring about of gamblers to the place.

So we are going to take one of those parking lots and put an RV park, a 50 space RV Park. We think we can do it at about $30,000 a space. That is way cheaper than building a hotel. And frankly the guy who is driving one of these $100,000 RVs, they have got some real money.

That is a pretty common thing. You see them in Las Vegas, like Sam's Town has one, the California Hotel has one, [Boulder Station] I think has one. Well one of them down by Boulder Station.

There are several casinos -- oh, Circus Circus has one -- there are several casinos in Las Vegas that have RV parks, very common in the South. We had one at the Silver Slipper. And so -- and ironically most of these RVs are made in Indiana; Elkhart, Indiana is where they are made. And there is pretty good RV ownership in Indiana and Ohio. But none of the casinos in the region have an RV park.

And so we have an existing parking lot that works very well for it. Now we are going to chew up the parking lot because we have got to put in utility lines and sewer lines and all this stuff and reorient it. But we have a good deal of landscaping that fits. We have not gotten town approval to do it which is not always easily obtained for an RV park. And so we are looking to have that done by May 1 of next year.

And then finally a ferry. Now the Rising Star is on the Ohio River but there is no bridge there. And there is a bridge 15 miles north that takes you right to the Hollywood casino and there is a bridge 20 miles south that takes you right to the Belterra casino and we are sitting there with no bridge.

Now historically there was a ferry boat there from the early 1800s until 1946 when it hit ice and sank and it didn't get replaced because it had competing ferry boats on both sides of it. And then eventually you had bridges built north and south. But at this point there is this long stretch of river with no bridge and no ferryboat.

It would be wonderful to have a bridge, but the body has got $100 million to build a bridge that can go over the boat traffic that you have on the Ohio River. But we can start a ferry service pretty inexpensively. The trick to this was getting a piece of land in Kentucky that would be zoned appropriately to accommodate a ferry. And we have now achieve that.

We acquired a piece of land directly across from us, we did get the approval of the Board of Adjustment which is the zoning authority that we needed approved it. It wasn't that easy; there were some neighbors who opposed it. I think they were fearful that we were talking about a bigger, noisier ferry than we are. We are just talking about a little 10 car ferry boat that goes back and forth.

But just like a dripping faucet eventually fills a bucket, a little 10 car ferryboat going back and forth 14 hours a day, 365 days a year eventually moves a lot of people. And part of the reason to do that is there is probably 100,000 people -- I think Boone County, directly across -- about 120,000 people.

Probably half of those people are going to be closer to us than any other casino with this ferry. And so -- and we ran the math from our player base. We know the people who live around us on the Indiana side, we get about $280 per capita if I remember correctly.

And the people who live directly across from us in a place called Rabbit Hash, Kentucky, we get $8.00 per capita, which is really not too surprising because it is a 50 minute drive from directly across from us, that is a 3 minute ferryboat ride.

And so we think we kind of improve our geography pretty significantly with a little ferryboat. Now the boat itself is really just a little push tug with a barge which can be purchased. There is many of those available at any given time. But we have to build roads on both sides and landings into the river and that is actually the bulk of the $1.7 million that we have in here is an estimate.

We need to build those roads in accordance with the Corps of Engineers rules and we need their signoff on it, which takes time because they are a bureaucracy of sorts. But we have hired good engineers and we will meet the Corps of Engineers' standards. And then the boat itself has to meet the Coast Guard standards and the crew has to meet the Coast Guard standards.

All said and done hopefully we can get this thing running by a year from now. And we have budgeted at $1.7 million. Now you can play with the numbers in little bit, this is something that has probably got a really high return, I mean this could pay for itself in a year or two. So that is the ferry service.

Down at the Silver Slipper property is in good shape and of course the hotel is new. But it is lacking one really important thing, it does not have a pool. And in that part of the world summer is long and hot and humid and people like having pools.

Our competition all have pools, really nice pools for the most part. And -- but we do have one advantage, we are at the foot of a beautiful 8 mile long beach. Now you don't really want to go swimming off the beach because once you go into the water it is muddy.

In fact not too long ago somebody got some brain eating disease out of the water. But it is muddy because it is where the mouth of the Mississippi goes into the Gulf and so you can't really see very far. It is not polluted it is just warm brackish water.

