Golden Entertainment Inc (GDEN) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second quarter 2014 Lakes Entertainment Incorporated earnings conference call. My name is [Jinada] and I will be your coordinator for today. At this time, all participants are in a listen-only mode. (Operator instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Mr. Tim Cope. Please proceed.

Thank you, [Jinada]. Good afternoon and welcome to Lakes Entertainment second quarter 2014 earnings conference call. On the call with me is Mr. Lyle Berman, Lakes chairman of the board and chief executive officer.

As we begin our prepared remarks, I would like to remind everyone that this call may contain forward-looking statements, including statements concerning business strategies, and their intended results, and similar statements concerning anticipated future events.

These statements are subject to risks and uncertainties, including those risks described in our filing with the SEC, and actual results may differ materially. Lyle will begin our discussion today with a general overview, and update on our casino projects.

I will then discuss the first quarter financial results, and recent business events, and then we'll conduct a question and answer session. Now, I will turn the call over to Lyle Berman.

Thank you, Tim, and welcome, everyone, to Lakes second quarter 2014 earnings call. I will start by discussing the second quarter operating results at our Rocky Gap casino resort, which is located in western Maryland.

Rocky Gap is a AAA 4-diamond resort that includes a casino, hotel, event center, spa, 4 restaurants, and the only Jack Nicklaus signature golf course in Maryland. The casino currently features 577 slot machines, 15 table games including poker, a casino center bar, a hotel lobby bar, and several food outlets.

Although Rocky Gap experienced construction disruptions related to the addition of new parking spaces and the expansion and refurbishment of other areas during the quarter, financial results have been in line with expectation, and up significantly from prior year.

May 22nd, 2013, marked the one-year anniversary of the casino opening -- I mean, 2014. At June, total revenue was up approximately 50%, compared to June of last year. July continued to show a strong trend, with approximately a 15% increase in year over year growth in revenue.

During early July, we completed the construction of 150 additional surface parking spaces, located in close proximity to the casino, which provide additional convenient parking for our guests.

We also recently completed the refurbishment of the fitness center and golf pro-shop, both of which have been well-received. We have upgraded the outdoor activities area, and offer several recreational options, including bikes, paddle boats, fishing gear, and boats.

We have improved the outdoor lounge area with enhanced outdoor food and beverage service, additional fire pits, and more seating. With a cost of approximately $3.5 million, these upgrades reflect our commitment to providing exceptional guest service.

As we previously announced during the second quarter, we entered into an agreement to sell our interest in the Dania Casino in Jai Alai, for approximately $2.6 million. We received an initial payment of $1 million in April, at which time 40% of our original ownership in Dania was transferred to the buyer.

The remaining purchase price will be paid in 3 equal, semi-annual installments of approximately $530,000, and 20% of our original ownership in Dania will be transferred to the buyer upon each payment. We expect to receive the next payment in October, 2014.

We continue to maintain the 10% ownership interest in Rock Ohio Ventures, 80% ownership in the Horseshoe Casino in Cleveland, the Horseshoe Casino in Cincinnati, Thistledown Casino, and Turfway Park in Kentucky.

The Horseshoe Casino in Cleveland features approximately 1,700 slot machines, 89 table games, a 30-table poker room, and multiple food and beverage outlets. The Horseshoe Casino in Cincinnati features approximately 2,000 slot machines, 87 table games, a 31-table world series of poker room, several food and beverage outlets, and a parking structure.

The Thistledown Casino in North Randall, Ohio, features its existing racetrack, 1,100 video lottery terminals, and new dining and night life options. Turfway Park is a premiere thoroughbred horse racing track located in Florence, Kentucky. We currently have cash and short-term investments in excess of $80 million.

In addition, the Jamul Indian Village is required to begin repayment of our principle on our $60 million note receivable, when and if a casino opens, and certain third parties construction and development funds have been repaid.

Interest payments of 4.25% on our note receivables would be required immediately upon a casino opening. This note was written off our books in prior years. The Jamul Tribe is working with Penn National Gaming to develop a casino on the tribe's existing reservation.

Penn previously announced that it has launched construction activities at the site, and is planning to open the casino in mid 2016. We continue to evaluate the various business opportunities to maximize value for our shareholders. With that, I'll turn the call back over to Tim to provide an overview of financial results. Tim?

