June Quarter Preview: Casino Operators Still Challenged. Investment Highlights: Companies Featured Buy. Hold. Industry Update.

Transcription

1 GAMING Justin T. Sebastiano (212) Industry Update July 17, 2008 Companies Featured Buy Full House Resorts, Inc. (FLL - $ AMEX) EPS ($) P/E 87.5x 19.4x 7.6x Lakes Entertainment, Inc. (LACO - $ NASDAQ) EPS ($) (0.65) (1.57) 0.42 P/E NM NM 11.1x MTR Gaming Group, Inc. (MNTG - $ NASDAQ) EPS ($) (0.14) (0.01) 0.21 P/E NM NM 18.5x Hold Ameristar Casinos Inc. (ASCA - $ NASDAQ) EPS ($) P/E 9.3x 10.6x 10.7x Boyd Gaming Corp. (BYD - $ NYSE) EPS ($) P/E 4.9x 7.9x 8.9x Monarch Casino & Resort Inc. (MCRI - $ NASDAQ) EPS ($) P/E 9.3x 15.1x 11.3x Pinnacle Entertainment, Inc. (PNK - $ NYSE) EPS ($) P/E 13.6x NM 28.5x Trump Entertainment Resorts, Inc. (TRMP - $ NASDAQ) EPS ($) (1.05) (1.24) (0.65) P/E NM NM NM June Quarter Preview: Casino Operators Still Challenged Investment Highlights: Most of the monthly gaming revenue, for the markets in which our covered companies operate, fell in 2Q08 in the high single digits to mid-teens when compared to the year-ago period. Weaker consumer spending as a result of higher gasoline prices and increased food costs, and the implementation of a smoking ban in two jurisdictions, led the declines, in our view. These factors, combined with a dismal housing market, gloomy employment and wage data, and the uncertainty surrounding the U.S. financial institutions industry, have sent consumer confidence down to levels not seen since early According to several different casino operators, the economic stimulus package has not had a meaningful impact on the casino floor. We modeled little, if any, gain from the rebate checks in our monthly revenue estimates for 2Q08. We believed that the ever-increasing price of gasoline and higher food costs would deter would-be gamblers from putting their entire rebate checks "on black." The Energy Information Administration expects regular-grade motor gasoline retail prices to remain above $4.00 a gallon for the balance of This pessimistic outlook, combined with a beaten-down consumer and the overall macro view of the U.S. economy, does not bode well for meaningful same-store growth in gaming revenue for the balance of the year, in our opinion. We have lowered our 2Q08, FY08, and FY09 estimates for Hold-rated Boyd Gaming, Monarch Casino & Resort, and Trump Entertainment Resorts. Please see each company write-up for the details. We reiterate our Buy ratings on shares of Full House Resorts, Lakes Entertainment, and MTR Gaming Group. Full House and Lakes are plays on the tribal casino management contract business model. MTR stock should rebound thanks to the company's renewed marketing focus, which is expected to lead to wider margins. Our 12-month price target for FLL is $4.50; our price target for LACO is $10; and our price target for MNTG is $7. The Disclosure section may be found on page 10 of this report.