But the sand beach itself is beautiful. And in fact we -- of all the casinos on the Mississippi Gulf Coast we by far have the nicest beach setting. And that beach is the closest beach to the cities of New Orleans and Baton Rouge, which are 3 million people. And so when they are looking to go to the beach we are their beach.

And frankly the property kind of ignores it. You drive along this beautiful beach and then you park in a parking garage, you are on our property and we really have no amenities on that beach at all.

And so, we are planning to build a pool that is out along the beach with a bar on it that will be at the front of the property, it is quite visible when you come and go. And we think that helps us fill the hotel midweek. But on weekends, especially in the summer, the high rollers, they tell us their wives want to go visit our competition because they have pools and spas and we don't.

And so, if we can have a nice pool out along the beach it also helps us get a better level of player on the weekends when we are already full. But we think we can upgrade who we have and it is about $400,000. This isn't a huge lazy river swimming pool area, it's more like what a nice hotel in the Caribbean would have.

It is a nice pool with a deck around it and a bar next to it. So it is a place to sit out, enjoy the beach surrounding and you can take a dip in the pool without having to go into the brackish water of the Gulf. And so again, the goal there is to get it done by May 1 next year.

And then up at Bronco Billy's, part of the reason we bought this is it has the land next to it where one can build a hotel and we think Cripple Creek can follow the same trend that has gone on now for five or six years up at [Black Hawk] where the casinos have added nice hotels and that has grown the market with people coming up from Denver.

Now Cripple Creek will always be smaller than Black Hawk because Colorado Springs is smaller than Denver. But we think there is an opportunity for that same sort of thing. In fact we noticed one of our competitors, Century Gaming, has said they are going to build a nice little hotel that is [kitty] corner from us which we think is great and we would like to do the same.

This is a historical town with very tough architectural standards and historical commissions and so on. So -- which is appropriate. So this isn't something where we say, okay, we are going to build something that looks like a Fairfield Inn and slap it up, that would not get approved.

So this is going to take some thought and thinking. And so we do have in the budget $100,000 to design this hotel. To actually build it is probably $20 million or $30 million and we don't have that money today.

But if all this stuff works hopefully it gets our EBDIT up to something in the mid-$20 millions versus right now in the very high teens or about $20 million. And at that point we are levered 4 times instead of 5 times and that is probably the magic number at which you can refinance the debt on much better terms. And maybe as part of that you put a credit facility in place to go build the hotel in Cripple Creek.

So that is the $10 million that we plan to spend. Today we are sitting on about $20 million of cash, about $10 million to $12 million of that is used in operation so it is literally sitting in slot machines, leaving a little less than $10 million that would be available for this.

We do have a $2 million credit facility which is unused at the moment. We generate $5 million to $7 million a year in free cash flow. And so if you start looking at maintenance CapEx plus this $10 million you are up to about $16 million.

That is pretty close to working, but it is cutting it a little close if we didn't raise any equity. And I don't want to rely too much on free cash flow because if you had a recession in the middle of this you might have projects you can't finish. And frankly half a ferryboat doesn't do anybody any good.

So we wanted to get a little more comfort, plus it makes the banks more comfortable. So that put us in a position of needing to raise a modest amount of equity. And we didn't need too much, but $5 million was the number, that was the number the banks threw out and we agreed to.

So then how do you do it? Well, we looked at a public offering -- really way too expensive. By the time you get an investment banker involved and the Company would have an attorney, they would have an attorney and you know how it works.

Once you have two attorneys the legal fees triple because they negotiate against each other. And then the investment bank itself takes a fee. And $5 million is just too small for them to get excited about.

We've looked at doing -- and frankly they said, well, raise $20 million, it's like, well, we don't need $20 million, we just need $5 million. We didn't want the dilution for doing more than that. We looked at doing a PIPE, which is a private investment in a public equity, usually done by hedge funds and similar. And that is also expensive. And so they start -- it ends up being expensive.

So finally, we settled on a rights offering. And I will tell you, a rights offering is not that common in the US, although there has been a few of them. It actually in the early days of MGM that is how Kerkorian got the Company going. And he did two rights offerings that he backstopped himself and raised the equity to go build MGM Grand.

More recently Empire Gaming has done a couple, including a really large one back in the first quarter, to fund a big casino up in the Catskills. Overseas they are quite common. Countries like Italy and Sweden, probably 80% of the equity they raise is through rights offerings. And they are pretty common in England, just not that common in the US.

