Full House Resorts Inc (FLL) 2020 Q1 法說會逐字稿

Good day and welcome to the Full House Resorts, Inc. first quarter 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.

Thank you and good afternoon, everyone. Welcome to our first quarter earnings call.

As always, before we begin, we remind you that today's conference call may contain forward-looking statements that we're making under the safe harbor provision of federal securities laws. I would also like to remind you that the company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for the discussion of risks that may affect our results. Also, we may make reference to non-GAAP measures, such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as the various press releases that we issued. And lastly, we're also broadcasting this conference call at fullhouseresorts.com where you can find today's earnings release as well as all of our SEC filings.

And with that said, you ready, Dan?

Yes. First quarter seems like a long time ago now. I mean just addressing where we were in the first quarter, Silver Sipper was doing quite well; the Northern Nevada is doing okay; Rising Star and Colorado were doing better than they had in the second half of last year and trending positively. And then everything shut down in the middle of March. So the quarter is obviously very distorted by all of that. And I think the question now is getting stuff reopen. It's almost like having a development company where you've got a handful of employees and you're getting ready to open 5 casinos and put a lot of people back to work.

The -- I guess very important, at the end of March, we had $24 million of cash and equivalents. Now a good chunk of that is normally used in operations and most of the rest came by stopping construction on the parking garage that we have underway in Colorado, and that is being used as kind of a cushion.

In the first month that we were closed, which should have been from mid-March to mid-April, we'd probably burn through about $5 million. A lot of that is severances. We've reduced the payroll. And our burn rate after that period is about $3 million a month, of which about $1 million is debt service on our debt. And most of the rest is actually stuff like real estate taxes and utility costs and so on. Payroll is about 20% of the $3 million. We've gotten payroll down pretty smaller at this point.

We did just receive a $5.6 million loan under the CARES Act. It's a 2-year loan at 1% interest that has incentives in it for us to hire back employees, and we'll be hopeful at getting Colorado and Indiana up and running. Those are the 2 properties we have that have less than 500 employees. And there's a very specific provision that was in that CARES Act that allows subsidiaries like that to not look at the total parent in terms of number of employees. Silver Slipper has more than 500 employees, but those 2 have less number of hotels associated with them. And so we qualified. And frankly, there's all this language about possible forgiveness. Those rules aren't really spelled out yet exactly how it works. It's possible that some of that loan would qualify for forgiveness, depending on what our payroll is over the next 8 weeks, which in turn depends on when we're actually able to open. We have brought quite a few employees back to work already trying to put them to work to get ready to open at those properties.

So in terms of actual opening, the first one to open we think is going to be the Silver Slipper and that may be next week, the State Gaming Commission has said in advance of Memorial day weekend. So that's coming up. I'm not sure exactly which day. Some of this stuff has been a little strange. Like in Nevada, they suddenly said, we could open restaurants but not casinos. So we have a restaurant in Fallon, and we have like 36 hours' notice, we're like, we don't even think we can get food that fast. But we're now looking at getting that open now. It's just a coffee shop. It won't make a lot of money, but it might make a little money and gender some employee, some customer goodwill and get a handful of our employees back to work. But that also will make it easier when we open our casino because we're not trying to open both the restaurant and casino on the same day. So that's coming in Fallon.

At Tahoe, the Hyatt, which our casino was in, is not the same. They don't anticipate opening until early June. It's possible we could open the casino before the Hyatt, but that's possibly a little complicated. But I think we're in that time frame, sometime between now and early June, we open at Tahoe. In Colorado, as I indicated -- Governor's indicated, he did not expect the casinos to open in May. A lot of people interpreting that as being early June, but it might actually be mid-June, it's hard to say. And then in Indiana, they specifically did say June 14 should be the date that we count on. So in the next few weeks, we think we'll be opening all of our operations. And frankly, that has us pretty busy trying to figure out exactly how to do it. We've done the marketing plans in both Colorado and at Rising Sun, which is a lot of work. Where we have the CARES Act loans, we've got employees back to polish and buff the place and fix it up and get ready.