Thank you, Lyle. Second quarter results, net earnings for the second quarter of 2014 were $0.1 million compared to net earnings of $0.2 million for the second quarter of 2013. Earnings from operations were $0.3 million for the second quarter of 2014, compared to the last from operations of $1.2 million for the second quarter of 2013.

Basic and diluted earnings per share were less than $0.01 for the second quarter of 2014, compared to basic and diluted earnings per share of $0.01 for the second quarter of 2013. Lakes Entertainment report a second quarter 2014 net revenues of $14.1 million, compared to prior year second quarter net revenues of $8.5 million.

Second quarter 2014 net revenues were related to the operation of Rocky Gap. Lakes acquired this property in August, 2012, and as now mentioned, gaming operations begin on May 22nd, 2013. During the second quarter of 2013, net revenues of $4.8 million were related to the operation of Rocky Gap.

Also included in prior year second quarter net revenues were $3.7 million of management fees related to the management of the Red Hawk Casino, near Sacramento, California, owned by the Shingle Springs Band of Miwok Indians.

There were no management fees earned during the second quarter of 2014, due to the August 29th, 2013 determination of the management for the Red Hawk Casino. During the second quarters of 2014 and 2013, property operating expenses for Rocky Gap were $8.2 million and $3.4 million respectively, and primarily related to gaming operations, rooms, food, and beverage, and golf.

The increase in property-operating expenses resulted primarily from the inclusion of gaming-related expenses in the entire current year quarter. Gaming commenced in May, 2013, therefore gaming expenses were included for only a portion of the prior year second quarter.

For the second quarter of 2014, selling, general, and administrative expenses were $5.7 million compared to $4.6 million for the second quarter of 2013. Included in these amounts were Lake's corporate, selling, general, and administrative expenses at $1.9 million and $2.0 million during the second quarters of 2014 and 2013 respectively.

Lake's corporate, selling, general, and administrative expenses consist primarily of payroll and related expenses, and professional fees, as well as $0.4 million of business development costs. Rocky Gap selling, general, and administrative expenses were $3.8 million and $2.6 million during the second quarters of 2014 and 2013 respectively.

The increase in Rocky Gap selling, general, and administrative expenses was due primarily to increases in marketing and advertising expenses, and payroll and related expenses, related to the addition of gaming during May of 2013.

As Lyle mentioned, during the second quarter of 2014, Lakes entered into an agreement to sell its interest in Dania Casino in Jai Alai, Dania Beach, Florida, for a total of $2.6 million. Upon receipt of the payment during the second quarter of 2014, Lakes recognized a $1 million gain on sale of cost method investment, since this asset had previously been written [off].

During the second quarter of 2013, Lakes recognized pre-opening expenses of $0.9 million, related to the Rocky Gap project. There were no pre-opening expenses during the current year period. Depreciation and amortization was $0.9 million for the 3 months ended June 29th, 2014, compared to $0.5 million for the 3 months ended June 30th, 2013.

The increase was due primarily to depreciations on Rocky Gap fixed assets. The company has existing net operating loss carried forwards of approximately $72 million, that are available to offset future taxable income.

In summary, we are pleased with the performance of Rocky Gap, although ongoing construction projects had an impact on the second quarter operations, the property still performed well. With the recent completion of these projects, including the addition of 150 new parking spaces, the expansion of the fitness center, and the remodel of the golf shop, which were completed in early July, we have already seen an increase in visitation, and we're looking forward to operating the remainder of the summer and fall seasons with these new offerings.

In addition, we continue to evaluate new business opportunities to enhance shareholder value. Now I'll turn the call over to the operator for questions.

(Operator instructions). Your first question comes from the line of Tom [Schlumberger], with RBC. Please proceed.

Hi, Lyle and Tim. Do you guys envision a scenario where we would sell our interests in Rock, Ohio?

This is Lyle. Certainly that is something that we consider on a regular basis. It's a non-operating asset, and certainly deploying cash in something that generated earnings and cash would be desirable. So it's something we continue to evaluate.

How would the shareholders ascertain whether or not we've received fair value in our interests in Rock, Ohio?

Well, I think they would have to rely on management. It's our goal to maximize shareholder value. I'm personally a large shareholder, as is Tim Cope, and I think that we, that's the management and board of directors' decision.

