Small Cap Spotlight: FLL

Quick overview

Today’s overview is Full House Resorts, Inc. (NASDAQ: FLL). They have unique riverboat assets in the gaming industry and are betting their future on a remodel of their Waukegan casino. They’re fighting for tourist revenue in their localities, but running up against the limitations of their own balance sheet.

WHAT IT DOES
Full House Resorts owns and operates a portfolio of six regional casino properties across five states: American Place in Waukegan, Illinois; Silver Slipper Casino and Hotel in Hancock County, Mississippi; Chamonix Casino Hotel and Bronco Billy's Casino in Cripple Creek, Colorado; Rising Star Casino Resort in Rising Sun, Indiana; and Grand Lodge Casino inside the Hyatt Regency Lake Tahoe in Incline Village, Nevada. The company targets regional, drive-to gaming markets rather than Las Vegas Strip-style destinations, competing on convenience, hotel amenities, and dining rather than grand scale (music/food/entertainment, multiple properties).

They also have 3 “skins”, or sports wagering websites that compete in individual state markets in Indiana, Illinois, and Colorado. Two states are active internet gaming sites and one state, Colorado, has 3 sites that are not operating.

HOW IT MAKES MONEY
Revenue comes from slot machines, table games, hotel rooms, and food and beverage at each property, with slots historically the dominant contributor to casino win. American Place, a temporary facility in the Chicago-area Waukegan market, has become the company's largest single-property earner, with Q1 2026 revenue of $31.8 million and property-level adjusted EBITDA of $8.3 million. Trailing twelve-month revenue across the portfolio is roughly $302 million.

What really matters is simply the number of locals that the 3 properties can draw from, and how much they spend at each visit. It’s either ticket size goes up or population grows. That’s the nature of the drive-to-visit casinos. Gotta make it more accessible or require higher minimums or extend more credit.

FINANCIAL TRAJECTORY
Q1 2026 revenue was $74.4 million versus $75.1 million a year earlier (down slightly on a reported basis but up modestly excluding the April 2025 sale of Stockman's Casino). Adjusted EBITDA rose about 15% year over year to $13.2 million, driven mainly by American Place's ramp. The company has posted net losses on a GAAP basis, and the balance sheet carries roughly $473 million of total debt ($450 million in secured notes plus revolver borrowings) against about $31 million of cash, putting net debt to EBITDA near 9x — a heavily leveraged capital structure built to fund the Colorado and Illinois construction projects.

Right now the company is essentially run for creditors ($48M of Adj. EBITDA in 2025 vs. ~$42M of interest expense) with a sliver of equity waiting to either get zeroed or go bananas (if the Waukegan remodel is a smashing success).

RECENT CATALYSTS
Full House recently secured financing for a permanent casino in Waukegan, with construction expected to take 18 months to two years. Management has flagged that Chamonix in Cripple Creek is still ramping below expectations and made leadership changes at that property. Q2 2026 results are due August 6, 2026, and will be watched for whether American Place's growth is offsetting softness elsewhere and whether leverage metrics are improving.

INVESTMENT ANGLE
The bull case rests on American Place and the eventual permanent Waukegan facility becoming a much larger cash-flow generator once construction debt-funded capex tapers off, which could substantially de-lever the balance sheet. The bear case is straightforward: leverage near 9x EBITDA, ongoing GAAP losses, and an underperforming Colorado asset leave little room for execution missteps, and equity holders are effectively making a leveraged bet on a single growth project (Waukegan) coming in on time and on budget.

The bear case is the balance sheet and the continued threat from online gaming and Vegas. Vegas has draws outside of gambling- music, food, sports. Unfortunately for Waukegan, both Chicago and Illinois are in a financial death spiral, so you’re dealing with incompetent local governments as well.