The best way to describe it is it is kind of a reverse dividend. Instead of us sending money to the shareholders saying here is your dividend, we are kind of going out and saying, hey we need a little bit of money so you guys send us money. And frankly, if everybody did it that would be great.

And the way this works out is we have about 19 million shares outstanding so our market cap is about $38 million, we need $5 million. And so, it is kind of way of saying, well, for every $7.00 you have invested send us $1.00. And then all will be happy, we will have our $5 million.

It doesn't really work that way. Now if you are a -- but you'd have the right to subscribe to this and your ownership doesn't change. And if you run the numbers, let's say you own 1% of our Company and then you use your direct rights to subscribe to 1% of the $5 million you will still own 1% of the Company.

And the Company will have gone up in value by having $5 million on the balance sheet, all is fine with the world. Your ownership is exactly the same. Hopefully -- because you own the stock hopefully you have confidence in us and now you have the ability to have a little more money invested in us and hopefully he view that as a positive.

And so, if you could just -- if it were a partnership it would just pass the hat and everybody put money in, all would be well with the world. But in a public company you know some people won't exercise it. They forgot they own the stock, they were Chrysler dealers and the certificates are underneath their socks in their sock drawer or something, right.

So some people aren't going to -- just like if a company pays a dividend it always amazed me how many dividend checks don't get cashed and eventually end up going to the state. But -- so some people aren't going to exercise.

And so what you do to incentivize people to exercise is set the price at a discount. And so you get the right to buy additional shares of stock at a discount to where the stock has been trading.

It is interesting, it took me a while to understand this, but if you are a subscribing shareholder, in other words you are going to exercise your proportionate share of those rights, the direct rights, so to speak. The actual exercise price is irrelevant.

The lower the price the fewer shares you get, but the fewer shares the Company itself is getting and you and up in exactly the same place. You can modeled it out. I modeled it out a couple times to make sure I really understood it.

And the easiest way to think about that is what I just told you a minute ago. If you own 1% of the company and you take 1% of the offering you will still own 1% of a company that is now a little more valuable, things are unchanged. Notice in that explanation there is no mention of the exercise price, it is actually irrelevant.

Now it is relevant to somebody who does not exercise, call it the sleeping shareholder. Because you really should exercise. Now maybe there is somebody out there who just doesn't want to put more money in the company, in which case you kind of wonder why they own the stock in the first place. Or somebody just doesn't have the money, okay. And so there will be some people who don't exercise.

Well, to make sure that the Company gets the full $5 million I personally have committed to buy any of the rights that others don't exercise. And it is very similar, although I am not Kirk Kerkorian, I am wealthy enough to do that for this Company and it is what he did then, it is what K.T. Lim did recently with Empire Gaming.

Basically he says, fine, here is your chance to participate pro rata in this rights offering. If you choose not to do it we have a backstop party who is going to put up the money on your behalf. And that is fine, you will still own your stock, it is just you will be diluted a little bit.

If you had 1% of the Company you will now own a little less that 1% of the Company. In fact the exact number is 16.8% less of the Company. And so I agreed to backstop it and of course -- so I am taking some risk. I could end up writing a $5 million check. I get paid for that -- because of those rights not exercised I get to exercise first $1 million of them.

And so that is basically my fee, if you will. But it doesn't cost the Company anything. In effect, I am paid by the sleeping shareholders and the Company gets the benefit of a $5 million guarantee on the offering without any cost to the Company whatsoever.

And there is probably some benefit to the Company of having the CEO take out a checkbook and write a significant check. If everybody exercises their direct rights I won't get any shares and I will have gotten no fee for having done the guarantee.

But that would be okay, if the shareholders all raised up money and contributed pro rata it would be a great sign of confidence and that is fine. But I am confident not everyone will.

Now the rights offerings also typically have a thing called an overallotment provision, which says that -- let's suppose you own some of our stock and you would like to increase your ownership and you would like to do it by buying some shares at that $1.30.

Well, if there is a lot of shares not exercised, after I have taken the first $1 million the rest go into a pool. And any shareholder can try to participate in that pool up to 5 times their direct rights. And if there is enough shares in that pool you can significantly increase your ownership.

