FULL HOUSE RESORTS INC Management’s Discussion and Analysis of Financial Condition and Operating Results. (Form 10-K)

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The following discussion of our results of operations and financial condition
should be read together with the other financial information and consolidated
financial statements included in this Form 10-K. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from the results anticipated in the
forward-looking statements as a result of a variety of factors, including those
discussed in Part I, Item 1A.   "Risk Factors"   and elsewhere in this Annual
Report on Form 10-K. The results of operations for the periods reflected herein
are not necessarily indicative of results that may be expected for future
periods. Full House Resorts, Inc., together with its subsidiaries, may be
referred to as "Full House," the "Company," "we," "our" or "us."

Executive Overview

Our primary business is the ownership and/or operation of casino and related
hospitality and entertainment facilities, which includes offering casino
gambling, hotel accommodations, dining, golfing, RV camping, sports betting,
entertainment and retail outlets, among other amenities. We currently own or
operate five casino properties in four states - Mississippi, Colorado, Indiana
and Nevada. We view our Mississippi, Colorado and Indiana properties as distinct
operating segments and both of our Nevada properties as one operating segment.
We also benefit from six permitted sports "skins" that we are allowed to
operate, three in Colorado and three in Indiana. We have contracted with other
companies to operate these online sports wagering sites under their own brands
in exchange for a percentage of revenues, as defined, subject to annual minimum
amounts.

Construction continues for a sixth property, Chamonix, which will be located
adjacent to the Company's existing Bronco Billy's Casino and Hotel in Cripple
Creek, Colorado. It is expected to open in the second quarter of 2023 and will
be included in our Colorado segment. We are also developing American Place in
Waukegan, Illinois, including a temporary casino facility named The Temporary
that we intend to open in the summer of 2022. We expect to include American
Place as its own segment.

Our portfolio consists of the following:

Property                                            Location
Silver Slipper Casino and Hotel                     Hancock County, MS
                                                    (near New Orleans)
Bronco Billy's Casino and Hotel                     Cripple Creek, CO
                                                    (near Colorado Springs)
Rising Star Casino Resort                           Rising Sun, IN
                                                    (near Cincinnati)
Stockman's Casino                                   Fallon, NV
                                                    (one hour east of Reno)
Grand Lodge Casino                                  Incline Village, NV
(leased and part of the Hyatt Regency Lake Tahoe    (North Shore of Lake Tahoe)
Resort, Spa and Casino)
Chamonix Casino Hotel (under construction)          Cripple Creek, CO
                                                    (near Colorado Springs)
American Place (under development)                  Waukegan, IL
                                                    (northern suburb of 

Chicago)


Our financial results are dependent upon the number of patrons that we attract
to our properties and the amounts those guests spend per visit. While we provide
credit at some of our casinos where permitted by gaming regulations, most of our
revenues are cash-based, through customers wagering with cash or paying for
non-gaming services with cash or credit cards. Our revenues are primarily
derived from slot machines, but also include other gaming activities, including
table games, keno and sports betting. In addition, we derive a significant
amount of revenue from our hotels and our food and beverage outlets. We also
derive revenues from our golf course and ferry boat service at Rising Star, our
recreational vehicle parks ("RV parks") owned at Rising Star and managed at
Silver Slipper, and retail outlets and entertainment.

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We set minimum and maximum betting limits for our slot machines and table games
based on market conditions, customer demand and other factors. Our gaming
revenues are derived from a broad base of guests that includes both high- and
low-stakes players. At Silver Slipper, our sports book operations are in
partnership with a company specializing in race and sports betting. At both
Rising Star and Bronco Billy's, we have contracted with other companies to
operate our on-site and online sports wagering skins under their own brands in
exchange for a percentage of revenues, as defined, subject to annual minimum
amounts. Our operating results may also be affected by, among other things,
overall economic conditions affecting the disposable income of our guests,
weather conditions affecting access to our properties, achieving and maintaining
cost efficiencies, taxation and other regulatory changes, and competitive
factors, including but not limited to, additions and improvements to the
competitive supply of gaming facilities, as well as  pandemics, epidemics,
widespread health emergencies, or outbreaks of infectious diseases such as the
coronavirus.

We may experience significant fluctuations in our quarterly operating results
due to seasonality, variations in gaming hold percentages and other factors.
Consequently, our operating results for any quarter or year are not necessarily
comparable and may not be indicative of results in future periods.

Our market environment is highly competitive and capital-intensive. We rely on
the ability of our properties to generate operating cash flow to pay interest,
repay debt, and fund maintenance and certain growth-related capital
expenditures. We continuously focus on improving the operating margins of our
existing properties through a combination of revenue growth and expense
management. We also assess growth and development opportunities, which include
capital investments at our existing properties, the development of new
properties, and the acquisition of existing properties.