OK, because last call you were going to look into whether or not you could disclose some of the information you've received in order to file our tax return.

We did look into that. We are on a non-disclosure [NDA] with Rock, Ohio, and we looked into it, we talked to them about it, but at this point they want us to continue to honor our non-disclosure agreement. There is information out there in the public domain relative to the volume and the size and scope of the facilities. Tim, do you want to add anything?

No, I think that's appropriate, Lyle. I mean at this point, we're legally contracted to honor our confidentiality agreement with Rock, Ohio.

And that supersedes your obligation of transparency to your shareholders?

Well regarding transparency to our shareholders, we evaluate our $21 million investment on our balance sheet for the quarter, and certainly we've determined there's no impairment to that value at this point in time. Other than that, we really don't -- we certainly want to be as transparent as possible to our shareholders at all times. Unfortunately we're under this other contractual obligation.

Very good.

Your next question comes from the line of Stephen Haberkorn, with private investor. Please proceed.

Hello, that was a nice quarter. How long ago did we invest the $20 million in Rock, Ohio?

Tim, can you give those dates?

No, I don't --

Roughly.

It's approximately started, I think, in about 2010, and a little bit over throughout time.

So it's been about 3 years would you say?

Yes, I'd say that.

Clearly, most of the --

OK.

Most of the money was invested prior to the casino's opening.

OK, so it would be at least 2, 3 years ago.

I think that would be correct.

OK, my question is, like the other gentleman, we have no report on any return on that investment. You seem to know nothing about it. Telling us that we should look in the public area, that's not really the place. It's supposed to come from the company, and here's my concern.

In today's statement that was issued with the earnings, you said you have another $80 million to invest. How do we know you're not going to invest that, just as secretly? And I'm not concerned about you, Lyle, and you, Tim.

I'm concerned -- what do we know about the other people? Do we know that they're operating their casino, [and I don't mean this] disparagingly, [they're picking] excessive fees, that they're employing people with the same credibility that you would respect? How do we know that's being taken care of? How do we know they're not trading on this?

And my other question is you keep referring to this [Lulu] contract, the [NDA]. Back in April I asked to find out where it is, and could I see it? I've never had a response to that. Could you help me on that?

Well, number one, we don't invest money secretively. We certainly disclose when we invest, and what we invest in.

Well I meant secretly, we're not getting any results. I didn't mean -- right.

Well one of the reasons that people own stocks, is they do rely on management to make the right decisions for them going forward. But regarding the confidentiality agreement, I thought, Tim, you can correct me on this, but I thought that was a public document that we had filed, and we had told Stephen about, we had guided him where (inaudible).

No.

Yes, we -- it is not -- the actual agreement that contains the confidentiality language is not public filing. And Steve, we have discussed the fact that we have one, but it is not a public filed document.

No, but I think for transparency and full disclosure, our shareholders should be able to see that, and see when it was done, when it was dated, when it went into effect. It's a serious amount of money, $20 million, and then it goes to the credibility of investing the next $80 million.

And when I say hidden, I mean hidden we're not getting any results. That's highly unusual. So -- and when the $20 million was invested, it was the majority of what the company had at that time, so it was a serious investment.

If you could look into that, and get me the dates, I wrote that letter in April, and haven't had a direct response. You showed me something in the last quarterly --

We will look into that. I don't think it would be --

OK.

But I don't think we have an issue, and maybe filing a confidentiality agreement as a public document.

OK. My next question is repeatedly, and I may not have the verbiage exact, but you allude to the value of the company, and then the hidden value, and undiscovered value in assets. What specifically do you know that we don't know when you make those statements.

I think what we -- when we said that we think we're undervalued, we're looking at the sum total of the assets of our company as compared to the stock that -- the public value of the stock. When we value our assets, they're pretty much all disclosed, there aren't any hidden ones, we have an [LOL] of $72 million, which has value going forward. We disclosed, certainly, that the --

Well, let me ask you this, in the last one, in the way it reads, it says we believe our overall assets have substantial value that are not fully reflected in our balance sheet. So the purpose of fellow shareholders, an equal playing field for transparency, and full disclosure.

Would you be able to break that down and tell us what you guys have in mind? After all, we're trusting you, like you said, trusting management, we invested the money, we're getting no input as to any return on that money. And I'd like to know what assurances you have that the other side is absolutely --

We can get back to you --

Yes.

