Can Ocean Resort Casino Be Saved? A New Owner’s Investment Could Be The Answer
Anyone visiting Ocean Resort Casino for the first time cannot help be awestruck by how beautiful this property is, both inside and out.
Players have nine casinos to choose from in Atlantic City. Also, there’s a growing list of gambling options in Pennsylvania and other nearby states, all competing for business.
Despite its beauty, Ocean Resort Casino is not receiving anywhere near its anticipated share of the market.
The property can only continue to operate unprofitably for so long before something has to give. Ocean Resort is in trouble, and the whole town knows it. The property is facing not only severe financial problems but legal ones as well.
Ocean Resort’s ownership change
After only six months of existence, on Jan. 10, Bruce Deifik announced that the property is getting a new owner. He indicated that he would retain a non-controlling ownership interest.
However, a still unnamed outside company would be the principal owner.
Deifik indicated that the new controlling entity, whoever it may be, is planning to invest about $70 million toward enhancing the property’s offerings. Among the specific improvements mentioned were additional rooms and suites, enhancements to the casino floor, a buffet and “a substantial increase” in entertainment and special events.
The plan is to keep the AC casino open
At least for now, the jobs for the approximately 3,000 people working there are reportedly secure. However, this is contingent on the identity of the new owner, passing the mandatory background check and approval by state gambling regulators for a license.
Meanwhile, these were Deifik’s comments to the Associated Press.
“It has been truly an honor for myself and my family to have taken this property, opened its doors and brought back the players, the families, the convention guests and the sports betting enthusiasts. My family and I want to thank the 3,000-plus employees at Ocean for their tireless work to bring our property to life and put it on track to become the best gaming property in New Jersey. If approved and closed, this next round of investment into Ocean will put this property on an exciting path to growth.”
The transition won’t be easy
Implementing the proposed lofty plans for Ocean Resort Casino will take time. But assuming they go through as hoped, the undeniable shortage of offerings won’t be the only things on Ocean Resort’s agenda that need fixing.
It took two days of testimony and deliberations to finally convince the Casino Control Commission to grant Ocean Resort a license one week before opening.
A major concern was the company’s financial stability.
The commission must have been impressed that Deifik was able to come up with $200 million to buy the property from then-owner Glenn Straub and commit to investing $50 million more in renovations.
But given the new owner’s lack of experience running similar properties, the commission still had reservations.
It wanted more assurance that a new name and a new buyer with deep pockets for the facility wouldn’t be a reincarnation of the doomed Revel.
Predictions versus reality
The projections made by Chief Financial Officer Alan Greenstein were vital in convincing the commission that Ocean Resort Casino deserved a chance.
Greenstein stated that the resort anticipated gaining about 10.5 percent of the AC market during its first year of operation and 12 percent by 2021.
He also predicted that during its first year alone, the property would take in $292 million in gambling revenue and $127 million in non-gaming revenue.
However, the reality has proven otherwise.
According to the New Jersey Division of Gaming Enforcement (DGE), the revenue the casino-hotel took in has been far short of its projections. From the start of July 2018 to the end of November (the last month for which complete statistics are currently available), Ocean Resort Casino has consistently lagged behind its competitors.
In fact, every month the casino’s revenue from gambling was at or near the bottom of the pack. August and November were the only months when Ocean Resort Casino did not rank dead-last.
During the third quarter of 2018, Ocean Resort Casino registered a gross operating profit of $1.4 million; comparing that with the other new AC casino hotel, Hard Rock, which had a gross operating profit of $8.2 million.
Lack of customers
Of course, it’s hard for a casino-hotel to stay afloat when customers are scarce.
I visited Ocean Resort last month with a friend from New York City who hadn’t been there yet. After giving her a tour, we had dinner at Amada. We both couldn’t help but notice that the restaurant and the casino floor were nearly empty.
Ocean Resort Casino is also facing legal problems, as evidenced by a recent string of lawsuits.
In December, Joseph Morrisey, former manager of HQ2, a nightclub at the resort, filed a multimillion lawsuit against Deifik and lender JP Morgan Chase Bank for breach of contract.
Morrisey claimed that the reason for his firing was to thwart his partnership interest that was part of his management deal now that Deifik wanted to sell the property. Morrisey also claimed that JP Morgan hadn’t been made privy to his stake in the property.