RECENT DEVELOPMENTS

COVID-19 Pandemic. In March 2020, the World Health Organization declared the
outbreak of the novel coronavirus as a pandemic ("COVID-19"). Although COVID-19
continues to spread throughout the U.S. and the world, vaccines designed to
inhibit the severity and the spread of COVID-19 are now being distributed. At
the start of the pandemic, COVID-19 resulted in the implementation of
significant, government-imposed measures to prevent or reduce its spread,
including travel restrictions, business restrictions, closing of borders,
"shelter-in-place" orders and business closures. In March 2020, pursuant to
state government orders to prevent the spread of COVID-19, we temporarily closed
all of our casino properties. As a result, we experienced a material decline in
our revenues until our properties began reopening when permitted by local
authorities. We reopened the Silver Slipper Casino and Hotel on May 21, 2020,
Grand Lodge Casino and Stockman's Casino on June 4, 2020, and Bronco Billy's
Casino and Hotel and Rising Star Casino Resort on June 15, 2020. During the
shutdown period, we evaluated labor, marketing and other costs at our businesses
so that, upon reopening, our properties could reopen with significantly lower
operating costs. As a result, our operating performance since reopening in
mid-2020 has been stronger than pre-pandemic levels, despite capacity
restrictions throughout our facilities for portions of 2020 and 2021. The extent
to which our financial and operating results in future periods may be affected
by COVID-19 will largely depend on future developments, which are highly
uncertain and cannot be accurately predicted. Significant uncertainties include
the ability to operate; new information which may emerge concerning new strains
or variants of COVID-19 and their severity; any additional actions imposed by
governmental authorities to contain COVID-19 or minimize its impact; increased
operating costs in light of social distancing requirements as a result of
COVID-19; and general economic conditions, among others.

We believe we have a strong balance sheet and sufficient liquidity in place. As
of December 31, 2021, we had total cash and cash equivalents of $265.3 million,
which includes $176.6 million of restricted cash reserved to fund the
construction of Chamonix, and an undrawn revolver. As noted below, we further
augmented our liquidity in February 2022 through the issuance of $100.0 million
of Additional Notes and an increase in the size of our Credit Facility from
$15.0 million to $40.0 million.

American Place. In December 2021, we were selected by the IGB to develop and
operate American Place, our proposal for a casino and entertainment destination
in Waukegan, Illinois. The permanent American Place facility is expected to
include a world-class casino with a state-of-the-art sportsbook; a premium
boutique hotel comprised of twenty luxurious villas, each ranging from 1,500 to
2,500 square feet with full butler service; a 1,500-seat live entertainment
venue; and various food and beverage outlets. While we construct the permanent
American Place facility, we will operate a temporary casino facility named The
Temporary by American Place. The Temporary is expected to include approximately
1,000 slot machines, 50 table games, a fine-dining restaurant, two additional
restaurants, and a center bar. We intend to open The Temporary in Summer 2022,
pending customary regulatory approvals.

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Debt Financing. Subsequent to year-end, we successfully completed our funding of
The Temporary, which is intended to open in Summer 2022. On February 7, 2022, we
closed on our private offering of $100.0 million in Additional Notes. The
Additional Notes were sold at a price of 102.0% of the principal amount and were
issued pursuant to an indenture, dated as of February 12, 2021, under which we
previously issued $310.0 million in 2028 Notes. Also in February 2022, we
amended our Credit Facility to, among other things, increase its size from
$15.0 million to $40.0 million, all of which is currently available to draw
upon.

Key performance indicators

We use several key performance indicators to assess the operations of our properties. These key performance indicators include the following:

Game revenue indicators:

Slot coin-in is the gross dollar amount wagered in slot machines and table game
drop is the total amount of cash or credit exchanged into chips at table games
for use by our customers. Slot coin-in and table game drop are indicators of
volume.

Slot win is the difference between customer wagers and customer winnings on slot
machines. Table game hold is the difference between the amount of money or
markers exchanged into chips at the tables and customer winnings paid. Slot win
and table game hold percentages represent the relationship between slot win and
coin-in and table game win and drop.

Room revenue indicators:

Hotel occupancy rate is an indicator of the utilization of our available rooms.
Complimentary room sales, or the retail value of accommodations furnished to
customers free of charge, are included in the calculation of the hotel occupancy
rate.

Adjusted EBITDA, Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin:

Management uses Adjusted EBITDA as a measure of our performance. For a
description of Adjusted EBITDA see   "Non-GAAP Measure."   We utilize Adjusted
Segment EBITDA as the measure of segment profitability in assessing performance
and allocating resources at the reportable segment level. For information
regarding our operating segments, see   Note 13   to the consolidated financial
statements set forth in Part II, Item 8. "Financial Statements and Supplementary
Data." Additionally, we use Adjusted Segment EBITDA Margin, which is calculated
by dividing Adjusted Segment EBITDA by the property's revenues.

Operating Results – 2021 vs. 2020

Consolidated operating results

The following summarizes our consolidated operating results for the years ended
December 31, 2021 and 2020, and reflects the mandatory closure of all of our
properties for approximately three months beginning in March 2020 due to the
pandemic.

                                                        Year Ended
(In thousands)                                        December 31,
                                                    2021         2020        Increase
Revenues                                          $ 180,159    $ 125,589       43.5 %
Operating expenses                                  142,605      115,113       23.9 %
Operating income                                     37,554       10,476      258.5 %
Interest and other non-operating expenses, net       25,413       10,421      143.9 %
Income tax expense (benefit)                            435         (92)   
  572.8 %
Net income                                        $  11,706    $     147    7,863.3 %


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                                  Year Ended
(In thousands)                  December 31,
                              2021         2020       Increase
Casino revenues
Slots                       $ 113,612    $  77,437      46.7 %
Table games                    13,749       10,764      27.7 %
Other                           3,070        2,611      17.6 %
                              130,431       90,812      43.6 %

Non-casino revenues, net
Food and beverage              27,347       19,766      38.4 %
Hotel                           9,624        7,410      29.9 %
Other                          12,757        7,601      67.8 %
                               49,728       34,777      43.0 %
Total revenues              $ 180,159    $ 125,589      43.5 %

The following discussion is based on our consolidated financial statements for
the years ended December 31, 2021 and 2020, unless otherwise described. Because
all of our operations were closed due to COVID-19 government mandates from
mid-March 2020 through much of the second quarter of 2020, the comparisons for
these years are not particularly meaningful. The periods of closure were:

? Silver Slipper Casino and Hotel – closed from March 16, 2020 until May 21, 2020

? Grand Lodge Casino and Stockman’s Casino – closed from March 17, 2020 until

June 4, 2020

? Bronco Billy’s Casino and Hotel – closed from March 17, 2020 until June 15,

2020

? Rising Star Casino Resort – closed from March 16, 2020 until June 15, 2020.