Down in Silver Slipper, they're doing some of that as well, getting ready for next week. We're installing like plexiglass panels between some slot machines that can slide in and out. So if you want to be separated from the person next to you, you can pull that panel out. And we're hoping that, that will allow us on some of the popular banks to keep all the machines going instead of having to turn off every other machine. It's not clear yet, varies from state to state on what the different rules are going to be. We're trying to figure out how to make table games at the various Slipper. And so a lot of those rules we're trying to work out with the different gaming regulators and internally.

But where people -- and so the first question is, when do we open? Second question is, under what rules? And we're still trying to figure that out. And I guess the third is, will the customers are really going to show up? We've heard anecdotally that there's about a half a dozen tribal casinos that have opened in different places where they are allowed to do so. And so far, they all seemed to be doing pretty well. And I think Golden Gaming, at their earnings call, indicated that they had pubs up in Montana that had slot machines in it and some sort of a route operation. And they've opened and seemed to be back to pre-pandemic business levels pretty quickly.

So there's not a lot of data out there. But what data there is, it seem to indicate that business will recover pretty quickly. My guess is some of that is pent-up demand and then maybe a few weeks later, the reality of the 15% unemployment rate might start to sink in. But there's a lot of different moving pieces in this. Like a lot of our customers are retired. If you retired, you can't really be laid off and you still got a $1,200 stimulus check. So we have some of that going on as well. So now we are planning to open carefully. In most cases, we will not open all the restaurants. We will not open all the table games. And we're going to try to make sure that we have more customers than employees, if you will. So we're trying to open kind of on the leaning side, and we can always build from there because we just want to be cautious just in case customers don't show up. So we hope they do, but we're planning for a more conservative scenario.

Meanwhile, the mobile sports wagering is coming along. All 3 of our partners in Colorado have been licensed. They're awaiting approval of their apps. Smarkets has indicated they expect to be open this month, actually, in the next 10 days. And the one in Churchill, we think will be up and going sometime this summer, but we don't control or know exactly when that is. Professional sports does seem to be trying to find ways to come back. And of course, that will help the sports betting. Now I think people want to get up and running with these sports skins anyway because we want to get market share and get people signed up on our stuff. So I don't think anybody's dragging their feet waiting for professional sports. But there's a lot of work that our partners have to do to get their apps approved by the different regulatory agencies and get licensed themselves. And -- but they are licensed now in Colorado. And Churchill is -- as it mentions in the release, it's been up and running in Indiana and the other 2 are still seeking approval in Indiana, and that's probably not very far off either. When all 6 are up and running and we think that's prior to the end of the third quarter and maybe even at the end of the second quarter, and when all 6 are up and running, our minimum guarantees are about $7 million a year -- are exactly $7 million a year and there's no expenses. There are very few expenses related to that. So that's almost all income and there's no maintenance CapEx or anything. So it's a pretty substantial thing for our company, and it's coming on stream shortly. What else is there? It's...

The only other thing I was going to mention, Dan, was we are very fortunate to have a good group of lenders. And so in April, we effectively amended our indenture to delete the debt-to-EBITDA requirement for the first quarter. But I mean that group is a good group. Back in mid-March within days of the closures, our lender group came to us with a plan for amending pretty much a full year's worth of covenants and didn't make sense yet to figure out exactly how those should look, even we didn't know when we were going to reopen. But now that we have some potential dates in sight, we'll inch a bit closer to getting those future covenants all worked out.

We should mention, we do anticipate that we will need covenant relief on the June quarter, which that 10-Q will be filed in mid-August. And we just decided to leave that to be dealt with in August with our lenders kind of on a handshake. And because by then, we'll have stuff open and we'll know more about the sports betting. We'll be in a better position to figure out what the covenant should be going forward from there. But at the moment, we have covenant at the end of June that we think it's pretty unlikely that we're going to make.

And we haven't tested it, technically.