2 June Quarter Earnings Preview Most of the monthly gaming revenue, for the markets in which our covered companies operate, fell in 2Q08 in the high single digits to mid-teens when compared to the year-ago period. Weaker consumer spending as a result of higher gasoline prices and increased food costs, and the implementation of a smoking ban in two jurisdictions (Illinois and Colorado), led the declines, in our view. These factors, combined with a dismal housing market, gloomy employment and wage data, and the uncertainty surrounding the U.S. financial institutions industry, have sent consumer confidence down to levels not seen since early Many of our companies expected to see gains in gaming revenue thanks to the federal economic stimulus package checks (and direct deposits) that were doled out over the past three months. However, according to several different management teams, the stimulus package has not had a meaningful impact on the casino floor. We modeled little, if any, gain from the rebate checks in our monthly revenue estimates for 2Q08. We believed that the ever-increasing price of gasoline and higher food costs would deter would-be gamblers from putting their entire rebate checks "on black." The Energy Information Administration expects regular-grade motor gasoline retail prices to remain above $4.00 a gallon for the balance of 2008 (July, $4.17; August, $4.22; September, $4.23; October, $4.23; November, $4.25; December, $4.21). In fact, the government agency does not estimate the price per gallon to fall below $4.00 until October 2009 ($3.94). These pessimistic estimates, combined with a beaten-down consumer and the overall macro view of the U.S. economy, do not bode well for meaningful same-store growth in gaming revenue for the balance of the year. Figure 1: Monthly Gaming Revenue Comps Gaming Market 2Q08 2Q07 3Q07 Atlantic City -5.8% -2.5% -3.2% Black Hawk, CO (thru May) -10.1% 4.6% 4.9% Churchill County, NV (thru May) -1.9% 2.1% -2.1% Illinois -18.0% 5.0% 4.1% Indiana (same store) -8.9% 2.9% 4.1% Iowa (same store) 2.8% -5.0% flat Louisiana (same store) 0.8% -0.8% -1.0% Missouri (same store) -2.9% 3.5% 0.3% Las Vegas Strip (thru May) -9.4% 1.9% 5.4% Las Vegas Locals (thru May) -14.1% 4.8% 4.9% Las Vegas Downtown (thru May) -12.1% 3.9% 9.1% Pennsylvania (same store) 13.3% no comp no comp Reno (thru May) -9.7% -1.3% -5.3% West Virginia (slot win only) -6.1% 0.6% -6.5% Source: Various State Gaming Commissions and Morgan Joseph & Co. Inc. 2 MORGAN JOSEPH & CO. INC.

3 Ameristar Casinos (NASDAQ: ASCA) Hold 2Q08 Earnings Release: Early August Our estimates: Revenue $332mm, adjusted EBITDA $83mm (excludes $3mm in stock-based comp), EPS $0.30 Consensus estimates: Revenue $331mm, EBITDA $81mm, EPS $0.32 As per the 2Q08 monthly gaming revenue data reported by the various gaming commissions in which Ameristar operates, the company turned in casino wins that were in line with our estimates in aggregate. Ameristar St. Charles, helped by the addition of the new hotel tower, offset weakness at the Ameristar East Chicago property. We expect the East Chicago property to come under extreme pressure beginning in August, when the newly refurbished Horseshoe casino just outside Chicago opens. Missouri loss limit Colorado gaming restrictions Status of hotel expansion at Ameristar Black Hawk Boyd Gaming (NYSE: BYD) Hold 2Q08 Earnings Release: Late July Our estimates: Revenue $450mm (from $479mm), adjusted EBITDA $112mm (from $122mm), EPS $0.22 (from $0.30) Consensus estimates: Revenue $473mm, EBITDA $122mm, EPS $0.29 We have lowered our 2Q08 estimates to reflect: continued weakness across all of Boyd's markets looming increased competition in Las Vegas locals market (August - Eastside Cannery on Boulder Strip; Late Aliante Station in North Las Vegas) continued pressure on Blue Chip in northern Indiana from Four Winds tribal casino Our new FY08 estimates are as follows: Revenues: $1,834mm from $1,912mm; EBITDA: $485mm from $519mm; EPS: $1.09 from $1.33 Our new FY09 estimates are as follows: Revenues: $1,820mm from $2,007mm; EBITDA: $502mm from $570mm; EPS: $0.96 from $1.46 Opening of Water Club at Borgata Financing for Morgan's hotel and General Growth Properties' JVs at Echelon project Progress of Echelon Place construction and possibility of an increase in budget Progress of hotel expansion at Blue Chip 3 MORGAN JOSEPH & CO. INC.