Revenues. Consolidated revenues increased by 43.5% in 2021, reflecting
approximately three months of closure due to the pandemic in 2020. Growth in
2021 was due to a full year of operations, a gradual relaxation of
pandemic-related restrictions, stronger operational performance at Silver
Slipper, and contributions from our six contracted sports wagering agreements
(compared to three that were live in 2020). "Other Non-casino Revenues" includes
$5.9 million of revenue related to our contracted sports wagering agreements in
2021, compared to $2.2 million in 2020. See   "Operating Results - Reportable
Segments"   below for details.

Operating expenses. Consolidated operating expenses increased 23.9% in 2021,
primarily due to a partial year of operations during the 2020 period and
variable costs that increased along with increases in guest volumes. Such
variable costs included higher gaming taxes due to additional gaming revenue,
and higher food costs related to additional restaurant covers, which altogether
accounted for more than half of the increase in operating expenses in 2021. The
remaining increase was from selling, general, and administrative expenses,
reflecting additional professional fees, a gradual resumption of activities
following the closure period in late 2020, an increase in accrued bonus
compensation, and $2.1 million of expenses related to corporate initiatives that
are not expected to recur in 2022.

While our operating costs increased in 2021, overall operating margins improved.
Upon reopening in mid-2020, we improved operating efficiencies at all of our
properties, in part by better matching customer demand with the operating hours
of our food and beverage and table games departments. We also significantly
reduced our marketing expenses upon reopening, benefiting from analytics
provided by new slot marketing systems installed in late 2019. These changes
affected marketing, payroll and related expenses across all departments at the
Company.

See more information in our featured segments described below.

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Interest and other non-operating charges, net.

Interest Expense

(In thousands)                                           Year Ended
                                                       December 31,
                                                      2021        2020

Interest expense (excluding amortization of borrowing costs) $24,179 $9,400
Amortization of loan issue costs and discount 1,349 1,276 Capitalized interest

                                  (1,871)      (853)
                                                    $  23,657    $ 9,823


Interest expense increased primarily due to an increase in our debt levels. In
February 2021, we refinanced all $106.8 million of our outstanding Senior
Secured Notes due 2024 (the "Prior Notes") with $310.0 million of 2028 Notes, in
part to fund our Chamonix project (see Part I, Item 1.   "Business - Operating
Properties - Chamonix Casino Hotel"  ). See   Note 6   to the consolidated
financial statements set forth in Part II, Item 8. "Financial Statements and
Supplementary Data" for a more detailed discussion.

Other non-operating expenses, net

We incurred $1.8 million in 2021 and $0.6 million in 2020 of other non-operating
expense, primarily from fair value adjustments of our common stock warrant
liability. During the period that the warrants were outstanding, increases in
our share price resulted in increases in the value of the warrants, causing
non-cash expense; conversely, decreases in our share price resulted in decreases
in the value of the warrants, causing non-cash income. In 2021, the final fair
value adjustment to our outstanding warrants of $1.3 million was made when such
warrants were repurchased in February 2021. Using a portion of the proceeds from
the issuance of the 2028 Notes, we retired all outstanding warrants for
$4.0 million in the first quarter of 2021.

Other non-operating expense in 2021 also includes a net loss of $0.4 million
from the extinguishment of debts in 2021. This amount consists of a $6.1 million
extinguishment loss related to the February 2021 refinancing of our Prior Notes,
and a $5.7 million gain due to the forgiveness of principal and interest in
December 2021 for CARES Act loans made to certain qualifying subsidiaries.

See Note 6 to the consolidated financial statements in Part II, Item 8. “Financial statements and supplementary data” for a more detailed discussion.

Income taxes. Our effective income tax rate for the years ended
December 31, 2021 and 2020 was 3.6% and (167.3)%, respectively. Our tax rate
differs from the statutory rate of 21.0% primarily due to the effects of changes
in tax law, changes in valuation allowance, and items that are permanently
treated differently for GAAP and tax purposes. During 2021, we continued to
provide a valuation allowance against our deferred tax assets ("DTAs"), net of
any available deferred tax liabilities. In future years, if it is determined
that we meet the "more likely than not" threshold of utilizing our DTAs, then we
may reverse some or all of our valuation allowance against our DTAs.

We do not expect to pay any federal income taxes or receive any federal tax refunds related to our 2021 results. We expect to use net operating loss carryforwards from prior years to offset any taxable income generated in 2021. Due to the level of uncertainty regarding sufficient prospective income as measured under GAAP, we maintain a valuation allowance against our DTAs, as mentioned above.

See note 9 of the consolidated financial statements in part II, point 8. “Financial statements and additional data” for a more detailed discussion.

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Results of operations – reportable segments

We manage our casinos based primarily on geographic regions within the United
States. Our 2021 results reflect a change in our operating segments. We now
break out our on-site and online sports wagering skins in Colorado and Indiana
as a standalone segment, Contracted Sports Wagering. Certain reclassifications
were made to 2020 amounts to conform to current-period presentation for enhanced
comparability. Such reclassifications had no effect on the previously reported
results of operations or financial position. See Part I, Item 1. "  Business -
Introduction"   for additional discussion.