Yes. Technically, we haven't tested. Then the only thing, Waukegan is still out there where we were 1 of 3 bidders to clear the city's process. The State Gaming Commission still intends to choose somebody. Before we shut down, we were in discussions with 3 different parties to partner with it, and we would anticipate financing that on a project-financing basis. I think everybody is pretty distracted with getting their own casinos open at this point. But I think once we do get open and things get resolved, we'll resume those conversations. Waukegan's a good opportunity for whoever is chosen by the Gaming Commission. We think we have a very good proposal there, and we'll see where it goes. So it's kind of hard to imagine building something new when you can't even operate the ones you have. But those opportunities don't come around every day. So we had put in a proposal, we make the first hurdle and we're still in the game.

I guess that's it. I'm happy to take any questions. It's -- we're -- I think we're doing fine under the circumstances and eager to get stuff reopened. So...

(Operator Instructions)

While we're waiting to -- go ahead.

Go ahead, sir.

I was just going to say while we're waiting for people to queue up for questions, I write kind of a detailed shareholder letter that went out with a proxy that kind of replaces the old class annual reports. And in there, I made the comment that in the regional gaming markets, they tended to recover faster than, say, Las Vegas or destination gaming markets and did so after 9/11 and did so in 2018 -- 2008 with the recession. We actually went back and pull those numbers, and that's absolutely true. We can happily show them if anybody wants them. But if you look at what happened after 9/11 when the air service was disrupted and people were afraid to fly, the regional gaming bounced back pretty quickly and much faster than any destination that required people to fly to, and a very few people fly to our casinos. So I think that the same phenomena will happen again. And then in the recession, the regional gaming did better because after all it's a less expensive entertainment. It's not very expensive to get your car and drive from Cincinnati to Rising Star or Colorado Springs to Cripple Creek. And -- so we think we're doing relatively well. That doesn't mean we're going to be up 20%, it just means we'll do better than, say, Las Vegas or Atlantic City. And I think we'll do fine. But we never had a situation quite like this before, and so it's hard to say.

Any questions?

We'll go to our first question from David Bain of Roth Capital.

Yes. I was just going to ask first on the impact or the impact from COVID, has that caused you to relook and maybe analyze sort of the entire cost structure in a way that you believe could impact the -- or not impact longer-term revenue generation and maybe allow for stronger flow-through in the portfolio?

Yes. We have looked at it pretty carefully. And it's actually reminiscent of when I was at Pinnacle, we had opened L'Auberge in Lake Charles. They have been open about 5 months when Hurricane Rita hit us, and we had to close for, as I recall, 5 or 6 weeks. And it had a lot of revenue and not a lot of income in the first 5 months of operation. And while we were closed, we reexamined everything pretty carefully. And once it reopened, it was quite profitable and has been ever since. And now it may have gotten there anyway just maturing, but the hurricane actually gave us a chance to do that. And the same thing here. And then we've been going through everything looking at what makes sense. The -- for example, we will not operate table games 24 hours a day at several markets. We won't operate all the restaurants as we had before.

Under some of the new rules on table games, we'll end up having higher table game minimums in order to keep them profitable, which means operating fewer over them. Even on the slot machines, we're trying to be smarter. The frequent player program in Rising Sun was pretty antiquated, and we've done a complete rethink of it. Now that we have better information coming from the Konami system, we know with much better detail which customers are most important to us. And we tailwind the program to reward those who are important to us and to reduce some of the giveaways to people who are less important to us. The old program, I think there were people who we're not making money on. And so by having this opportunity to rethink it and reimagine it and reinvent it. And frankly, now we've brought our casino hosts back to work out of their homes to call people up and explain the new system to them. And for our most important customers, it's actually a better system. And so we have the time to explain that and the resources.

So yes, right. I think and hope we can open smarter and better than we were before. And we're rethinking really everything in the company right down from like the menu of the coffee shop in town is a much more simple menu now than it was before. And all the way down to -- if we want to operate that Mexican restaurant at Bronco Billy's until we get into peak demand periods and when it's really proven that it's needed. I mean so across the board, we're trying to figure out how to be smarter. So...