4 Full House Resorts (AMEX: FLL) Buy; $4.50 Price Target 2Q08 Earnings Release: mid-august Our estimates: Revenue $2.6mm, adjusted EBITDA $1.1mm, EPS $0.02 Consensus estimates: Revenue $2.6mm, EBITDA $1.0mm, EPS $0.02 In our opinion, investors should buy this stock for the cash flows generated from the FireKeepers management contract. This is what the stock trades on, in our view, not Full House fundamentals. Construction on FireKeepers began in May and is progressing well. The project is on budget and on schedule for a 2Q09 opening. Progress on construction of FireKeepers tribal casino Still looking for a small acquisition? Lakes Entertainment (NASDAQ: LACO) Buy; $10 Price Target 2Q08 Earnings Release: Early August Our estimates: Revenue $10.6mm, adjusted EBITDA ($10.1)mm, EPS ($0.40) Consensus estimates: Revenue $11.0mm, EBITDA ($9.1)mm, EPS ($0.30) Lakes owns 61% of WPT Enterprises and must consolidate that company's financials. As such, Lakes' financials do not paint a good picture of the company's growth potential. Four Winds tribal casino is performing above internal expectations according to Lakes management. Red Hawk is on track for a late December 2008 opening. Progress on construction of Red Hawk tribal casino How many signatures have been collected for the Ohio referendum? 4 MORGAN JOSEPH & CO. INC.

5 Monarch Casino & Resort (NASDAQ: MCRI) Hold 2Q08 Earnings Release: Week of July 21 (historically no conference call, just a release) Our estimates: Revenue $37mm (from $38mm), adjusted EBITDA $7.6mm (from $8.3mm, excludes $500K in stock-based comp), EPS $0.19 (from $0.21) Consensus estimates: Revenue $38mm, EBITDA $7.5mm, EPS $0.20 We have lowered our 2Q08 estimates to reflect: continued weakness in the Reno market as evidenced by the monthly gaming revenue data a still-frothy promotional environment increased competition for hotel guests due to increased supply from the Peppermill Resort Casino hotel expansion Our new FY08 estimates are as follows: Revenues: $150mm from $152mm; EBITDA: $32mm from $34mm; EPS: $0.78 from $0.83 Our new FY09 estimates are as follows: Revenues: $157mm from $159mm; EBITDA: $41mm from $44mm; EPS: $1.04 from $1.16 Topics/questions for management: Progress on expansion Promotional environment still high? Update on Kerzner lawsuit MTR Gaming Group (NASDAQ: MNTG) Buy; $7 Price Target 2Q08 Earnings Release: early August Our estimates: Revenue $125mm, adjusted EBITDA $19.5mm (excludes $500K in stock-based comp), EPS $0.02 Consensus estimates: Revenue $127mm, EBITDA $19mm, EPS $0.04 Gaming revenue in West Virginia came in slightly below our forecast but not enough to move the EPS needle in our model. According to monthly data from the Pennsylvania Gaming Control Board, Presque Isle turned in revenue in line with our estimate. Renewed marketing focus on northeastern Ohio and northwestern Pennsylvania combined with the increased promotion of cross-market play between Mountaineer and Presque Isle should help widen EBITDA margins. Increased cross-market play between Mountaineer and Presque Isle? Debt reduction still a top priority? 5 MORGAN JOSEPH & CO. INC.

6 Pinnacle Entertainment (NYSE: PNK) Hold 2Q08 Earnings Release: early August Our estimates: Revenue $269mm, adjusted EBITDA $40mm, EPS ($0.01) Consensus estimates: Revenue $265mm, EBITDA $42mm, EPS ($0.01) Our monthly revenue estimates for Pinnacle's properties are in line with what the respective gaming commissions have reported. We believe Pinnacle will follow through on its plan and begin to scale back promotional expense at Lumiere Place given the strong marketing push the company made there over the past six months. We have heard rumblings that the River City project in St. Louis County may not open until late 2009 as opposed to mid We model a 4Q09 opening. Update on River City project in St. Louis County Updates on Baton Rouge and Sugarcane Bay Financial flexibility of the company Trump Entertainment (NASDAQ: TRMP) Hold 2Q08 Earnings Release: early August Our estimates: Revenue $229mm (from $248mm), adjusted EBITDA $33mm (from $37mm), EPS [($0.39) from ($0.30)] Consensus estimates: Revenue $238mm, EBITDA $37mm, EPS ($0.42) We have lowered our 2Q08 estimates to reflect: continued weakness in the Atlantic City market as evidenced by the monthly gaming revenue data continued pressure from Pennsylvania and New York City racinos Our new FY08 estimates are as follows: Revenues: $983mm from $1,011mm; EBITDA: $155mm from $161mm; EPS: ($1.24) from ($1.10) Our new FY09 estimates are as follows: Revenues: $1,055mm from $1,085m; EBITDA: $198mm from $205mm; EPS: ($0.65) from ($0.48) Progress on construction of new Taj tower Temperature of promotional environment Financial flexibility of the company 6 MORGAN JOSEPH & CO. INC.