The following table presents detail by segment of our consolidated revenue and
Adjusted EBITDA. Management uses Adjusted Segment EBITDA as its measure of
segment profit.

(In thousands)                                    Year Ended
                                                December 31,
                                              2021         2020       Increase
Revenues
Mississippi                                 $  90,628    $  62,513     45.0 %
Indiana                                        41,435       29,524     40.3 %
Colorado                                       23,660       19,614     20.6 %
Nevada                                         18,516       11,732     57.8 %
Contracted Sports Wagering                      5,920        2,206    168.4 %
                                            $ 180,159    $ 125,589     43.5 %
Adjusted Segment EBITDA and Adjusted EBITDA
Mississippi                                 $  29,843    $  14,669    103.4 %
Indiana                                         8,736        2,444    257.4 %
Colorado                                        5,545        3,790     46.3 %
Nevada                                          4,933          454    986.6 %
Contracted Sports Wagering                      5,890        2,086    182.4 %
Adjusted Segment EBITDA                        54,947       23,443    134.4 %
Corporate                                     (7,733)      (3,789)    104.1 %
Adjusted EBITDA                             $  47,214    $  19,654    140.2 %

Adjusted Segment EBITDA Margin
Mississippi                                      32.9 %       23.5 %    9.4 pts
Indiana                                          21.1 %        8.3 %   12.8 pts
Colorado                                         23.4 %       19.3 %    4.1 pts
Nevada                                           26.6 %        3.9 %   22.7 pts
Contracted Sports Wagering                       99.5 %       94.6 %    4.9 pts


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The following table summarizes the consolidated results of our casino activity by key performance indicators as defined above:

                                       Year Ended
                                     December 31,
(In thousands)                    2021           2020       Increase

Slot coin-in                  $ 1,951,311    $ 1,380,727     41.3 %
Slot win                      $   148,232    $   102,861     44.1 %
Slot hold percentage(1)               7.6 %          7.4 %    0.2 pts
Table game drop               $    77,104    $    61,873     24.6 %
Table game win                $    13,823    $    10,962     26.1 %

Percentage of participation in table games(1) 17.9% 17.7% 0.2 pt

__________

(1) The three-year averages of the reservation percentage of slot machines and table games

percentage were 7.4% and 17.5%, respectively.

Mississippi

Our Mississippi segment consists of the Silver Slipper Casino and Hotel.
Pursuant to a pandemic-related order from the state gaming commission, we
temporarily suspended operations for a portion of the prior year, from
March 16, 2020 through May 21, 2020. During 2021, we saw the gradual relaxation
of various pandemic-related business restrictions. As a result, revenues
increased by 45.0% during 2021. Casino revenue increased by 48.5%, driven mainly
by higher slot volumes, accompanied by increases to table games volume and hold.

Non-casino revenue increased by 37.5% during 2021, also due to the gradual
lifting of pandemic-related business restrictions. The majority of our
non-casino revenue is from our food and beverage outlets. Food and beverage
revenues rose by 39.4%, due to additional buffet covers and strategic buffet
promotions. Hotel revenues increased by 26.5%, wherein total occupied
room-nights increased by 33.5% to 42,743 room-nights for 2021, despite lower
average daily room rates as compared to 2020.

Adjusted Segment EBITDA increased by 103.4%, reflecting a focus on marketing and
labor improvements. During the shutdown period, we reexamined our cost
structure, specifically focusing on labor and marketing efficiencies
company-wide. Upon reopening, we ensured that the hours of operations of our
amenities were appropriately matched to our business levels. Additionally,
Silver Slipper's operational performance reflects the benefit of numerous
investments in the property in recent years. Such investments included a
substantial renovation of the casino and the buffet, a renovated porte cochère
and other sense-of-arrival improvements, the Beach Club, the Oyster Bar, and the
introduction of on-site sports betting.

Indiana

Our Indiana segment consists of Rising Star Casino Resort. Pursuant to a
pandemic-related order from the state gaming commission, we temporarily
suspended operations for a portion of the prior year, from March 16, 2020
through June 15, 2020. Reflecting the gradual relaxation of pandemic-related
business restrictions, revenues increased by 40.3% during 2021. Casino revenue
rose by 46.3%, with slot revenues increasing by 53.0% and table games revenues
increasing by 34.8%. Both our slot and table games departments benefited from
relatively flat hold percentages on higher volumes during 2021.

Non-casino revenue increased by 27.1% during 2021 due to higher guest volumes,
especially as capacity and operating restrictions continued to ease in 2021.
Hotel revenues drove much of this increase, up 35.4%, reflecting an increase in
daily average room rates and a 27.9% rise in total occupied room-nights to
51,951 room-nights in 2021. Food and beverage revenues increased by 31.4% during
2021 from increased covers.

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Adjusted Segment EBITDA increased by 257.4%, reflecting our focus on controlling
costs and our revamped marketing approach, as well as capital investments made
in recent years. Such capital investments included commencement of our ferry
boat service, renovations of the pavilion and much of the hotel, conversion of a
deli into a new restaurant, the RV park and a new slot machine management
system. Efforts to control costs included reducing staff, decreasing marketing
expenses, and replacing our buffet with more efficient food and beverage service
options. Additionally, new Indiana gaming legislation went into effect on
July 1, 2021, including a reduction in certain gaming taxes for Rising Star.