If there is not enough shares in that pool that will be allocated out pro rata. And if very few people exercise in this then anything left over I have to buy, so that is the put value.

Let me put some numbers in that -- let's suppose you own 100,000 shares of our stock. You will receive rights to buy 20,000 shares approximately, 1 for 5. And that's direct rights, you get first priority of that. That holds your ownership the same, that is your pro rata participation in the offering.

And so if you exercise that and send us a check for $1.30 times 20,000 then you will continue to own the same ownership position. But if you want to increase your position you can also put in to buy as much as 100,000 additional shares, 5 times that 20.

And so -- and if there is enough shares in this pool then you could end up owning 220,000 shares having purchased 120,000 of those at $1.30. But it is anyone's guess as to whether there will be enough unsold -- unexercised rights for that pool. A good chance there is some. It may not be enough for everybody to get what they want and it will be allocated based on what they ask for, just like a normal offering is supposed to be.

And so that is how it works. And now as a result the Company is highly likely to get $5 million. And from the Company's point of view it kind of doesn't matter who it comes from, whether it comes from me or it comes from you or it comes from somebody else, the Company is highly likely to get the $5 million.

So therefore the Company and its Board has not taken a position on whether you as an individual should exercise or not. And you should take -- consider that pretty seriously because you are buying stock, albeit at $1.30, which is a discount to where it has been.

And by the way I should mention that discount. We messed around with it a lot. Originally it was going to be $1.20 and then the stock ran up, our stock was pretty volatile and a lot of it depends what is the right discount.

Pretty normal range of discounts on these is 20% to 30%; this is almost exactly 20% of where the stock has traded on average in the last six months.

Year-to-date.

Year-to-date, the year is seven months. If you look at it versus the last 30 days it is a bigger discount than that. If you look at it to today's price it is a bigger discount than that. But frankly we are in the process of preparing all this and our stock was moving all over the place. So we finally just settled on $1.30.

Again for the subscribing shareholder it doesn't matter. Frankly from my perspective it matters, but there is a yin and yang in it. The smaller the discount the more shares I would be likely to get but at a little higher price. And so even myself, I was kind of -- wasn't sure whether I wanted it to be higher or lower.

And so -- but we ended up, in the negotiation between me and the Board, resolving it at $1.30. So that is how it works, everything is filed with the SEC. We will find out within a couple weeks whether they are going to review it or not. Pretty good chance that they do because they haven't reviewed our stuff in quite some time.

We tried our best to make it as clear a document as possible so that maybe they took a cursory look at it and said, no, this is pretty clear, we don't have to review this.

If they don't review it then we would go effective with the rights offering sometime in September and it would be outstanding for something like 20 days and 20 days for everybody to send us what they want to do and then we would close the deal shortly thereafter.

If we get reviewed by the SEC it will push it off into the fall sometime. And I should mention the record date under the NASDAQ rules has to be at least 10 days from today and so it is 10 trading days from today, so it is Monday --.

10 actual days, so we set the record date as August 25.

August 25 is the record date. So if somebody wanted to own shares and get the rights they could buy shares in the next 10 calendar days and they would receive the rights and the oversubscription rights with that, if you buy stock after that 10 day period you would not.

The rights are not transferable with the stock at $2.00 a share, it was just like wasn't worth bookkeeping trouble. And then the other nuance I would point out and it is really a nuance is we discovered late in this, let's suppose absolutely nobody exercised their rights. I would end up -- would have ended up buying the entire $5 million offering. That would amount to like 21% of the stock.

Under the NASDAQ rules I am not allowed to buy over 20% unless we go have got to have a shareholder vote. And we didn't want to go through the cost and time of trying to have a shareholder vote. So my cap is technically limited to some odd number of shares that works out to 98.85% of all the rights that are available.

Now you will notice in the S3 that Brad Tirpak, who is our Chairman, and Craig Thomas*, who is on our Board, have -- and me -- we jointly own about 7% of the stock. And we have all indicated that we intend to exercise the direct rights that we receive.

So with those intentions and my commitment capped at the NASDAQ rule you end up at over $5 million. But you will notice that little nuance in there where it talks about my backstop being capped at 98.85% of the total deal, that is why -- we didn't want to have to go get a shareholder vote.

As a practical matter it is pretty irrelevant. It is highly unlikely that less than 2% of our shareholders exercise their rights. So I think effectively I really am guarantying the deal. Did I miss anything, Lewis?