In addition, according to records from the Atlantic County Clerk’s Office and the Press of Atlantic City, two construction liens against Ocean Resort are still outstanding. The filers are demanding a collective $1.1 million for work performed by contractors and subcontractors who have yet to receive payment.
Ocean Resort’s tumultuous history
To better understand why Ocean Resort is in a predicament it is in now, let’s briefly summarize the history of this facility.
When the $2.4 billion Revel Hotel and Casino opened on the Atlantic City Boardwalk on April 2, 2012, it was heralded as a game-changer.
The facility will be forever remembered in this town, but not in the way intended.
From day one to its September 2014 closing, it never turned a profit. The Revel was ill-conceived, mismanaged, not the right fit and doomed from the get-go.
On Sept. 2, 2014, after two bankruptcy filings in two years, the Revel closed its doors permanently.
Thereby, concluding Chapter 1 of a story on how not to succeed in business.
In April 2015, Straub purchased the shuttered property for a mere $82 million. He then sat on it for nearly three years, without ever completing the promised renovations or obtaining the license to open it.
In September 2016, Straub renamed the vacant property TEN (after Bo Derek). But for all of the people still waiting for the casino and hotel to reopen finally, but losing hope that it ever would, the only rating possible was zero.
A major part of the problem was Straub’s insistence that he didn’t need a license because he would be turning over the management to a third party. The Casino Control Commission insisted otherwise, and the two parties came to a standstill.
Finally, in January 2018, a new buyer came forward.
A company called Ocean Walk, headed by Denver-based developer Deifik, reached a deal to purchase the idle casino hotel from Straub.
Deifik handed over $200 million to Straub and renamed the property Ocean Resort Casino shortly after that.
That concludes Chapter 2 of the saga.
On June 27, 2018, a day ahead of schedule, Ocean Resort Casino and Hard Rock AC simultaneously opened to the public. However, for Ocean Resort, it was only a week after the Casino Control Commission granted it a license.
Hopefully, Chapter 3 won’t end the same way the first two chapters did — with a closed casino.
Did the casino open too soon?
Granted Ocean Resort Casino faced a big uphill battle given all that went wrong with its two predecessors. But given this new facility’s lackluster start, too, one only has to hope that it isn’t déjà vu all over again.
All of the enhancements that Deifik mentioned as a priority going forward with the new owner are clearly needed. But what is mind-boggling is the enormous haste with which Ocean Resort Casino opened (less than six months after Deifik purchased the property).
Secondly, another six months have passed since then. Certainly, the resort could have done a lot more during that time. It could offer amenities that would make it a viable casino destination, not just for high rollers, but for a wide range of players.
Ocean Resort Casino may have fared better copying a page from the Golden Nugget Atlantic City playbook.
Ocean’s decision to open on the same day as Hard Rock may have been shortsighted, too. Initially, the huge spillover of players and visitors from Hard Rock to Ocean Resort was undoubtedly good for business.
However, the simultaneous opening meant that not just initial but ongoing comparisons between the two resorts would be inevitable.
Did Ocean Resort Casino open too soon? I think so. The owner may have bitten off more than he can chew, and now the property, its staff and loyal players all have to deal with the consequences.
What went wrong and why
Ocean Resort Casino resides at the far northern end of the AC Boardwalk, on the site of the former Revel.
However, I don’t think the less-than-ideal location has been more than a minor factor contributing to this casino’s problems.
The resort is walking distance of Hard Rock and jitneys. Trams transport customers cheaply to and from the Boardwalk entrance at frequent intervals. There is also plenty of parking.
Not being in walking distance of other casinos certainly hasn’t hurt the Borgata.
I think the problems lie far more with the shortcomings inside the facility and lack of preparation by the person heading it.
An article I wrote for NJ Gambling Websites on July 30, 2018, highlighted my initial impressions of both of the new casinos in Atlantic City, summarizing what was great and what wasn’t.
Unfortunately, much of what I said needs improvement back then at Ocean Resort still does.
No established brand and no comparable previous casino experience
Unlike Hard Rock Atlantic City, which came to Atlantic City as a readily identifiable brand with years of experience operating large casino properties all over the world, Ocean Walk was an unknown entity.
And Deifik’s limited experience in the casino gambling industry was confined to financial interests in much smaller properties.