-- for example, on our balance sheet, we don't show, we have written off the Jamul note of $60 million. However, that -- so we're carrying that on our balance sheet for 0, yet when we -- because Penn has announced that they are under construction, and intend to open by 2016, we think over time, we're going to get the full value of that investment.

Our NOL of $72 million, I don't believe is also reflected on our balance sheet, yet as we start invest money and have earnings, certainly the value of that NOL goes up. When we talk about Rocky Gap on our balance sheets, I believe we carry that at our costs, which we've disclosed.

I believe our total investment today is about a little shy of $40 million. We believe that asset has a higher value than that. So we can get back to you on those comparisons.

Your next question comes from the line of [Rory Barry], private investor. Please proceed.

Hey, I've got a question for Tim Cope. Tim, interest income is a ridiculously low sum. For 6 months it's $71,000, what about $85 million, which is like 1/100 of 1%. And I can get 2-2.5% at the local savings and loan. So I guess my question is why is this so ridiculously low, and why don't you declare about it $2 dividend, so the shareholders can invest that money?

Well, to start backwards on your question, [Rory], dividends have always been discussed internally, and continue to be discussed as certainly a viable option of how to best utilize our $80 million amount of cash.

In the meantime, our short-term investments are invested in essentially commercial paper, corporate bonds, and a minimum amount of CDs. And it is conservative, I certainly agree with you on that point.

But the reason it is in a conservative investment mode at this time, is so that it is readily available to utilize as we progress, either in new projects, or if we should do either the dividends, or stock buyback, or any other alternatives that the board continues to discuss.

And also I'll just point out, it looks unusually low comparatively to prior year, because if you remember, prior year interest income included the approximately 9.5% we're earning on our notes from Shingles Springs.

Speaking of that, you said imminent investment, in case you need to make it. Have you got anything imminent in the way of an investment, in another casino or in a purchase, or in another company, or whatever? And can you tell us about it?

Again, as Lyle mentioned earlier, we do continue to evaluate new opportunities. We've done a substantial amount of work for the first 2 quarters particularly. Nothing to disclose at this point in time, but again, we continue to look.

OK, got another question on accounting, Tim, and that is basically the land that Jamul's on, you haven't sent out a note that you, as a firm purchase, on the day that the thing opens up, the date Jamul opens up, and yet you have not taken any of the gain from the land into your accounting.

Isn't that pretty firm that they're building out there, and that they plan to open up? And can't you in effect take up that -- what is it, $4.5 million gain on the books? It may be discounted, but at least take it up?

Well as you point out, the word is plan to open. It certainly hasn't opened yet, so until such time as it has opened, we really can't write that up on our books. What we would do, is at the time we were actually paid for it, we --

Yes, but all accounts receivable is, is future payments, and yet you put accounts receivable on your book, and there's nothing sure that everybody's going to pay their accounts receivable, and why wouldn't this fit in the definition of accounts receivable?

Well I certainly understand the [the comment] accounts receivable, but we fully expect any accounts receivable to be paid. There's certainly a transaction that has occurred, that is a collectible transaction.

In this case, Jamul has not yet occurred, so at the time we actually receive a payment, we would record the gain, or to your point, if the casino's open, the payment is due, and we go to collect, and they haven't collected it, we certainly have a right to have a receivable, and evaluate it at that point.

However, this is Lyle talking, bear in mind that in the interest of being totally transparent, we certainly have disclosed that A, we've written it off the books, but we will have -- it will be due in collectible once the casino opens. So whether we recognize it or not, I realize that it would be a nice -- it shows a little more earnings, but when you discuss cash, it would have no impact on our cash.

Well this is another one of those undisclosed assets, in fact, that we're talking about (inaudible).

Oh, I would call this very disclosed, but yes, it is not carried on our balance sheet. That is correct.

OK, so why can't you make two balance sheets, disclosed and undisclosed?

I actually think we should be able to. Our accountants -- lawyers tell us we're not supposed to do that, because when we talk about undisclosed, they're sometimes just speculative, but we're going to look into that to see what we can put in approximate values.

I think you can do -- my accounting as a history, but I think you can do it, if you do it in the way of footnotes, in other words if you have a footnote saying this is following a list of undisclosed assets could be taken into consideration.