You did not, Dan. It was exhaustive. Let's do a quick Q&A.

Yes. And please come up with questions because maybe it will highlight something I missed.

(Operator Instructions). Chad Beynon, Macquarie.

Hey, this is actually Ed Engle on for Chad, thanks for taking my question. Looking at the Silver Slipper, it appears having a new property in Biloxi hasn't really affected results in the Gulfport. Do you see any (inaudible) trends throughout the quarter or was performance relatively stable?

Well, I think that property is like an hour away from us. So it doesn't really affect us directly. You are talking about the Scarlet Pearl?

Yes.

Probably more importantly, about a year ago the Island View added a big hotel tower, like 400 rooms, it was a pretty significant investment. And their casino revenues didn't rise much. And so, they have kind of put it into overdrive to try to make sure that they fill those rooms and that has affected us some.

Now maybe because they are 20 or 30 minutes east of us, so they are 20 to 30 minutes or maybe 30 minutes west of Biloxi. So it is kind of like maybe Island View is being impacted by the Scarlet Pearl and therefore we are being indirectly hurt by the Scarlet Pearl.

So I am not going to say the Scarlet Pearl has had no effect, but it is pretty minimal. And frankly the Scarlet Pearl, if you go there you arrive -- you are within sight of Beau Rivage. And boy, I mean that is like, I don't know, if you give me a fantastic hamburger and it is about three feet from me and there is a McDonald's hamburger that is a foot from me I am probably going to reach for the three feet.

So I think actually in an odd way the Scarlet Pearl is a positive for us. Because there is no limit on the number of casinos in Mississippi. And there is all sorts of land that people are always looking at trying to finance a new casino.

And if I remember correctly, Chad, they invested somewhere in the neighborhood of $300 million there. And I don't think they are getting much of a return. And that is going to make it really hard for about a dozen other projects that are floating out there at any given time to try to get their financing.

This is a pretty built up market, it is hard to make the numbers work on a new casino in Mississippi. And every now and then somebody gets a dream, they get running on it and try to make it go, but I think the numbers are hard to make work.

In the case of the Scarlet Perl the owner wrote a really large equity check, I think it is over 50% equity in the project. And he is going to end up with a pretty low return on his equity. And I think that is going to stabilize the market for a while in an odd way.

Great, thanks. And then just across the portfolio in general, a lot of competitors were noting that May and June were a bit weaker than expected. Kind of notwithstanding some of those negative hold trends can you kind of talk about some of the market trends you saw across your portfolio in general?

Well I'm trying to remember, May was a bad calendar and then June was a catch up calendar, if I remember correctly. And so, May was kind of a hiccup. But then when you realized it had one less weekend than normal and that you kind of picked it up in the adjoining month it ended up kind of okay.

Now I was talking with one of our general managers last night, we were kicking ourselves because it seems like every four years you have a weak couple weeks with the Olympics, everybody stays home and watches the Olympics on television. And you don't see it at Tahoe where people are on vacation, but you see it in a market like Fallon where you have local people and it is a little bit soft.

We were kind of kicking ourselves that we didn't dream up some promotion that says every time they play the American anthem we will pass out (inaudible) or something. And this is a guy like me who has been around the industry for a long time, we are both kicking ourselves that we knew that there would be this Olympic phenomenon.

Now a part of that -- we are actually having a pretty good August. But just the last week was a little bit soft. And I bet you will find people griping about the Olympics as they did 4 years ago and 8 years ago and 12 years ago.

But back in -- and by the way, it is not huge, it is just a little soft and you start the saying why is this soft? And then you realize while I am talking to him I had the Olympics playing in the background, he had the Olympics playing in the background, it was like, well, maybe we know why it is a little soft.

And so, but I didn't see anything in the second quarter that was untoward if that is what you are wondering. I will mention it is raining a fair amount in Louisiana. And Louisiana is a place where it does rain a fair amount. And 10,000 people have been evacuated from Baton Rouge and so on and so forth. And Baton Rouge is like an hour and a half west of us.

So far we are okay. We actually had an okay weekend and we -- our property has not been flooded, our roads leading to us aren't flooded and our customers live where it is raining but they seem to be still coming. So, I think it has affected other people in Louisiana more than us, we are actually in Mississippi on the edge of Louisiana. But we are doing okay despite the rain.