Okay. Great. And I know it's kind of a hyperlocal market, which I agree, definitely should recover faster than the other markets and location's significant. But do you envision a more promotional environment when the lights turned back on? Is there -- it sounds like you've already done some pre-marketing strategies that you're implementing even during these times. Or is it more like you turn the lights back on, everyone knows for the casinos that are in town and many are just looking to go back to gaming activities?

No. Look, in Rising Star and actually in Bronco Billy's, if anything, it might be a little less promotional because we figured out that to certain groups of customers, we were probably giving them more comps than they really deserved. And then we actually ran the math on one of the categories at Rising Star, and I'm paraphrasing numbers because I don't remember exactly what they were, but it was a customer who might be worth $5,000 a year in gaming win based on their play. And if they took advantage of everything we gave them, it might cost us $5,000 a year. And that was like, so that customer is not really profitable. And so we said, let's kind of change that parameter. Hopefully, keep the customer, but make them a profitable customer. We had some customers who were clearly gaming the system and you start looking at everything they were getting, the free buffets and the free hotels and everything else, and they were almost carefully gauging their play so that they could loot off us for free.

And so in some ways, we're going to be less promotional. On the other hand, and for some of our most important customers and by most important I mean most profit because we will try to make sure that we do better. If -- I'll give you a simple example. The -- it's a 5-tiered program at Rising Sun now. And historically, we would have some sweep stake like a hot seat product or something, and it might be $100. And so for a low-end customer, that would be a great price; for a high-end customer, that would be a small price. Well, under the new program, that's as well, if you're a 2-star customer, it's $2 -- $200; and if you're a 3-star customer, it's $300; and if you're a 5-star customer, you go win $700.

And so the size of the prize is related to where you are in the tier program. So if you're one of the VIP customers, you're actually getting rewarded better. But in order to be in that high-end category, your expected win per year is enough bigger that we don't mind paying the $700 if you happen to win it. And so we're trying to be more thoughtful about this stuff and make sure we're rewarding the people who we make money with and not just giving away free food to people we don't make money with.

And the player development host coming back, that's a little bit of an unusual anomaly in those 2 markets. The Small Business Administration loans, in fact, the name of the program is the Paycheck Protection Plan, and the idea is rather than have these people be on unemployment with no medical plan, try to incentivize companies to keep them on the payroll with a medical plan. And so by bringing them back, we may -- there's no certainty, but we may qualify for forgiveness under the plan. But a lot of the rules are kind of vague at this point, but at least on the rules that they've given that we should qualify for forgiveness.

So it's kind of like at those 2 markets, we have an opportunity to call our development people and our hosts and say, "Hey, we want you to come back to work. We'll put you on the payroll and we'll pay for your medical plan." All of which is essentially paid for by the Small Business Association and -- but we're trying to do it in ways where we can put people to work that we will get benefit from. And in some cases, we're literally bringing back bartenders and giving them a paint brush and say, "If you help us paint, we'll put you back on the payroll." Because the program kind of incentivizes us to do that.

So we are kind of prime candidates for the program, and we're using it the way it's intended to try to put people back to work. But like at Rising Star, we are the largest employer and largest taxpayer in the community of Rising Sun, Indiana. And we normally have about 400 employees there. We got down to about 20 employees. We're now trying to get back about 100. And then when we're able to open, which we think is in mid-June, we'll be back to 400. But that program, we're already setting out. It looks at your first 8 weeks from when the loan got funded, we were funded last Friday. So if we can put people back to work now, it's kind of subsidized. And so when you look at bringing back casino host, just call up people and say, "Hey, how are you doing? Can I drop back some toilet paper or something you might really appreciate these days?" And maybe you wouldn't ordinarily do that. But given that it's kind of subsidized and that's what the program intends for us to do, we're doing. So...

Great.

