It’s official; pending final approval, Ocean Resort Casino (formerly Revel and Ten) is once again changing hands.
“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 sale was both surprising and unsurprising.
Surprising because the property reopened its doors just six months ago.
Unsurprising in that Ocean Resort has struggled mightily in the highly competitive Atlantic City casino market. According to the New Jersey Division of Gaming Enforcement reports, Ocean Resort AC, one of the largest casinos in the market, finished dead-last in Atlantic City casino revenue in four of its first five months.
Who is buying Ocean Resort Casino?
The identity of the new owners is unknown, but according to industry analyst Chris Grove, they’re believed to be an existing bank already involved in Ocean Resort ownership, along with a small consortium of private individuals.
Deifik will retain a small, non-controlling ownership in the property.
The new owners are reportedly pumping an additional $70 million into the property. That money will be used to upgrade the property further ($175 million was spent renovating the property under Deifik). Updates include a buffet, additional suites and rooms, and expanded entertainment options.
Ocean Resort hampered by unique issues
Ocean Resort isn’t the typical failed casino.
It’s not an old, rundown property. In fact, it’s the opposite of that.
But instead of being one of the great casino success stories, the property (that cost $2.4 billion to build) usually tops the list of the greatest casino blunders in US history.
Timeline of major moments in Revel’s history
Throughout its history, the former Revel Casino has been a money pit and an absolute nightmare for all involved.
In less than 10 years, the property has changed hands four, five or six times depending on your definition of an owner, and gone through three names, two bankruptcies and one closure.
- 2008: Revel Entertainment Group begins construction of Revel.
- April 2010: Morgan Stanley (a 90 percent owner of REG) sells its stake in the half-built casino.
- February 2011: REG receives $1.15 billion in new financing.
- February 2011: New Jersey approves a $260 million investment (in exchange for 20 percent of the property’s revenues) to get the Revel project back on track.
- April 2, 2012: Revel opens its doors.
- February 2013: Revel then files for Chapter 11 bankruptcy protection.
- June 2014: Revel files Chapter 11 bankruptcy for the second time.
- September 2014: Revel closes its doors a mere two years after it opened. The property never had a profitable quarter.
- October 2014: Brookfield Holding purchases Revel during a bankruptcy auction.
- November 2014: Brookfield backs out of the Revel purchase.
- April 2015: Developer Glenn Straub, who led the shuttered property on one of the wildest two-plus years ride imaginable, buys Revel and renames the property TEN.
- January 2018: Developer Deifik buys TEN; rebrands it as Ocean Resort Casino.
- June 2018: Ocean Resort Casino opens its doors.
- January 2019: Unknown group buys Ocean. The deal still needs official approval.
Revel 1.0: A bad start that only got worse
The original Revel couldn’t get out of its own way and doomed from the get-go.
Ownership made bad decision after bad decision that led to mounting debt and a lack of customers.
The property was hemorrhaging as much as $80 million a quarter, which led to its first bankruptcy. After the restructuring of debt, the quarterly losses were reduced, but Revel was still losing $20 million a quarter. That led to a second bankruptcy and Revel closing its doors.
Among Revel’s many issues include:
- A terrible layout, e.g., putting the hotel lobby on the 11th floor that didn’t have direct casino access.
- The first AC casino to become 100 percent nonsmoking.
- The lack of a rewards program available at opening.
- Exclusively opening high-end restaurants and shops to attract the type of customer that goes to Las Vegas and Macau, not Atlantic City.
- A botched plan, which intended save money on energy but wound up costing the casino millions of dollars per month.
Revel 2.0 (aka TEN): The Glenn Straub era
The property sold for pennies on the dollar during its bankruptcy auction to Florida developer Straub.
The Glenn Straub era is the stuff of legend.
After purchasing the shuttered casino, Straub put forth several “ambitious” plans for the property, including a tower of geniuses, motocross course, zip lines, obstacle courses and water parks.
In the end, Straub settled on turning the Revel into precisely what it was before: a hotel-casino. But even that toned-down plan came with that unique Straub flair.
After reaching an impasse with regulators, Straub sold the property to Deifik.
Not least of which was getting out from under the debilitating energy contract that helped sink the first iteration of Revel.
Revel 3.0 (aka Ocean): A good plan that never had a chance
Things began to rapidly move once Deifik took over the property in January 2018.
But the fairytale sequel was short-lived. From July to November 2018, Ocean Resort ranked dead last in the nine-casino market in terms of revenue.
Most of the design flaws were fixed, amenities and policies better reflected the Atlantic City market, and the property was no longer saddled with insurmountable debt, people were still taking their business elsewhere.
There is no shortage of possible reasons why:
- The property is still carrying the baggage of Revel.
- Ocean Resort opened on the same day as Hard Rock Atlantic City.
- As an independently owned casino, Ocean Resort lacks the database of a major casino corporation.
- An upscale resort casino is a bad fit for the Atlantic City market.
The new owners apparently believe they can succeed where all others have failed.
History is betting against them.