Lakes Entertainment, Inc. (LACO)
Q3 2008 Earnings Call Transcript
November 06, 2008, 2:00 pm ET
Lyle Berman - Chairman and CEO
Tim Cope - President and CFO
Justin Sebastiano - Morgan Joseph
Todd Eilers - Roth Capital
Chris Krueger - Northland Securities
Clint Morrison - Feltl & Company
Calvin Orey - Orey Capital
Brett Hendrickson - MaComas Capital
Alex Lieblong - Key Colony
Steven Silk - C. Silk & Sons
Previous Statements by LACO
» Lakes Entertainment, Inc. Q2 2008 Earnings Call Transcript
» Lakes Entertainment, Inc. Q1 2008 Earnings Call Transcript
» Lake Entertainment Q4 2007 Earnings Call Transcript
Thanks [Amisya], good afternoon, and welcome to Lakes Entertainment third quarter 2008 earnings conference call. On the call with me is Lyle Berman, Lakes' Chairman of the Board and Chief Executive Officer.
As we begin with our prepared remarks, I would like to remind everyone that this call may contain forward-looking statements within the meaning of the Federal Securities law, including statements concerning business strategies and their intended results, similar statements concerning anticipated future events and expectations that are not historical facts.
These forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them.
Lyle will begin a discussion today with the general overview and update our casino projects. I will then discuss the third quarter financial results and recent business events and then we'll conduct a question and answer. Lyle?
Thank you Tim, and welcome everyone to Lakes' third quarter 2008 earnings call. Let's start the call right away talking about the recent election in Ohio. As you can imagine, we are very disappointed that our My Ohio Now Casino Resort Initiative was not approved by the voters in the State of Ohio in Tuesday's election.
The total cost of our efforts in Ohio will be approximately $29 million. However, during the referendum process we never lost sight of our core operations and the development projects which continue to proceed as planned. We believe that our company is well positioned for growth, given the upcoming opening of the Red Hawk Casino as well as the projects we have in various stages of development.
Before talking about our current operations and developments, I just wanted to briefly mention the current economic environment. Obviously, we here at Lakes are concerned about what has occurred in the financial markets over the past few months and we're keeping very close tabs our operations and especially our cost structure as we prepare to enter to 2009.
It's very difficult to forecast our business in the short term due to the volatile economic conditions. But we want to stress that our fundamental business remains strong and we believe that we will whether any storm that comes our way, especially once the Red Hawk Casino opens.
I would also like to emphasize that while we are always evaluating potential new opportunities, our current focuses is on the successful opening of Red Hawk, the management of our other casino operations and the successful development of our remaining projects under contract.
Speaking of which, let's start off with our operations and development discussion with the latest from the new Red Hawk Casino in Shingle Springs California which is the casino development and management project currently under construction with the Shingle Springs band of Miwok Indians.
At end of September, Governor Schwarzenegger signed a bill ratifying the amended compact between the Shingle Springs Miwok Indians and the State of California, which will allow for class III gaming to be offered at the Red Hawk Casino.
The new compact runs through 2029 and allows for a maximum of 5000 Class III electronic gaming devices at one gaming facility, in return for getting more Class III gaming devices. The Shingle Springs band will share revenues with the state based on a sliding percentage of net win ranging from 20% to 25% from the operations of the Class III slot machines. The tribe will also contribute $4.6 million per year to the revenue sharing trust fund which pays up to $1.1 million each year to non-gaming tribes in California.
The same day of the ratification, the Shingle Springs tribal gaming authority, an affiliate of the Shingle Springs band of Miwok Indians, closed on the $77 million FF&E financing, the final portion of funding for the Red Hawk Casino. Securing the funding was a testament to the strength and progress of this project, considering the extremely volatile economic environment and the tight credit markets in which we currently reside.
As of today, the casino project is approximately 92% complete, while it's dedicated interchange from US Route 50, which will allow for easy access for our customers to the casino, is now substantially complete and will be open tomorrow for use by tribal members. The project remains within budget and on schedule for a planned grand opening at the end of the year.
In the meantime, the amended compact has been submitted to the bureau of Indian affairs for its approval, and we anticipate receiving BIA approval prior to the end of this month. Subject to receiving all final approvals upon its opening, the Red Hawk Casino plans to feature approximately 2,000 Class III slot machines, 75 table games, a high stakes gaming room as well as ten food and beverage outlets, enclosed parking and other typical facilities.