And does that make us more promotional? I don't know. I think it makes us maybe perfect. And I think everybody's just look, yes, it's easy to -- when you think of how difficult it is to open these places. And that's why -- I mean our place is relatively small, but we're still going from 5 management employees to 500 employees like the Silver Slipper go from 5 or 6 management employees to 550 employees in a very short period of time and get the doors open. That is no small task. And -- but that's why companies like Wynn and Las Vegas Sands kept paying their employees because they have 10,000 employees at a place like Bellagio. And if they all scatter to the wind, just recruiting and training 10,000 people will cost you millions and millions of dollars. Now we have these much smaller properties, it's certainly a lot easier for us, but it's still not easy. And it takes take lot of effort and a lot of work to take up these things, reopen them. So...

Net-net, now I think we're going to be down in our markets for what it's worth, Dave. So it's right. Marketing, right. Okay. Yes.

Okay. Perfect.

At least, in a nutshell, there's no -- let's see where the world is before we go to the next stage, right? And at least from the tribal casinos, there's just few reports of it now, people showed up and stood in lines to get in. There is one travel casino in Idaho, didn't open 20 years. And when they opened, they only had half their slot machines turned on. They limited the number of people coming in, and they still had the highest handle in their 20-year history on the day they reopened. And I'm not forecasting that we will be as fortuitous as they've been, but that was a pretty nice data point to look at. So...

Right on. And I'm just going to go over one question, if that's okay. I know you discussed sports wagering in the prepared remarks. And I was kind of hoping you could also touch on the iGaming opportunity. I mean, obviously, there's a few more political hurdles for approval. It seems to be a quicker way, at least to us, for state governments to build their coffers quicker than building a new casino and some other things. Any thoughts on iGaming for Full House?

Yes. Nice for reminding me actually. And it's not just iGaming. I think there's also some states that have considered casino gaming, and this may put some emphasis on them, places like Virginia and Georgia and so on, that they will have physical issues that will encourage them to consider casino gaming because it does produce a lot of tax revenues. And then on the iGaming, that's going to be a very big business in New Jersey, twice as big as mobile sports betting. iGaming is where somebody can play a slot machine on their iPad. And that could be somebody in a nursing home or somebody who just lives a long ways away from Atlantic City or maybe they're just bored for a minute and they pull up their iPhone and play a casino game. And the interesting thing is in Atlantic City, in the state of New Jersey, you can only be in those businesses if you're tied in with a brick-and-mortar casino. And that's been the case elsewhere in the country as well. And the brick-and-mortar casinos in Atlantic City have had growing revenue the last 4 or 5 years. Not high growth, but you have a very big base, so $2.5 billion a year. And they have been up. And while they have been growing, iwagering is now a $0.5 billion a year business and mobile sports betting is $0.25 billion a year business. And so these businesses have come on and not hurt the brick-and-mortar, but at least so far, the iGaming looks to be a bigger business than mobile sports betting.

iGaming is not yet legal in Indiana or Colorado or Mississippi where we operate, but I think there's a good chance it will be in the not-too-distant future. It's a pretty easy transition to make once you already have brick-and-mortar casinos and then you have mobile sports betting. And then the state realizes that they can get more tax revenues by allowing iGaming and allowing the brick-and-mortar operators to do it. So that's -- we chose to do the sports betting in partnership with people who are in that business, in part, because it's a small number of independent statistical events like the Super Bowl. And you can end up with a large number of bets on one game and you could end up with an unbalanced book and -- like we're in Colorado.

So if the Broncos were in the Super Bowl and they were up against the Patriots, we'd have lots of bids trying to bet on the Broncos and nobody on the Patriots. And we like to think we're in the gaming business, but we don't gamble. That would be gambling. And so we don't take any of that risk in our mobile sports betting operation. We do have a little bit of that risk at the little sports book down in Mississippi. And even there, we managed to lose $300,000 on LSU, $1 million Chipotle championship, and LSU is now only half away from us. But it was kind of a good taste of how bad it could be if you had the Super Bowl on a state-wide mobile gaming platform. And so we're leaving that for the big guys who specialize in that stuff, and they do have operations in different places. So they can be hedged.