Colorado

Our Colorado segment includes Bronco Billy's Casino and Hotel and the Chamonix
project. Pursuant to pandemic-related state orders, we temporarily closed Bronco
Billy's for a portion of the prior year, from March 17, 2020 through
June 15, 2020. Upon reopening, we resumed construction of Chamonix, which
adjoins and will be connected to Bronco Billy's. Such construction has resulted
in the loss of all of Bronco Billy's on-site parking, many of its hotel rooms,
and some of its casino and restaurant space. To alleviate the lack of on-site
parking, we introduced complimentary valet parking, as well as a free shuttle
service to an off-site parking lot. Additionally, with the gradual relaxation of
pandemic-related business restrictions and elimination of betting limits,
revenues increased by 20.6% during 2021. Casino revenue increased by 18.8%, with
slot revenues rising by 17.3% and table games revenues increasing by 109.4%.
Both the slot and table games departments had relatively flat hold percentages
on higher volumes during 2021.

Non-casino revenue increased by 33.4% during 2021 due to higher guest volumes,
especially as capacity and operating restrictions continued to ease in 2021.
Food and beverage revenues drove much of this increase, up by 36.9% during 2021
due to increased covers and the reopening of our steakhouse. Hotel revenues
followed with an increase of 23.7%, as higher average daily room rights offset
the gradual loss of guestrooms due to Chamonix's construction during 2021 and
the impact of the closure period.

Adjusted Segment EBITDA increased by 46.3%, reflecting an improved customer
experience and analytics from Bronco Billy's new slot marketing system and labor
controls that were partially offset by certain labor expenses related to the
pandemic. Results also benefited from the increase in capacity and operations as
described above.

Nevada
The Nevada segment consists of the Grand Lodge and Stockman's casinos. Our
Nevada operations are seasonal, with the summer months accounting for a
disproportionate share of annual revenues. Winter is a secondary peak season, as
Grand Lodge Casino is located near several ski resorts, including Alpine
Meadows, Northstar and Palisades Tahoe. We typically benefit from a "good" snow
year, resulting in extended periods of operation at the nearby ski areas.

This business segment was more negatively affected by the COVID-19 pandemic than
our other business segments, as pandemic-related restrictions at the nearby ski
resorts in late 2020 and early 2021 affected destination travel to the region.
Pursuant to pandemic-related state orders, we temporarily closed both Grand
Lodge Casino and Stockman's Casino for a portion of the prior year, from
March 17, 2020 through June 4, 2020. Reflecting the gradual relaxation of
pandemic-related restrictions, revenues increased by 57.8% during 2021. Casino
revenue accounted for most of this increase, rising by 59.0%. Slot revenue
increased by 68.2% during 2021 and table games revenues rose by 19.7%, both due
to higher slot and table games volumes at Grand Lodge. While we resumed table
games operations starting in the third quarter of 2020 at Grand Lodge, such
operations remained closed at Stockman's during 2021. Electronic table games
have been installed as an alternative to meet this demand at Stockman's.

Adjusted segment EBITDA increased by 986.6%. As restrictions eased in Nevada, both properties improved their revenues while continuing to control their overall expenses. As with our other properties, we have focused on workforce efficiency at Grand Lodge and Stockman’s as we reopen in mid-2020.

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Contracted Sports Wagering

The Contracted Sports Wagering segment consists of our on-site and online sports
wagering skins in Colorado and Indiana. Revenues and Adjusted Segment EBITDA
were both $5.9 million during 2021, resulting in respective increases of 168.4%
and 182.4%, as compared to 2020. Our fourth and fifth sports wagering skins
commenced operations on April 1 and April 23, 2021, respectively, resulting in
sequential growth in both revenues and Adjusted Segment EBITDA. Our sixth skin
contractually went live on December 1, 2021, and subsequently received gaming
approval on February 28, 2022. As a result, all of our six permitted sports
wagering skins were in operation in the fourth quarter of 2021. We receive a
percentage of defined revenues of each skin, subject to annual minimums. Such
minimums total $7 million of revenue on an annualized basis under our current
agreements, with minimal related expenses.

In February 2022, one of our contracted parties for sports wagering informed us
of its intent to cease operations on May 15, 2022, which will create one
available skin in each of Colorado and Indiana. We are currently negotiating
with other companies to be the replacement operator for such skins. However, no
assurance can be given that we will be able to enter into any replacement
contract on similar terms or at all.

Additionally, we expect to have an available sports skin in Illinois, as we were
recently chosen by the IGB to develop and operate a casino in Waukegan,
Illinois. Illinois law allows one sports skin for each physical casino license,
which results in fewer total sports skins than in each of Colorado and Indiana.
Illinois is also the sixth most populous state in the country, with
approximately 12.8 million residents. As a result, we expect to receive better
terms for our expected Illinois skin than for any of our individual skins in
Colorado or Indiana. However, no assurance can be given that we will be able to
enter into a contract related to such skin, either on better terms than our
other skins or at all.

Business

Corporate expenses increased by 104.1% in 2021, primarily due to $2.1 million of
expenses related to corporate initiatives that are not expected to recur in
2022. Corporate expenses also increased due to additional professional fees, a
gradual resumption of activities in late 2020 following the closure period, and
an increase in accrued bonus compensation, reflecting our improved operating
results. In Spring 2020, when our casinos were closed, we temporarily reduced
our corporate staff to a small group of employees.

In 2020, we began allocating certain costs to the properties. Previously, such
costs were carried at the corporate level. For 2021, a total of $1.9 million was
allocated, compared to $0.8 million in 2020. We believe that such allocations
are appropriate, as the corporate team provides additional support to each of
our properties, and that such allocations make our segment results more
comparable to other casino companies.