Great, thank you. And then just one last follow-up, could you just maybe please just (inaudible) on some of the trends you are seeing with rated versus unrated and then maybe just across the [player tiers] in general?

Well, most of our players are rated. But if you are talking about really high end we have a really small really high end. I don't -- if you are trying to look for macroeconomic features I didn't pick up on anything like recession or something. I wish we could make book on the presidential race, that would be a very popular bet. But you have got to go to London to do that.

And I think it has been okay. But, you know what, I am not sure we would know. You almost have to ask somebody like (inaudible) or [Pinnacle] who has got a large number of properties. We are more focused on what sort of promotion did the Hollywood and [Bay] St. Louis put out last week. And there is something going on in the macroeconomy, I am not sure we would pick up on it as quickly as they would.

Yes. Yes, it really does depend by the property, Ed. If you look at the Silver Slipper in Q2 our retail business, that is the non-rated play, actually did quite well. We did find in the rated play too, but it really depends by the property.

And I don't -- like Dan said, I don't know that you're going to get a whole ton of useful information from us given how small we are as a Company.

Terrific, thank you for your time.

Howard Rosencrans, Value Advisory.

Thank you, Dan, that was great color. You addressed a lot of the questions that I had. The maintenance CapEx number that you gave out on an ongoing basis excluding the growth CapEx number was $6 million?

No, $3 million a year. But the $10 million we intend to spend on all these different projects is kind of a two-year timeframe. So over that two-year timeframe it would be $6 million. But it is about $3 million a year and about half of that should be slots.

And frankly, I mean you don't have to look very -- if you add up we are at 2,800 slots now? Where are we with Cripple Creek? Somebody will look up that number. But let's say it is in the ballpark of 3,000 slots. And if you went and replaced all slot machines today it would cost to about $22,000 a slot machine, that is $66 million, right.

So you to start to say, well what is the turnover rate on the slots? Well, if it is once in 10 years that is $6 million, fortunately slot machines last a long time and you don't really have to changeover a large part of the floor every year, you just have to refresh it enough that --.

It's almost like going to the county fair every year -- as long as they add one new ride people still want to go to the county fair and probably 20 of the rides are so old you probably shouldn't be getting on them.

And so -- but you do have to constantly refresh that casino floor and that is probably $1.5 million of the $3 million right there. And the rest of it is stuff like roofs, you know roofs leak. We had a chiller blow out at the Silver Slipper the other day, and so it is just stuff that you have to replace that you would --.

And it is a little bit subject of what that number is, but that is kind of the number we have settled on. And I view that as stuff we have to do that we don't really expect an ROI on it. But if you don't do it your property eventually gets more and more tired and then you have got a problem.

And just to understand where you stand on your debt for the moment, it is due in -- there is a piece due in 2019, the other piece is due in 2022, but you have to pay it at the same time in 2019 or --.

And the back end question to that was, can you do something to reduce the rate meaningfully or you have to get to a 4 times leverage ratio? It would seem with your free cash flow levels or your projected free cash flow levels.

If I take out the growth CapEx you have a good amount of free cash flow. I would hope somebody would be more than willing in this friendly environment to lend you at a friendlier rate.

Well, first off, the $10 billion of stuff we are spending gets -- I mean I know the second lien piece is expensive, it is at 13 --.

13.5%.

13.5%, plus there were upfront fees plus the warrants and everything else, so it is expensive debt. But, frankly the return we expect to get on this $10 million, even though it is unlevered, is even higher than that. Otherwise we wouldn't be doing this, we would be trying to pay down second lien debt.

But when we were doing the refinancing, the first lien debt was willing to roll basically and they reduced their amortization to help us make these investments. And there was very few fees on that, almost none. But they only wanted to go to a new three-year term.

The second lien debt had fees and warrants and all this stuff and it has a grid. As our leverage gets better the cost on that debt comes down, not dramatically so but it does come down and can get down to 12.5%. And it is non -- if we tried to pay it off today it is [103] and next year it is [102] and then [101] and then par.

But they were willing to go out six years. I would too if I was getting 13.5%, right. And so we kind of -- but they said they are willing to go six but they don't want to be years after the first lien.

So the way we've resolved it is we said, okay, the first lien we will go three years and the second lien at our choice is either due at a six-year term or six months after the first lien comes due.

