The latest news surrounding Ocean Resort Casino is rather alarming.
According to published reports, through its first seven months of operation, the company is $23 million in the red. Even worse, Ocean is not meeting compliance guidelines. The latter problem dates back to November 2018.
This news came out during Wednesday’s hearing in front of the Casino Control Commission.
New York-based hedge fund Luxor Capital Group began the process of taking over ownership from former principal owner Bruce Deifik, who had purchased the property in 2018.
The two parties filed a joint petition for a divestiture trust agreement that was unanimously approved by all three members of the committee.
Eric Matejevich, who previously served as COO of the now-shuttered Atlantic Club, was approved as the designated trustee.
So Luxor, once approved for a casino license, has a tough road ahead.
Financial woes and compliance issues at Ocean Resort
Ocean has failed to meet the financial conditions placed on the property during its licensing hearing.
The biggest, according to the Press of Atlantic City, relates to the New Jersey Division of Gaming Enforcement. Ocean Resort was told to immediately notify the DGE if the casino fell below the $36 million threshold at any point.
Ocean Resort sought relief of the minimum requirement in October, which was granted and later extended until November.
Alisa Cooper, Casino Control Commission’s vice chairwomen, voiced her concerns over the property’s continued financial struggles.
“This property has clearly had (a) very challenging past, and I am very, very concerned about its future. I sincerely hope that this arrangement before us today will be successful and enable this property to survive.”
Ocean Resort’s months of losses
Essentially, Ocean’s first year of operation only included two months of what is considered the prime summer season in Atlantic City.
The numbers show that business has not been good since, according to the Press of AC. The last several months of operating losses, in particular, are alarming:
- Through the first 24 days of January: $4.1 million
- December 2018: $5.8 million
- November: $5.5 million
- October: $4.1 million
- September: $3.2 million
Based on the property’s previous track record when it was known as Revel, the Casino Control Commission made 26 stipulations when it approved Ocean for a casino license.
But according to Sara Ben-David, a deputy attorney general with the DGE, the casino has failed to meet those previously set financial conditions. This includes falling below a reported $20 million.
As a whole, Ocean’s revenue has been sluggish since its opening. Its gambling revenue, as well as its NJ gambling site revenue, have been at or near the bottom of the pack.
The troubling saga of Revel/TEN/Ocean
When Revel, the $2.4 billion megaresort opened its doors, it was viewed as a key part of Atlantic City’s future development. But it never lived up to the hype or expectations.
Instead, two bankruptcies and a September 2014 closure are what Atlantic City residents remember most about it.
But Florida developer Glenn Straub decided to take his chances by purchasing the property in 2015 from bankruptcy court for the bargain price of $82 million. His grand plan was to rebrand Revel as TEN.
The irony of the Straub chapter is he is the only owner to turn a profit on Ocean/Ten/Revel — without ever opening it, according to the Associated Press.
Deifik purchased the property from Straub last year for $200 million. The property was once again rebranded as Ocean Resort Casino and opened the same day as Hard Rock Atlantic City.
But like Revel, it failed to find its financial footing.
Ocean staying open during the transition
Luxor has no plans on taking over the property and selling it to the highest bidder. When news of the ownership change broke last month, the new owner made it clear that it plans on investing in the property.
Capital investment plans include a world-class buffet that the property has never had, including during its days as Revel. Construction walls are currently up to let guests know that plans are afoot.
Additional improvements include completing the unfinished floors in the hotel tower, adding 500 rooms to the current inventory. Improvements to the casino floor are also on the to-do list.
Luxor still needs to complete the casino application process that can take up to 120 days. The trust was created to hold the share of the parent entity to AC Ocean Walk.
Once Luxor takes over, will Ocean finally show it has what it takes to hang with the big boys in town? Hard Rock AC (the former Trump Taj Mahal) has not experienced the same struggles.
Ocean just needs to catch a strong financial wave of profitability. Staying open is a good start.
DGE Director David Rebuck remained hopeful despite Ocean’s financial struggles:
“The good news is Ocean Resort is open for business and will remain open for business, and we’re excited about its future. The bad news is that another investor lost their funds and did not succeed.”