And now when you go to iGaming, we don't have the same issue. Somebody's playing on a slot machine on their iPad, it's millions of independent statistical events that have a very predictable outcome. That's our normal business. And so we would probably have to license or purchase the technology and probably hire the right people. And look, it may make sense if somebody makes us a good enough offer, we'd still do even that in partnership with somebody else. But it is a business we could probably do on our own. And I think it'd be a big and positive business somewhere down the road. But -- and the state -- and the pressure on the state finances is probably just going to help that happen.

Yes. Our agreements with our 3 -- or I guess our 6 agreements for both states for the sports betting does not prevent us from doing the online casino. We could always do an online casino with any of those partners for what it's worth. When we first start talking sports betting, not a surprise, they all wanted a casino, too. But this is kind of carved up outside of that. And so if any of them wanted to do the online casino, you would see our guarantees go up.

Right. Right on. Okay. Awesome. Dan and Lewis, excited for everything to be open before 3Q.

I hope so. We're looking forward to it.

And we'll go to our next question from Chad Beynon of Macquarie.

Some of your competitors have helped us with not only the cash burn, but some breakeven EBITDA levels. I think across the board, most of your competitors have talked about if you got back to 25% to 40% of normalized revenues that would kind of get you to a breakeven EBITDA point. But understanding that your margins are starting from a lower point than theirs, is that still kind of how you're thinking about a breakeven point? Or I guess maybe just asking a question, I mean have you done the work in terms of what you need to see from a demand standpoint to get to EBITDA breakeven across your portfolio?

Well, yes, we have done that math. And I think it might depend on how you construe EBITDA. Each of our properties has a significant -- and any casino has a significant fixed number like utilities, which will run -- it's $40,000 in Colorado and $110,000 in Silver Slipper. Insurance, it's a pretty big number, property insurance. In some cases, you have fixed gaming taxes that are based on number of machines and so on. And if our revenues -- in order to have breakeven EBITDA after all of that stuff, we probably need to get revenues of maybe 50% or 60% of what they were in 2019.

Now I don't think that's a margin issue compared to these other people. I think because you look at that and say, "Well, I'm paying all that stuff anyway. Even when it's closed, we're paying all that stuff." And so what sort of revenue levels do you need to be able to contribute towards paying those utility costs and so on, that would be like 25%, okay? But you got a pretty big hurdle to get over. So like you're happy to be open even if you're only doing 35% of last year's revenues because at least it's helping to pay the utilities and real estate taxes. But that's still not going to get to the EBDIT before your debt service. And then you got to get to the point where you are in debt surge.

So no, I'd be astounded if we don't do at least 50% to 60% of what we did last year. There isn't any new competition. Most of our customers are either retired or still employed. And we think -- and frankly, I get a little frustrated because I think our customers understand that our casinos can be a safe place even in pandemic times. You can come into the building pretty easily. We are going to take people's temperatures. They don't arrive in crowds. And so very few of our customers even arrive on buses or anything. And then you can go find your own slot machine and be socially distant from other people. And now crap tables are way more complicated, but craps is a very small part of our business.

And so I think people view us as being -- people know the experience would not feel unsafe driving their car to us and finding a slot machine to enjoy their entertainment. But if you look at some of the reopening rules that are coming out, we're being lumped together with state payers and stuff like this where it might be harder to be socially distant. I find that a little frustrating. But because I think our customers do understand it that when we are allowed to open, I think our customers will show back up. And -- but our breakeven point before -- at the point where we start to produce income to pay debt service is more like 50% to 60% of what the revenues were in 2019, to answer your question.

No. That's perfect.

And by the way, I think that's true of virtually any regional casino. I'd be astounded if there was anybody at a breakeven point that was 25% of the revenues last year. I think they're probably saying...

That the casino by itself is not...

Yes. If you're saying -- if they open and cover incremental employees would be 25%. But you got a lot of costs that you've got to pay whether the casino is open or closed.

Yes.