Now the real intent is to work with the bank group to now do a normal five-year term on that. And so, the second lien debt is out there for its full six years and the first lien debt becomes a more common five-year term.

And then at some point probably a year or two from now when our leverage is lower, then we can look to refinance that second lien debt at much lower interest rates than where it is. And at that point we could pay it off with very little penalty and go to a much normal thing.

You know, it was a tough call honestly when you bought -- when we bought Cripple Creek that second lien debt is so expensive it sucks up a lot of the value of what Cripple Creek earns if you just run the math. We did it because it gave us diversity and because you know that the debt is not going to be out there forever whereas hopefully we will own Cripple Creek forever.

And so it was not unlike when Steve Wynn was building Wynn on the Las Vegas strip, he had some expensive debt and he was pretty pissed off about it and he choked on it and everything else. But he swallowed hard, borrowed the money, built the hotel and then later refinanced it on better terms.

And that was a similar scenario. We weren't happy with the rate -- listen, the Summit guys are smart guys and they were there when we needed them and they are good to work for, they are not cheap, they are expensive. And so, we are happy to have them. But somewhere down the road we would like to have this Company be on a stronger financial footing and not have to pay 13% on our debt.

Does this take you out of the -- that was also great color, thank you. Does this take you out of the box to get out on the street and tell the story and -- until after the rights are completed?

Yes, I was going to say recognize with the S3 we are in registration. So everything I have said is in the registration statement, which I helped write, so I am pretty familiar with it. So we have to be careful to adhere to what is in the registration statement.

But we are more than happy to talk to anybody at any time. And frankly you will see us out and about. But we have to be careful since we are technically in registration. we are -- not just technically we are in registration.

Great.

I will tell you Howard, the last year and a half for us has really been about just fixing day-to-day operations, kind of keeping our heads down and just building it up piece by piece. And we are really excited to get this rights offering done and for the first time really go out on the road and tell the story, which we haven't had time to do yet, quite frankly.

Yes. And by the way, these things don't happen by themselves. I mean pushing people to get this stuff done, to get the designs done, to get the bulldozer up at Fallon and blow up the executive office building. There is -- in any Company there is inertia on this stuff.

So when you start telling people who have been in those offices for 30 years that you are going to move the offices, tear them down and put a parking lot, their first impression is, you know that makes a lot of sense because we have these entrances.

But then when you start saying, yes, we are going to blow up your office, we need you to clean it up and move it out because we are going to blow up your office, then you run into the inertia.

And when the bulldozer is outside of that building, I may park it there for a few days just to kind of incentivize them, we will get them out of those offices and move it along. So a good part of what I do is provide adrenaline to an organization.

Great, thank you.

Brian Warner, Performance Capital.

Hi, thanks for taking the question. Hi, how are you.

Good, good, you are probably our last one. I know we have gone a little long today which I apologize for. But go for it.

Oh, that is okay. Just a few a little all over the place. Can you give us a little more color on what the ferryboat's impact might be on sort of traffic to Rising Star and how that might translate into EBITDA? I mean I know it is a big underutilized property.

And then additionally, I am just wondering sort of how you are feeling about the occupancies at the new hotel tower at the Slipper now that it is -- I don't know if stabilized is the right word. But how you are generally feeling about that.

And then just lastly, candidly, with the gaming and leisure properties of the world out there looking for properties sort of all the time, how do you guys weigh off the opportunity to dramatically reduce your sort of cost of debt and capital versus sort of running the business on a going forward basis? I mean I assume at some point it is something you are going to consider.

Okay, I am going to take those in reverse order. The REIT thing is certainly a possibility. We have thought about it from time to time. Frankly, we have been so busy on other stuff that we haven't focused on it. But it is certainly a possibility at some point.

And of course they like nice stable property, so they would love the Silver Slipper, it would fit right in our portfolio. I probably have to stabilize Rising Sun a little better. And I think if they got to know Cripple Creek, which we just bought, they would be interested in that too.

So it is something that we could do down the road, but we don't have any urgency to do it. As you can see, despite being a fairly levered Company, our capital needs aren't that much. I mean we looked at it and said we need $5 million of equity capital. And at one point I said, well I will just write the check and then the Company can't just sell me $5 million worth of stock.