7 Justin T. Sebastiano Boyd Gaming Corporation (BYD) Income Statement Model ($ in thousands except per share) Year Ends December Q07 2Q07 3Q07 4Q Q08A 2Q08E 3Q08E 4Q08E 2008E 2009E Net Revenues Stardust 117, Las Vegas Locals 962, , , , , , , , , , , ,745 Downtown 256,781 63,833 64,984 59,329 66, ,043 60,929 57,186 53,396 60, , ,767 Midwest & South 971, , , , , , , , , , , ,255 Total Revenues 2,308, , , , ,643 1,997, , , , ,434 1,834,241 1,819,767 Y/Y change 3.9% -20.0% -16.3% -7.7% -8.1% -13.5% -8.9% -12.1% -6.7% -4.6% -8.2% -0.8% EBITDA Stardust 15, Las Vegas Locals 300,013 74,579 66,844 61,313 72, ,510 66,655 57,983 57,485 61, , ,997 Downtown 53,573 13,881 13,156 10,336 14,754 52,127 10,169 9,264 9,238 10,837 39,508 38,776 Midwest & South 257,570 57,281 54,917 56,432 43, ,620 45,599 40,450 47,729 42, , ,215 Corporate Expenses (39,981) (12,193) (9,995) (11,671) (15,101) (48,960) (13,746) (13,500) (12,500) (12,000) (51,746) (49,850) Subtotal 586, , , , , , ,677 94, , , , ,137 Equity Contr. from Borgata 91,775 21,872 18,778 27,620 18,200 86,470 19,005 17,663 21,918 18,462 77,048 92,625 Total EBITDA 678, , , , , , , , , , , ,762 Total EBITDA Margin 29.4% 30.1% 28.1% 29.4% 28.1% 28.9% 27.1% 24.9% 27.1% 26.7% 26.4% 27.6% Y/Y change 1.5% -27.7% -14.1% -3.9% -8.0% -14.8% -17.8% -22.2% -14.0% -9.6% -16.0% 3.4% Depreciation & Amortization (205,871) (40,936) (42,262) (41,764) (42,295) (167,257) (43,494) (43,894) (44,294) (44,694) (176,376) (188,735) Share-based compensation (19,392) (4,184) (4,366) (3,509) (2,743) (14,802) (2,969) (3,000) (3,100) (3,050) (12,119) (12,000) Deferred rent (4,630) (1,130) (1,130) (1,130) (1,130) (4,520) (1,134) (1,130) (1,130) (1,130) (4,524) (4,520) Preopening expense and other (35,496) (16,394) (8,774) (6,576) (7,712) (39,456) (5,987) (6,000) (6,000) (6,000) (23,987) (24,000) EBIT 412,964 92,776 87,168 91,051 80, ,732 74,098 57,837 69,346 66, , ,507 Interest Expense, Net (160,399) (36,548) (33,687) (34,490) (32,729) (137,454) (30,253) (28,245) (28,730) (28,932) (116,159) (115,993) Share of Borgata's non-operating exp (10,577) (3,801) (3,574) (3,402) (2,991) (13,768) (4,605) (4,528) (8,551) (8,240) (25,923) (46,258) Other (1,801) (76) (14,344) (3,532) (123) (18,075) Income Before Taxes 240,187 52,351 35,563 49,627 44, ,435 39,240 25,064 32,065 29, , ,256 Provision for Income Taxes (83,074) (18,846) (12,622) (17,742) (13,917) (63,050) (13,538) (9,148) (11,704) (10,836) (45,380) (40,243) Tax Rate 34.8% 36.0% 35.5% 35.8% 31.0% 34.6% 34.5% 36.5% 36.5% 36.5% 36.0% 36.5% Discontinued operations (40,335) 182,761 (829) (57) , GAAP Net Income (Loss) 116, ,266 22,112 31,828 31, ,512 25,702 15,916 20,362 18,851 80,676 70,012 Fully Diluted GAAP EPS $1.30 $2.44 $0.25 $0.36 $0.35 $3.40 $0.29 $0.18 $0.23 $0.21 $0.92 $0.79 RECONCILIATION TO ADJUSTED EPS Extraordinary items 28,367 7,392 12,695 3,059 (1,268) 21,878 58, ,289 - Discontinued operations 40,335 (182,761) (252) (182,127) Preopening and other 