Rory, all that information we've discussed is in our footnotes.

But not as far as amounts, or valuations or anything, and you have to kind of dig it out.

Well again, they're in the appropriate footnotes, with the dollar amounts. So they are there.

OK. By the way, tell Stephen that I've got the agreement in my favorites, and it's odd, you can get it on the internet if you dig it out, and I found it, and they do furnish you with an accounting though. It says that they have to furnish you with an accounting, so basically you know what the stockholders don't know, am I correct?

We do receive their financial results on a quarterly basis.

Your next question comes from the line of [Bill Razzo], private investor. Please proceed.

Hi, good afternoon. I was reading a press release a while back about the company implementing a poison pill, which seems to prevent buy out. Can you explain this a little, and why it is in the best interest of the shareholders?

Yes, this is Lyle Berman calling. This actually has the goal that when you look at our stock prices compared to what we believe are the realistic value of our assets, we put in a poison pill so that if somebody wanted to come in and take control of the Company, they have to talk to the board, and get the board's concurrence with that. We think that is in the best interest of our shareholders. Tim, has our current proxy gone out?

Yes it has.

In our current proxy, a shareholder of Lakes, I should say requested, but really demanded, that we put it in our proxy for the annual meeting, that he wants us to -- the shareholders to vote that A, the board cannot put in a proxy -- put in a poison pill without shareholder approval, and he would like the shareholders to have us rescind the current poison pill.

We, as a company and the board, have suggested, recommended to our shareholders that they vote against that. We think it's in the best interest of the shareholders to have the poison pill, and of course our board vetted it thoroughly, and came to the conclusion that it was in the best interest.

OK, thanks.

Your next question comes from the line of Colin King, with Kirr, Marbach & Co. Please proceed.

Hey, guys. Just wanted to get some color on the size of acquisitions you're looking at. Would you consider investing in excess of the cash on balance sheet?

And then in terms of timing of that, is there a point in time where you'd say OK, it's been too long, we haven't found any suitable acquisitions, and we'd look to make another move? I guess just trying to figure out the timing aspect of that.

This is Lyle Berman again. To answer the last first, certainly at some point, if we could not find a suitable investment, we certainly would have to consider making major either stock buyback or cash distributions. We haven't set a firm date for that, but it's certainly something we discussed at every board meeting.

In terms of size of an acquisition, we are looking at major acquisitions that would be major to our company. We are not looking to be a conglomerate of a whole bunch of small, independent, not-related assets. And we would certainly consider an acquisition far in excess of our cash, of course, if it could be financed, either perhaps by the banks, high yield funds, or even partly by the seller.

OK, great. One other question for you, on the Jamul note receivable that's not yet on the balance sheet, would you guys consider selling that before the casino opened, to someone who's more suitable to be a creditor, or do you guys intend to hang on to that thing, and just be a creditor to that casino as long as --

The answer is we certainly will consider selling it. We believe that until the casino opens, however, it probably has very de minimis value. You have the risk that it never opens, and of course you then don't have anything, and of course if it opens, certainly the success of the casino which we really feel will be successful, both because of Penn Gaming as well as the location of the casino.

But until it opens and we can document that the current interest due of 4.25% is being paid, we think that even at that point, it would take a discount to face, because of both the fact that it's only 4.25% interest, as well as Native American gaming.

However, if you add in the risk of even opening, or not being successful, I believe today it would have de minimis value, but certainly once the casino opens, or gets very close to, it's something we will clearly entertain.

OK, great. Thanks, guys.

Your next question comes from the line of David Hargreaves with Sterne Agee

You guys are very patient. I'd like to go on the record as saying I'm very pleased with the job you're doing. If we think back to when you built Grand Casino, and the quality of product that you put on the market, and look around today and the post-recession environment, at a lot of CapEx-deferred properties with watered-down odds, what do you see in terms of opportunities to build, to come back and build a new empire?

And do you think you'd lean towards building or towards buying? And in particular, I'd be interested in getting your thoughts, in particular, Harrah's closing down the Tunica facility that you guys built long ago, and what do you think about that property now? I'd love to get your color on all these thoughts.

Well, in terms of -- all of Lakes' and Grand Casino's experience has always been in building green field construction, rather than buying assets. We just found great opportunity there. Today, there's very little opportunity in green field construction, and the little opportunity that there is, is highly, highly competitive, and generally in new states it's highly taxed as well. That being said, we still look at that.