Non-GAAP measure

"Adjusted EBITDA" is earnings before interest and other non-operating income
(expense), taxes, depreciation and amortization, preopening expenses, impairment
charges, asset write-offs, recoveries, gain (loss) from asset disposals, project
development and acquisition costs, and non-cash share-based compensation
expense. Adjusted EBITDA information is presented solely as supplemental
disclosure to measures reported in accordance with generally accepted accounting
principles in the United States of America ("GAAP") because management believes
this measure is (i) a widely used measure of operating performance in the gaming
and hospitality industries and (ii) a principal basis for valuation of gaming
and hospitality companies. In addition, a version of Adjusted EBITDA (known as
Consolidated Cash Flow) is utilized in the covenants within our credit facility,
although not necessarily defined in the same way as above. Adjusted EBITDA is
not, however, a measure of financial performance or liquidity under GAAP.
Accordingly, this measure should be considered supplemental and not a substitute
for net income (loss) or cash flows as an indicator of our operating performance
or liquidity.

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The following table presents a reconciliation of net income to Adjusted EBITDA:

(In thousands)                                       Year Ended
                                                   December 31,
                                                  2021        2020
Net income                                      $ 11,706    $    147
Income tax expense (benefit)                         435        (92)

Interest expense, net of amounts capitalized 23,657 9,823 Loss on extinguishment of debt, net

                  409           -
Adjustment to fair value of warrants               1,347         598
Operating income                                  37,554      10,476
Project development costs                            782         423
Preopening costs                                      17           -
Depreciation and amortization                      7,219       7,666
Loss on disposal of assets, net                      676         684
Stock-based compensation                             966         405
Adjusted EBITDA                                 $ 47,214    $ 19,654


The following tables provide reconciliations between operating income and Adjusted Segment EBITDA and Adjusted EBITDA:

For the Year Ended December 31, 2021
(In thousands)
                                                                                                                     Adjusted
                                                                                                                     Segment
                   Operating     Depreciation      Loss on         Project                           Stock-         EBITDA and
                     Income           and          Disposal      Development      Preopening         Based           Adjusted
                     (Loss)      Amortization     of Assets         Costs           Costs         Compensation        EBITDA
Reporting segments
Mississippi        $   26,553    $       2,701    $      589    $           -    $          -    $            -    $     29,843
Indiana                 6,396            2,340             -                -               -                 -           8,736
Colorado                3,959            1,482            87                -              17                 -           5,545
Nevada                  4,386              547             -                -               -                 -           4,933
Contracted
Sports Wagering         5,890                -             -                -               -                 -           5,890
                       47,184            7,070           676                -              17                 -          54,947
Other operations
Corporate             (9,630)              149             -              782               -               966         (7,733)
                   $   37,554    $       7,219    $      676    $         782    $         17    $          966    $     47,214


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For the Year Ended December 31, 2020
(In thousands)
                                                                                                                Adjusted
                                                                                                                Segment
                              Operating     Depreciation      Loss on         Project           Stock-         EBITDA and
                                Income           and          Disposal      Development         Based           Adjusted
                                (Loss)      Amortization     of Assets         Costs         Compensation        EBITDA
Reporting segments
Mississippi                   $   11,421    $       3,004    $      244    $           -    $            -    $     14,669
Indiana                             (34)            2,478             -                -                 -           2,444
Colorado                           2,336            1,450             4                -                 -           3,790
Nevada                             (562)              581           435                -                 -             454
Contracted Sports Wagering         2,086                -             -                -                 -           2,086
                                  15,247            7,513           683                -                 -          23,443
Other operations
Corporate                        (4,771)              153             1    
         423               405         (3,789)
                              $   10,476    $       7,666    $      684    $         423    $          405    $     19,654


Operating expenses deducted to arrive at operating income (loss) in the above
tables include facility rents related to: (i) Mississippi of $2.3 million in
2021 and $1.6 million in 2020, (ii) Nevada of $1.8 million in both 2021 and
2020, and (iii) Colorado of $0.6 million in both 2021 and 2020. Finance lease
payments of $0.7 million in both 2021 and 2020 related to Rising Star's smaller
hotel within the Indiana segment are not deducted, as such payments are
accounted for as interest expense and amortization of debt related to the
finance obligation.

Cash and capital resources

Cash flow

As of December 31, 2021, we had $265.3 million of cash and equivalents,
including $176.6 million of restricted cash dedicated to the construction of
Chamonix. We currently estimate that between $7 million and $9 million of cash
is required for our day-to-day operations, including for on-site cash in our
slot machines, change and redemption kiosks, and cages. We believe that current
cash balances, together with the available borrowing capacity under our
revolving credit facility and cash flows from operating activities, will be
sufficient to meet our liquidity and capital resource needs for the next 12
months of operations.

Cash flows - operating activities. On a consolidated basis, cash provided by
operations during 2021 was $29.5 million, compared to $9.0 million in 2020.
Trends in our operating cash flows tend to follow trends in operating income,
excluding non-cash charges, but are also affected by changes in working capital
accounts, such as receivables, prepaid expenses, and payables. Compared to 2020,
the increase in our operating cash flows during 2021 was primarily due to our
strong operating performance. Such results were brought on by a combination of
higher volumes reflecting the gradual relaxation of pandemic-related business
restrictions during the 2021 period, as well as more higher operating margins
from the reexamination of our cost structure, specifically focusing on labor and
marketing efficiencies company-wide.

