Hedge Fund Succeeds to Make Casino Profitable

May 10, 2020 James Heinsman In the News

Ever since Luxor Capital Group, a New York-based hedge fund, took control of a previously unsuccessful casino in Atlantic City, the casino has been thriving. So says the New Jersey Casino Control Commission, the agency that granted Luxor the final authorization to own a casino.

Ocean Resort Casino in Atlantic City, New Jersey. Photo courtesy Farragutful

“There’s no doubt this property has turned around in so many areas,” Commissioner Alisa Cooper said.

When the casino was called Revel, it never was able to make a profit. It went bankrupt twice before it closed in 2014 along with three other Atlantic City casinos.

In January 2018, a developer from Colorado, Bruce Deifik bought the property and re-opened it in the summer of the same year. But again, the business foundered, and Deifik handed the casino over to Luxor, who had been one of his backers on the project, in return for forgiving the debt. Sadly, Deifik died in a car accident in April 2019.

Luxor got to work getting the casino up to speed, with an infusion of $70 million, $50 million of which was to pay down debt. New management was established with experience with Atlantic City markets, and they also fixed up some of the complaints about the property, including a poorly laid out casino floor and frightening escalators which were said to induce vertigo in some patrons.

The most important change seems to have been branding. As Revel the casino was described as a resort with gambling among its many amenities. Luxor changed that message to emphasize the casino as its real and main feature. Now Revel is called Ocean.

One of Luxor’s partners, Michael Conboy, told regulators that the hedge fund intends to own the casino for at least the next 25 years.

“Before the coronavirus, Ocean was self-sufficient,” he said. “Our budget for 2020 showed the company covering its expenses and generating free cash flow beyond that. We can debate what will happen when the city opens up. Long-term, the trajectory is still as positive as it was in February when it was incredibly positive.”

Alisa Cooper, Michael Conboy, Revel,

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