In the winter of 2019, if any New Jersey sportsbook had tried to offer odds on the Atlantic City casino hotel then known as Ocean Resort Casino making it through another summer, no gambler in their right mind would have taken the bet.
Fast forward to the end of summer 2023, and the property now called Ocean Casino Resort is one of the city’s best performers. In fact, an argument can be made that Ocean’s rise to the upper echelon of the Atlantic City casino market is the most remarkable turnaround of any gambling parlor in history.
Celebration certainly appropriate for Ocean
From its failed origins as Revel Casino Hotel to its seemingly doomed trajectory in February 2019, the $2.4 billion casino at the north end of the AC Boardwalk felt almost cursed (if you believe in that kind of stuff). But, apparently, the gambling gods decided Ocean was deserving of a better fate.
Through the first half of 2023, Ocean is the second-most profitable operator in the city and the third-highest revenue-generating casino in town.
The four-and-half-year revival of Ocean will culminate at the end of September when it hosts a celebrity-laden $1 million private blackjack tournament. Jay-Z, Beyonce, Tom Brady, Robert Kraft, Michael Rubin, Kevin Hart and Kim Kardashian are among the reported names attending the Reform Alliance’s charity card game.
Ocean Casino nearly sank before it could swim
The fact that a high-profile, star-studded event like that is taking place at Ocean speaks volumes about just how far the casino has come in such a short time.
Ocean Casino Resort was underwater, financially speaking, from the start. Between its grand opening in June 2018 through January 2019, the casino was not earning money.
The late Bruce Deifik had a bold and commendable vision for the casino that just did not align with certain economic realities, namely mounting debt that was incurring interest. Ocean actually lost more than $27 million in those first seven months, according to NJ gaming regulators.
A Wall Street investment firm, Luxor Capital Group, assumed control of Ocean and installed a new executive team. By the end of 2019, the casino eked out a $6.7 million operating profit, the lowest reported earnings among AC’s nine casino operators.
Just as things were starting to look brighter for Ocean (and the entire Atlantic City casino market), the world changed. COVID-19 and the ensuing government mandates shut down AC casinos for months. Even when the casinos reopened, restrictions remained that limited casino, hotel, restaurant and entertainment venue operations for almost an entire year.
Playing a dealt hand turned out good for Ocean
Ironically, one of Revel’s oft-cited liabilities turned into a massive competitive advantage for Ocean in 2020 and into 2021. Ocean’s cavernous space, high ceilings and expansive casino floor proved to be a welcoming environment for people wanting to get out of their homes yet remain cautious of an air-borne illness.
Toward the end of 2021, Ilitch Holdings — a Detroit-based corporation that owns Little Caesars pizza, two professional sports franchises and a casino — bought into the changing tide at Ocean. Ilitch paid $175 million for up to 50% stake in the Atlantic City casino.
Luxor and Ilitch restructured the C-suite again in 2022. The two companies also went all in on a multi-million-dollar capital investment project that included completing 12 unfinished floors of hotel rooms, adding restaurants and retail spaces, reconfiguring the gaming floor, a new high-limit slot room and a completely reimagined space for sports betting where the sportsbook used to be.
The changes paid off. By the end of 2022, Ocean’s gross operating profit of $96.2 million was fourth among AC operators.
This year is looking even better for Ocean. Through the first half of 2023, Ocean has reported more than $47.6 million in gross operating profits, which is 40% higher than through the same period last year.
So far in 2023, only Hard Rock Hotel & Casino Atlantic City (which also has an online product, Hard Rock Bet NJ) — which opened on the same day as Ocean — has a higher GOP.
Casino Management 101: Do the opposite of whatever Revel did
Revel’s other big knock was that it was not a gambler’s casino. A high-ranking executive was once quoted as saying Revel was a resort that “just happened” to have a casino. In other words, they didn’t value gamblers.
Ocean took a different approach. Leaning on the experiences and relationships of its executive team — many of whom worked at other successful AC casinos — Ocean appealed to high rollers and casual gamblers alike.
A new player rewards program was rolled out in 2021/22 and Ocean tier-matched card levels from competitors. Similar to the market’s other high-performing casinos, Ocean kept its promotional spending in check while increasing offers to more consistent players.
The plan has worked, drawing in more gamblers to the property at a time when many casino operators are starting to rely more on internet gaming. Ocean only trails Borgata Hotel Casino & Spa (the market leader for nearly 20 years) and Hard Rock in revenue generated from in-person gamblers in 2023.
Through August, Ocean has reported more than $267.5 million in land-based revenue, an increase of almost 13% over its pace in 2022. Besides Borgata ($508 million) and Hard Rock ($338 million), no other casino in AC is above $175 million for the year.
Ocean hotel operations are also vastly improved. Through the first half of 2023, only Hard Rock has a higher occupancy rate (87.7%) than Ocean (75.8%). Ocean, however, is averaging nearly $100 more per room ($239) than Hard Rock ($133) and upwards of $50 more than Borgata ($182).
Things to keep an eye on at Ocean
If there’s anything to nitpick about Ocean’s success, it would be the property’s lingering debt. According to the casino’s financial filings with NJ gambling regulators, Ocean’s debt obligations, as of June 30, exceed $170 million.
Nearly $90 million of the outstanding debt was combined with the Ilitch investment to pay down two existing loans and other costs.
The rest of Ocean’s debt is from a $89.9 million capital investment used to construct 461 new hotel rooms on the 12 unfinished floors.
There’s also an opportunity for improvement in Ocean’s online casino performance. Ocean and its online partners rank last among the licensed NJ online casino providers.