Four years ago, gaming veteran Andre Hilliou was brought on as CEO of the 20-year-old gaming operator Full House Resorts, with a goal of market leadership in local casinos and the development and management of casinos on behalf of Native American tribes and commercial clients. In addition to the company’s cornerstone-managing partner of Harrington Raceway & Casino in Harrington, Delaware-the company recently purchased Stockman’s Casino, which is the market leader in Fallon, Nevada. Full House is preparing to open the Firekeepers Casino in Battle Creek, Michigan, under a management agreement with the Nottawaseppi Huron Band of Potawatomi Indians. Most importantly, the company has a good management team, little debt and money to invest. Hilliou spoke with Global Gaming Business Publisher Roger Gros at his office in Las Vegas in March.
GGB: What was the genesis of Full House?
Hilliou: Full House Resorts, Inc., a public company, was started by a group of investors, which included the late investor Alan Paulson and former Chrysler Chairman Lee Iacocca, among others.
We are doing quite well, and we’re very close to opening the casino in Michigan. The Stockman’s Casino in Fallon is the market leader, and we recently renegotiated the contract with the racetrack casino in Delaware.
When I came in, we put a new management team together that has the ability to tackle large projects. Of course, we are looking at diversifying our company from managing casinos to owning casinos. We’re doing this by taking the revenues from our management contracts, which flow greatly to the bottom line, and using that cash flow to buy properties-a very simple and effective business plan.
Anyone who knows American business knows Lee Iacocca and the role he played in reviving Chrysler in the 1980s. Was he very helpful to you when you came on board?
Lee was part of the team that recruited me. His high visibility is very helpful, and has provided us with some very valuable insight. I speak with him on a regular basis and find him very helpful.
Does he really understand the gaming industry?
He understands business. Business is business whether it’s creating the Mustang, turning around Chrysler or helping a gaming company going forward. He’s very insightful and always asks the right questions.
In addition, Full House Resorts has a highly independent board, which is quite unusual for small gaming companies. It makes our job much easier and more gratifying.
We are seeing, at this moment in history, some of the major gaming companies teetering on the edge of bankruptcy. What is the financial shape of Full House?
We are actually doing quite well. We’ve always been very conservative in our approach to gaming. We bought the property in Fallon at the right multiple and we sold a connecting hotel at a much higher multiple. Our level of debt is almost non-existent, and we are cash-flow positive and are expecting good things out of Michigan in the summer.
Our business plan is very simple. We are looking at small, local casinos that have a leadership position in their market with good management teams in place. When we buy those properties, we expect them to be accretive to earnings immediately. And when we look at earnings, we do not look at the past, but the present and the future. The advantage of a company like Full House with senior executives in the gaming industry is that we have seen what goes on at the top of the hill and the bottom of the hill, and most importantly at the bottom of three hills beyond that. It is the reason that we probably haven’t bought more casinos-they were just not available at the right multiples-but we also know at the end of the day, we’ll have the right formula; we are extremely focused on shareholder value.
Tell us about your expectations for the Firekeepers casino in Michigan.
We have been working very closely with the Huron Potawatomi tribal council. The tribe has been working for many, many years to bring their dreams to fruition. The casino is located on about 75 acres of land just about halfway between Detroit and Chicago on I-94 right at exit 103-couldn’t be a better location, with limited competition and great demographics. The project should do extremely well, and revenues have held up well in Michigan and outside Atlantic City and Las Vegas. My concern-and it’s a good problem to have-is that we’ll be capacity-constrained immediately upon opening.
When is the opening scheduled and what are the specifics when it comes to gaming?
We’ll open in the summer with 2,500 slot machines and 80 tables.
In this economic downturn, are you actively looking for casino purchases?’
Yes, we are, but a lot of casino owners seem to think we’ll get through this recession quickly, and they are leery about selling during the downturn. I am not sure I agree with them.
We take a much longer view. We believe the market is there and it is stabilizing. But it has completely changed. The ability to sell at high multiples is gone, so is the ability to borrow at low rates. But we have the ability to borrow at reasonable rates because we have a good relationship with our bank, having repaid our loan ahead of time, being debt-free and with a great project ahead of us. 2009 should be a banner year for the company and its shareholders.
You’ve taken a unique route up the ladder. You started in the food and beverage area. I can’t think of another company CEO who came up through that path.
Whether you start in food and beverage, finance or marketing, we all move forward based on our abilities. We all enter through different doors but we make our way based on our abilities to perform.