He came to Atlantic City with zero experience running a casino-hotel of the same type, much less taking over a property with a history of repeated failures.
Furthermore — incredible as it may sound — Deifik not only purchased the property before ever seeing it but had never even been to Atlantic City either. Creating a successful casino-hotel in AC from scratch requires a basic knowledge of the area and the clientele one hopes to attract.
Gaming industry consultant and professor of casino management at Fairleigh Dickinson University Robert Ambrose told Philly.com that, “Ocean Resort appears to be struggling… against better-known properties.” He also said that “building the customer base and the loyal following is very difficult, especially if you don’t have an established brand.”
Ambrose conceded that “it’s tough being a new business and being a new kid on the block. … It’s a risky business.”
This is a place where a first-time visitor, and even repeat visitors, can easily get lost. The entrance is on the Boardwalk, yet the elevator lists the level as RB.
The lobby is not on the ground floor, as expected, but on a high floor above the casino. Restaurants and specific gaming areas are also hard to find since there are not enough signs telling patrons where to go.
William Hill Sportsbook: Great for what it is, but not newcomer friendly
Ocean Resort Casino did an admirable job partnering with sportsbook giant William Hill to create a state-of-the-art sportsbook. High rollers will feel right at home there. So will anyone who loves to bet parlays, teasers, and props, as no Atlantic City sportsbook offers players more betting options.
However, where the Ocean Resort sportsbook falls short is in its failure to address the needs of casual bettors and newcomers.
The sheer volume of betting options can be overwhelming to someone who wants to make a couple of moneyline or point spread football wagers on a Saturday or Sunday.
In addition, it does not accept verbal bets. Instead, bettors need to fill in the grids on designated betting sheets and hand them to the clerk at the window. This can be confusing and time-consuming to an inexperienced bettor and result in many mistakes.
I found the sportsbook staff less friendly and helpful than at some of the other sportsbooks in town. Very long lines are another problem.
Furthermore, sports bettors are as deserving of comps as those who give comparable action play other casino games. In fact, the two groups are far from mutually exclusive. This casino’s William Hill sportsbook does have a rewards program for sports bettors, but it is not linked to the casino’s player rewards program.
After placing $1,000 in bets, the bettor receives $1 in additional free bets. That’s it — not much incentive to keep playing there.
Tiny poker room
Ocean Resort Casino does offer poker, but the room is small and hard to find.
There are only a few open tables, with one to two no-limit games usually the only option. With no tournaments or special promotions for cash game players, there’s little incentive to play there.
Not enough first-rate entertainment
The resort has only one concert venue, Ovation Hall, which also doubles as a venue for boxing matches.
During the past year, scheduled entertainment has been very limited, especially big-name acts, and the offerings have clearly paled in comparison to its nearest competitor, Hard Rock Casino.
If Ocean Resort Casino is to succeed in attracting bigger crowds, it needs to step up its entertainment offerings considerably.
The casino could also benefit from having frequent special events that get a lot of people in the door, like holiday celebrations, food and wine tastings, and prize drawings.
The problem is not lack of places to eat, but the lack of reasonably priced places to eat. Even the casual eateries are pricey.
I think this casino needs to offer at least a few specials where patrons can get a full meal for a discounted price.
There could also be bigger representation in the annual 50 Bites promotion, as well as special events for foodies, such as Savor Borgata or celebrations of specific foods, such as Bacon Week and Chocolate Week at the Tropicana.
Ocean Resort Casino continues to struggle to find its niche in a shrunken market. The naysayers, who claimed last spring that nine casinos are too many and Atlantic City is headed toward another downward spiral, are repeating the same dire predictions.
However, according to a Jan. 11, article in The Press of Atlantic City, casino gambling experts like Ambrose and Rummy Pandit, executive director of the Levenson Institute of Gaming, Hospitality & Tourism at Stockton University, disagree.
Ambrose believes that Ocean Resort Casino, “under the right branding and marketing, can survive as a resort experience and contribute to Atlantic City.”
In addition, Ambrose and Pandit both regard the new investment in the property announced by Deifik as “a positive sign not only for the property but for the city itself.”
City Council President Marty Small echoed the same sentiments when he stated the following:
“Moving forward, hopefully with further investment, they (the new majority owner) will bring a new vision, not only to make the Ocean Resort sustainable, but profitable as well.”