Right. Yes. That makes -- certainly makes sense. And then during your tenure at Full House, you've been on the offensive. You've been on the defensive. You've talked about looking at other businesses. You bought other properties. You've had other companies look at you. I think you've mentioned that on prior calls. So I guess just given what's happened in the past couple of months, just from an equity impairment standpoint and kind of where your stock is, where other stocks are and kind of how you look out, what is the best path for shareholders? Has anything really changed in your view in terms of the strategy, the best path forward to create value? Or is this just something that you guys have talked about some of the steps that you've taken to improve shareholder value? But is there anything else that is now on the table given the current environment?

Well, I think the pandemic kind of changed everything and changed very fast. I mean our stock was $3.50 a share, and we're trying to figure out how to build Waukegan. And we were working on improving our operations. We had 2 properties that like we opened this little Christmas Casino in Colorado. It was pretty small. It rose -- our revenues grew 7%, but that wasn't enough to offset the increased cost. And so we had moved to close that. If you back that out, the Colorado results were almost flat. And in Rising Sun, we had a number of issues in the second half of last year and ended up with a pretty disappointing second half of last year, whereas the Silver Slipper had the best year in its history, and that's our most important property last year. But we saw opportunities to improve our results just by not making the same mistakes at Rising Star and being more focused on getting it to better profitability and the same sort of thing in Cripple Creek.

And so yes. And we were starting to build this parking garage through the first phase of an expansion in Cripple Creek. So all of a sudden, it was like, wow, you have to close, and it was like boom, boom, boom, everything is closed. And you don't know how long. You don't know how you're going to be able to open. You don't know what the world will be like when you do reopen. And so immediately, you start focusing on surviving. I mean literally, surviving. And because you knew immediately that we would be in default of our debt covenants, which allows your lenders to shove you into bankruptcy, if they chose to. Fortunately, we have with good relationships with our lenders. We started talking to them immediately because we have fiduciary obligations to them as well. We wanted them to understand that we were working to make sure that their interests were guarded, they're taken care of and we talked to them a couple of times a week, and I think they are reasonably happy with what we've done to safeguard their interest. And representative of that, they did great with the covenants for March, as Lewis mentioned.

Now we're getting to where we can see the light at the end of the tunnel. We're going to be able to open stuff. I think we're going to be back to producing cash flow to pay the lenders here in the next few months. I think that'll happen pretty quickly, especially when the sports betting starts coming online and by later this year, maybe be back operationally to where we were like the fourth quarter this year, hopefully, better than the fourth quarter last year. Third quarter might even be better than the third quarter last year. And by this time, a year from now, maybe they've found a vaccine and we're back to normal a little bit. And it's (inaudible).

Fortunately, most of our play is slot machines. But I've been trying to figure out how you keep something as simple as a blackjack table safe. And you can, and we have, in some markets, purchased these big plexiglass things that sit on the blackjack table that separate the customers from each other and from the blackjack dealer. It's a little weird that you're kind of gambling in a little phone booth, but it's possible. But then how do you deal with the chips and the cards and the money? And I happen to have a cousin s who's -- happens to be a neurologist. And I called her and we were talking about it, she's like you probably need 2 dealers. One dealer has clean hands, the other one has contaminated hands. So when you buy chips, the guy with the clean hands gives you the chips. When you lose a bet, the guy with the contaminated hand takes those chips away for you because you have contaminated them. And you don't want those to be then given to a different player, right? So then the contaminated chips have to literally go through a dishwasher or something to keep them clean. And by the time you start running the math and having 2 dealers and 3 players and so if you can't make money on a blackjack table, why bother.

Now scientific games does have a table, I'm trying to find if we can get a couple of them, that have built into them iPads that you don't need chips. And it was an idea that nobody paid much attention to before. But you can put your money into a bill acceptor, just like the slot machine, and you make your decisions on this iPad. There is a dealer and the dealer deals the cards, and there's a smart shield that knows the cards that have been dealt. And all of a sudden, you can kind of have a blackjack-type experience without worrying about the chips being contaminated or -- and all of that stuff and it's -- now that's an interesting idea. Now that's probably a table game that they couldn't sell before and now they probably can't make them fast enough. But you see you're starting to focus on this and yes, we're a long way from starting to figure out, do we acquire somebody. Because if you did look at some -- like there was a casino we looked at not too long ago that was for sale, and I think it's probably still for sale. It hasn't been sold that I know of. And -- but it's closed. I don't know when that's going to be able to be open. I don't know what rules it's going to be able to reopen under. I don't know how well it's going to do once it does reopen. So I wouldn't know how to even put together a proposal to buy it even if I had the money to buy it. And so it's kind of -- we can revisit that sort of thing down the road. But right now, we got plenty on our plate to get open what we have and then figure out where we go from there.