We are looking, when we do this, to do a major acquisition, but we don't think that in the emerging gaming market, to cobble together a number of very small properties, probably is not something we're looking at.

If you recall, Lakes was always the big dog, so to speak. Wherever we opened a casino, we were at least a major influence, except when we did the Stratosphere. That being said, we look at all kinds of opportunities, we did have extensive talks with Caesar's Palace relative to Grand Casino Tunica, which didn't materialize into anything.

And we continue -- I mean every time there's a casino sale, it certainly is brought to our attention. As we have mentioned, we are looking both within and without the gaming industry, and we have looked at a number of things where we got very close, from our position.

Until we sign what's called a definitive agreement, we don't think it's something that would be in the interest of shareholders to disclose. So we haven't got to the point of definitive agreements yet, but we continue our looking. Tim, any addition to that one?

No, I think that's appropriate, Lyle. That is what we're busy doing, and Dave, we appreciate your comments.

Do you share my observation, that the gaming business isn't what it used to be, and it may have left some opportunities open? Because I think a lot of poorly capitalized companies have left a window there.

But it's clearly not what it used to be, however when you look across the United States, almost all of the emerging markets you see negative comp increases. And I'm not suggesting that we can't improve a number of casinos that we've looked at.

But the bottom line is the sellers don't seem to want to recognize that emerging gaming is not what it used to be. And until things flatten out, and we start seeing comp store -- comp casino increases, there's certainly a high degree of risk at buying, especially at the price that many times they see.

OK, well thanks for your patience in explaining things to everyone, and keep up the good work.

OK.

Thanks, David.

Your next question comes from the line of [Gene Harris] with Lakes Entertainment. Please proceed.

Gentlemen, are you there?

Yes, how are you today?

Hi, my name is Gene Harris, Jr. I'm not with Lakes, I'm a stockholder, and I live near Rocky Gap so I'm out there quite often. My question is we've got a market capitalization of $116 million today. The balance sheet shows $132 million of stockholders equity, close to $90 million in cash, and $72 million tax laws carry-forward.

It seems to me that these numbers are out of whack, that the market cap should be higher than it is. Why not announce a $5 million or $10 million stock buyback over the next 18 months, subject to market conditions? That's question number one.

In answer to that, we do look at that on a regular basis, we discuss it at every board meeting. All I can say is at this point we have opted not to do that, but there are some definitely problems with that too.

We have ongoing -- we're looking at a number of ongoing opportunities, and certainly in order to do a stock buyback, we have to discontinue those, or we have to make public. We -- the Company can't buy back stock if we know something more than the shareholders know. So that is one of the issues.

I don't know that $5 million or $10 million would do the job. I think it would be probably a bigger number, and it probably might be, probably a tender offer rather than a stock buyback from time to time in the open market, because I don't think in that regard, there's ever an open time when we can fully -- we fully disclose everything we know.

OK, my second question is more related to Rocky Gap in particular. I enjoy going there, they've got great dealers, but I do see a lot of employee turnover. Many folks just go elsewhere, leave the industry, whatever, and I wonder if we can do something to improve retention of employees there.

Gene, this is Tim Cope. I couldn't agree with you more. Since day 1, just finding enough employees to start with has been a challenge, and certainly retaining employees, as you point out, has continued to be a challenge.

We offer a number of training school, we work with the local colleges there in Cumberland and the surrounding communities to have formal training programs for the individuals, and it just seems in many situations that -- I'm not saying they don't want to work, but maybe they get trained enough to maybe relocate to a different area, different region. But it is an ongoing challenge for us, there's no doubt about it.

OK, fair enough. Thank you, folks.

Thank you.

Your next question comes from the line of David Schwartz with PWL. Please proceed.

Hi, thanks for taking my question. Now that you've operated a casino at Rocky Gap for more than a year, have you noticed any differences in the customer base than you expected, meaning how far people are traveling to Rocky Gap, and also how much is competition from the casinos in eastern Maryland and surrounding state affecting Rocky Gap?

I think we're getting our business pretty much the way we expected it. The certainly we're a locals casino, and for the day trip customer, and we're an overnight casino for the more the resort experience.