Cash flows - investing activities. On a consolidated basis, cash used in
investing activities during 2021 was $37.2 million, compared to $2.6 million
2020. Capital expenditures in 2021 primarily related to our Chamonix
construction project, which continued to progress in 2021, and real estate
purchases in Cripple Creek. This amount also includes approximately $2.0 million
for capital expenditures made in 2021 at Silver Slipper to repair damage caused
by Hurricane Zeta. Cash used in investing activities during 2020 were primarily
related to capital expenditures for Chamonix.

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Contents

Cash flows - financing activities. On a consolidated basis, cash provided by
financing activities during 2021 was $235.3 million, while cash provided by
financing activities during 2020 was $1.5 million. In February and March 2021,
respectively, we received $310.0 million of gross proceeds from the issuance of
our 2028 Notes and $46.0 million of gross proceeds from our underwritten equity
offering. These cash inflows in 2021 were partially offset by the payoff of the
Prior Notes (including the related prepayment premiums), as well as expenses
related to our debt and offerings. Cash provided by financing activities in 2020
primarily reflect $5.6 million of unsecured loans under the CARES Act, which
were forgiven in full in accordance with their terms by the U.S. Small Business
Administration in December 2021.

Other factors affecting liquidity

We have significant outstanding debt and contractual obligations, in addition to
planned capital expenditures related to the construction of Chamonix and
American Place. Our principal debt matures in February 2028. Certain planned
capital expenditures designed to grow the Company, such as the permanent
American Place facility and the potential expansion of Silver Slipper, may
require additional financing and/or temporarily reduce the Company's ability to
repay debt.

Our operations are subject to financial, economic, competitive, regulatory and
other factors, many of which are beyond our control. Such factors include the
potential effects of COVID-19 and its variants. The extent to which our
liquidity in future periods may be affected by COVID-19 and its variants may
largely depend on future developments. Such future developments are highly
uncertain and cannot be accurately predicted at this time, as discussed under

“RECENT DEVELOPMENTS.”

Long-Term Debt. At December 31, 2021, we had $310.0 million of principal
indebtedness outstanding under the 2028 Notes, and no drawn amounts under the
Credit Facility or outstanding letters of credit. In December 2021, our
qualifying subsidiaries' $5.6 million of CARES Act Loans were forgiven in full
per the terms of such loans. We also owe $3.3 million related to our finance
lease of a hotel at Rising Star.

See   Note 6   to the consolidated financial statements set forth in Part II,
Item 8. "Financial Statements and Supplementary Data" for details on our debt
obligations.

Hyatt Option to Purchase our Leasehold Interest and Related Assets. Our lease
with Hyatt to operate the Grand Lodge Casino currently has an option for Hyatt
to purchase our leasehold interest and related casino operating assets. See
  Note 7   to the consolidated financial statements set forth in Part II,
Item 8. "Financial Statements and Supplementary Data" for further information
about this option and related rental commitments that could affect our liquidity
and capital resources.

Capital investments. In 2021, we resumed the construction of Chamonix after temporarily suspending all capital investments in March 2020 after the closure of our properties linked to the pandemic. Our capital investments are designed to drive revenue and revenue growth, to improve the guest experience at our properties, and to increase visits.

Chamonix - As previously discussed above in   "Operating Properties - Chamonix
Casino and Hotel"   under Part I, Item 1. "Business," we increased the size of
the Chamonix project's hotel capacity by 67%, to approximately 300 luxury guest
rooms and suites from our previously planned 180 guest rooms. We also revised
our construction budget for Chamonix in January 2022, increasing it from $180
million to approximately $250 million to reflect supply chain issues, inflation,
and a difficult construction environment. To fund Chamonix's construction, we
issued our 2028 Notes and placed a portion of such proceeds into a restricted
cash account dedicated to Chamonix's construction (see   Note 6   to the
consolidated financial statements set forth in Part II, Item 8. "Financial
Statements and Supplementary Data"). As of February 28, 2022, the balance of
such restricted cash account was approximately $221.4 million. We expect to
invest approximately half of such amount in 2022 and the remainder in 2023, with
an expected opening of Chamonix in the second quarter of 2023.

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Contents

American Place - As discussed above in the   "Executive Overview,"   we were
selected by the IGB to develop and operate American Place in Waukegan, Illinois.
While the larger permanent facility is under construction, we will operate a
temporary casino named The Temporary by American Place. During 2022, we plan to
invest approximately $100 million in The Temporary, which includes significant
upfront gaming license payments and the purchase of slot machines that are
expected to be transferred to the permanent casino once opened. To fund such
construction, in February 2022, we issued $100.0 million of Additional Notes and
increased the size of our revolving credit facility to $40.0 million, all of
which is currently available to draw upon (see   Note 6   to the consolidated
financial statements set forth in Part II, Item 8. "Financial Statements and
Supplementary Data"). We intend to open The Temporary in Summer 2022, pending
customary regulatory approvals.

Other Capital Expenditures - Additionally, we may fund various other capital
expenditure projects, depending on our financial resources. Our capital
expenditures may fluctuate due to decisions regarding strategic capital
investments in new or existing facilities, and the timing of capital investments
to maintain the quality of our properties. No assurance can be given that any of
our planned capital expenditure projects will be completed or that any completed
projects will be successful. Our annual capital expenditures typically include
some number of new slot machines and related equipment; to some extent, we can
coordinate such purchases to match our resources.

We evaluate projects based on a number of factors, including expected profitability, length of development period, regulatory and political environment, and ability to secure the necessary financing to complete the development or project. acquisition, among other considerations. No guarantee can be given that additional projects will be continued or completed or that completed projects will be successful.

Main debt agreements

See Note 6 to the consolidated financial statements included in Part II, Item 8. “Financial statements and additional data” for more information.