16,744 3,149 4,258 3,435 5,181 16,023 3,921 3,810 3,810 3,810 15,351 15,240 Adjusted Net Income (Loss) 202,224 44,046 39,894 38,379 34, ,209 29,624 19,726 24,172 22,661 96,182 85,252 Adjusted EPS $2.25 $0.50 $0.45 $0.43 $0.39 $1.77 $0.34 $0.22 $0.27 $0.26 $1.09 $0.96 Y/Y change -3.3% -36.2% -22.1% -1.4% -13.2% -21.2% -32.2% -50.1% -36.4% -34.7% -38.3% -11.8% Avg Diluted Shares Out 89,601 88,460 88,714 88,885 88,512 88,643 87,809 87,959 88,009 88,059 87,959 88,359 Dividend per share $0.53 $0.135 $0.15 $0.15 $0.15 $0.585 $0.15 $0.15 $0.15 $0.15 $0.60 $0.60 Source: Company reports and Morgan Joseph & Co. Inc. estimates 7 MORGAN JOSEPH & CO. INC.

8 Justin Sebastiano Monarch Casino & Resort, Inc. (MCRI) Income Statement Model ($ in thousands except per share) Year Ends December Q 2Q 3Q 4Q QA 2QE 3QE 4QE 2008E 2009E Revenues Casino 103,333 25,298 29,278 29,937 25, ,259 23,756 26,257 28,769 25, , ,742 Food & Beverage 41,037 10,504 10,568 11,012 10,280 42,364 9,761 9,723 10,681 10,794 40,959 41,369 Hotel 26,413 6,828 7,027 8,003 6,028 27,886 5,831 6,324 7,602 6,028 25,786 26,301 Other 5,070 1,189 1,286 1,230 1,163 4,867 1,232 1,222 1,168 1,104 4,726 4,726 Promotional Allowances (23,693) (6,037) (6,598) (6,558) (6,327) (25,519) (6,307) (6,529) (6,992) (6,577) (26,405) (24,577) Net Revenues 152,160 37,782 41,561 43,623 36, ,856 34,273 36,997 41,229 37, , ,562 Y/Y change 8.9% 6.1% 10.4% 4.1% -0.3% 5.1% -9.3% -11.0% -5.5% 1.0% -6.3% 4.5% Operating Expenses Casino 34,135 8,469 9,268 9,233 8,957 35,928 8,747 9,452 10,069 8,943 37,211 35,962 Food & Beverage 19,534 4,969 4,867 5,382 5,066 20,283 4,689 4,618 4,913 4,857 19,078 19,325 Hotel 8,383 2,143 2,112 2,162 1,941 8,358 2,105 2,214 2,433 2,050 8,801 7,901 Other 1, , ,383 1,302 S, G & A 43,053 11,031 12,220 12,140 12,304 47,695 12,584 12,709 12,869 12,797 50,958 51,275 Gaming Development ,661 26,976 28,844 29,302 28, ,758 28,472 29,347 30,634 28, , ,765 Adjusted EBITDA 45,499 10,806 12,717 14,321 8,255 46,099 5,801 7,649 10,594 8,294 32,339 40,797 % Margin 29.9% 28.6% 30.6% 32.8% 22.4% 28.8% 16.9% 20.7% 25.7% 22.3% 21.6% 26.1% Y/Y change 9.8% 7.5% 13.9% 2.4% -19.9% 1.3% -46.3% -39.8% -26.0% 0.5% -29.8% 26.2% Depreciation & Amortization (8,559) (2,075) (2,065) (1,982) (2,015) (8,138) (2,007) (2,007) (2,382) (2,382) (8,776) (9,526) Stock-based compensation (2,057) (500) (572) (591) (608) (2,271) (520) (540) (540) (600) (2,200) (2,250) Pre-opening expense Operating Income 34,882 8,230 10,080 11,748 5,632 35,690 3,275 5,103 7,673 5,312 21,363 29,021 Interest income , ,000 Interest exp, net of cap int (98) (149) (3) - - (152) (4) (47) (93) (107) (251) (484) Other Income Before Taxes 35,060 8,425 10,550 12,316 6,174 37,466 3,522 5,296 7,830 5,455 22,104 29,537 Provision for Income Taxes (12,190) (2,930) (3,650) (4,280) (2,124) (12,984) (1,220) (1,854) (2,740) (1,909) (7,724) (10,338) Tax Rate 34.8% 34.8% 34.6% 34.8% 34.4% 34.7% 34.6% 35.0% 35.0% 35.0% 34.9% 35.0% Extraordinary