Yes. We're still pretty fortunate, too, Chad, with -- and if you think about the growth pipeline, just with what we have, 2021, should still be a very good year relative to any other year in recent history because of those sports betting agreements. And I kind of gloss over it sometimes, and I don't mean to, but the nice thing about those sports betting agreements is you have minimum. It's a $7 million minimum with essentially no expenses attached. And so you effectively have $7 million a year of guaranteed EBITDA year in, year out. And so when you start thinking about going forward, you've kind of eliminated a big swath of downside variability. You still have the existing operations, which we think we can improve further from here. And so that all puts you on a very nice trajectory here going forward once those sports betting agreements will launch.

Now we had talked in the past about trying to go out and refinance our debt with -- under the guise of those sports betting agreements. And that's still certainly going to be an option, but we've got a little bit of a blip between here and there because of the pandemic. And so sometime down the line, we can look back at all sorts of things, whether it be the growth we have or growth otherwise. So we're -- the bigger picture is still there.

Well, and frankly, we had EBDIT last year $15 million and change, which is not kind of a disappointing number for us. But when you really backed into it, the Christmas Casino was pretty good like $2 million -- a little under $2 million in that. And then the problems we had at Rising Star was a bigger good chunk. If you back those out, it was probably $18 million or $19 million a year. And so the goal is to try to get our normal business back to about $20 million a year plus the sports betting stuff, then you're at $27 million. We have $108 million of debt and we only levered 4x. You can probably refinance the debt at a much lower interest rate than it is now. And that's our goal at the moment. We can be there in a year, then we're in pretty good shape. And then that opens up the door to figure out, okay, now what do we do with our resources, right? But we need to walk before we can run and we're focusing on walking. So...

Opening the door. Let's get those doors open soon.

And we'll go to a question from [Stephen Bransetter] of AVR Investments.

Just to reiterate, the online I guess casino games and online poker, are those -- would you be getting like skins for those? Or if the states approve it, how do you think that would go forward, if any of the states approved it?

Well, there's 2 states that I'm aware of that have -- New Jersey had it for a while, Pennsylvania has just approved it. And it has to be related to a brick-and-mortar casino and/or in New Jersey racetracks. And so it would probably be similar to the sports betting, which is if you want to offer online sports betting in Indiana, it has to be done in affiliation with a brick-and-mortar casino. Now our casino is the smallest one in the state. We're in the southeast end of the state, and yet you'll be able to be in a suburb of Chicago and make bets online. And if it's with one of our partners, we get a percentage of the revenue on that bet. Now if it's online wagering, that might be directly with the website that we run. But the legislation hasn't happened yet. So I don't know if it's -- do we get 3 skins per license like that with mobile sports betting or is it 1 skin per license like it is in -- in Colorado, it's 1 skin per license, but we happen to have 3 licenses. And so that legislation is not out there. There is some discussion of it within the legislature that we're aware of. And I do think it's likely to happen. But it's not imminent. It's probably still a year or 2 away.

And I would like to turn the call back to Dan Lee for any additional or closing remarks.

Okay. Now I think we're done. We're here working hard and those who -- I -- we're kind of used to rambling around this office on our own. But gradually, we're getting some of the other people back to work. Nevada is kind of gradually opening and hopefully, this continues to go smoothly. So I hope everybody is staying healthy and hopefully, there's better days ahead. Thanks.

And again, that does concludes the call. We would like to thank everyone for your participation. You may now disconnect.