Critical accounting estimates and policies

Our consolidated financial statements were prepared in conformity with
accounting principles generally accepted in the United States of America.
Certain of our accounting policies require that we apply significant judgment in
defining the appropriate assumptions for calculating estimates that affect
reported amounts and disclosures. By their nature, judgments are subject to an
inherent degree of uncertainty, and therefore, actual results may differ from
our estimates. We believe the following critical accounting policies affect the
most significant judgments and estimates used in the preparation of our
consolidated financial statements.

Impairment of Long-lived Assets, Goodwill and Indefinite-Lived Intangibles

Our long-lived assets include property and equipment, goodwill, and
indefinite-lived intangibles, and are evaluated at least annually (and more
frequently when circumstances warrant) to determine if events or changes in
circumstances indicate that the carrying value may not be recoverable. Examples
of such events or changes in circumstances that might indicate impairment
testing is warranted might include, as applicable, an adverse change in the
legal, regulatory or business climate relative to gaming nationally or in the
jurisdictions in which we operate, or a significant long-term decline in
historical or forecasted earnings or cash flows or the fair value of our
property or business, possibly as a result of competitive or other economic or
political factors. In evaluating whether a loss in value is other than
temporary, we consider: (i) the length of time and the extent to which the fair
value or market value has been less than cost; (ii) the financial condition and
near-term prospects of the casino property, including any specific events which
may influence the operations; (iii) our intent related to the asset and ability
to retain it for a period of time sufficient to allow for any anticipated
recovery in fair value; (iv) the condition and trend of the economic cycle;
(v) historical and forecasted financial performance; and (vi) trends in the
general market.

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We review the carrying value of our property and equipment used in our
operations whenever events or circumstances indicate that the carrying value of
an asset may not be recoverable from estimated future undiscounted cash flows
expected to result from its use and eventual disposition. If the undiscounted
cash flows exceed the carrying value, no impairment is indicated. If the
undiscounted cash flows do not exceed the carrying value, then an impairment is
recorded based on the fair value of the asset. Fair value is typically measured
using a discounted cash flow model whereby future cash flows are discounted
using a weighted-average cost of capital, developed using a standard
capital-asset pricing model, based on guideline companies in our industry.

We test our goodwill and indefinite-lived intangible assets for impairment
annually during the fourth quarter or when a triggering event occurs. For our
2021 and 2020 annual impairment tests, we utilized the option to perform a
qualitative analysis for our goodwill and indefinite-lived intangibles and
concluded it was more likely than not that the fair values of such intangibles
exceeded their carrying values. Any impairment charges incurred are not reversed
if a subsequent evaluation concludes a higher valuation than the carrying value.

Capitalization and depreciation policies for fixed assets

We define fixed assets as certain property and equipment with economic useful
lives that extend beyond a year. Such fixed assets are stated at cost. For the
majority of our property and equipment, cost was determined at the acquisition
date based on estimated fair values. We acquired Bronco Billy's in May 2016,
Silver Slipper in October 2012, Rising Star in April 2011 and Stockman's in
January 2007. Project development costs, which are amounts expended on the
pursuit of new business opportunities, and acquisition-related costs are
expensed as incurred. Maintenance and repairs that neither materially add to the
value of the property nor appreciably prolong its life are also expensed as
incurred. Depreciation and amortization are provided on a straight-line basis
over the estimated useful lives of the assets. When we construct assets, we
capitalize direct costs of the project, including fees paid to architects and
contractors and property taxes. Salaries are capitalized only for employees
working directly on the project. In addition, interest cost associated with
major development and construction projects is capitalized as part of the cost
of the project. Interest is typically capitalized on amounts expended on the
project using the weighted-average cost of our outstanding borrowings.
Capitalization of interest starts when construction activities begin and ceases
when construction is substantially complete or development activity is suspended
for more than a brief period.

We must make estimates and assumptions when accounting for capital expenditures.
Whether an expenditure is considered a maintenance expense or a capital asset is
sometimes a matter of judgment. When constructing or purchasing assets, we must
determine whether existing assets are being replaced or otherwise impaired,
which also may be a matter of judgment. In addition, our depreciation expense is
highly dependent on the assumptions we make about our assets' estimated useful
lives. We determine the estimated useful lives based on our experience with
similar assets, engineering studies, and our estimate of the usage of the asset.
Whenever events or circumstances occur, which would change the estimated useful
life of an asset, we account for the change prospectively.

Income taxes

We are subject to federal and state taxes in the United States. Significant
judgment is required in determining our provision for income taxes, our deferred
tax assets and liabilities, and any valuation allowance recorded against our net
DTAs. We make these estimates and judgments about our future taxable income that
are based on assumptions that are consistent with our future plans. Tax laws,
regulations, and administrative practices may be subject to change due to
economic or political conditions, including fundamental changes to the
applicable tax laws.

Our income tax returns are subject to examination by the IRS and other tax
authorities. Positions taken in tax returns are sometimes subject to uncertainty
in the tax laws and may not ultimately be accepted by the IRS or other tax
authorities. We assess our tax positions using a two-step process. A tax
position is recognized if it meets a "more likely than not" threshold. It is
then measured at the largest amount of benefit that is greater than
fifty percent likely of being realized. Additionally, we recognize accrued
interest and penalties, if any, related to unrecognized tax benefits in income
tax expense.

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Recently issued accounting pronouncements not yet adopted

See note 2 to the consolidated financial statements in Part II, point 8. “Financial statements and additional data” for a discussion of recently issued accounting pronouncements not yet adopted.

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