Items (790) Discontinued operations GAAP Net Income (Loss) 22,080 5,495 6,900 8,036 4,051 24,482 2,302 3,443 5,089 3,546 14,380 19,199 Fully Diluted GAAP EPS $1.15 $0.28 $0.36 $0.41 $0.21 $1.27 $0.12 $0.19 $0.27 $0.19 $0.78 $1.04 RECONCILIATION TO ADJUSTED EPS Extraordinary items Discontinued operations Preopening and other Adjusted Net Income (Loss) 22,870 5,495 6,900 8,036 4,051 24,482 2,302 3,443 5,089 3,546 14,380 19,199 Adjusted EPS $1.19 $0.28 $0.36 $0.41 $0.21 $1.27 $0.12 $0.19 $0.27 $0.19 $0.78 $1.04 Y/Y change 7.8% 14.8% 22.4% 8.3% -20.7% 6.6% -56.4% -47.9% -33.9% -9.1% -38.8% 33.5% Avg Diluted Shares Out 19,267 19,324 19,366 19,366 19,261 19,329 18,546 18,546 18,546 18,546 18,546 18,546 Source: Company reports and Morgan Joseph & Co. Inc. estimates 8 MORGAN JOSEPH & CO. INC.

9 Justin T. Sebastiano Trump Entertainment Resorts (TRMP) Income Statement Model ($ in thousands except per share) Year Ends December Q 2Q 3Q 4Q QA 2QE 3QE 4QE 2008E 2009E Net Revenues 1,026, , , , , , , , , , ,687 1,054,641 Y/Y change 3.4% -1.4% -4.6% -2.5% -6.4% -3.7% -2.8% -6.1% 1.5% 5.2% -0.6% 7.3% EBITDA Taj Mahal 114,300 27,397 24,000 37,000 18, ,797 21,000 22,725 40,338 27, , ,135 Plaza 40,700 6,797 8,200 16,900 6,000 37,897 7,100 9,180 14,884 8,197 39,361 44,496 Marina 48,200 8,097 7,500 9,800 3,900 29,297 2,672 6,865 10,553 5,567 25,657 30,842 Property EBITDA 203,200 42,291 39,700 63,700 28, ,991 30,772 38,771 65,775 40, , ,473 Property EBITDA margin 19.8% 18.1% 16.3% 22.7% 12.4% 17.6% 13.5% 16.9% 23.1% 17.0% 17.9% 20.7% Corporate expense (22,800) (6,164) (7,100) (5,200) (5,267) (23,731) (5,300) (5,325) (5,300) (5,250) (21,175) (20,226) Adjusted EBITDA 180,400 36,127 32,600 58,500 23, ,260 25,472 33,446 60,475 35, , ,247 Adjusted EBITDA margin 17.6% 15.4% 13.3% 20.8% 10.1% 15.2% 11.2% 14.6% 21.2% 14.8% 15.8% 18.8% Y/Y change 11.1% -2.9% -26.6% -2.7% -40.5% -16.7% -29.5% 2.6% 3.4% 54.6% 3.2% 27.9% Depreciation & Amortization (68,091) (15,266) (16,316) (17,700) (16,392) (65,674) (17,121) (16,900) (18,000) (20,300) (72,321) (83,300) Stock-based compensation (5,197) (1,036) (900) (900) (433) (3,269) (900) (900) (900) (900) (3,600) (3,600) Pre-opening & dev expense (7,361) (200) (200) Total OPERATING INCOME 99,751 19,625 15,384 39,900 6,208 81,117 7,451 15,646 41,575 14,411 79, ,347 Interest income 10,363 1,383 1,834 2,256 2,080 7,553 2,031 1, ,360 2,000 Interest exp, net of cap int (130,144) (31,442) (32,534) (33,476) (33,582) (131,034) (33,860) (33,040) (33,784) (33,983) (134,667) (139,820) Other income (expense) Income Before Taxes (20,030) (10,434) (15,316) 8,680 (25,294) (42,364) (24,378) (15,965) 8,692 (19,572) (51,224) (26,472) Provision for Income Taxes (6,356) (200) - - (150) (350) Tax Rate 31.7% 1.9% 0.0% 0.0% 0.6% 0.