Most of our day trip customers come within a 60-mile radius. When you get outside of 60 miles, there are other casinos that enter into the day trip competition, but certainly for the day trip within 60 miles, we pretty much own that market.

When we go to the destination resort, I think if anything, we're probably a little bit disappointed in the number of people we're getting out of the major three big cities. We're only a 2-hour drive from Baltimore, 2-hour drive from Washington D.C., and 2.5 from Pittsburgh.

And yet I will say that I think there's a high percentage of our overnight customers actually come from within 60 to 75 miles as well. So one of our challenges is to get the higher gamer that comes from a little bit further out.

Do you do any --

I always like to say, if you're with your wife or your girlfriend, and you want to get away for a 2-day, 2-night, 3-night vacation, you don't really want to go to downtown Baltimore, or downtown Pittsburgh.

Probably not. Is there any promotion in those cities, like billboards or anything, to draw people to Rocky Gap?

We do a -- Tim, I'll let Tim comment on this.

This is Tim. Yes, we have done a number of test cases certainly in all those cities, in terms of newspaper ads, online advertising, to determine response rates, and we have found very low response rates from many of those major metropolitan areas.

So what we've done, is we've refocused our efforts in those areas more now to group business, with our meeting space, event center now opened, we're starting to draw the smaller groups that are booking our resort for future attendance. So we seem to be drawing more from the city area now through the group environment.

I see. On a different topic, is the shareholder proposal the reason why the proxy was filed 3 [minutes] later this year than previous years?

No, it wasn't. It was just simply a matter of calendar and coming up with the date for the shareholder meeting.

And normally you've had them in June, and this year it's in September --

Yes, I would say historically I agree with you, they're usually in the early part of the year, although we have had them in September in the past.

OK, thanks for taking my questions.

Thank you.

Your next question is a follow up from the line of Stephen Haberkorn, private investor. Please proceed.

Hello. I got cut off before. I don't mean to be a smart aleck about this, but if you could do us a favor, I've heard this a few times from you and management that there's information available in the public, that would relate to Ohio, to Rock gaming.

You have a pretty good expertise in the casino business, that's why I'm a stockholder. Could you take that information, and could you put it together and tell us where you would draw value there? Because for amateurs doing it, it's not the same as a professional like you and Mr. Cope.

You know where it is, and we understand you're just doing approximation, but it's out there, and coming from management who's invested $20 million, I think you kind of owe that to the stockholders, rather than send us on a haphazard chase. We don't know what we're doing, but it is all out there. I understand what you're saying, there's a lot out there --

I hear what you're saying --

-- and I think --

We will look into that. I know our lawyers caution us against making predictions because when they don't come true, there seems to be a high propensity to sue. On the other hand, I know we should be able to put out the information with total disclaimers that this is just --

Right. OK, and I'll tell you what, I'll be happy to sign any agreement that I will not sue under any condition, but I think it needs your professional input. And let me ask you one other thing. I would almost ask you to find a new law firm.

Because I got a letter from them, where I don't know if they were bullying me, intimidating, or what, but they were telling me that they would refuse to answer any more of my letters. I think that's inappropriate.

I think for a member of the bar to write a letter to a stockholder like that, is despicable, and I think you should look for a new law firm, because I don't know that they have the shareholders' interest there.

And I'm not trying to be a wise guy, but I would more rather focus on you looking for the numbers in the public domain, dissecting them, because I've had people look at them, and said what's the big deal, if you think it's out there.

It needs to come from the company. And you can put all the disclaimers on it, but I think it's there, and for a 4 year $20 million investment that we know nothing about it, I think that would be fitting, especially.

And I don't mean this in a bad way, you have $90 million more to invest that may be invested the same way, and we're never going to know anything. I've never heard of anything like that. I know the Coke formula is secret, I know the chairman of the board of Coke doesn't know the formula. But we shouldn't have that secrecy here.

OK --

So if you could --

We will look into it and see.

And at this time, we have no further questions. I will now like to turn the call back over to Lyle Berman for any closing remarks.

Well thank you very much, Operator, for all of your questions. We will focus on continuing to execute on our strategy of generating shareholder value. Thank you once again for your interest in Lakes, and we will speak with you again in our next earnings call. Thank you. Bye now.

Thank you for your participation in today's conference. This concludes the presentation, you may now disconnect. Have a great day.