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COMMITMENTS AND CONTINGENCIES | 9 Months Ended
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Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Leases The nature of our operating leases is as follows:
Leased Property |  | Expiration
Grand Lodge Casino facility |  | August 2018
Land lease of Silver Slipper Casino and Hotel site |  | April 2058
Additionally, we have less significant operating leases for certain office and warehouse facilities, office equipment, signage and land. Grand Lodge Casino Lease. In 2011, we entered into a lease with Hyatt Equities, L.L.C. to operate the Grand Lodge Casino (“Grand Lodge Lease”). The Grand Lodge Lease is secured by the Company’s interests under the lease and property (as defined in the Grand Lodge Lease) and is subordinate to the liens in the First and Second Lien Credit Facilities. Hyatt Equities, L.L.C. has an option to purchase our leasehold interest and related operating assets of the Grand Lodge Casino subject to assumption of applicable liabilities. The option price is an amount equal to the Grand Lodge Casino’s positive working capital, plus Grand Lodge Casino’s earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the twelve-month period preceding the acquisition or for such period of time remaining on the lease term, whichever is less, plus the fair market value of the Grand Lodge Casino’s personal property. The Grand Lodge Lease was amended in 2013 to extend the initial term to August 31, 2018, among certain other conforming changes. Options to Purchase Silver Slipper Casino and Hotel Leased Land. In 2004, our subsidiary, Silver Slipper Casino Venture, LLC, entered into a land lease with Cure Land Company, LLC for approximately 31 acres of marshlands and a seven-acre parcel on which the Silver Slipper Casino and Hotel is situated (the "Silver Slipper Land Lease"). The Silver Slipper Land Lease includes base monthly payments of $77,500 plus 3% of gross gaming revenue (as defined in the Silver Slipper Land Lease) in excess of $3.65 million. The Silver Slipper Land Lease includes an exclusive option to purchase the leased land (“Purchase Option”) after February 26, 2019 through October 1, 2027, for $15.5 million plus a retained interest in Silver Slipper Casino and Hotel’s operations of 3% of net income (as defined in the Silver Slipper Land Lease), for ten years from the purchase date. In the event that Full House sells or transfers (i) substantially all of the assets of Silver Slipper Casino Venture, LLC, or (ii) its membership interests in Silver Slipper Casino Venture, LLC in its entirety, then the purchase price will increase to $17.1 million plus the retained interest for ten years mentioned above. In either case, we also have an option to purchase only a four-acre portion of the leased land for $2.0 million, which may be exercised at any time in conjunction with the development of a hotel and which accordingly reduces the purchase price of the remaining land by $2.0 million. The current term of the land lease is through April 30, 2058. Bronco Billy's Casino and Hotel Pending Acquisition As discussed in Note 3, on September 27, 2015, the Company agreed to acquire the operating assets and assume certain liabilities of Bronco Billy's from the Pioneer Group. Under the Bronco Billy's Purchase Agreement, Full House made a non-refundable (except under certain conditions) deposit of $2.5 million which will be credited against the purchase price upon closing. The $30 million purchase price is subject to reduction to $28.5 million if Bronco Billy’s Adjusted EBITDA (as defined in the Bronco Billy's Purchase Agreement) for the applicable period is less than $4.7 million, and is also subject to certain conditions and working capital and other customary adjustments. The Bronco Billy's Purchase Agreement may be terminated by Pioneer Group if the closing has not taken place by January 15, 2016 (the “Outside Date”). Full House may extend the Outside Date for up to four periods of 30 days each if the sole reason the closing fails to occur by the Outside Date is the failure of Full House to obtain required gaming approvals despite its good faith efforts and, for the fourth extension period, Full House increases the Deposit by $100,000. In addition, Full House has the option to terminate the Bronco Billy's Purchase Agreement without penalty if Bronco Billy’s Adjusted EBITDA for the most recent twelve-month period prior to closing, but not later than the twelve-months ending December 31, 2015, is less than $4.5 million. Full House intends to finance the acquisition concurrent with the refinancing of its outstanding first and second lien debt. The Company expects to complete its refinancing and close on the Bronco Billy’s acquisition in late 2015 or early 2016, subject to obtaining regulatory approvals and other customary closing conditions, including, without limitation, approvals from the Colorado gaming authorities. The transaction is not subject to a financing or due diligence condition, though the Company performed substantial due diligence. Silver Slipper Casino Hotel Construction On August 26, 2013, the Silver Slipper Casino and Hotel entered into an agreement for the construction of a 129-room hotel adjoining the casino. The hotel was opened in phases beginning in May 2015 and completed in September. The final construction bills are still being resolved; the Company estimates that the total cost was approximately $20.5 million and there is approximately $1.4 million remaining to be paid as of September 30, 2015. These remaining costs are expected to be funded from the proceeds in the construction trust account of $569,000 and the remainder from our working capital. Indiana Department of Revenue During 2014, we received a proposed assessment of $1.6 million, including interest and penalties, from the Indiana Department of Revenue (“IDOR”) related to unpaid sales and use taxes for periods prior to 2013, which we protested. In April 2015, we withdrew our formal protest with the IDOR and accepted the IDOR’s revised audit findings and proposed assessment. The revised assessment totaled $237,000, including interest and penalties, which approximated our estimate and was remitted in April 2015. Indianapolis Proposal On August 10, 2015, the Company responded to a "request for proposal" (RFP) by the Indianapolis Airport Authority with a proposal for a $650 million lifestyle complex, anchored by a modest-sized casino. Under our proposal, the Company would act as the "master developer" (as such term is used in the RFP) of the project and plans to seek partners for many of its aspects. The project is contingent, amongst other things, on being selected by the Indianapolis Airport Authority, on changes in the state gaming laws and other regulatory approvals that would allow the relocation to Indianapolis of approximately half of the gaming devices that the Company is licensed to operate in Rising Sun, Indiana, and on obtaining financing for the proposed project. There is no certainty that the Company's proposal will be selected or that the proposed project will become a reality. Litigation In 2013 and 2014, the Company expended approximately $1.6 million repairing defects to its parking garage at the Silver Slipper Casino and Hotel. The parking garage was originally built in 2007, and the Company acquired the property in 2012. The Company hired outside legal counsel to pursue the reimbursement of such costs from the contractor and architect, who neglected to install certain structural elements required by the building codes. During the third quarter of 2015, the case was dismissed in favor of the defendants, as the statutes of repose had expired and, in the judge's opinion, the Company had failed to prove elements that would have extended its right to seek reimbursement of the remedial costs. We filed an appeal on November 2, 2015. During the third quarter of 2014, the Company settled its lawsuit with Majestic Star Casino LLC ("Majestic Star") and Majestic Mississippi, LLC ("Majestic Mississippi") related to the Company's attempted purchase of the Fitz Tunica Casino & Hotel. Pursuant to the terms of the settlement, Majestic Star and Majestic Mississippi received $1.7 million of the funds held in escrow which was recorded by the Company as a settlement loss. Legal Matters We are party to a number of pending legal proceedings that occurred in the normal course of business. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.

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