So here we have a rights offering and which is a good way for all shareholders to participate in that. And so, now at -- and at the moment the deal with Summit is quite fresh, we just paid a lot of fees and so on.

But, sure, somewhere down the road when we are trying to refinance all this debt would we consider [GOPI] or some other REIT, of course we would. And so, I don't think there is an urgent need for it but something that we always keep in mind. And by the way, if you run the math, we very easily could pay off our debt with that sort of sale-leaseback.

If you go to the Silver Slipper occupancy, we are now up 90% plus. The goal is 100%. I will tell you when I worked with Steve Wynn at Mirage Resorts we had some months where The Mirage, with 3,000 rooms would go an entire month without an unsold room. And those last unsold rooms, the last few points of occupancy, it is all profit, it is really all profit.

So the goal is 100%. Now, 90% is pretty good and we have gotten there. And then you start looking at it and saying, well, why is it 100%? Well, it is not 100% because of the midweek. The swimming pool will help the midweek pretty significantly pretty significantly.

And if you run the math on saying well what if it helps us rent four rooms a night, five nights a week, eight months of the year and we get I think it is $120 of room revenue and gaming revenue per occupied room. And you run that math the pool pays for itself pretty quickly. Make your own assumptions but it is not too hard to run that back.

But then you start to realize kind of that anecdotally you hear that our -- some of our most important customers will stay with us most of the year, but in the hottest part of the summer they are over at Island View because they have a spa and two swimming pools and they drive past us to go there. And so, can we improve the gaming propensity to gamble by the people staying at the place on weekends? And I think we can.

So we are happy with how it is going, we are finally up to 90%. It will get more challenging in the off-season. And I am always pointing out the fact that we are not at 100% is a marketing opportunity, how do we fill those extra rooms.

We are not on the freeway, we are like eight miles off the freeway. So we don't have the chance of putting a sign up that says, $25 rooms tonight, drive your truck in here because we are quite a ways off the freeway. So we have to be more creative in trying to figure out how to get people to come to us.

And then your first question on the ferryboat, I mean you could run the math yourself, but it is a 10 car ferry boat, goes back and forth probably four times an hour, so that is 40 cars an hour. Now that is 40 cars each way so it is really 80 cars an hour. But the only ones that matter to us are the ones that are westbound coming from Kentucky to Indiana.

Somebody in Indiana going to Kentucky they are going over there to go shopping or something. So that doesn't help us. So there is 40 cars an hour, that is total potential. Let's say it only runs half that, so it is 20 cars an hour. And let's say only half of those cars go into our casino, so that's 10 cars an hour.

And -- but there is two people per car. So 20 people per hour coming into our casino, our casino revenues divided by our admissions are about $65, so that is $1,300 an hour, let's say it's 12 hours a day, 365 days a year, that is $5.7 million a year incremental revenue. That could be half profit.

I've run this map 17 different ways and I get wildly different numbers every time I do it. But in my mind I think it is highly likely that this ferryboat gets higher than a 20% return on investment and it might be a 100% return on investment.

It is very hard to know because I don't know how big an impediment to people view getting on a ferryboat versus going over a bridge. The fact that we will charge $5.00 a car but then give it back in the casino.

And one of the things I worry about is on a Saturday somebody drives down and finds out there is 30 cars ahead of them and then they have to wait an hour to catch a ferryboat, well, we intend to have a website where you can go to and reserve a place on the ferryboat and half the positions will be held through reservations. So when you leave your you know you have a spot on that boat so we can get around that.

But I think just about -- you should run the math yourself. Just about any set of assumptions you will find out it moves the needle at Rising Sun, and that is why we are doing it.

Sure. Terrific, thanks so much, good luck with all of it.

Hey, David, that is probably all that we have time for today.

I will turn the call back over to Dan Lee for any additional comments or closing remarks.

Yes, I will just add Lewis and I are around, call us at any time, we are always available. And switchboard is 702-221-7800, right?

Yes.

And we have to be careful what we say because we are in registration but we have not hired a solicitation agent or even an information agent because we are a pretty small company and we think we can answer the phones and answer people's questions and save the money.

So on that I thank everybody for your attention. I apologize for having started a little bit late, we had a lot to talk about. But I wanted to make sure the S3 got filed first. So, thank you.

That concludes today's conference. Thank you for your participation. You may now disconnect.