Having purchased the struggling venue in January, Luxor Capital Group has been finally granted interim licence for Ocean Resort Casino by the Casino Control Commission, allowing it to run the business while waiting for the permanent authorization. As the previous owners failed to stop the rapid decline of the casino, the firm will be closely watched, while the authorities try to assess whether it has what it takes to turn things around.
Luxor is hoping to be the fourth time lucky
The casino has changed hands three times since its opening in 2012, making Luxor its fourth owner. None of the previous three had much luck, as the venue had been put through bankruptcy twice in two years and consequently bought at a bankruptcy auction in 2015. It did not open again until January 2018 and when it did, it was with no more success than before.
Losing millions of dollars and occupying the position of the gambling city’s biggest long-term loser, the casino continued to plunge deeper into debt and losses, unable to find a stable ground. And so this January the last owner, Colorado-based real estate developer Bruce Deifik, sold the entire property to Luxor, a hedge fund from New York, who believes their expertise will help them succeed where others failed.
The hedge fund is investing further $70 million
Luxor had, in fact, already contributed to Ocean’s financing when Deifik was making his purchase, however, now that the venue is in their ownership they have pledged another $70 million investment to help turn the property around. $50 million of this sum went to pay off a debt owed to J.P. Morgan from Deifik’s time, while the rest was said to be used towards additional suites and rooms, enhancements to the casino floor, extra slot machines and increasing the entertainment programming and player events.
It is, of course, too soon to predict whether things will work out, however, the current situation gives some reason for optimism as this June has become the record month for the property. Not only did the casino generate $21.5 million in revenue reaching its all time high, it has also recorded the highest hotel occupancy in its existence.
Next step is acquiring a permanent licence
The unusual success should certainly somewhat appease the Casino Control Commission’s concerns about the financial stability of the venue and about the hedge fund’s capability to keep it open for longer than a few months. That is precisely what the regulators will be thoroughly investigating before they make the final decision on whether or not Luxor deserves to be granted a permanent licence. In the meantime, the CCC gave the owner various financial conditions, as recommended by the state Division of Gaming Enforcement. Adhering to these will also be crucial in continuing Luxor’s licence.
As the Ocean currently has no official CEO, the Commission named Gary van Hettinga as a trustee that will help oversee operations until a permanent chief executive is appointed. This choice seems only natural as Van Hettinga used to act as the property’s CEO in the past. He also worked as top administrator for Caesars World and Tropicana Atlantic City and as CFO for the Mohegan Sun in Connecticut.