New Jersey’s Casino Control Commission has granted interim authorization to New York Hedge Fund Luxor Capital Group as it continues its acquisition of Atlantic City’s Ocean Resort Casino.
The interim authorization gives the group temporary control of the property and sets up a more comprehensive review by the commission and the state Division of Gaming Enforcement to determine if Luxor will be granted a New Jersey casino license.
Ocean casino opened in June 2018 and almost immediately began experiencing financial difficulties. Testimony before the commission has reveled that the lost nearly $23 million in seven months and failed to satisfy prior financial conditions imposed by state gaming regulators.
That prompted Luxor, a principle investor, to move to acquire control of the casino from former owner Bruce Deifik in February through a trust agreement. Deifik later died in a car accident.
“We are excited to be of a part of Atlantic City’s future and Ocean Casino Resort’s continued success,” said Mike Conboy, Luxor partner and director of research according to the Press of Atlantic City. “We look forward to working with the employees and management team.”
Luxor has invested nearly $70 million into Ocean. About $50 million was used to pay down debt owed to the second primary lender, J.P. Morgan.
The casino has been on more solid financial ground since the change, reporting an 18 percent increase in revenue for July, the first month its revenues can be compared to 2018. The casino took in about $20 million in July and $21.49 million in June.
James Plousis, chairman of the Casino Control Commission said that while Ocean’s “financial condition has indeed improved, it remains critical that the regulatory authorities continue to monitor its ongoing financial stability through the ICA process at a minimum.”
“We are all acutely aware of this property’s past struggles. In fact, there were real questions as to whether this asset would ever be operational again,” Plousis said. “Acknowledging that it was not its original intention, I, for one, am pleased that Luxor has taken an ‘all in’ approach to its investment in Ocean. … By all accounts, it appears that Ocean is competitive and positioned to generate positive cash flow.”
The commission also approved Gary Van Hettinga as trustee of the casino while a permanent chief executive of Ocean is sought and final qualification of the hedge-fund group is being investigated.
Van Hettinga, of Egg Harbor Township, served as president and CEO of Resorts Casino Hotel for nearly two years.