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Extraordinary items 1,700 - (2,274) - (214,080) (216,354) Discontinued operations GAAP Net Income (Loss) (23,952) (10,634) (17,590) 8,680 (239,524) (259,068) (24,378) (15,965) 8,692 (19,572) (51,224) (26,472) Fully Diluted GAAP EPS ($0.59) ($0.26) ($0.43) $0.21 ($5.89) ($6.37) ($0.59) ($0.39) $0.21 ($0.47) ($1.24) ($0.65) RECONCILIATION TO ADJUSTED EPS Extraordinary items (1,700) - 2, , , Discontinued operations (734) Preopening and other 6, Adjusted Net Income (Loss) (20,221) (10,438) (15,316) 8,680 (25,444) (42,518) (24,378) (15,965) 8,692 (19,572) (51,224) (26,472) Adjusted EPS ($0.50) ($0.26) ($0.38) $0.21 ($0.63) ($1.05) ($0.59) ($0.39) $0.21 ($0.47) ($1.24) ($0.65) Avg Diluted Shares Out 40,374 40,428 40,480 40,477 40,666 40,513 41,319 41,319 41,319 41,319 41,319 40,669 Source: Company reports and Morgan Joseph & Co. Inc. estimates 9 MORGAN JOSEPH & CO. INC.

10 Required Disclosures For price charts with our ratings and target price changes go to I, Justin Sebastiano, the author of this research report, certify that the views expressed in this report accurately reflect my personal views about the subject securities and issuers, and no part of my compensation was, is, or will be directly or indirectly tied to the specific recommendations or views contained in this research report. Research analyst compensation is dependent, in part, upon investment banking revenues received by Morgan Joseph & Co. Inc. Morgan Joseph & Co. Inc. intends to seek or expects to receive compensation for investment banking services from subject companies within the next three months. I, Justin Sebastiano, currently own a long position in the shares of Full House Resorts. Investment Banking Services/Past 12 Mos. Rating Percent Percent BUY [B] HOLD [H] SELL [S] Meaning of Ratings A) Buy means reasonable outperformance relative to the market over months. B) Hold means market-type risk adjusted performance; potential source of funds. C) Sell means expected to underperform the market. Other Disclosures The information contained herein is based upon sources believed to be reliable but is not guaranteed by us and is not considered to be all inclusive. It is not to be construed as an offer or the solicitation of an offer to sell or buy the securities mentioned herein. Morgan Joseph & Co. Inc., its affiliates, shareholders, officers, staff, and/or members of their families, may have a position in the securities mentioned herein, and, before or after your receipt of this report, may make or recommend purchases and/or sales for their own accounts or for the accounts of other customers of the Firm from time to time in the open market or otherwise. Opinions expressed are our present opinions only and are subject to change without notice. Morgan Joseph & Co. Inc. is under no obligation to provide updates to the opinions or information provided herein. Additional information is available upon request. Copyright 2008 by Morgan Joseph & Co. Inc. Morgan Joseph & Co. Inc. 600 Fifth Avenue, 19th Fl New York, NY Tel Fax Sales and Trading New York Tel Fax Pittsford Tel Fax MORGAN JOSEPH & CO. INC.