This month’s membership blast is an important and highly informative report as it marks the completion of one year of charitable gambling as August 31 marked the end of FRYS' fiscal year. As such, the report is a little longer on financial data since metrics for both August and the aggregate fiscal year are included. Let’s get right to it:
FRYS’ charitable gambling revenues finished on a curious note as e-tab sales soared to a record high of $138K (monthly average = $92K) whereas paper tab sales were soft at $44K (monthly average = $58K). Unfortunately, profit probabilities did not play out in FRYS’ favor on either front. Although e-tabs had record sales, gross profits were a soft $12K due to the weakest gross profit margin experienced at 8.8% (prior monthly average = 14.5%). Likewise, paper tabs also underperformed with a monthly gross profit margin of 16.3% (prior monthly average = 17.9%) for a gross profit of $7K.
Turning to Bingo, August set a new record of activity with $15K in Bingo sales and gross profits of $2K for a gross profit margin of 14.8%, which was by far the worst performance for Bingo as gross profit margins had been averaging 28.0%. If I recall correctly, a couple sizeable Bingo jackpots were hit in August, driving profits lower.
As a reminder, the month of July was strong with favorable profit margins, which resulted in elevated levels of profit-sharing FRYS recognized in the income statement for August as profit-sharing is paid in arrears. Given the weaker margins observed over August combined with elevated profit-sharing, net income for August was in the red at -$2K. Included in the net loss was an organizational sales volume tax of $3.6K, which if removed, would have resulted in a positive net income for the month.
In summary, August produced record levels of e-tab sales even though August is viewed as the last month of summer (and should have had slower volume), providing positive momentum heading into the busiest season of the year at Boxers. Yes, margins were weak but that is the nature of gambling – sometimes the house does better and sometimes the house does worse.
Now, let’s talk about the aggregate financial performance of FRYS' first year in charitable gambling from October 2021 – August 2022. Over that timeframe, e-tab sales were an incredible $1.06 million with paper tab sales of $641K. E-tabs proved to be less favorable to FRYS, producing a gross profit margin of 14.0% while paper tabs came in at 18.4%; however, even with the weaker gross profit margin, e-tabs produced more gross profit at $148K against paper tabs of $118K.
Bingo, which is the newest operation as gaming has been taking place only since February, produced sales of $68K with a gross profit of 18K, making Bingo FRYS’ most profitable gaming experience with an impressive gross profit margin of 26.4%.
Total revenue from FRYS’ primary gaming activities of e-tabs, paper tabs, Bingo and electronic Bingo was a blistering $1.8 million! Moreover, net income (prior to any charitable gifts) for 11 months of gaming activity was $93K for a net profit margin of 5.24%. Producing almost $2 million in sales and $100k in profits during 11 months speaks volumes to the great work the charitable gambling team has done as well as the team at Boxers on the frontlines selling pull tabs and running bingo - powerful performance team!
Of note, due to FRYS’ great success of $1.8 million in sales, the charitable gambling operation is subject to an audit since sales exceeded the audit threshold of $750K in revenue.
Turning to other news, the FRYS board of directors confirmed the intent to funnel the next couple months’ net profits into repairs and maintenance at the Rotary Camp, sprucing the interior up with an array of projects.
In closing, the charitable gambling team thanks you all for the continued support. No doubt there was a lot of learning to be done and bumps along the way over the last 11 months but year 1 is now officially in the books (hurray!). The FRYS / Boxers partnership is firing on all cylinders as we head into the busiest time of year at Boxers: fall & football.
Much appreciated,
Chad