Ocean Casino Resort Has A New 50% Owner: Ilitch Holdings

Updated on October 30, 2021 0 comments 4832 Reads
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The rapid rise of Ocean Casino Resort from a struggling property with an uncertain future to a profitable business and new force to be reckoned with in a highly competitive market has been tumultuous but fascinating. The many twists and turns along the way have included multiple ownership and leadership changes and even a name change.

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Initially, the property was called Ocean Resort Casino. The decision to rename it Ocean Casino Resort instead might seem insignificant. However,  it reflects the shift in emphasis on what it can offer first and foremost to casino players and primarily to high-end players.

How the purchase of Ocean Casino Resort by Luxor Capital Group saved the day

Most importantly, ever since Luxor Capital Group, a NYC-based hedge fund firm, purchased the property from the previous owner, the late Bruce Deifik, in January 2019, Ocean has improved in virtually every aspect of its operation. Luxor has not only lived up to its agreement to invest $70 million toward debt repayment and property enhancements but has accomplished much more. It managed to turn around a property that had been losing up to $1 million a week into one that consistently made money.

A few of the many notable improvements that Luxor has accomplished include clearer signs on the casino floor, new elevators between hotel rooms and the casino, new restaurants and lounges, expanded entertainment, and enhanced amenities and rewards for high-end players.

Not at all what the naysayers predicted

Ocean’s success story is a far cry from what anyone would have predicted back in June 2018 when the resort first opened its doors on the site of the doomed-from-the-start Revel. In fact, many people said that the new property’s fate was sealed from the get-go by the “Revel curse.” Six months later, it was hard to argue otherwise.

However, the naysayers couldn’t have been more wrong.  By January 2020, only one year after Luxor Capital took over ownership, Ocean Casino Resort’s profit surpassed $10 million for the seventh month in a row.

Then, in May 2020, even though at the time, like all of the other Atlantic City casinos, Ocean remained temporarily closed due to the coronavirus, its interim license was upgraded to a permanent one. Furthermore, Ocean Casino Resort was the only Atlantic City casino both to register a profit during the third quarter of 2020 and show a year-to-year increase in revenue from 2019 to 2020.

But now that Luxor Capital Group’s strong leadership and hard work have made a notable difference, Ocean Casino Resort has its sights set on continuing to grow even more. The Detroit-based firm Ilitch Holdings also sees Ocean’s potential and wants to play an active part in its realization.

Ilitch Holdings’ purchase of 50 percent ownership of the resort is now official

Back in 2014, after the Revel had closed, Ilitch Holdings, which owns the Motor City Casino in Detroit, considered the possibility of purchasing the defunct Atlantic City property to create a new casino. However, given the high real estate taxes and utility costs along with the formidable task from the start of having to overcome the association with the poorly managed Revel, it didn’t pursue the idea.

In fact, despite Ilitch Holdings being a major player in multiple industries in Detroit, its name did not appear in the news again as a company interested in entering the Atlantic City market until earlier this year. Presumably, the resounding success of Ocean Casino Resort after Luxor Capital Group took over had reawakened Ilitch Holdings’ interest and the desire to become directly involved after all.

Accordingly, as I reported in my June 17, 2021 article for Michigan Online Casino, “Ilitch Holdings Has plans To Make Big Waves In Atlantic City, Too,” Ilitch Holdings and Luxor Capital Group jointly agreed to equally share ownership. However, before the terms of the April 2021 agreement could be finalized, it required the approval of state regulators. In addition, Ilitch Holdings, which had applied for a license to operate in New Jersey, would need to receive one.

On Oct. 14, the Division of Gaming Enforcement and Casino Control Commission gave their official preliminary stamp of approval in granting an Ilitch Holdings subsidiary OCR Investments, LLC an interim casino license. Ilitch Holdings now officially owns 50 percent of Ocean Casino Resort while Luxor Capital Group retains ownership of the other 50 percent.

According to an October 14, 2021 article for PlayNJ.com, Ilitch Holdings will pay up to $175 million for its share of the ownership of Ocean Casino Resort.

Ilitch Holdings’ background and qualifications

The name Ilitch Holdings might still be unknown to many people in New Jersey, but that is certainly not the case in Detroit.

The late Michael Ilitch founded the family-owned company in 1999. Although the motor city still serves as its home base, over the years it has grown into an international conglomerate.

Ilitch Holdings is the sole owner of the Motor City Casino in Detroit. It also owns two Detroit major sports teams: the Tigers and Redwings.

Ocean Casino Resort in Atlantic City will mark its first time as a part-owner of a casino in another state. However, the Ilitch family’s extensive business experience in other industries beyond the confines of Detroit had to impress the NJ DGE and CCC. For example, the family owns Little Caesars Pizza, Champion Foods, and Olympia Entertainment.

What changes can Ocean Casino Resort players and guests expect now that Ilitch Holdings is involved?

Like its predecessor, the Revel, Ocean Casino Resort has invested heavily in trying to come across as a place that caters to higher-end players. The revamped players rewards program, WOW and the recently opened COVE for high-end slot players and LOFT for top-tier table players serve as prime examples.

This focus on attracting players who can contribute the most to the casino’s bottom line will continue. However, John Policicchio, a marketing executive at Motor City Casino indicated that the Ilitch family also regards New York City as a market worth pursuing more vigorously.

Another major area of focus will be the addition of new rooms. According to the president of Motor City Casino, Bruce Dall, Ocean Casino Resort plans to open 464 new rooms, including 100 suites, in time for the big July 4 holiday weekend. This will increase the total number of rooms from the current 1,399 to more than 1,860. The project will cost more than $70 million. However, it would add 12 floors to the existing tower, three of which would consist entirely of suites.

Bill Callahan, executive vice president of hospitality and gaming at Ocean Casino Resort, had the following to say about the room expansion project:

Over the last year, Ocean has worked to strengthen its position in the market. We are excited to advance Ocean’s achievements. The ability to meet growing demand in our hotel experience will create new energy throughout the resort – from our casino floor and award-winning restaurants to our renowned nightlife and entertainment venues.”

The Ilitch family also plans to spend another $105 million toward debt repayment.

They do not plan to change the casino’s name. It will remain Ocean Casino Resort.

One big area of concern: the sudden resignation of the former CEO at Ocean, Terry Glebocki

Whether or not the approval of the joint ownership affected Glebocki’s decision to leave Ocean Casino Resort isn’t clear. However, at the hearing before state regulators earlier this month, no Luxor or Ilitch executives could provide a clear plan stating who would serve as her successor.

During Glebocki’s tenure as CEO, Ocean Casino Resort improved its revenue production ranking among the nine Atlantic City casinos from 6th place to 3rd place.

However, based on the fact that Ocean’s growth has been relatively recent, and now the corporate restructuring and departure of the CEO added to the mix, CCC Chairman James Plousis said that state regulators need to oversee the situation closely. It ordered Ocean Casino Resort to appoint a new CEO or comparable executive quickly. Continuing strict financial accountability measures also remain in effect.

Summary and conclusion

Unfortunately, just as Ocean Casino Resort receives the good news that state regulators have agreed to grant Ilitch Holdings an interim license to serve as its co-owner, it must deal with the daunting task of appointing a new CEO.

NJ Online Casino will continue to follow and report on this story and other important developments as they unfold at this Atlantic City casino.

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