The New Jersey Casino Control Commission recently approved the sale of Ocean Casino Resort to the New York-based Luxor Group. With Twin River on the verge of buying Bally’s from Caesars Entertainment, there is renewed confidence in the long-term prospects of the Atlantic City casino industry.
The Luxor Group has had casino holdings before but never as a principal owner. Luxor executive Michael Conboy said his company viewed the Ocean purchase as “a 25-year investment”.
“My view is, before the coronavirus, Ocean was self-sufficient. And our budget for 2020 showed the company covering its interest and maintenance capital expenses and generating free cash flow beyond that,” Conboy said.
“We can debate what happens after the city opens up, but we again expect Ocean to be self-sufficient. We will focus on near-term cash flow, and push off for six or 12 months our more grandiose plans. But it doesn’t change where Ocean will be five or 10 years from now.”
Ocean CEO Terry Glebocki said the casino already had several major plans in the works, including the renovation of 12 floors in the currently unoccupied hotel and the addition of high-end slots and table games to the main casino floor.
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The Ocean property was formerly the Revel Casino, which opened in 2012 and after a second bankruptcy closed its doors in 2014. The late Bruce Deifik, who was a developer from Colorado, purchased the hotel and casino property in 2018. Ocean opened in the summer of 2018 around the same time as the Hard Rock Casino, which was formerly the Trump Taj Mahal.
Deifik was struggling financially in 2019 when Luxor pitched in $70 million to keep the property running. In late 2019 the name was changed from Ocean Resort Casino to Ocean Casino Resort, which showed a new philosophy that focused more on gamblers and less on spa guests.
Some 95% of the workers at Ocean have been laid off temporarily due to COVID-19 lockdown measures. Glebocki said she had kept in touch with those employees as well as past hotel guests, and that “the overwhelming majority” of those former customers “want to come back”.
With the sale to Luxor, Ocean decreased its outstanding bills from $22 million down to $5 million. Because of that, the New Jersey Casino Control Commission reduced the amount of cash on hand required from $32 million to $25 million.
Last year, Ocean Casino Resort ranked seventh among the nine land-based casinos in Atlantic City with total revenue of $238.2 million.